STRATEGIC MANAGEMENT PAPER FOR

ROVIX CAFÉ

Submitted to Mrs. Fershie D. Yap, Ph. D

College of Accountancy and Business Administration

In Partial Fulfilment
Of the Requirements for the Degree of
Bachelor of Science in Accounting Information System

Sarmiento, April Joy

I. INTRODUCTION

Rovix Café is known for its food service and cafeteria with the tagline "Your home away from
home." It is located in Amungan Iba, Zambales. Due to the massive and growing adoption of this
business, they established other branches in and outside Zambales. Rovix Café has found a strong
position and is located in a prominent and affordable location in Amungan Iba, Zambales, and
other branches. They run their business based on the needs of their customers in order to meet their
expectations and provide them with good quality taste at an affordable price.

In this time of pandemic, Rovix Café offers more healthy and affordable products that bring
satisfaction to their customers' needs. They offer milkshakes and milktea with different flavours,
burgers, pastas, and pizza. They also deliver food door-to-door to make it easier for their customers
to order the foods that they want. Rovix Café focus is your convenience – order online from your
laptop, desktop, or smartphone can be available during 5 AM to 8 PM a day. Fast shipping, low
prices, and outstanding customer service make their business the best choice to meet all of your
professional and food service supply needs.

Rovix Café vision is to produce quality, nutritious, and flavorful food in an environment that
champions all who contribute their energy and skill. Rovix Café service is distinguished by their
passion for food and their abiding commitment to sustainable environmental practices whenever
possible. Whenever possible, we choose to use food that has been sourced in an socially
responsible manner. Rovix Café commitment includes providing food services in a caring work
environment that offers meaningful employment opportunities to all employees.
II. RESEARCH DESIGN AND METHODOLOGY

Primary Data

Primary data was collected from the Securities and Exchange Commission's website. This data
provides the market size, market growth, and ranking positions of all milk tea firms operating in
the Philippine market. External factors affecting the industry are also included.

Secondary Data

Secondary data was acquired through inputs from the internet. The data contains market trends
for the milktea industry, information on its main rivals, and the most recent technological
advancements in the Philippine milktea market. Additionally, information on current trends in the
industry under investigation is needed. For comparative reasons, background information on a few
key industry rivals is also required, particularly in the financial and operational aspects.

Scope and Limitation

The analysis and study of Rovi Café are the sole topics included in the Strategic Management
Paper; among the various industry segments, this study concentrates on milktea establishments in
the Philippines. The performance and market position of the organization are the main topics of
this paper.

III. VISION / MISSION

Vision Statement
“To be a top provider in Zambales and be known for excellent customer service by providing a
flexible and elastic service with consistency and an appearance that will make a good impression.”
Diagnosis:

It answers the question “What do we want to become?”

Mission Statement

“Rovix Café business isn’t just serving food but to serve people with good food and
convenience at affordable price by establishing a successful, dynamic social enterprise. One of
their major goals should be to provide a customer experience that encourages repeat business. From
the moment a patron enters our business until that patron leaves, that person should feel as if they
are valued. And to bring people together and have a positive impact on our customers, our team,
the environment and the community.” Diagnosis:

The mission statement doesn’t include the customers; markets; concern for survival, growth, and
profitability; and concern for employees as shown in table 1.
YES NO Excerpt from Mission Statement

Customers middle-to-higher income residents

Products/Services Hhigh-quality milktea

Markets local market residents and tourists

Technology high quality milktea

Concern for dedicated to offer high quality milktea

survival, growth,
profitability
Philosophy long term success

Self-concept continuously improve business aspects for sustainability

Concern for public sustainable long-term success of the province and in region 3
image
Concern for long-term success of employees
employees

Table 1. Diagnosis for Current Mission Statement

The mission statements comply with the essential requirements of a good mission statement, Fred
David’s (2011) were used and it includes the following:

• Customer - Who are the firm’s customers?

• Products - What are the firm’s major products or services?

• Markets- Geographically, where does the firm compete?

• Technology- Is the firm technologically current?

• Concern for survival, growth and Profitability- Is the firm committed to growth and financial
soundness?

• Philosophy - What are the basic beliefs, values, aspirations, and ethical priorities of the firm?

• Self-concept- What are the firm’s distinctive competences or major competitive advantage?

• Concern for public image- Is the firm responsive to social, community and environmental
concerns?

• Concern for employees- Are the employees’ valuable asset of

the firm?

IV. ENVIRONMENTAL ANALYSIS

Market

The people of the province of Zambales and Region 3 with lower to higher income levels
as well as tourists will help compensate for the Rovix Café market.

Zambales is a province in the Philippines located in the Central Luzon region in the island
of Luzon. Its capital is Iba. Zambales borders Pangasinan to the north, Tarlac and Pampanga to the
east, Bataan to the south and the South China Sea to the west. With a land area of 3,830.83 square
kilometres (1,479.09 sq mi), Zambales is the second largest among the seven provinces of Central
Luzon. The province is noted for its mangoes, which are abundant from January to April. It has 13
towns, Iba is the capital town.

