I.

Title of the Case: The Globe Construction Company

II. Problems Encountered:
a. How is the Globe Construction Company established?
b. What is the reason why the top management held a management workshop?
c. What is the purpose or objectives of that workshop?
d. What did the Project Manager proposed during the management workshop and
what is the opinion of the Purchasing Manager about this proposal?
e. Where would you locate the buying function?
III. Summary of the Case: The Globe Construction Company was built by Mr. Eduardo
Concepcion in mid-1950s. Due to the development of the construction industry in the
government sector in the mid-1960s, wherein Ferdinand E. Marcos is the President of the
Philippines of that time, the company progress’ and expands at as very fast phase. That’s
why because of this booming effect of construction industry in the government sector,
most of the company’s projects or ground plans were dedicated for the government. But
aside from constructing large projects for the government sector, they also started doing
large projects for private sectors. Competition is not a problem for the Globe
Construction Company at that time that’s why they enjoyed the benefits and the profits
that they get from the government’s projects. But the tables have turned when Mrs.
Corazon C Aquino became the President of the Republic of the Philippines. Private sector
gain more construction projects than government sector. That’s why competition became
a big problem for the Globe which forces them to change their approach when bidding
for both sectors by reducing the size of their margins. This led the Globe Construction
Company to conduct a management workshop one weekend in April of 1989 discussing
the methods of how they will going to improve their organization’s efficiency and
effectiveness which was held by the company’s top management. Also, the workshop
will discuss the present policies and procedures of the company in able to make this as a
standard for the new company operations manual.
The workshop was attended by the president, vice-president for administration
and for the operations, purchasing manager and all the project managers. The company
has twenty project managers wherein their primary responsibility is to take-in-charge of
the company’s construction projects. The company has an about eighteen on-going
construction projects which has an estimated bid price of at least P100 million each,
ranging from office condominiums, shopping centers and government buildings. There
are also fifteen buyers who is responsible for the purchasing of materials needed for
construction projects that always report to the purchasing manager which was the head of
the purchasing unit. On the other side, the Vice President for Operations takes in-charge
of all the on-going construction projects.
During the workshop, Mr. Isidro Remigio, one of the project managers of the
company, proposed that buyers should be at the job site all the time in able for the
transfer of reports from buyers to the Project Managers becomes easier and faster. He
proposes this because reports takes so long, sometimes about 2 weeks, before purchasing
reacts to their purchase order (PO). Also, this proposal will help them understand why
some materials are urgently needed. But the Purchasing Manager interrupted and answer
 the inquiries of Mr. Remigio. He said that they don’t implement Purchase Orders. They
purchase materials ordered by the Project only if the central warehouse don’t have stock
on the needed items and if the Executive Committee approved the items included in the
Bill of Materials (BOM). He also said that any excess order will not be ordered unless
there is an ameliorated bill of materials. That’s why if the buyers directly report to the
project managers, this could increase the budget cost
The President of the Company also gives his sentiments after hearing Mr.
Remigio and the Purchasing Manager’s statements. He is concerned about the availability
of funds for the approved Purchase Orders to be acted upon by purchasing. He said that
it’s good for the construction projects to have their needed materials to be on time but he
is not encouraging them to hoard too much because it can tie-up their funds and increase
their costs of interest. On his last statement, he is hoping that they would also consider
the availability of funds for Purchasing wherever it is located in the organizational chart.
IV. Solution:
a. The Globe Construction Company was established in the mid-1950s by Mr.
Eduardo Concepcion. The company grew at a very fast phase due to the
construction boom in the government sector during ex-President Ferdinand E.
Marcos administration. The company also started constructing large projects
during 1970s and early 1980s for both government and private sectors but most of
their projects came from the government sector. Competition is not also a
problem for the Globe Company at that time that’s why they enjoyed the benefits
and profits they get from the government projects
b. The reason why the top management conducted a management workshop is
because the competition became stiffer after Mrs. Corazon C Aquino held as the
President of the Republic of the Philippines. This competition rises because the
Private Sector gain more construction projects than the government sector.
c. The purpose of the workshop is to discuss the present and existing policies and
procedures to use it as a standard for the new company operations manual. Also,
to discuss the ways of how will the organization improve themselves to become
more efficient and effective.
d. The Project Manager named Isidro Remigio proposed that the buyers should be
appointed at the job site in able for the easier and faster transaction between the
buyer and the Project Managers. But one of the Purchasing Manager disagree
about this proposal. He stated that if the buyers will directly report to the project
managers, it can increase the budget cost because they might purchase some items
that are not included in the Bill of Materials which was approved by the Executive
Committee.
e. For me, I will place the purchasing or buying function under the construction part
because I believe that purchasing first the required and needed materials can
prevent any companies from over budgeting or over spending.