A431 Galang Gozun Pangilinan Sinamban Singian Midterm Project PUREGOLD

Strategic Business Analysis on Puregold Price Club, Inc.
HOLY ANGEL UNIVERSITY

COVER PAGE
Puregold Price Club, Inc.
Midterm Project
A Strategic Business Analysis on

Puregold Price Club, Inc.
In Partial Fulfillment of the Requirements for the Course

Strategic Business Analysis
Submitted by:
Galang, Marnel Jasper A.
Gozun, Trisha Mae B.
Pangilinan, Jonas Keith Y.
Sinamban, Darlene M.
Singian, Jon Ericson B.
(A431)
Submitted to:
Ms. Claudia Cayanan
March, 2022
TABLE OF CONTENTS
INTRODUCTION.................................................................................................................... 1
Background of the Company....................................................................................................... 1
MISSION .................................................................................................................................... 2
VISION ....................................................................................................................................... 2
GOALS AND OBJECTIVES ..................................................................................................... 2
CORE VALUES ......................................................................................................................... 3
EXTERNAL ANALYSIS ........................................................................................................ 4
OT ANALYSIS ........................................................................................................................... 4
PORTER’S FIVE FORCES OF INDUSTRY ANALYSIS ........................................................ 7
PESTLE ANALYSIS .................................................................................................................. 9
INTERNAL ANALYSIS ....................................................................................................... 15
Industry Key Success Factor ..................................................................................................... 15
Evaluating the culture of a firm................................................................................................. 25
Future Financial Health Based on Past Performance ................................................................ 29
Analysis of Core Strategic Assumptions ................................................................................... 33
GENERIC BUSINESS ANALYSIS APPROACHES AND TOOLS ................................ 37
Reference List ......................................................................................................................... 50
APPENDIX A ......................................................................................................................... 52
INTRODUCTION
Background of the Company
Puregold Price Club, Inc. is a Philippines-based company that trades goods on a wholesale
and retail basis, such as consumer products (canned goods, housewares, toiletries, dry goods, and
food products, among others). The said establishment operates through a hypermarket called
Puregold Price Club, which sells a variety of food and non-food items to both retail customers and
resellers. Puregold Junior is a supermarket chain operated by the Company's subsidiary Puregold
Junior Supermarket, Inc. Its Puregold Extra is the small store format, which offers a range of goods,
comprising the Company's stock keeping units (SKUs) ranging from 3,000 to 5,000. Its store
provides products that range from groceries, apparel, household accessories and furniture. It has
approximately 280 operating stores and over 20 food service stalls.
Puregold Price Club, Inc. (PGOLD) was founded on September 8, 1998, as a company
engaged in the wholesale and retail trading of goods such as consumer products. In December
1998, the company opened its first store in Mandaluyong City. "Tindahan ni Aling Puring,"
PGOLD's loyalty program, debuted in 2004. PGOLD also owns Entenso Equities, Inc., the holding
company for two companies, Ayagold Retailers, Inc. and San Roque Supermarkets. One Puregold
branch is operated by PPCI Subic, Inc. in Subic Bay, Olongapo City. In 2018, PGOLD formed
Purepadala, Inc., primarily to run the Company's remittance operations. PGOLD operated 244
hypermarkets, 100 supermarkets, 28 extras, 31 minimarts, 20 S&R warehouses.
Company’s Market Share, Human Capital and Other Information
In recent times, Puregold is the no. one Retailer in the Hypermarket Format in the
Philippines and the No. 2 Retail Format in the Country. With numerous stores nationwide, the
company has been catering to a growing number of Filipinos. They have over 1500 Suppliers and
Trade Partners. They serve over 230,000 sari-san stores and small businesses in the Metro, various
locations in the Northern and Southern parts of Luzon, and Visayas Puregold has completed over
600 million sales transactions.
Puregold supermarkets employ over 30000 people. Puregold's competent employees serve
its valued customers through an effective customer service program and a competitive pricing
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scheme. Puregold was named one of Reader's Digest Asia's "Most Trusted Brands," and they went
on to become the Philippines' second largest hypermarket and supermarket retailer in terms of net
sales, opening as many new Puregold stores in their early years. They maintain the quality of their
products and the competitiveness of their strategies by lamenting their good image in the retail
industry.
MISSION
“Our Mission is to Provide Products, Services and Business Opportunities to Every Filipino
Family.
· We Establish Lasting Relationships with Our Suppliers and Business Partners.
· We Strive to Promote the Personal and Professional Development of our Employees.
· We Commit Profitable Results to the Stockholders.
Sa bawat araw, PUREGOLD kasama mo!”
VISION
“To be the Most Customer-Oriented Hypermart offering a One-Stop Shopping convenience and
Best Value to our Customers.
Sa PUREGOLD, Always Panalo!”
GOALS AND OBJECTIVES
Focus on modern grocery retail
Puregold is the second largest modern grocery retailer in the Philippines by sales. It
operates hypermarkets, supermarkets and discounters carrying the flagship Puregold brand.
Its target markets are low- and middle-income consumers, and resellers that operate
traditional neighborhood outlets known as sari-sari stores. PGOLD also operates S&R
Membership Shopping stores, the only warehouse membership club in the Philippines that
services middle- to higher-income consumers.
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Key player in industry consolidation
We expect PGOLD to remain a key player in the modern grocery retail business through
rapid store network expansion, especially in areas outside Metro Manila where modern
retail penetration is considerably lower. As competition in these areas is less intense and
operating costs are lower, we believe same-store-sales growth will improve and overall
margins widen.
Traditional retail to remain a major growth driver
76 Traditional trade accounts for 73% of the country’s grocery retail industry. Given the
high level, we think traditional grocery retailing will remain a significant driver of
PGOLD’s revenue growth for some time. PGOLD derives about 35% of its revenue from
approximately 300,000 reseller members of its loyalty programme out of more than 1m
traditional retail channels in the country.
CORE VALUES
Sense of Belonging
· Feeling that one has an essential role to play as part of the PUREGOLD family
Customer Service
· Providing products and services that meet the demands and expectations of customers
Dynamism
· Open, adaptive and responsive to the changing environment
Commitment
· Dedicated and conscientious focus on work
Integrity and Loyalty
· Honor, credibility, honesty, dignity, "palabra de honor", "walking the talk"
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EXTERNAL ANALYSIS
Opportunities Threats
Market Digitization and Innovation Economic Turmoil
New Distribution Channels Weak online platform security and online

scams
Necessities are never subject to lockdown Competitive market and saturation
OT ANALYSIS
In the insurgence of the pandemic, a lot of outside factors have emerged that could
potentially harm a certain industry. This necessitates the companies to analyze these said factors
even if they are already outside their scope of control. A wise manager or leader, could see these
uncertainties as something that could potentially contribute and be leveraged rather than be viewed
as a factor that could lead to an aftermath of cessation. This juncture will explain the connivance
of internal factors to the outside elements that is specifically brought by the pandemic.
OPPORTUNITIES
1.) Market Digitization and Innovation
This day and age can be considered as the era of social networking sites and platforms.
It is where the ease of channels for communication have elevated on a certain notch. In order
to maintain the momentum of being the leading retailer supermarket in the country, it is very
vital to maximize this opportunity to Puregold’s end. The utilization of efficiency by the firm
can be manifested by introducing their own “Aling Puring App '' that has a user interface of
shopping and making groceries but through online. The said application is a good investment
since it still can be used even if the pandemic will cease. Authors firmly believed that
utilization of online platforms will continually exist even after this health crisis. Facebook,
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twitter and Instagram are also good advertising platforms that have been amplified by the
pandemic. The traditional billboard and flyers are not as effective as before since face-to-face
interactions are hindered by the consumers. The impact of social networking on online retailers
has been reviewed in a recent report by the BI Intelligence Research Institute. The report says
that in recent years, large volumes of electronic purchases have been made through ads posted
on social networks such as Facebook and Pinterest. Meanwhile, e-commerce experts and
activists believe that the amount of discussion about these advertisements, their average sales
price and the frequency of their sharing have been effective factors in increasing the number
of referrals from social networks to online e-commerce.
2. New Distribution Channels
Beside the infamous “aling puring app” there are a lot of distribution channels that have
emerged due to the pandemic. One of the most prominent distribution channels that have
reached their breakthrough in this uncertainty is Grab. Puregold is a store partner of Grab in
which consumers can place their order via the app. It is an expanded medium for Puregold that
could leverage the user interface and market share of Grab. Southeast Asian confirms that
when new daily Covid infection rates are higher, necessity orders passed through Grab’s
platform also tend to be higher. There is some evidence to suggest that delivery platforms gave
merchants a much-needed lifeline as in store sales dropped during the pandemic. An August
2020 survey of merchants on delivery platforms found that several months into the pandemic,
average monthly sales were higher than before joining the platform.
3. Necessities are never subject to lockdown.
Government’s main response to the pandemic is the restriction of face-to-face

