MARKETING POTENTIALS IFUGAO LOCAL PRODUCTS: TOWARDS SUSTAINABLE

ECONOMIC GROWTH

INTRODUCTION

Rationale

Prior to 1970’s, Philippines was considered a model of development; one of Asia's industrial powerhouses.
Domestic products were exported to different countries which includes produced consumer goods, processed raw
materials and with assembly plants for automobiles, televisions and home appliances. Scrap metal was imported and
made into steel for ships. Factories produced cement, textiles and fertilizer. These are indications that the country’s
economic status was soaring high. Entrepreneurial activities are seen one of the core reasons contributing to it. But
this prosperity of the country ended in the 1980’s where the Philippines suffered from economic adversities.
Economic problems and social unrest occurred. Our economy also dropped during the Asian financial crisis in 1999
and most recently the global financial crisis that started in the United States.

Until now, Philippines hardly cope with these economic adversities. Entrepreneurs were the greatly affected
as shown by the rising percentage of unemployment, laying off of employees by way of cost cutting procedure and
reducing of salaries and wages. In order to provide the basic needs of families, people tighten up their budgets as
prices of commodities continue to increase.

This economic state of recession must not discourage people into business. But rather take courage and
embrace challenges to enter entrepreneurial activities. In fact, the entrepreneurial abilities were challenged due to
the need to survive this economic crisis.

The Philippines is a highly entrepreneurial country. According to Zenaida Maglaya, Trade Undersecretary for the
Regional Operations Group, MSME’s promote equitable and inclusive growth, especially in the countryside. “MSME
are substantial contributors to our country’s economic growth, trade, employment, innovation, and poverty
alleviation, she said”. Such enterprises account for 99.5% of established businesses and employ 62.8% of the
country’s workforce.

To ensure MSME’s continued growth, the MSME Development Council approved the MSME Development
Plan 2017-2022. The plan envisions “more globally competitive MSME’s that are regionally integrated, resilient,
sustainable, and innovative, thereby performing as key drivers of inclusive Philippine economic growth,” Maglaya
said

Women hold significant leadership positions in national and local government, universities, business
corporations and family business enterprises in the Philippines in fact 51% of entrepreneurs in the Philippines are
female.

The Philippine government pays attention to entrepreneurial efforts to boost economic growth, improve
living standards, and build worldwide market for Philippine products to attract foreign investors, offer incentive and
by lowering tariffs, including land ownership and “free trade.”

The performance towards economic survival proved that entrepreneurial activities is necessary for its
recovery. This is supported by Valdez in his study that “there is a need to convince more people to enter
entrepreneurship and inspire the existing ones to remain in their present economic condition in order to achieve
entrepreneurial economy”.

The National Economic Development Authority (NEDA) through the Medium-Term Philippine Development
Plan (MTDP, 2010) reported that as of the third quarter of 2008, out of the total of 8,072 new Small and Medium
Enterprises (SMEs), 25,578 were assisted under the OTOP Program. NEDA outlines the dual strategies of product
development through OTOP and credit provision through SME Unified Lending Opportunities for National Growth
(SULONG) to support 3 million entrepreneurs and generate 6 to 10 million jobs.
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The Cordillera Administrative Region, considered as the country's premiere highland region, is highlighted by
amazing sights, cool climate, unique culture, and people from line of business. One of the provinces with distinct
treasures in this region is Ifugao. Ciencia (2008) said that the Ifugao province has once become one of the poorest
provinces of the Northern Luzon area. However, from 2002 to 2006, the Ifugao provincial government implemented
a poverty alleviation program called the Health and Nutrition Status and Improvement-Poverty Alleviation Program
(Hensi-PAP) which became successful in reducing poverty cases in the province (Dumlao, 2006).

For the indigenous peoples of the Philippines, their carvings, accessories, delicacies, clothes and fabrics are
more than just items for sale. They are also tangible expressions of the culture and traditions that they steadfastly
hold on to even in these times of high technology when most everything can be done in an instant.

