STEP ANALYSIS

1. SOCIOCULTURAL FACTORS Branches within high-risk NEGATIVE

areas with presence of
insurgencies

2.TECHNOLOGICAL FACTORS Computer calculation Positive

speed on interest and
charges

Internet Connectivity Positive

User friendly system with Positive

high data integrity

3.ECONOMIC/ Competitors Negative

ENVIRONMENTAL FACTORS

Excellent Customer Positive

Service

Demand Positive

4.POLITICAL-LEGAL FACTORS Know Your Customer Positive

Policy

Knowledge in Anti Money Positive

Laundering Act
 Socio-cultural factors are forces within cultures and societies that affect the thoughts,
feelings and behaviors. The individual personality and behavior affects the way a certain
company’s policy implementation thus it makes Mlhuillier branches put in critical state and even
its employees and other stakeholders. Specifically in the high-risk branches in Mindanao some of
the employees cannot require customer’s identification card when they have transactions like
claiming of money remittance, or other transactions that requires identification, because if they
do some customers threatened them with guns. That’s why if you happened to be in Mindanao,
we have limited branches in there.

Technology trends affect business on many levels. When an employee is efficient, he

turns to be productive. Technology helps synchronize data and fast transactions. It gives many
opportunities and advantages. With the advent of technology and the demand to such is really
increasing, Mlhluillier’s ML Wallet is a game changer in pawnshops. Gone are the days that
customer needs to be physically present to transact at any branches, thru this, customers can
send, receive, give load, shop at ML shop and pay their bills without going to any branch. They
just need smart phone and download the application then tap and scan anytime, anywhere.
Pawned items are easy to pay interest anytime and anywhere. Before, when you renew your
pawned item you can only do it on the branch where you pawned the item with the help of
technology, Renewal Anywhere was created you can renew your item at any branch in
MLhuillier and you don’t have to wait for a long period because there is an auto calculation on
interest and charges. We have system that is user friendly with high data integrity.

Economic factors affecting business includes all important trends in the economy that can
help or hinder the company in achieving its objectives. Amidst rising global uncertainty and
inflationary pressures, the Philippine economy is poised to remain strong. The GPD recorded a
growth rate of -11.5 percent in the third quarter, compare to the previous quarter’s growth rate -
16.9 percent. The top three industries that posted positive growth were: Financial and insurance
activities, 6.2 percent; Public administration and defense, compulsory social activities, 4.5
percent; and agriculture, forestry and fishing, 1.2 percent.

The presence of competitors makes customers more choices. But with our excellent
customer service we were able to get the loyalty and even more customers. MLhuillier made sure
that customers entering our branches were comfortable and satisfied. Today, all branches follow
government protocol to ensure everyone’s safety. The demand in pawning since the pandemic
begins also rise. People who don’t go to work for living tend to pawn their jewelries and other
pawnable items.

With the growing victims of Scams government thru Banko Central ng Pilipinas intensify
its policy in Know your Customer Policy in all financial institutions. KYC policy is a mandatory
framework for banks and financial institutions used for the customer identification It is use to
maintain client accounts. It is a requirement to know and keep records on the essential facts of
each customer, as well as identify each person who has authority to act on the customer’s behalf.
MLhuillier is thankful to the government action because even before we impose and religiously
follow that policy and some of our competitors do not. That’s why before we have the reputation
of strict and first time customers don’t always choose us not knowing that their hard earned
money was secure within us .When the Banko Central ng Pilipinas strictly impose this to all,
many new customers have gained and educated that we are doing what is best for them and we
are following government policies.

All employees are required to attend seminars at the Banko Sentral ng Pilipinas which
include the Anti-Money Laundering Act- a law that refers to the regulations and procedures
intended to prevent criminals from disguising illegally obtained funds as legitimate income.
Through anti-money laundering laws cover a limited range of transactions and criminal behavior,
their implications are far-reaching. The knowledge that we have about it helps us protected as
well as the company’s reputation. We are trained to evaluate customers and if their purpose is
legit and legal. We have the responsibility to protect our employees, company and of course our
customers. It seeks to deter criminals by making it harder for them to hide ill-gotten money.
Anti Money Laundering regulations require financial institutions to monitor customer’s
transactions and report on suspicious financial activity. If there is customer complain about
scams or illegal transactions we immediately coordinate to our superiors to conduct thorough
investigation and later report it to AMLA to have legal investigation to protect confidentiality.
 MLHUILLIER Mckinsey
7’S Framework