interaction. It is a means that prioritizes health at the expense of the economy. This being a
double-edged sword has spared the necessity establishments as they are given pardon to
operate. It is an opportunity for Puregold to bask since people are more wary about the
product’s safety and quality. Being a large scale company can ensure that every product is
sanitized in comparison to the street-wide vendors. The pandemic has also left business to be
more innovative about their product offerings, channels, and marketing campaigns.
Nonetheless, despite the government restrictions that have been implemented, Puregold is one
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of the establishments that never took advantage of their bargaining power. A good depiction
that it is an establishment worth patronizing,
THREATS
1.) Economic Turmoil
One of the most pressing issues about this health crisis is the collapsing economy of
the country. On top of it, public funds are still being embezzled instead of utilizing them in a
sound manner. No business has escaped the drastic effect of the pandemic. This turmoil is
heavily reflected in the working class (the primary target market of Puregold.) Since a lot of
Filipinos are in terms of no work and no pay, almost everyone is dependent on the cash aids
distributed by the respective LGU’s. The COVID-19 outbreak changed dramatically and
altered the attitudes, intentions and purchasing patterns of consumers. Consumer spending is
one of the most important driving forces for global economic growth. Beyond impacting some
of the factors that determine consumer spend—such as consumer confidence, unemployment
levels, or the cost of living—the COVID-19 pandemic has also drastically altered how and
where consumers choose to spend their hard-earned cash.
2.) Weak online platform security and online scams
There are still a material amount of consumers that are hesitant to transact online due
to numerous reported cases where people take advantage of online anonymity. Almost every
brand with an online presence is impacted by e-commerce fraud. Customers distrust mobile
devices to transfer money or for making any transactions. The reason is that security is a major
concern for the customer’s fulfillment. Since online transactions produce risks of glitches and
scams, consumers still often choose to do transactions face to face. Grocery shops, needing a
high participation of customer effort have threatened the sales and profitability brought out by
the pandemic. Other concerns in online transactions that hinders the consumers are; (1) Higher
risk of identity theft. (2) Need for digital literacy. (3) Even large-scale banks are victims of
glitches.
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3.) Competitive market and saturation
Filipinos are now more exposed to making business than being employed. Direct
supplier purchases are now more sought especially in the emergence of the pandemic,
Entrepreneurship has been rising especially in this time where employees are being laid
off. Nearly half (46%) of all Filipinos have a very positive view of the entrepreneurial
opportunities in their country; furthermore, 66% believe they have the entrepreneurial
capabilities needed to start a business. Filipino entrepreneurs see owning a business as a
path to being independent as well as the opportunity to earn a living and improve one’s
economic lot. Entrepreneurship is seen by Philippine society as a very good means to
improve one’s economic and social standing. This social and cultural orientation serves as
one of the major drivers promoting entrepreneurship. The large domestic market with high
consumer spending as well as good education and training also drives the population to try
entrepreneurial activities. There are also several government programs that support
entrepreneurship. These micro and small enterprises, when aggregated could potentially
harm the sales of the company.
PORTER’S FIVE FORCES OF INDUSTRY ANALYSIS
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Threat of Substitute
The company has a wide array of products and mainly serves the basic
commodities/ grocery items such as staple household necessities. The potential
development of substitute products does not adversely affect the firm since Puregold has
always been flexible in terms of being adaptive to certain changes in the new products
being introduced in the market. Due to immense number of products not being inclusive to
only one supermarket, the probability of monopolizing a certain product is near to
impossible, though probable, it still does not affect the ground of the firm.
Bargaining power of Suppliers
Having a good relationship with their suppliers, the firm is not subject to suppliers’
ability to haggle in line with the products they produce.In addition, it is already known that
Puregold has already started producing certain commodities as their own line of product in
rivalry with Sm’s Bonus. This being said, the bargaining power of Puregold’s supplier has
only a moderate effect on the company’s profitability and standing if in case they will act
not in accordance with the firm’s interests.
Rivalry among existing Firms
It has always been reiterated above that the competition in the retail industry has
always been saturated. It is already established herein that the rivalry between the
competitors in this field of industry is relatively high. Notwithstanding the fact that
Puregold already marked their territory as the leading supermarket, they should not let their
guard down as Sm hypermarkets are still on the scheme of arena vying for that certain
position. Both are proactive and innovative when it comes to the tides of competition.
Bargaining power of Buyers
The general public has been the target market of the company. On the other hand,
consumers' bargaining power is relatively low. This can be manifested by Puregold having
inexpensive product offerings. Selling affordable and quality products at the same time
while having multiple promotional discounts leave the consumers not to resort to the firm’s
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rivals. Puregold even have their wholesale program to cater the resellers (sari-sari stores)
that are below the suggested price.
Threat of New Entrants
The industry is already exhausted by Puregold, Robinson’s Supermarket, All Day,

Sm Hypermarket, Rustan's etc. These top key players make the entry for new competitors
to be very tough since they have already established their brands and good reputation to
the market. In addition, consumers value the image and branding of these firms as their
trusted supermarkets being a large-scale business in comparison to the new entrants.
PESTLE ANALYSIS
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Political Factors
It is imperative for Puregold to examine all policies that pertain to the supermarket
and retail industry. Under this facet of the PESTLE analysis, imminent factors that
Puregold needs to consider include the following:
(1) political tension on increasing the employee salaries and wages,
(2) political aid in anticipated globalization, and
(3) high political stability in the country.
The first factor is the most significant since employee rights and compensation is a
common call among activist and political groups. Uproars from the foregoing are expected
to be more frequent as cost of living continue to rise. The second factor pertains to how
future political developments may help launch local brands and businesses to the world.
Support from political parties is often pursued when large local brand names plan to
leverage their current stand in the market. The third factor is dependent upon the trend in
political trajectory. Political parties have yet to force a major deviation from the 1987
Philippine Constitution. This may give Puregold some leeway in setting up contingencies
in cases of political instability.
Economic Factors
The dynamics of the economy can greatly affect how the business operates.
Inflation, boom, growth, deflation, and recession have varying types and degrees of effect
on market participants such as Puregold. Under this aspect of the PESTLE analysis, the
following economic factors are relevant to Puregold:
(1) steady and strong growth in GDP,
(2) competitiveness of the Philippine currency,
(3) increasing growth rates in population,
(4) rising employee productivity, and
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(5) structure of the market and the economy.
The first two factors refer to how well the country fairs to the global economy.
Philippines is still a developing country, but it continues to experience growth that can be
sustained in the coming years. The third factor disrupts the entire economy if an influx of
people just suddenly shows up. Unemployed people increase which can decrease supply
and increase demand. Thus, projections of population growth and composition is
considered in conjunction with the law of demand and supply. The fourth factor introduces
the concept of the learning curve and technological impact. Employees with increasing
productivity render a greater amount of work with the same time and/or render the same
amount of work with less time. This saves the company more resources to be repurposed
to supplement business growth. The fifth factor apply to the current stand of Puregold in
the market as well as the economy. The company must be able to surpass or at least match
the progress of other market participants relative to the proportion of the market supposedly
held by the company.
Social Factors
Consumer taste and preference is ever-changing and is based from several different
aspects. Traditions, norms, cultures, values, and practices come into play, but Puregold
may use the characteristics of an average person in the Philippines as a basis for its future
strategies. Under this part of the PESTLE analysis, the following economic factors are
considered:
(1) online shopping and marketing,
(2) trends in social diversity,
(3) trends in lifestyle, and
(4) social structure stability.
The first factor concerns the impact of the Internet to the way how shopping and
marketing works. Most advertisements and endorsements are now in digital format as the
average screen time of consumers increase every year. Puregold may use this to its
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advantage to attract the most people through popular social media platforms or influencers.
Its online shopping platform can also be improved to entice customers. The second factor
pertains to the volatility and variability of social structures. Extensive research is often
required to get an overview of how does an average consumer shop. It is also difficult to
keep track of the variables that keeps changing while a strategy is still in place. The third
factor is somewhat synonymous to the preceding factor, but it focuses more on the effect
rather than the cause of changes in variables. An example would be a person who decides
to go on a healthier diet after years of neglect in his health. This would mean a shift in
demand of two separate products which can be used by Puregold to better sell its products.
The fourth factor connects to how well does the preconditions last in the present social
landscape. Most of the assumptions in tastes and preferences are usually short-run.
Puregold may have to find a pattern in the trends to better create a general truth about its
consumers.
Technological Factors
In the most recent years, technological advancement has become rampant. Two of
the most notable development pertain to communication and transportation. These both
concern the company as Puregold needs to market its products to people and move it from
the source to the end user. Under this aspect of the PESTLE analysis, the technological
factors that bears significance to the company includes the following:
(1) trends in payment methods,
(2) occurrence of cyber-attacks, scams, and frauds,
(3) computerization and automation of the business,
(4) digital business analysis, and
(5) digital marketing tools.
The first factor had been actively altering from a cash-based payment into a cashless
payment. Nowadays, customer use credit cards, debit cards, vouchers, and store credits. It
is only a matter of time before Puregold needs to consider accepting cryptocurrency
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payments or other digital currencies. The second factor is related to the preceding factor as
digital currencies or real currencies stored as digital information can be easily hacked.
Digital information of Puregold must also be safeguarded and backed-up along with other
preventive, detective, and corrective measures to counter a cyber-attack. Phishing and other
forms of scams and frauds must be made aware to all employees and officers of the
company through a seminar or workshop. The third factor refer to the gradual change of
the business processes from being accomplished by humans to being accomplished by
machines. Labor cost will decrease but overhead owing to the machine and technology will
increase. Puregold must understand the pros and cons of semi- or full-automation. The
fourth factor relates to how stored data can be analyzed to form conclusions and ideas of
important business aspects. This is known as big data which can be made useful for the
company with the aid of technology. The fifth factor is related to the social factor discussed
earlier, but the difference lies on the specific developments in digital marketing tools. A
common tool today is the search engine optimization which improves the sites chances of
popping in a regular search by a consumer.
Legal Factors
A lawsuit against the company can be detrimental in terms of settlement or