Indigenous peoples, says Lily Quindo, a B’laan from South Cotabato, are hard pressed to find more sources
of income as they remain among the poorest in the Philippines. They are also faced with the possibility of losing their
ancestral domain, while they suffer from lack of access to basic social services such as health and education. Not all
of them even get the benefits of the government’s conditional cash transfer program, which is supposed to help the
poorest people in the Philippines. Deriving extra income from their products would thus go a long way in helping
them out of poverty.

The Province of Ifugao is the fourth poorest in the country (NSCB 2000) having the highest poverty incidence
in the Cordillera Administrative Region. The Philippines Human Development Report (2000) listed Ifugao as having
the 6th lowest Human Development Index (HDI) of 0.4480 in 1987 out of 78 provinces. Its HDI slightly improved to
0.512 in 2000 but still in the Cordillera region. Although, they have very positive attitude toward work and consider
themselves employed where most of them are engage in farming, wood carving and weaving.

Judith Marames, an Ibaloi from Baguio City, says indigenous people will need help in improving the design
and finding a steady market, especially in Metro Manila where consumers appreciate the value of handmade and
traditional arts and crafts.“Producing these goods is part of our culture,” says Hiagonon Nena Undag. “These are
what we do in between the Agricultural Cycle, and we can improve on them if we could only have access to rawer
materials or have better capitalization and marketing skills.”

In Ifugao Province, the crusade against the deterioration of the Banaue Rice Terraces and the weakening
culture of the Ifugaos continue, but this time, the elders are harnessing the talent and skills of their own people to
once again strengthen their cultural ties and identity. Since the Banaue Rice Terraces Commission was abolished in
2002, major financial sources which helped delay the progression of its decay has stopped trickling in, save for some
private domestic donors and a few local and offshore foundations that still contribute some funds. With the
launching of the Haggiyo Enterprise Products (HEP) of the Ifugao provincial government led by Gov. Teodoro
Baguilat, the sustenance of the terraces and the region’s culture and traditions have given new inspiration to the
once-disheartened natives of this mountainous northern province.

The rising problem of commercial farming and migration of some families to the lowlands prompted the
provincial government of Ifugao with the help of national line agencies, like the Department of Environment and
Natural Resources (DENR), to re-establish their culture based farming methods in order to maintain the robustness
of the earth, save the lush forests and help the people live decently by supporting bio-diversity inspired livelihood
projects. According to Baguilat, the inception of HEP was aimed to slowly reintegrate the Ifugaos back to their roots
by opening up opportunities that abound in the province. “The opportunities are right here, we will just have to join
together and utilize the natural resources that are plentiful in our region, “Baguilat said, adding that the provincial
government has devised a fund support for interested entrepreneurs.

State of the art

Ifugaos are known for organic farming, among the organic commodities were cookies, breads, rice wines,
fruit wines, wild mountain teas, woven clothing, Ifugao wood carvings, coffee beans, and other food items including
the famous Tinawon upland rice. It was revealed that they are already supplying the bulk of Arabica and Robusta
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coffee varieties to the famed Figaro Coffee Company due to the bean’s superior quality. “These products may be
common to other people, but its uniqueness comes from the history and culture that is behind its creation.

Ifugaos, with their meager resources and limited land area for extensive agricultural inputs, have survived
through centuries of organic farming methods. This method is still in use today by the natives but farming
commercialization in other parts of the Cordilleras have since encroached on the few remaining watersheds and
assaulted the natural characteristics of the earth, due to the heavy use of chemical based fertilizers on massive
vegetable and hybrid rice production. Ifugao is a landlocked province and one of the six provinces that comprise the
Cordillera Administrative Region (CAR). It is considered as the most developed province in CAR due to its high
poverty reduction to 23% from a high 55% in 2000.

While some potential entrepreneurs are very optimistic of their success, some are very hesitant in putting up
their business because of certain factors and barriers such as their educational attainment and competitors which
affect their decisions. Success somehow depends on entrepreneurial attitudes like determination and willingness to
take risks directed towards the improvement of their businesses.