SRATEGY STYLE

SHARED
SRUCTURE SKILLS
VALUES

SYSTEM STAFF
 In Mckinsey 7s framework is often used when organizational design and effectiveness are
at question. You can use it to identify which elements you need to realign to improve
performance, or to maintain alignment and performance during other changes. It can use the 7s
model in a wide variety of situations where it’s useful to examine how the various parts of
organization work together. The three hard elements are strategy, structures and system. These
are relatively easy to identify, and management can influence them directly. The four soft
elements, on the other hand, can be harder to describe, less tangible and more influence by your
company culture. But they’re just as important as the hard elements if the organization is going
to be successful. The most common use of the framework are: To facilitate organizational
change, To help implement new strategy, To identify how each area may change in a future and
To facilitate the merger of organizations.

1. Strategy is a plan developed by a firm to achieve sustained competitive advantage and

successfully compete in the market. A sounding strategy is the one that’s clearly articulated, is
long-term, helps to achieve competitive advantage and is reinforce by strong vision, mission and
values. But it’s hard to tell if such strategy is well-aligned with other elements. At MLhuillier,
strategic planning is done every year by top management. From gathering customer’s survey and
feedback form that was personally done and interview by the Area managers, they study and
analyze what should be done and improve. Management also hires people to do mystery shops at
all branches to check and ensure that all employees are religiously following company’s rules,
procedures and extend excellent customer service which is the most important part of our
services. Those mystery shoppers test our knowledge and our dedication in giving excellent
customers service. The management established that the reason that we are still trusted and
continue gaining more loyal customers is because of our excellent customer service.

2. Structure represents the way business divisions and units are organized and include the
information of who is accountable to whom. It is the organizational chart of the firm. It is also
one of the most visible and easy to change elements of the framework. How your company is
organized.

As a branch manager, I take full responsibility on my assistant manager and tellers. The
word bypass is a big NO to the company. The teller and assistant branch manager reports to
branch manager then to Area manager to Regional Manager and to the General Manager.
Divisions have its own heads and division managers. Tasks are allocated to respective
employees. Example if we have inquiries about our benefits we just call the human resource
department and then there is someone who is in charge. But, when the in charge is on leave there
is nobody that can answer our inquiries. Mlhuillier should improve its organizational chart to
keep business flow smoothly not only for customers, for employees as well.

3. Systems are the processes and procedures of the company, which reveal business daily
activities and how decisions are made. System is the area of the company that determines how
business is done and it should be the main focus for managers during organizational change. It is
the daily activities and procedures that staff uses to get the job done.

BOS is the main system Mlhuillier is using. All of our transactions are automatically
registered and computed in the system. Spending millions to continually improve the system in
order to compete and gain advantage to competitors is worthy. It is user friendly, accurate and
easy for everyone to update. Procedures are properly followed and observed.

4. Shared Values are at the core of Mckinsey 7s model. They are the norms and standards
that guide employee behavior and company actions and thus, are the foundation of every
organization. These are the core values of the organization, as shown in its corporate culture and
general work ethic. They were called “superordinate “when model was first developed.

Mlhuillier core values are the following:

*Integrity – honesty in dealing with customers, colleagues and owners/stakeholders. In

every transaction there is money involved and integrity is one of the most important characters
and behavior an Mlhuillier employee must have to gain trust from customers, colleagues and
stakeholders.

*Professionalism-conducting oneself with the highest level of professionalism, keeping

matters confidential, and behaving in such a way that the company’s reputation is enhance.
Maintaining professionalism especially in dealing with our customers. We keep their information
and records secure and confidential. Whatever we do or where ever we go we know that we
carry with us Mlhuillier that’s why we see to it that we stick to our core values all the time.
Separating personal issues or problems helps us maintain professionalism inside and outside the
office.

*Customer service- Putting all customers at the top of our minds, giving them the best
services, satisfying their requirements and making them customer for life. Mlhuillier sharpens
employees by sending us to trainings and seminars about customer service. Customers are the
blood of the company. Giving them excellent service is the priority of all employees. When the
customer gets inside of the branch we make sure that we have served what they want and
introduce our other services and products that we have. Sometimes we make our customers feel
we are putting personal relationship to them.

*Concern for the company- Taking care of the company’s property, reputation and
image. All branches follows 5’s (Sort, Set in Order, Shine, Standardize and Sustain) and there
are 5s team to check each branches performance. Materials Management Division is the division
that monitors all company’s assets and properties. Employees use and do not abuse company’s
properties. We take care of it as it was our own and we don’t want the company to have more
expenses. This core value guides employees to act properly because we know that what we do
will reflect to the company.