litigation costs. This is not considering the damage on the established goodwill of the
company. This is why companies like Puregold comply with rules and regulations set by
regulating bodies. Under this facet of the PESTLE analysis, the following legal factors are
being considered:
(1) rules and regulations from the national government, and
(2) rules and regulations from the local government.
The first factor effectively encapsulates all binding legal obligations which relates
to the Philippines. It may be in the form of laws, regulations, rules, memoranda, circulars,
rulings, or treaties. The company must therefore comply with the labor standards on proper
workplace conditions, employee rights, minimum wages, among others. It must also give
focus on business laws that regulates the supermarket and retail industry on how to legally
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commence and operate the business. It must also take into account the reportorial
requirements as a public corporation to the Securities and Exchange Commission.
Moreover, taxes must be properly filed and paid to the correct collecting agent within the
specified deadline for each type and instance. The second factor is more specific on the
legally binding obligations that arise within the vicinity where the branch operates. A
common local ordinance that affected many provinces or cities during the Covid-19
pandemic was the imposition of liquor bans. The entire aisle of liquors was shown as off
limits until such time that the liquor ban is lifted. Any willful attempt of noncompliance to
any of the applicable rules and regulations may backfire in expense of the company.
Environmental Factors
As climate change continue to be a hot topic across the globe, environmentalists

have urged private companies, especially the bigger ones, to step in and help in saving the
deteriorating environment. Companies who make blatant efforts to ignore the calls in
saving the environment often receive backlash from the public. Under this part of the
PESTLE analysis, the environmental factors include the following:
(1) eco-friendly packaging of products and purchases,
(2) sustainable business practices, and
(3) corporate social responsibility.
The first factor is one of the most popular topics about the environment. Laws and
regulations are already set in some places that bans the use of single-use plastics. Puregold
branches offer tote bags for a small price to encourage consumers to reuse the bag and
reduce the use of plastic. Some branches offer paper bags or used box cartons as an
alternative. Though they still offer plastics in some branches, these plastics are claimed to
be biodegradable. If a law was passed that prohibited the use of such material, Puregold
has no other choice but to comply. The second factor is about making business processes
either harmless or harm less. Some companies emit chemical wastes that are definitely bad
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for the environment especially when improperly disposed. Puregold, on the bright side,
only has to worry about the packaging materials that their supplies come in. Some of the
carton boxes are reused as discussed earlier, but others are disposed completely. They must
take into account on where these waste materials end up. The third factor is one of the
important objectives of any company in the modern times. The 3Ps (People, Planet, Profit)
is often the business model of some company. Puregold must be aware of ethical business
decisions especially when it matters. Environmentalists and activist groups are always on
the lookout for companies that are against this idea.
INTERNAL ANALYSIS
Industry Key Success Factor
Competencies Description Customer Uniqueness Leveragabili Industry

Value Description ty KSFs
Description Description
It has auspiciously High Medium High ⇨ Location and

positioned itself in the retail accessibility
market and nearly dominates
the supermarket segment
around the nation. Its
continual growth is
remarkably evident with
over 354 organized stores
built at various strategic
locations. It became the most
nearby store which primarily
conducts operations at the
residential areas which is
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greatly convenient for its
customers.
Seamless Shopping High Medium High ⇨ Product

Experience in one location - differentiatio
a One-stop shop for n
customers who are availing
their needs and wants for
personal use or for the
business (food, clothing,
school supplies, furnitures,
appliances other essentials)
(food stalls and other retail
stores) (pay bills such as for
internet connection)
There is a wide spectrum of High High High ⇨ Market share

market positioning where expansion
customers flexibly shop and
regardless of their social diversificatio
status because the company n
was able to promote itself as
something that encompasses
all levels of social strata.
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Additionally, its branding is
community-friendly and
popular among the masses
because it perfectly suits the
needs and preferences of the
Filipinos.
Promotes strong branding by High High Medium ⇨ Incentives

introducing “Tindahan ni and financial
Aling Puring” program assistance to
where it can attract sari-sari small
store owners to choose businesses
Puregold as their main
supplier of goods.This
provides a lot of perks to its
members like exclusive
discounted prices of
products, programs for
starting their own sari-sari
store business, loading
business, and continuity
insurance program for
TNAP members.
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Engaging shopping Medium Medium High ⇨ Product

experience by way of marketability
intricate product placements.
This provides increased
opportunities for customers
to see other products that are
complementary to their
needs. The set up enhances
the viewing experience of
the customers by allotting
the biggest front space of the
store for the main necessities
such as food, rice,
vegetables, etc.
Recognized and valued High Medium Medium ⇨ Customer

customers' loyalty by giving loyalty and
appreciation through their patronage
"Puregold Perks Card"
which is a program that
rewards shoppers with points
that can be earned with
every purchase they made
and can be used to avail any
item from the store.
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A cost leader in the market High Low Medium ⇨ Competitive

for offering products with pricing
prices lower than its
competitors.
Proactive approach to High Medium Medium ⇨ Innovative

current market needs. product
Adaptive to the instability of offering
the environment through the
aid of technology. Leverage
digital platforms by
introducing Puregold
application
A diverse mix of local and High High High ⇨ Product

international brands variety
Exceptional accommodation High Medium Medium ⇨ Corporate

towards customer social
satisfaction in lieu of responsibilit
achieving one of the 3Ps y
(People, Planet, Profit)
through customer service
and free medical check-ups
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*Physical stores adapt to High High High ⇨ Wide reach

available space. of market
segment
Conclusion:
Along with all the numerous companies trying to develop and augment their competencies
and advantages particularly in the industry of food, merchandising and manufacturing. Puregold
became one of the most recognized supermarkets in the commerce. This is due to its firmly
established competencies which are generally founded from their smart customer orientation
which distinctly prioritize the needs of their market. It is also a well-organized store and was
able to maintain their price competitiveness and good relationship to its customers.
Having it from the perspective of consumers, especially the Filipino community,