Entrepreneurs are constantly on the lookout for business opportunities are keen observers of existing and
potential problems in business. The common problem they face include those connected with source of funds,
source of raw materials, red tape in government, manpower/labor/HR and the lack of information to assist the
Filipino Entrepreneurs.

An entrepreneur is an individual who possesses an idea, a venture, an enterprise and he assumes significant
accountability for the inherent risks and outcome. It applies to someone who create value by offering a product or
service by carving out niche in the market that may not exist currently. Schumpeter argues that the entrepreneur is
an innovator, one that introduces new technologies into the workplace or market, increasing efficiency, productivity
or generating new product or services.

Business Strategies are important in an enterprise. A business strategy is the means by which it sets out to achieve
its desired ends (objectives). It can simply be described as a long-term business planning. Typically, a business
strategy will cover a period of about 3-5 years (sometimes even longer). A business strategy is concerned with major
resource issues e.g. raising the finance to build a new factory or plant. Strategies are also concerned with deciding on
what products to allocate major resources to - for example when Coca-Cola launched Pooh Roo Juice in this country.
Strategies are concerned with the scope of a business' activities i.e. what and where they produce.

Thompson and Strickland (1999) said business strategy is otherwise termed as business level strategy that
refers to the managerial game plan for a single business. It is mirrored in the pattern of approaches and moves
crafted by management to produce successful performance in one line of business. It is powerful if it produces a
sizable and sustainable competitive advantage: it is weak if it results in competitive disadvantage.

Financial Management is a category of business strategies which refers to the supervision and control in the
acquisition and usage of cash and inventories in an enterprise.

Ziegler (1999) tells that financial management involves all the activities that enable a company to obtain capital for
growth, allocate resources efficiently, maximize the income potential of the business activity and monitor results
through accounting documents. Such management requires a well-written, comprehensive financial management
plan clearly outlining the assets, debts and the current and future potential of your business.

Competitive strategies are also important. Competitive strategies are concerned with doing things better
than rivals. To be competitive a firm shouldn't just copy the ideas of rivals. They should seek to out compete rivals.
There are two main ways of being competitive; 1.) By selling goods at lower prices than rivals. This is possible when a
firm is the market leader. 2.) By differentiating your product from those of rivals - which enables you to charge a
higher price if desired.
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A small business can use technology to create competitive advantage. Competitive advantage is gained from
getting products to market, investigating marketing campaigns, and responding to customers quicker than
competitors. The reason for integrating technology into a business is that it meets the needs of the market and gives
an advantage.

Rochester (2006), a recent study by CIO Insight Magazine revealed that of those companies that meet their
strategic goals, 79% of them incorporate technology into their strategic plans and companies that aren’t meeting
their goals shows that only 46% of them incorporate technology. Yet most small and medium-sized businesses still
treat business and technology as discrete activities.

A study by Beckman and Marks (1996) found that business experience was a factor in the success of small
firms. Another study by Costa (1994) indicated that strategic planning contributes to long-running success for
businesses. Other factors for success include quality, customer focus, innovative marketing practices, flexibility and
employee empowerment (Zetlin, 1994). Filley and Pricer (1991) defined several tools for small business success.
These included good management techniques, such as appropriate operating strategies, leadership and time
management. Other tools were good financial management and pricing strategies, motivational strategies for
employees, and ensuring only those employees with abilities are hired.

Thus, This study will be conducted in order to know the extent of the level of effectiveness and efficiency
and problems encountered by these Indigenous Local Products Enterprises in Ifugao in terms of Financial
Management, Inventory Management, Human Resource Management, Security and Operations Management and
Marketing Management wherein results will serve as bases for the formulation of policy recommendation in order to
improve the enterprises competitiveness such as surpassing the economic adversities and continues to operate
amidst the occurrence of global changes and fast advancement of technology. This study serves as a basis for
business improvements as well as for job opportunities for individuals who put up their own businesses whether
micro, small or medium scale. It is also important to continue and expand this study to have additional findings
regarding queries about entrepreneurship and its impact to an individual and to the society as a whole. This would
lead to generalizations which would contribute to the fund knowledge.