Based on the 2010 Census of Population and Housing (CPH), the province of Zambales,
excluding Olongapo City, posted a total population of 534,443 persons as of May 1, 2010. This is
larger by 100,901 persons compared to its total population of 433,542 persons counted in the 2000
CPH. The increase in the population count from 2000 to 2010 translated to an average annual
population growth rate (PGR) of 2.11 percent. This is higher than the 1.61 percent annual PGR of
the province between the census years 1990 and 2000. If the average annual PGR recorded at 2.11
percent during the period 2000 to 2010 continues, the population of Zambales would double in 33
years. Fifty years ago, the population of Zambales was only 168,112 persons.
This population size is less than one third of the population of the province in the 2010 CPH.

Competition

The identified competitors of Rovix Café are the The Bakery-Zambales branch, Soulmate Diner’s-
Zambales branch, Chryz Cafe-Zambales branch, and other well-known milktea shops in Zambales.

Socio-Cultural

Socio-cultural aspects are a combination of social and cultural elements. These elements include
the traditions, ways of life, and values that define a society or a community. Concepts of beauty,
education, language, law, politics, religion, social organizations, technology, material culture,
values, and attitudes are examples of cultural components. Reference groups, families, roles and
status in society, as well as free time and resources, are social influences. When creating marketing
strategies for enterprises or organizations looking to elicit action from specific populations, socio-
cultural elements must be understood. Income plays a significant role in determining whether or
not prospective students are likely to enrol in higher education.

Filipinos have specific taste buds. Filipinos love to give gifts and souvenirs, especially on special
occasions, and they do enjoy eating sweets and finger foods for dessert and snacks.

Technology

There is a variety of machinery used in the production of milk tea nowadays, which will be very
beneficial for the development of innovative milk tea flavors.

Economy

Exchange Rate

The Philippine Peso will likely to continue to appreciate against the US dollar to
P40.65:U$1 (source: BSP, Dec. 2016).
Environmental

Climate change has had an impact on International farmers, ranchers, rural land owners, and
foresters and will continue to do so, through its influence on production, distribution, and yields.
Waste disposal is another issue, with improper disposal resulting in foul smells, leaching into water
supplies, and air pollution.

In the Philippines, finding pure water is quite challenging. This is brought on by biological and
other waste excreting into rivers, lakes, and ponds' water. Milktea Company may have a tendency
to consume too much water because water is crucial to manufacturing. Water is one of the major
components in milktea, so it might have an impact on the product prices.

Political

Tax rate policy will give awareness to the enterprise on whatever changes has been made regarding
taxes, so as to avoid evasion or other related matters. It is beneficial both on the company and for
the Government in terms of financial matters.
V. INDUSTRY AND COMPETITOR ANALYSIS

Industry Analysis

Porter’s Five Forces Model adopted for Rovix Café

Figure 1. Rovix Café Adaptation of Porter’s Five Force Model

Porter’s five forces (figure 1) model helps Rovix Café as they define the parameters within which
new rules, participants and markets continue to emerge.

Porter’s Five Force Model – Adapted for Rovix Café:

1. The Potential for Entry into the Industry

 The product will be loved by the customers because it is affordable and has a good quality.
Customers expect a lot. To be happy with a quick service meal, they want great taste, quality and
low prices. And now they want nutritious items with healthy ingredients on the menu. So the owner
of the business look for “locally-sourced” ingredients, organics and their burger filled with more
vegetables, which appeal to younger customers, while adding items that appeal to more mature
crowd.

2. The Level of Rivalry of Competition

Since The Bakery, Big Cup, and Chryz established themselves in the market, there are an
increasing number of competitors, and Rovix Café will find it difficult to compete with these
businesses. The aforementioned rivals have already developed a solid reputation in the public eye
for providing services and other goods.

3. The Power of Buyers

The choosing and switching behavior of customers has an impact on milk tea shops since
customers have the capacity to affect a company's pricing decisions. Prices must be modified in
accordance with the target market's affordability and purchasing power. This analysis leads to the
conclusion that customers in milktea shops have a moderate amount of negotiating power.

4. The Threat to Substitutes

A substitute performs the same or a similar function by a different means (Porter, 2008).
The threat of substitute is high if the substitute provides a cost-effective trade-off compared to the
original product.

In light of today’s economic status, people are searching for less expensive products. Rovix
Café offers affordable milktea product with a high quality same to their competitors.

5. The Power of Funders, Faculty, and Staff

In industry analysis, suppliers are defined as those organizations or individuals that provide
the materials, information or knowledge to allow an organization produce its goods and/or services
(Martinez and Wolverton, 2009). Considering the strength of the supplier's brand as well as the
importance of the milktea goods' quality and service. Given that Rovix Café is a new company in
the sector and there are many milk tea providers on the market, it can be difficult for them to
discover vendors who offer low prices and attractive deals. The milktea establishments are
attempting to purchase in bulk in order to reduce the cost due to the high price of sugar and
flavoring powder. If the company can't locate a supplier who offers a decent deal and reasonable
pricing, there is a strong likelihood that it will pass the cost onto the customer, resulting in an
expensive milk tea product.