practicality is on the top of the criterion that creates value for customers. Puregold is, if not one
of, the top tier Filipino supermarkets due to its accessibility. Being an archipelagic country did
not hinder Puregold to establish branches nationwide. In addition, another core competency that
has high customer value is its wide array of product selection that cater the needs of everyone.
Hinging it on practicality, consumers value companies that give them options. It is almost
conclusive in itself that external rewards have high customer value for distinctive competency.
Discounts, coupons and similar sort of strategy helps the firm attract more customers, but
nonetheless another reason for customers to shop. Taking into account all the aforementioned
competitive edge of Puregold among its competitors, the engaging shopping experience that the
company brings to its customers is worth noting. They are able to achieve this by means of
having unique and intricate product placements.
What makes Puregold stand out from the rest is the allocated space it has for the basic
necessities that most customers look for in a supermarket, like food, rice, poultry products,
fruits, and vegetables. From the moment a customer enters a Puregold branch, what first
approaches him is the huge and vast space that is reserved for these necessities, which stimulates
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a good ambience and allowing customers to maximize their shopping experience, later on
making them regular customers of the company. Another thing that is highly regarded of
Puregold is its provision of both complementary international and local products. These are
placed together to allow customers to have a variety of choices with their purchases.
Additionally, since the emergence of globalization, most local products are being disregarded
by hypermarkets, but Puregold continues to patronize and prioritize Filipino products as a way
of recognizing the importance of this in the society and economy. Is Puregold only a
supermarket where anyone can buy what they want? Not really. Puregold is also known as a
supplier, not only by providing the needs and wants of every Filipino, but also by filling the
shelves of our groceries and sari sari stores. In fact, Puregold has a separate customer loyalty
program for entrepreneurs. The TNAP or Tindahan ni Aling Puring Program allows small
businesses such as sari sari stores to get more out of their bulk purchases at a discounted price.
Also, with the emergence of the pandemic, the store is evolving into an online store. The
store accepts orders and deliveries through their own mobile application. This allows the
business to not only dominate the physical store but also create a name in the online market.
Moreover, with its almost 450+ branches around the Philippines, it gathers the trust of the
people. This enables the store to gather different providers in one area making it a one stop shop
such as when people want to buy medicine, or pay bills. These providers are paying rent to
puregold for allowing them to operate inside the store.
Puregold is second to none in terms of uniqueness in both value proposition and strategy
execution. The supermarket finances and assists small businesses which, in turn, become lifetime
partners by means of the Tindahan ni Aling Puring (TNP) Program. Existing and potential
customers alike are constantly reminded of the Puregold brand through such sub-entities which
had been unique to the company for years. Another core competency that emanates uniqueness
is the market positioning of the brand reflected by its welcoming physical stores, targeted
product offerings, and remarkable customer service. Its market share comprises a comprehensive
mix of different socio-economic segments. In relation to this, its diverse blend of local and
international product offerings as a distinctive competency had supplemented its pursuit to target
various segments simultaneously. It also considers market saturation and demand in a specific
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area which eventually gave birth to its smaller counterparts - Puregold Jr., Puregold Extra, and
Puregold Mini Mart - as opposed to the famous Puregold Supermarket. Combining these with
everything else that completes the competency list, Puregold sets itself apart as a supermarket
that deeply connects with the Filipinos.
INTERPRETATION
Core Competency
Bringing convenience is the primary priority of Puregold for its customers and employees.
It was able to strategically build their stores near residential locations which greatly indicates a
high customer value. However, it is inevitable to have competitors located nearby which is the
main consideration why it is only a medium uniqueness. Overall, this thriving competency of
Puregold has high leveragability since it approximately dominates the supermarket segment in
the industry. Therefore, the KSF is location and accessibility because customers can easily find
various Puregold stores wherever they go. PUREGOLD is very well known to be a one-stop
shopping convenience store as it provides anything that you need from food, clothing, school
supplies, furniture, appliances, and other essentials. This results in a high customer value
satisfaction for the company. Meanwhile, this is only slightly unique since some companies also
offer this kind of seamless shopping experience. On the other hand, PUREGOLD also has food
stalls inside the premises and customers can also be at the counter when paying bills such as for
their internet connection. This proves high leveragability to the company as it can enter the
renting business. Meanwhile, the KSF of PUREGOLD is its product differentiation as it offers
different items to customers from affordable to luxury products. Having a friendly community
has high customer value because a sense of belongingness is important to customers. Grocery
shopping should be therapeutically done and not having the need to conform where consumers
don’t need to feel intimidated. It is also highly unique since other grocery shops have positioned
themselves to be on the prestige tier. And this all being said, Puregold has high leveragability
and can sufficiently leverage this type of market positioning. Thus, KSF is market expansion
since the market of Puregold caters from economic A-E. Puregold’s TNAP Program aims to
assist small sari-sari stores by helping them increase their potential net earnings through
provision of exclusive discounts, services, free training, and seminars. This leads to a high
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customer value since it cultivates a strong sense of support, loyalty, and satisfaction among
Puregold customers. This program is also considered unique as it is the first hypermarket to
come up with the idea of eliminating their small competitors by working with them and
becoming their main supplier of goods. It has medium leveragability as other competitors have
also implemented different loyalty programs that can attract customers. Thus, the KSF are the
incentives and financial assistance to small businesses as these promote customer loyalty leading
to the increase in company’s sales. Puregold’s product placement in its stores allows customers
to shop in a hassle-free and systematic way. The store setup is specifically tailored to only assist
in fulfilling the needs of the customers; hence, it creates medium customer value. Most
supermarkets bring together certain products in certain aisles, Puregold differentiate itself by
ensuring that each product is placed optimally to engage customer interaction. This is why the
uniqueness description is set to medium. The realized benefit from this core competence has
allowed Puregold to highly leverage itself above other market participants. Summing up all these
factors, the KSF is product marketability given that this enhances the overall shopping
experience and product appeal.
Distinctive Competency
It will take numerous strategies and efforts for a business to attain loyal customers. These
are essential for Puregold's sustainable growth which is why they have implemented a customer
loyalty program with the use of their perks card. This is a high customer value because they are
able to recognize the loyalty of their customers and show them appreciation by giving back some
benefits and rewards. It has medium uniqueness and leveragibilty since other competitors were
able to implement their own techniques to achieve the loyalty of their customers. All over,
Puregold is known for valuing customers through offering enough benefits that subsequently
derives the KSF which is the customer loyalty and patronage. One thing to note at PUREGOLD
aside from the quality is the affordability of its products. The discount on batch purchases
incurred a high customer value as they can save more and earn more at the same time.
Meanwhile, the competition to become a cost-leader in the market is quite stiff making it
uniqueness low. Also, it allows medium leveragability since being a cost leader will not be
applicable to other businesses. Accordingly, its KSF is competitive pricing as it is still the
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neighborhood market for everyone particularly low-income earners and sari-sari store owners.
The pandemic has left industries to be all virtual. Puregold did not disappoint since it has
introduced their own app specifically made for their consumers. It has high customer value since
this is a way where Puregold gives their customers options on how they will purchase.
Accessibility is one of the main criteria for customers to patronize. It has medium unique
description and leveragability since almost all large scale business implemented this type of
marketing, All in all, it resulted in KSF of innovative product offering since Puregold is one of
the pioneers in resorting this way. It is a manifestation of how Puregold innovates their market
approach. Puregold is also known for its heartening concern to its customers through during and
after-sale services. High customer value is derived from this because it is auxiliary to the brand
value proposition. It attracts potential customers and retains existing ones. Additionally, market
participants in the supermarket industry have customer service. Puregold differentiates itself by
going beyond expectations such as providing free medical check-ups. So, despite the
commonality of after-sale services, this brings the company medium uniqueness. Medium
leveragability is deemed appropriate for this distinctive competence as it can be improved to
consider the needs in achieving a holistic, pleasant shopping. Therefore, the KSF is corporate
social responsibility since it fulfills the duty of Puregold to the people, one of the components
of the 3Ps (People, Planet, Profit).
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Table 5.5 Evaluating the culture of a firm
Organisation culture as a source of competitive advantage
Potential source of value Description of culture practices and results
Describe how the culture of the From the beginning, the guiding principle of Puregold was
organisation creates economic all about caring people, particularly their employees as their
value through high sales, high utmost priority. The company inculcated a culture and sense
margins or other ways in which of family amongst its workforces. Its purpose was not only
financial value is created. about making quick revenue. The firm’s culture practices
mainly focus on giving great working experience that
resulted to more productive employees, higher customer
satisfaction, reduced turnover and better financial
performance which generates greater economic value to the
business. With this work culture of Puregold, it also
acquired the distinction of being the first pure retail
company to be listed on the Philippine Stock Exchange,
which greatly contributes to the championing of micro-
entrepreneurship and growth of the local retail industry
across the country. Puregold’s workforces were aware that
in order to succeed, they must do their best to win over each
customer who walks in. These pioneering employees of
Puregold gave their best to this fledging company through
their initiative and enthusiasm. In return, the management
wholeheartedly supported the professional and personal
development of their team, so that they can grow their skills
just as Puregold grows its network of stores.
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Describe how the culture of the When the company culture values their workforce, it
organisation is valuable and becomes valuable and extraordinary. The entire organization
rare. This includes attributes of Puregold aims to foster a culture of engagement,
and characteristics associated delivering that close-knit collaboration and sense of family
with the culture that rivals do to all their locations throughout the Philippines. As their
not have. mission stated, “We Strive to Promote the Personal and
Professional Development of our Employees.” The main
objective of its culture is the advancement and development
of opportunities for all their employees. Throughout each of
their employee’s career life in Puregold, everyone has an
opportunity to be part of their training in technical,
leadership and behavioral skills to maximize their potential.
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Describe how the culture of the The culture of Puregold which is substantially costly to
organization is imperfectly develop is their continuous learning, which is manifested in
imitable. every level of their organization. These are complimented
by their annual team building activities, daily pep talks and
HR bulletins both online and in each of their workplace in
order to inform and inspire their Puregold family. Aside
from these, they conduct various wellness seminars on
personal and health finance and they have service awards to
recognize tenured employees’ loyalty throughout the years
to sustain their motivation. As Puregold continues to
expand, more of their employees enjoy the opportunity to
relocate and work in their home provinces with their
families. In addition, Luis Co Chi Kiat Foundation is one of
the sources of pride of Puregold wherein the employees who
are deserving but underprivileged students are given the
opportunity to earn a college degree. The Foundation has
produced graduates and scholars and many of them
graduated with latin honors and passed the boards.
Deserving individuals are also given the opportunity to
cross-train or be promoted, in line with their mandate of
encouraging promotions from within.
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Conclusion:
Successful businesses like Puregold are aware of the significance of culture and how it
can create an immense impact to the company. The culture of the organization can increase the
morale of their employees and encourage an equitable workplace which will result in favorable
outcomes and better financial performance.
Puregold’s culture is often more about attitudes and not with tangible perks and benefits.
The company prioritizes their people towards personal and professional development. Its
concern for their employees drives the organization into sustainable growth and develops an
equitable work culture. Puregold aims for mutual development and success with their
workforce which is why they focused on implementing programs that can maximize the skills
and potentials of their employees. They always believe that their people define their business
and investing in programs that can provide great working experience is one of their keys
towards embracing the importance of culture in their workplace.
Puregold sought to accurately reflect their values and align their overall mission to their
organizational culture. This maneuver can be a potential measure to influence the realization of
its competitive advantage. Puregold has a distinctive culture that can maximize and stimulate
its resources to be more committed to the objectives of the organization which can constitute
economic value. Moreover, the firm’s culture can be a sustainable competitive advantage
because it prioritizes not only its catalyzed financial value but also the value of its inputs which
are the reason why it is rare and inimitable. This personality of this organization regarding their
culture is an incomparable source of competitive advantage since it is rooted by healthy
engagement with their skilled workforce and associated with continual progress attainable with
long-term goals and systematic procedures.
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C. Future Financial Health Based on Past Performance
The financial aspect is an integral part in business analysis. It provides quantitative