Statement of the Problem

Specifically, this study aimed to answer the following questions:

1.What is the profile in terms of:

Entrepreneur’s profile

Age

Sex

Highest educational attainment

Enterprise Profile

Type of products

Length of operation

Initial capitalization

Number of workers

Form of ownership

2.To what extent is the level of effectiveness and efficiency of the Enterprises in managing the indigenous local
products in Ifugao in terms of:
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Financial management

Inventory management

Human resource management

Security and operations management

Marketing management

3.Is there a significant difference in the level of effectiveness and efficiency of the Ifugao indigenous local products
enterprises when grouped according to profile variables?

4.What are the common problems encountered by the enterprises of indigenous local products enterprises in Ifugao
in terms of:

Financial management

Inventory management

Human resource management

Security and operations management

Marketing management

Research Paradigm

1.
1. Effectiveness
Effectiveness and
and efficiency
efficiency of
of
Personal Profile of the the Enterprises
the Enterprises
Respondents
1.
1. Financial
Financial Management
Management
Age
Sex 2.
2. Inventory
Inventory management
management
Highest Educational
3.
3. Human
Human Resource
Resource
Attainment
4.
4. Marketing
Marketing management
management
Profile of the Enterprises
5.
5. Security
Security and
and operations
operations
Type of products management
management
Length of Operation
Initial Capitalization 2.
2. Problems
Problems encountered
encountered by
by the
the
Number of workers Enterprises
Enterprises
Form of Ownership
1.
1. Financial
Financial Management
Management
Conceptual Framework
2.
2. Inventory
Inventory management
management

The figure above showed the relationship3. Human

3.of the Resource
Human Resource
variables. The moderating variables includes the
entrepreneurs profile and enterprises profile. Under 4.the entrepreneur’s
4. Marketing
Marketing Profile the variables included are age, sex,
management
management
highest educational attainment while the enterprise profile consists of the type of products, length of operation,
5.
5. Security
Security and
and operations
operations
initial capitalization, number of workers and form of ownership.
management
management
The process constitutes the analysis of the effectiveness and efficiency of the enterprises in terms of
financial management, inventory management, human resource, marketing management and security and
operations management. In addition, the problems encountered were thematically clustered and be presented.
However, to determine the significant difference among the variables, Analysis of Variance will be used.
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After gathering the analyzed data the researcher will formulate policy recommendations in order to improve
the competitiveness of the indigenous local product enterprises .

Objectives

To determine the level of effectiveness and efficiency of the Enterprises in managing the indigenous local products in
Ifugao.

To determine if there is a significant difference in the level of effectiveness and efficiency of the Ifugao indigenous
local products enterprises when grouped according to profile variables?

To determine the common problems encountered by the enterprises of indigenous local products enterprises in
Ifugao in terms of:

To determine if there is a significant difference in the problems encountered of the Ifugao indigenous local products
enterprises when grouped according to profile variables?

MATERIALS AND METHODS

In this chapter, the researcher showed how the study was conducted. It presented the following; the
research design, the research environment, the respondents of the study, the data gathering procedure, the data
gathering tool and statistical tool.

Research Design

The researcher adopted the descriptive-evaluative method. According to Hubbard (2013), descriptive-
evaluative research is the collection of data describing some phenomena that may or may not be quantifiable such
as close-ended scales, open-ended survey questions, observation, and interviews.The study will employ the
descriptive survey method to gather primary data for this study. According to Burns and Grove (2009), descriptive
research “is designed to provide a picture of situations as it naturally happens”. Descriptive research design was used
in this research. In addition, Shields (2013) cited that descriptive research is defined as a purposive process of
gathering, analyzing, classifying, and tabulating data about prevailing conditions, practices, beliefs trends, and cause.

Quantitative-qualitative research approaches will be used to evaluate the indigenous local products in Ifugao.