*ownership – Thinking like owner, loving one’s work, making decisions that count and
being accountable for its consequences. Management always welcome ideas and suggestions
from the bottom of operations because top management knows that we are the one who is facing
that day to day scenario and problems acquiring in the daily operation. As a branch manager I
have the authority on my branch and my staffs. But I also know that whenever there will be
problem arises I am the one who will face the consequences. This core value enables me to make
decisions that could fit on company’s values and image.

*continuous self-improvement – Seeking opportunities for growth, providing for

opportunities for growth and self-improvement, and living within one’s means. To continue
support employees growth the company put up Mlhuillier University were we have regional
trainers that consistently evaluating and conducting seminars and trainings that every employee
needed. It helps us mold to do better personally and professionally. Living within one’s means is
the value we do. As a financial institution who lends money to its customers we saw and learn
that spending more than what we earn will make us become one of our customers. The
company educated us to be financially wise and stable.

*innovativeness – Being ahead of what everyone else is doing as well as investing in

technology. Mlhuillier does stop on what we have. It continues to spend millions of pesos to
improve our technology systems and had put up the most advance system the ML Wallet. By this
application , you can send money or load , pay bills and shop online. Our Information and
Technology department continues to find ways to have the most advance, fastest , reliable and
secure systems.

*respect – Being obedient to the leaders of the organization, respecting the rights of
colleagues, giving what they deserve and being supportive of management. Before a newly hired
employee was deployed in the branch assignment it has orientation which briefs them to be
obedient to superiors and respect colleagues. We all know that our leaders were chosen by the
management because they are excellent individuals in the organization. We are supporting the
management and the company if we support our superiors. We have so much respect to them as
they also respect us. Through this core value, we are able also to respect not just our customers
but the whole society as well.

5. Skills are the abilities that firms’ employees perform very well. They also include
capabilities and competences of the organizations employees. During organizational change, the
question often arises of what skills the company will really need to reinforce its new strategy or
new structure.

The company requires their employees to have very good interpersonal skills to be able to
give their client the best customer service. Should also be good in decision making and risk
taker. Risk in the sense that it is a financial institution and any time an unprecedented incident
may happen. We should be vigilant and always ready. Must know how to multi task and can
really work under pressure. Flexibility in adopting any changes or new systems, strategy or

6. Style-Represents the way the company is managed by top-level managers, how they
interact, what actions do they take and their symbolic value. Management style of Mlhuillier is
participative where owners spread the authority and power throughout the organization by
presenting problems and issues for discussion and then working with employees to reach a final
decision. Management usually conducts branch meeting to raise concerns, problems and
solutions then branch managers will brought up those concerns on branch managers meeting
where area managers, regional managers, Auditing Division, Information Technology division
and representatives of main office in each division is present. Then area manager and regional
managers will have their meeting before they go to a national meeting at the head office with the
top management and executives. Whatever policies and agenda they have to share with the rank
and file have corresponding memos and should be discuss to the subordinates down to the tellers
and memo should be sign by everyone who reads and understand it. Command from executives
dictates and rule us where to go and what to do. It is the symbolic value for us.

7. Staff element is concerned with what type and how many employees an organization
will need and how they will recruited, trained, motivated and rewarded. The employees and their
general capabilities.

Recruiting new employees has its qualifications and standard to meet. Area managers are
the one who request additional employees on its branches. After recruiting, new employees will
be trained in the back office by ML University trainers before their deployment in their
respective branches. Motivation and rewards comes in different forms, monetary incentives for
some products was given every month that push employees to sell more. There are also
motivations to sell products or services to have commission. Staff that stays in the company was
rewarded by acknowledging their hard work and loyalty. They were given trophy, jewelry and
cash incentives.
 PORTER’S FORCES OF COMPETITION: MLHUILLIER PHILIPPINES

NEW ENTRANTS

Small Pawnshops
Strong –4 Banks
Moderate -0 Financing Firms
Weak -1 WEAK

RIVAL FIRMS
BARGAINING POWER
BARGAINING POWER
OF CUSTOMERS Cebuana Lhuillier
OF SUPPLIER
Housewifes, professionals, Palawan Pawnshop
Banks
businessman,pensioners,
Villarica
OFW’s and students
RD Pawnshop
MODERATE
STRONG
STRONG

SUBSTITUTE

Loansharks

Cooperatives

Individuals

Micro-finance

Banks

STRONG
 A competitive force is a strategic tool that helps the strategic manager to determine
different industry sustainability at different levels of profitability. Porter’s business model impact
in formulating, implementing and evaluating industries strategies. These forces are normally
employed to understand rivalry force, of firms; industry attractiveness and productivity. This
describes a careful study of how competitive forces a firm’s strategy is influenced, thus these
factors may boost threats or opportunities relative to the specific business-level strategies.