measures of financial performance and financial position of the company. Being enlisted as a
public corporation, Puregold, officially known as Puregold Price Club, Inc. (PGOLD), is
mandated by the Securities and Exchange Commission (SEC) to issue audited annual financial
statements and other pertinent reports. These reports are made publicly available through the
Philippine Stock Exchange where public corporations alike are listed. All data presented below
were gathered from the official website of the Philippine Stock Exchange: PSE Edge. However,
since the website only shows reports for the past two years, the PSE Edge mobile application
was used instead.
Multitude of information can be found from the reports, but only a handful is necessary to
determine the current and future financial health of the corporation. The main report used in
gathering information is the annual report, otherwise known as the complete set of audited
annual financial statements (SEC Form No. 17-1). Puregold has yet to publish the financial data
pertaining to the year 2021 so the preceding four years are presented instead. Relevant
information from the statement of financial position, income statement, statement of cash flows,
and other reports are summarized for easier comprehension. These are presented below:
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• Can the organization fund future growth aspirations?
The organizational goal of Puregold includes market expansion in terms depth and
breadth. To materialize these future growth aspirations, the corporation must secure the
necessary fundings. Companies usually engage in debt financing and equity financing to fund
their business strategies. Maverick (2021) states that both have pros and cons, but generally
speaking, debt financing is more favorable for the owners of the business especially if it is
30
reasonably certain that the loan can be paid off in the future. The creditor does not obtain control
in the business upon the commencement of the contract and the contractual relationship ends
when the principal loan is already paid in full. Long-term benefits can be realized through this
type of financing. Setbacks of debt financing are only existent in cases of nonpayment which is
highly unlikely in the case of Puregold. Its solvency ratio had always been around 2.00 to 3.00
for the past years which indicates that it can pay off maturing long-term debt. It is also worth
noting that it gradually shifts its financing towards debt through the years as evidenced by the
increase in debt ratio from 0.33 in 2017 to 0.48 in 2020 and the decrease in equity ratio from
0.67 in 2017 to 0.52 in 2020. Additionally, the corporation had significant financing activities in
2020 and 2018 where there had been an influx of around P20,000,000 debt financing or non-
current liabilities in both years. This goes to show that Puregold had given greater importance to
the long-term benefits of moving from equity to debt. Even its liquidity on short-term financing
had improved by two-folds, whereby its current ratio increased from 1.62 in 2018 to 3.47 in 2020
which means that Puregold had been able to meet its currently maturing obligations along with
its non-current obligations.
• Is the financial status of the firm a resource weakness or resource strength?
Another important component of the financial aspect is the financial status of the
company. As apparent from the financial statements of Puregold, its financial status had been a
main supply of resource strength. Puregold’s financial performance had been exemplary in the
past years, even during the height of the Covid-19 pandemic. This is owing to the fact that
supermarkets are essential to humans especially during the pandemic (Samuels, 2021). Despite
the several repercussions of the pandemic, Puregold continued to thrive in its industry as people
continue to patronize its products and services. This can be perceived through its stable growth
of around 10% to 20% in revenues for the intervening periods. The cumulative increase for the
past four years alone had amounted to around P50,000,000. The gross revenue or the top-line of
the income statement is an indication of how well the company sells its products and services as
well as how well it prices them. The gross profit margin is constantly around 17% which is
favorable in the supermarket industry. On the other side of the spectrum, the bottom-line of the
income statement reflects how well the company manages its overall operations from its main
line of product or service up to its investment and financing decisions. All in all, the cumulative
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increase in net income for the past four years had been around P3,000,000 which equates to an
annual growth ranging from 5% to 15%. This indicates that the company was able to maximize
profits and minimize its expenses for the intervening periods. The net profit margin had been
around 4.50% for the past years which is also favorable in the supermarket industry. Aside from
this, the company had engaged with some investing activities to improve its bottom-line. In the
year 2018, substantial non-operating income had been realized amounting to around P400,000
which is 20 times larger than the immediately preceding year. Summing these up, the return on
assets and return on equity of Puregold had constantly stayed around 6.50% and 12.00%,
respectively. Therefore, stakeholders will be encouraged to the company as it possesses a strong
financial status.
• Is the cash flow from operations sufficient to sustain the business?
Putting aside all other financial matters, cash is one of the most important assets in a
business. In case of a hyperinflationary economy, businesses which have the most cash will
survive the foregoing crisis since all other assets will instantly lose their value by the minute.
This is why greater reliance is given towards liquid assets where cash is considered to be the
most liquid (Kennon, 2021). Puregold knew this so it gradually shifted its asset composition to
better improve its liquidity. Its current assets steadily increased around P5,000,000 to
P20,000,000 in the past years while its current ratio increased by 100% in the past four years.
Puregold had focused on liquidity to streamline its cash flows as its manifests in the financial
statements. Its cash inflows from operations had insignificantly decreased, but this does not
mean that the business cannot sustain its operations anymore. Puregold either managed to
decrease either its cash outflows in investing or financing decisions to reflect an increasing trend
in cash flows of P13,237,635,499, P5,449,208,255, P2,621,713,000, and P1,649,762,850 for the
years 2020, 2019, 2018, and 2017, respectively. Aside from experiencing a positive net cash
flows in its business, the increases are significant enough to signify that Puregold can sustain its
operations. With all of these considered, it is safe to conclude that Puregold can fund its future
growth aspirations, maintain a financial status that emanates resource strength, and sustain its
business through sufficient cash flows.
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D. Analysis of Core Strategic Assumptions
Key strategic Assumption Assumption Conclusion on

choices risk positive negative strategic risk
assumption
Alliance with small Elimination of Possibility of Programs like this