Research Environment

This study will be conducted in the municipalities of Ifugao namely; Lamut, Lagawe, Kiangan, Banaue,
Asipulo. Aguinaldo, Alfonso-lista, Tinoc, Hingyon and Mayoyao

The municipality of Lagawe will the main target of the study since it is the capital town of the province and
there is a greater number of establishments whose been operating for many years and was able to surpass economic
adversities. As the target of the study, the researcher aimed to determine the strategies that made them
competitively advantageous.

The municipality of Lamut, has been known for its tagline “Umuna ti Lamut” where it has received many
citations and awards that made them progressive. As per observation many individuals put up establishment that
will soon make Lamut a center of commerce in the Province because of its accessibility and located in a wider and
plain land.

The municipality of Kiangan is also one of the towns where many businesses are found. As its population
increases with corresponding increase in demands, variety of businesses also come into existence. They offer native
or souvenir products that most tourist look for.

The municipality of Banaue is a place where you can find the famous Banaue Rice Terraces. Since it is
considered a tourist spot of the province it is expected that individuals from different provinces and from different
countries come and visit this place. Many individuals also put up establishments specifically hotels and restaurants in
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order to cater the needs of these people. And where most locally produced products was displayed and sold to
visitors.

For the municipalities of Asipulo, Aguinaldo, Alfonso-lista, Tinoc, Hingyon and Mayoyao Ifugao are
municipalities whose economic status is still in progress since they are considered the municipalities with lesser
residence and most of the places are mountainous. As per observation and as per DTI records most businesses are
categorized under the Micro Enterprises.

Research Respondents

The respondents of the study will be the entrepreneurs engaged in production, manufacturing and selling of
the indigenous local products in Ifugao.

Data Gathering tool

The researcher adopted the research questionnaire from several sources. The questionnaire was validated
by the panelist before it was floated. The researcher also seeks the approval of the DTI provincial director to get the
list of MSME’s in Ifugao (updated 2017) who engaged in producing indigenous local products.

The survey questionnaire was used as a technique in gathering the data. The first part of the questionnaire,
consists of the entrepreneur’s profile and the enterprise profile. The second part constitutes the level of
effectiveness and efficiency of the enterprises in terms of financial management, inventory management, human
resource, marketing management and security and operations management. In addition, the problems encountered
were included. The respondents were allowed to answer the questionnaire in their most convenient time and
allowed them to ask questions for better understanding and clearer perception.

Data Gathering Procedure

The researcher employed the following data gathering procedure with the research questionnaire as the
gathering tool:

Letter were attached to the questionnaires, the letter contained title of the study and the purpose, followed by the
request to conduct the study.

The questionnaires were personally handed to the respondents.

The respondents answered the questionnaires within 15-20 minutes with the help of the researcher.

Statistical Treatment of Data

After the data will be gathered, the tabulation, analysis, and interpretation of findings will be discuss. The
following statistical treatments will be used.

To determine the level of effectiveness and efficiency of indigenous local product enterprises in Ifugao in terms of
Human resource management, Inventory management, Security and operation management and Marketing
management, means and standards deviations will be computed using the four-point Likert scale in scoring the data.

The scale is as follows:

Poin Scale Qualitative Description

t
4 3.50 - 4.00 Very effective Very efficient
3 2.50-3.49 Effective Efficient
2 1.50-2.49 Not effective Not efficient
1 1.00-1.49 Not at all Not at all
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To determine the significant difference in the level of effectiveness and efficiency of the indigenous local product
enterprise in Ifugao when grouped according to profile of the entrepreneur and profile of the enterprise, Analysis of
Variance (ANOVA) will be used

To determine the problems encountered the scale is as follow:

Poin Scale Qualitative Description

t
4 3.50 - 4.00 Not at all a problem
3 2.50-3.49 Slightly serious problem
2 1.50-2.49 Serious problem
1 1.00-1.49 Very serious problem

To determine the significant difference on the problems encountered of the indigenous local product enterprise
when grouped according to profile of the entrepreneur and profile of the enterprise, Analysis of Variance (ANOVA)
will be used.