1. New Entrants are WEAK. These new entrants to the industry typically bring new
capacity, a desire to gain market share and substantial resources. They are therefore threat to an
established corporation. However, on the case of pawnshop, it is easy, no barriers to entry.
Today, pawnshop industry is continuously growing in numbers due to low starting capital of
100,000 according to Section 4106P of Banko Sentral ng Pilipinas. Hence, starting capital is low
sustaining and having adequate fund is a must to gained more customers and to keep the
pawnshop run. Customer’s trusted existing pawnshops than new ones. MLhuillier gained the
trust of its customer’s by having the well trained employees who appraised items carefully and
appropriately.

2. Rivalry among competitors is STRONG because at present this industry is growing

rapidly. There are a lot of competitors in size and power for pawnshop industry. Pawnshops
dominated the total financial system with a total 17,421 representing 62% of the total financial
institutions. This proves that pawnshops are attractive and highly patronized. If the rivalries
among competitors are many, a competitive move by one firm can be expected to have
noticeable effect on its competitors and thus may cause retaliation. We tend to lower our interest
offered, create promotional activities, giving freebies, discounts and applied diversification
strategies (related and non-related). During 1980’s our interest range to 8-10 percent compare 3
% as of today. The appraisal rate differs same as term and interest rate. Giving compassion in
times of pandemic is one of the company’s efforts to make our customers feel how we value
them, as mandated by Banko Sentral ng Pilipinas we follow Bayanin to Recover As One Act
giving 60 day grace period for paying loans without additional charges or interest. We have a
system that our competitors do not have, the Renewal Anywhere which customers can renew
their pawned item anywhere in the Philippines. It is hassle free and less worries even they travel.
Today, pawnshops seem like a sari-sari store. It offers wide and many services.
 3. Substitute products or services are WEAK. Substitute products are those products that
appear to be different but can satisfy the same need as another product. Pawnshop has few
substitutes such as loan-shark, cooperative, individuals and bank. It limits the potential return of
a firm by placing a ceiling of the prices firms in the industry can profitably change. To the extent
that switching costs are low, substitute may strong effect to firms as of now; there are no definite
substitute for pawnshop because of its flexibility, affordability and hassle-free concept.
Mlhuillier is everywhere in the Philipines, we have branches even in rural areas.

4. Buyer’s power is STRONG. The buyers are` the customers of the Mlhuillier and they
are housewife’s, professionals, businessman, pensioners, OFW’s and students. Indeed they are
great in numbers. These customers’ needs funds hour after hour for business and personal use
therefore our demand is high too. Because we already gained loyalty in terms of service quality
and trust, customers always choose us not just because of our excellent customer service but we
were able to give their needs that unlike to our competitors that have limited fund they tend to
offline. We have

5. The power of supplier is MODERATE. Mlhuillier allocate a day before and ensures
adequate money in every branch especially weekends and holidays. It supplies cash thru its bank
partners to enable to conduct operations, which lend money to customers. Due to large amount of
money that every branch needs, there are times that banks were not able to give the whole
amount we needed and we have no choice but to give up some services especially, paying
remittance came from abroad that mostly in large amount of money. But we never do offline
mode for pawning as it is our main service. It is moderate because customers have many choices
to choose from depending on the interest rates offered, quality of customer service and
promotional strategies being applied to make customers delighted and satisfied. Competitors are
increasing in numbers. Customers have many options where to pawn their products as there are
many pawnshops operating in the entire country. The supplier is high when they are fewer in
numbers and therefore can dictate the price. Supplier can affect an industry through their ability
to raise prices or reduce the quality of purchased goods and services. A supplier is powerful if
the supplier industry is dominated by few companies, but it sells too many. During peak seasons,
I can say that we are the one who can stand still; a lot of our customers today came from
competitors that they denied because they have lack of funds.
References:

www.investopedia.com

corporatefinanceinstitute.com

kkgpublications.com

Mlhuillier.com