players in the competition and product stockout require increased
industry (e.g. sari- establishment of since most of the capital
sari stores) through strong financial sari-sari stores will requirements. A
TNAP program certainty as this rely on Puregold as larger business
program makes their main supplier requires a greater
Puregold the main of different goods. capital, larger
supplier of goods of workforce, more
small sari-sari facilities, and more
stores. equipments. There
is also a likelihood
of loss of control
since larger
businesses mean
delegating more
management duties
or dividing
workloads between
different locations.
This can potentially
lead to
compromised
quality and
compromised
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productivity since
management and
staff may not be
able to keep up with
the excess
workload.
Direct distribution Minimization of Requires huge start- Puregold bears all

method (e.g. cross- warehousing and up costs for owning the financial risks.
dock facilities, store- distribution costs. or renting a building While expanding,
to-store transfer) Puregold has more to be used as the company must
control over the warehouses, mobilize all the
34
whole distribution purchasing capital required for
process. distribution/delivery store proliferation,
trucks, hiring labor advertising, service
to manage storage, quality or new
shipment and service
logistics, paying developments. This
utilities and risks of can be difficult to
possibly throwing manage on a large
out inventory that scale, especially
goes bad or expires. when the demand
for different
products by
different Puregold
branches escalates.
Maintenance of
Puregold’s
warehouses can also
be costly and this
can offset or even
exceed the profits.
EDLP (Every Day Can help in building The customers may Since Puregold
Low Prices) Strategy the brand image of suspect the employs an
Puregold, attract reputation of everyday low
customers, and Puregold and the pricing strategy, it
maintain customers’ quality of its should purchase
trust as products are products to be of supplies in volume
consistently priced poor quality since and negotiate the
lower. It can also the prices are set to lowest possible
lead to less be low everyday. wholesale prices
35
advertising costs as Moreover, because from their suppliers.
customers are the company strives They can only use
already aware about to provide the lowest relatively low
the low pricing. prices at all times, markups, earning a
they may not have lower profit
the sufficient profit percentage per item.
margin to offer Puregold tends to
occasional handle large
promotional volumes of
discounts. merchandise,
enough to offset
their lower profit
margins through
sheer number of
items sold.
Additionally, if
there are sudden
fluctuations and
prices go high, then
there is a risk of
losing customers’
trust as they are
used to lower prices.
Multiple branches Can improve the Multiple branches Creation of

strategically marketability of may require multiple and new
positioned in products since the increased capital branches can be
locations that are branches are located requirements for risky especially
accessible to the strategically within more infrastructures, when there are huge
target market (e.g. the customers’ facilities, new competitors on the
36
urban and rural reach. Multiple equipment, labor chosen location for
areas, major centers, branches can also force, and inventory. expansion. Puregold
transportation areas, attract new must be financially
etc.) customers as this prepared with
can create regards to the
familiarity and a required capital and
good impression resources for
among customers multiple expansion.
and investors. This venture may
also pose a risk of
loss of control since
expansion requires
delegation of
several management
duties and division
of workloads
between different
locations.
IV. GENERIC BUSINESS ANALYSIS APPROACHES AND TOOLS
Introduction
By 2011, a merchandise company named PUREGOLD Price Club Inc or simply known as
PUREGOLD plans to double its stores from 100 to 200 after five (5) years or in 2016. Not only it
was achieved but also from 2016 to 2021, the supermarket already has around 400 branches in the
Philippines. This shows that in every five (years), the organization was able to successfully double
its stores.
On the other hand, Covid19 made a negative impact on everyone around the world. Aside
from health, the pandemic also adversely affects the whole economy making lots of businesses
shut down and issue bankruptcy. However, despite the situation, PUREGOLD was still able to
37
operate normally and have a constant income growth. In fact, after analyzing the annual financial
report of the company from 2016-2020 gathered from the Philippine Stock Exchange,
PUREGOLD’s gross profit margin and net profit margin play between 16.5% to 17.3% and 4.4%
to 4.9% respectively (appendix 1). One of the reasons why PUREGOLD’s profitability was not
affected might be because its products are necessities and people cannot survive without them,
especially during lockdowns.
However, if we will investigate other areas, we can see that the merchandise company,
PUREGOLD was heavily restricted by the pandemic in utilizing its assets. From its financial
reports, it was revealed that from 2016 to 2018 when there is still no pandemic, the company’s
return on assets, which measures how profitable a company's assets are in generating revenue, is
between 8.5% to 8.9%. However, from 2019 to 2020 when the pandemic spreads and lockdowns
after lockdowns were implemented, its return on assets dropped around 6.7% to 6.5%.
Also, even if we say that its total assets are continuously increasing every year from 2016
to 2020, this is mainly because total liabilities are also increasing. Before the pandemic,
PUREGOLD only has around a 0.32 debt ratio, however, during the pandemic, the company’s
debt ratio jumped to 0.48. This shows that the company’s increase in assets is not because of its
equity but because of debts.
On the other hand, another thing that we need to consider is the liquidity of the company.
Amadeo (2020) describes liquidity as the amount of capital that is available in the company for
investments and spending. A liquid company can be considered good since it was able to pay its
short-term obligations. However, if the company is highly liquid, it may also mean that it is looking
for few investments or spends too little on research and development. In terms of PUREGOLD,
before the pandemic, from 2016 to 2018, the company was able to maintain a current ratio of 1.6
to 2.07 which is contrary to 2019 to 2020 when it spikes from 2.58 to 3.47 in a year. This indicates
that the company was not able to make necessary investments in a year and failed to maximize the
benefits from its assets.
To sum it up, even though it was shown that PUREGOLD’S normal operations were not
affected by COVID19, the situation still hinders the company from making investment decisions.
During the pandemic, the company was able to increase its assets mainly from debt as shown by
38
the increase in the debt ratio. However, these assets were not utilized properly as evident by the
decrease in return of assets in 2019 which continued even in 2020. Also, the organization became
highly liquid to the point that they no longer know what to do with their excess assets.
Thus, the group concluded that PUREGOLD Price Club Inc needs to make necessary
investments in this time. By doing so, it will be able to maximize its assets and increase its
profitability.
Opportunities of PUREGOLD Price Club Inc.
The following are the opportunities presented to PUREGOLD that can influence the
company in making an investment decision.
1) Increase Market Share
During this pandemic, the main response of the Government is always the restriction of
face-to-face interaction. Due to these, many businesses have already issued bankruptcy and
considered shutting down. Meanwhile. this is an opportunity for PUREGOLD to open more stores
in the country since people are striving to survive by purchasing all the necessities that they need.
Also, consumers are worried about the product’s safety and quality as compared to the products
offered to street-wide vendors. Nonetheless, it is now time for PUREGOLD to increase its share
in the market.
2) Market Digitization and Innovation
The 21st century can be considered as the era of technology. It is the time when having at
least one (1) gadget for each individual is a must. Due to the pandemic, since going outside if not
restricted is limited, people adapted to study and work at their homes. That is why everyone, even
a six (6) years old kid already has their own cell phone if not a laptop. In fact, the report says that
in recent years, large volumes of electronic purchases have been made in the market. This purchase
is inlined with the vision of the company to become a one-stop shopping convenience. Since
electronic gadgets became a necessity for the people, PUREGOLD has the opportunity to offer
these products in their stores for customers to have a seamless shopping experience.
3) New Distribution Channels

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PUREGOLD already entered online marketing by creating its unpopular Puregold app
where customers can order the products offered by the store. To fulfill the purchase of the
consumers, the company made a partnership with FoodPanda and Metro Mart Delivery Services.
Since the pandemic restricted the people from going outside, it allows the delivery companies to
double their business. From food, clothing, and appliances, people tend to order online and demand
delivery instead of going into physical stores. Thus, this became an opportunity for PUREGOLD
to open its own delivery services where PUREGOLD’s items were exclusively offered.
Objectives of the Case
The income ratio of the company shows that the normal operations of PUREGOLD were
not affected by COVID19, however, other data revealed that the pandemic hinders the company
in making investment decisions. Thus the business case has three main objectives.
1. To help the PUREGOLD in making investments that utilize its opportunities.
2. To expand the share of PUREGOLD in the market, particularly in the Philippines.
3. To increase further the profitability of the company while maintaining a good liquidity
ratio (above 1).
Alternative Course of Action
The group has identified three possible ways to achieve the objectives.
Alternative 1 – LOCAL EXPANSION
Since the sales of PUREGOLD with its products were not affected during lockdowns, the
company has the opportunity to open more stores in the country through local expansion.
As of October 2020, PUREGOLD already has 455 stores located in the Philippines.
According to Cigaral (2020), 89% of these stores were located in Luzon. Thus, with the excess
funds of the company, PUREGOLD should open new stores in new geographic locations but still
in the Philippines.
40
In terms of budget, the company may estimate its cost based on its 2011 investment when
it planned to open 100 more stores for 5 years by allocating P10 billion pesos. This shows that to
open new stores in the new geographic area, PUREGOLD should at least spend 100,000,000 (One
Hundred Million) pesos for opening one (1) store.
Advantages:
Through local expansion, the company may increase its return of assets and profitability.
Its market share will also dramatically increase due to the possible rise in revenue allowing it to
surpass its competitors. Moreover, it will create more jobs that will help the economy to recover
from the pandemic. Furthermore, it may improve the life of every Filipino by extending to them
the service and products of the company. We are all aware of how necessary the products of
PUREGOLD are, especially during this pandemic. By helping the Filipinos, especially during this
pandemic, the company can receive government grants to fund its expansion.
Disadvantages:
By opening new stores in a new geographic area, PUREGOLD is at a risk that the business
will get destroyed even before it recovers its investments because of natural calamities particularly
having a branch on those places mainly affected by the heavy storms or volcanic eruptions. More
extensive research about factors in the area is needed before PUREGOLD can open its branches
in other locations. Furthermore, after opening stores, the company needs to spend on marketing.
Alternative 2 – New Product Offerings
The presence of online classes and work from home normalized that everyone should have
at least a cellphone or a laptop. This brings an opportunity for PUREGOLD to enter the
technological market and invest in offering technological products.
PUREGOLD is known to provide one-stop shopping convenience where anyone can get
what they need during shopping. According to the site Valens Research (2020), the success of the
company can be traced back to how it started which is still envisioned today. The story goes back
to 1998 when the company opened its first branch in Saw Blvd Mandaluyong City where it offered
41
a wide array of goods such as groceries, apparel, household accessories, and furniture at very
affordable prices. Now those technological products are necessities, PUREGOLD should offer
these products at their store for it to be a one-stop shopping convenience store.
As of 2020, the Philippines has an estimated 110 million population. According to

Statistica (2020), there are 79 million smartphone users in the country which may increase to 91.5
million at the end of 2026. Considering that a budget computer costs at least P10,000, PUREGOLD
should allocate P10,000 times 455 (number of stores) if it plans to sell at least one product in each
store.
Advantages:
Through the new product offerings, PUREGOLD will retain its title as a one-stop
shopping convenience store. Also, people who are looking for affordable and quality gadgets
will patronize the products offered by PUREGOLD. There is still this common belief that
gadgets from malls are overpriced while items from streets are of low quality, that’s why the
gadgets offered by PUREGOLD are exactly what people want in terms of quality and price. Due
to these factors, the revenue of the company will increase making it more profitable.
Furthermore, offering gadgets will help the company to enter the electronics industry. If the
company wants, they can customize their products wherein their newly created Puregold
shopping application will be a default app in the gadget. Since the Puregold App is not as
popular as Shopee, Lazada, or food service apps such as foodpanda and Grab, this will serve as
additional marketing which is vital, particularly during this era where people preferred to order
online instead of personally buying outside.
Disadvantages:
New product offerings create a high risk for PUREGOLD since this is their first time to
enter into this kind of market. The first thing that they need to consider is having a contract with
the supplier of quality low-cost gadgets. Also, they need to rely on heavy marketing to promote
their products so people be aware of these offerings. Moreover, they need to set competitive
prices for these items as PUREGOLD is known to offer affordable products which in return may
42
provide them enough but not high revenue as compared to when sold in malls. Lastly, electronics
development is fast making excess stocks worthless if not sold in time.
Alternative 3 – Enter Delivery Business
The implementation of lockdowns restricted the people to go outside. This situation allows
delivery businesses to double their operations and increase revenue. Nowadays, people no longer
go outside to buy what they need, but instead, they just order them online be it clothes, appliances,
and even their everyday meals. This gives an opportunity for PUREGOLD to enter the delivery
business.
PUREGOLD already made a mobile application where buyers can place their orders. To
deliver their products, the company made a partnership with FoodPanda and Metro Mart Delivery
Services. Since PUREGOLD’s products were necessities, people will continuously buy them. This
is the reason why PUREGOLD should just open its own delivery service that will complement its
mobile application.
Advantages:
By entering the delivery business, PUREGOLD will get a portion of the share in that
industry. In this time of pandemic when people are used to studying and working at home, delivery
businesses gain lots of revenues. Also, this will serve as an avenue for PUREGOLD to exclusively
offer its products. With its quality and affordable products, wholesale discounts, and the perks of
being a Tindahan ni Aling Puling Member, people will surely patronize PUREGOLD products
even if it is just offered in a single app. Furthermore, PUREGOLD no longer needs to open more
branches since it can already reach far places. Moreover, unlike when the deliveries were not done
by PUREGOLD itself, the company can set their own policy regarding the delivery such as
requiring the delivery man to help the customers in carrying their orders, carefully placing furniture
and fixtures, or even assembling tv sets. This will improve the satisfaction of the customers with
the service of PUREGOLD. Lastly, this will resolve the long-time issue of being unable to return
the product to the delivery man because the delivery company is not the seller itself. If
PUREGOLD will make deliveries on its own, people will be assured that they can return,
complain, and fix their concerns if there is a problem with the orders they received.
43
Disadvantages:
The main risk associated with opening a delivery service is the cost of renting/purchasing
a place, trucks, equipment, and hiring manpower. No one knows if lots of people will still order
online after this pandemic and everyone is already vaccinated. This will make the business incur
more unnecessary costs. Moreover, only VISAYAS and MINDANAO regions will be the main
targets since data shows that PUREGOLD branches were concentrated in Luzon making it less
likely that more people from that area will order since a branch is just near their place. Lastly, there
are lots of well-known competitors in the market that customers already put their trust in.
Chosen Alternative:
Upon careful consideration of the cons and pros of the given alternatives, the group decided
to utilize Alternative 1 where the company will expand its business into a new geographic area but
still in the Philippines mainly because the benefits to be received will be greater than the cost as
the company can use their prior operational activities and developed core competencies in
implementing this alternative.
Implementation Strategy
This part discussed the specific details on how the expansion of business to the new
geographic area will be implemented.
Specific Undertaking Responsible Detailed Action Plan

Group
Review and Approve The management of PUREGOLD will

Management,
by the Board present the business case to the Board,
Board of Directors
particularly the need for investment which
(Duration: 1 Day)
will be subject to review and approval.
44
Choose a location to Research Upon approval of the Board, the

open a new branch Department management will ask the research
department to make a list of potential
(Duration: 15 days)
business locations. Afterward, the group
will conduct market research about
existing factors that can influence the
success of the business. These factors
include; target customers, demographics,
competition, and suppliers in the area.
Moreover, the group shall study if the
place is vulnerable to the natural calamity
that may hinder the operations of the
business. Furthermore, the company
should be aware of the zoning, tax, and
permit regulations that needed to be
followed. Choosing a suitable location is
the most vital in opening a branch.
Talk to the landowner Legal team After finding a suitable location, the legal
(Duration: 3 Days) team upon the discretion of the
management should make a contract of
purchase or rent to the landowner
regarding the sale or lease of the land
where the PUREGOLD branch will be
built.
45
Prepare and submit all
Management, After making a contract with the
the requirements
Legal Team landowner, the management together with
needed to open the new
the company’s legal team should prepare
branch
and submit all the requirements needed in
(Duration: 3 Days) opening the branch.
Ask Engineers to build

Management The management should hire engineers to
the new branch
build the building of the new branch.
(Duration: 60 Days)
Contact Suppliers and

Purchasing During the building of the new branch, the
Purchasing all the
Department purchasing department should make
machinery, equipment,
inquiries on the suppliers regarding the
and furniture for the
purchase of inventories and supplies.
chosen premises
Meanwhile, the department will also look
(Duration: 15 Days) for the needed machinery, equipment, and
furniture that will be used.
Advertise and Hiring

Marketing and At the same time with the purchase of
Staffs
Human Resource needed items for the new premises, the
(Duration: 15 Days) Department marketing department should create an
advertisement regarding the hiring of new
applicants. Afterward, the applicants will
be interviewed and hired by the Human
Resource Department.
46
Develop a Marketing Marketing After determining the premises, the staff

Plan Department needed, and the necessary equipment, the
marketing department will advertise the
(Duration: 30 days)
opening of the new branch by stating the
3-Days promo sale on the day of opening.
Appointing Manager Management At the same time with the marketing

activities, the manager of the new branch
(Duration: 1 day)
will be appointed among the existing staff
of the company.
Conduct Training for Human Resource Before the opening of the new branch, the
Manager and Staff Department human resource department will train all
the newly hired staff as well as the newly
(Duration: 15 days)
appointed manager on operating the store.
Grand Opening Management After the building of the branch is

completed and there are supplies,
equipment, machinery, and workers, the
new PUREGOLD will have its Grand
Opening.
Recommendation
Once again, the group strongly recommends alternative 1 due to the following reasons:
Maximize Opportunities – All three alternatives allow PUREGOLD to grab its present
opportunities. However, only alternative 1 where the company will make local expansion is the
47
opportunity that the company is most familiar with. Unlike in alternative 2 where the company
will offer new products and in alternative 3 where it will enter a new industry, PUREGOLD is
already a master in alternative 1. In fact, data shows that the company was able to double its stores
every five years. From 100 stores in 2011 to around 200 stores in 2016, and now 445 stores in
2021, PUREGOLD is truly successful in its local expansion. Thus, even if the pandemic hinders
the company to invest its assets, it is now the time for the company to continue its expansion of
business to serve the Filipinos.
Improve Market Position – having a bigger share in the market is a must for all businesses,
particularly in the line of providing necessities since people cannot live without them. Of all
alternatives, alternative 1 allows the company to improve its market position in the industry since
it is already well-known for providing quality and affordable necessities. If the company follows
alternative 2 or alternative 3 and offers electronic products or enter delivery service, the company
may increase its share but not in the same industry. Since the company is already a big player in
its own industry, it should focus on improving its position in the same market which will be
achieved through alternative 1.
Data shows that in 2016 with around 200 branches, PUREGOLD was able to secure 115
billion pesos total revenue. Meanwhile, this 2020 when the company has around 400 branches, it
was able to record 171 billion pesos in revenue. On average, if the company opens one (1) store,
the company may increase its revenue by 280 million pesos ((171billion-115billion)/(400-200)).
Increase Profitability – all alternatives will increase the profitability of PUREGOLD. However,
there are lots of uncertainties in implementing alternatives 2 and 3 as compared to alternative 1. In
contrast with alternative 1, alternatives 2 and 3 required different sets of operational activities as
well as core competencies. Meanwhile, the company is already used in opening branches in new
geographic locations and the activities, as well as competencies, can be carried over. This will save
the company some initial cost that is necessary for starting a new business.
To sum it up, opening a new branch creates more revenue and saves some costs as
compared to implementing alternatives 2 and 3. More revenue less cost equates to high net income
that will help the company to recover its return on assets when it drops from 8.5 to 6.5 at the start
of the pandemic.
48
Time – the present condition is very essential in choosing which alternative is the best to be
implemented. As of today, there are already lots of companies competing for the share of the
market in selling electronic gadgets and in being the number 1 delivery service worldwide.
However, in this time of pandemic when the world wants to go back on its feet, opening new
branches that offer necessities in alternative 1 is what the world truly needs. People cannot eat
their gadgets, and people will always choose to spend their money on food instead of wasting it to
pay shipping fees.
Lastly, the group is aware of the disadvantage of implementing Alternative 1. Some of

these are the threat of natural calamities in the area where the new branch will be located, lack of
delivery service for their own product, and inability to offer electronic gadgets which is already a
necessity in this era. However, as an accountant, the group believes that the benefits of
implementing alternative 1 are higher than its cost as compared with alternatives 2 and 3. To offset
the risk of opening a new branch in a new location, extensive research in the area is a must. Also,
to cope with delivery service problems, PUREGOLD already has an existing partnership with
foodpanda as well as metro mart delivery services which has a higher satisfaction rating in the
market. Moreover, people nowadays no longer go to physical stores and just order everything that
they need online. While shopping for PUREGOLD products online, they can still buy their
electronic gadgets at another store even without going outside their home and that is already the
ultimate shopping convenience.
49
Reference List
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https://www.thebalance.com/liquidity-definition-ratios-how-its-managed-3305939
Cigaral, I. N. (2020). Puregold allots P5 billion to acquire stores and expand reach.
https://www.philstar.com/business/2020/10/29/2053153/puregold-allots-p5-billion-
acquire-stores-and-expand-reach
G.E. (2021). Entrepreneurship in Philippines. GEM Global Entrepreneurship Monitor. Retrieved

March 12, 2022, from http://gem-consortium.ns-client.xyz/economy-
profiles/philippines/policy
Grab Singapore. (2022, February 7). Food merchants and digital platforms in the era of Covid.
Grab SG. https://www.grab.com/sg/blog/public-policy/food-merchants-and-digital-
platforms-in-the-era-of-covid/
Kennon, J. (2021). The importance of liquidity and liquid assets. The Balance.
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19 on economy/financial markets? The Economic Times.
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finances-due-to-the-impact-of-covid-19-on-economy/financial-
markets/tomorrowmakersshow/74827271.cms
Maverick, J. B. (2021). Equity financing vs. debt financing: What's the difference? Investopedia.
https://www.investopedia.com/ask/answers/042215/what-are-benefits-company-using-
equity-financing-vs-debt-financing.asp
Puregold Price Club Inc. Beta. (2021b). PUREGOLD Price Club Inc.: Most Customer-Oriented
Hypermart offering a One-Stop Shopping convenience and Best Value to Customers -
Mission, Vision and Values.
http://puregoldbeta.webtogo.com.ph/company.do?category_id=6798
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https://coolsysenergydesign.com/supermarkets-ops-during-covid19/
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STATISTICA (2020). Number of smartphone users in the Philippines from 2017 to 2020, with
forecasts until 2026. https://www.statista.com/statistics/467186/forecast-of-smartphone-
users-in-the-philippines/
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APPENDIX A
52

A431 Galang Gozun Pangilinan Sinamban Singian Midterm Project PUREGOLD

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Strategic Business Analysis on Puregold Price Club, Inc.

HOLY ANGEL UNIVERSITY

A Strategic Business Analysis on

In Partial Fulfillment of the Requirements for the Course

Background of the Company

Company’s Market Share, Human Capital and Other Information

· We Establish Lasting Relationships with Our Suppliers and Business Partners.

· We Strive to Promote the Personal and Professional Development of our Employees.

· We Commit Profitable Results to the Stockholders.

Sa bawat araw, PUREGOLD kasama mo!”

Sa PUREGOLD, Always Panalo!”

GOALS AND OBJECTIVES

Focus on modern grocery retail

Traditional retail to remain a major growth driver

· Open, adaptive and responsive to the changing environment

· Dedicated and conscientious focus on work

Integrity and Loyalty

· Honor, credibility, honesty, dignity, "palabra de honor", "walking the talk"

Market Digitization and Innovation Economic Turmoil

New Distribution Channels Weak online platform security and online

Necessities are never subject to lockdown Competitive market and saturation

1.) Market Digitization and Innovation

2. New Distribution Channels

3. Necessities are never subject to lockdown.

Government’s main response to the pandemic is the restriction of face-to-face

1.) Economic Turmoil

2.) Weak online platform security and online scams

PORTER’S FIVE FORCES OF INDUSTRY ANALYSIS

Bargaining power of Suppliers

Rivalry among existing Firms

Bargaining power of Buyers

Threat of New Entrants

The industry is already exhausted by Puregold, Robinson’s Supermarket, All Day,

(1) political tension on increasing the employee salaries and wages,

(2) political aid in anticipated globalization, and

(3) high political stability in the country.

(1) steady and strong growth in GDP,

(2) competitiveness of the Philippine currency,

(3) increasing growth rates in population,

(4) rising employee productivity, and

(1) online shopping and marketing,

(2) trends in social diversity,

(3) trends in lifestyle, and

(4) social structure stability.

(1) trends in payment methods,

(2) occurrence of cyber-attacks, scams, and frauds,

(3) computerization and automation of the business,

(4) digital business analysis, and

(5) digital marketing tools.

A lawsuit against the company can be detrimental in terms of settlement or

(1) rules and regulations from the national government, and

(2) rules and regulations from the local government.

As climate change continue to be a hot topic across the globe, environmentalists

(1) eco-friendly packaging of products and purchases,

(2) sustainable business practices, and

(3) corporate social responsibility.

Industry Key Success Factor

Competencies Description Customer Uniqueness Leveragabili Industry

It has auspiciously High Medium High ⇨ Location and

Seamless Shopping High Medium High ⇨ Product

There is a wide spectrum of High High High ⇨ Market share

Promotes strong branding by High High Medium ⇨ Incentives

Engaging shopping Medium Medium High ⇨ Product

Recognized and valued High Medium Medium ⇨ Customer