Key Success Factors for the Business

• High Quality Product – Rovix Café produce quality product that tailored the customers’ desire.

• Competitive Pricing – Rovix Café produce quality delicious milkteas’ at affordable price that
low-to-higher income residents can buy.

• New Ideas and Flavor – the business continues to innovate and develop new ideas and flavors to
address the trends in milktea.

• Channel of Distribution – the business adopts the most appropriate channels of distribution for
product accessibility.

• Customer Service – the business management practice high hospitality to customers in addressing
complains and suggestions.

C. Competitor Analysis

Chryz Cafe changed a lot over the past years and at a rapid pace, largely due to new technology
and evolving guest preferences.

Chryz Cafe develops their concept. While it might seem like an impossible feat, if you break down
the process into smaller steps, it becomes a lot more manageable. Creating a menu, mood, and
service style that feels cohesive largely relies on a keen intuition and clear vision. So, whether
you’re opening a business for the very first time or thinking of fresh business concept ideas that
differ from business you’ve established in the past, the same basic principles apply. Try to balance
uniqueness with expectation, keep things consistent, and put food first.

Chryz Cafe guests have changed what they eat, how they eat, and where they eat it. They want
their food fast and don’t want to wait long. They want the option for delivery, takeout, or dining
in the restaurant. And they want their food to meet all of their dietary restrictions while living up
to expectations and taste preferences. These shifts in guest preferences emerged alongside the tech
boom of the past years, during which time the business community had to do its best to keep up
with such change.

While Chryz Cafe is increasingly adopting technology as an important part of their business, the
industry still has room for growth. In order to meet the constantly changing preferences of guests
— not to mention run a more efficient business — Chryz Cafe should continue to invest in new
technologies to stay up-to-date, or even ahead of, industry trends. This way, they focus on doing
what they love: creating delicious food and memorable dining experiences.

Competitor Analysis Synthesis

The identified competitor as a source of high quality at affordable price milkteas’ and to
sustain the long term success of customers and employees.

Rovix Café is on a strong competitive position having a score of 2.70 on the CPM Matrix even
though the business has the lowest total compare to their competitor. It is because the business is
in start-up stage and their competitors were already operating for decades, but still the business
has the possibility to realize the position they want to be in the future.

Opportunities and Threats Identified

After the discussions about the external environment (primarily on high quality at affordable price
brownies) which the business operates, the following threats and opportunities have been
identified:
VI. COMPANY ANALYSIS

Strategy

In order to maintain the long-term success of customers and staff, Rovix Café is committed to
providing premium milk tea at a reasonable price to meet the needs of the local market area's
residents and tourists with low to high incomes.

Market Position

Rovix Café will develop in the area and target low-to-higher income local area residents and
tourists who are interested in exploring new experiences and goods and are unsatisfied with the
small selection and indifferent service available in milktea shops and other stores.

Structure

Organization Structure

Figure 2. Rovix Café Organizational Structure

This structure defines how activities such as task allocation, coordination and supervision
are directed toward the achievement of organizational aims. It can also be considered as the
viewing glass or perspective through which individuals see their organization and its environment.
Strengths and Weaknesses Identified

After the discussions about the external environment (primarily on high quality at affordable price
brownies) which the business operates, the following strengths and weaknesses have been
identified:

VII. STRATEGIC (OR LONG-TERM) OBJECTIVE

To be a top provider in Zambales and be known for excellent customer service by providing a
flexible and elastic service with consistency and an appearance that will make a good impression

VIII. STRATEGY FORMULATION

Recommended Business Strategies

Rovix Café in the industry should penetrate the market through product customization and
tapping possible distributors as a way of advertisement.

Recommended Organizational Strategies

After analyzing the key internal factors of Rovix Café the following strategies are highly
recommended:

• Rovix Café should offer quality milkteas at affordable price

• Penetrate the market thru product customization

• Availability of the product based on customer’ demand

Financial Evaluation of Strategies

Rovix Café established a forecast of the Income Statement and Cash Flows Statement for the
period 2021-2025. The financial projections below were based on the strategic objectives and
proposed strategies on the different aspects of the business.
Projected Income & Expense for 5 Years

INCOME: 2021 2022 2023 2024 2025

Total Sales 250,426 257,939 • 265,677 273,647 281,857
 Cost of 150,256 154,763 159,406 164,188 169,114
Goods Sold

Gross 100,170 103,176 106,271 109,459 112,743

Profit EXPENSES

Advertising 35,508 35,508 35,508 25,508 25,508

Accounting 25,840 25,840 25,840 25,840 25,840

Utilities 27,410 27,410 27,410 27,410 27,410

Total 88,758 88,758 88,758 78,758 78,758
Expenses

Net Income 14,418 17,513 30,701 33,985 14,418

Sales projection for FY 2021-2051 has an increase of 3%, Cost of Goods Sold was projected to
be 60% of sales. Net income has an increase of 1% per year for the first 3 years and jump to 4%
increase on the 4th year due to decrease in advertising expense.

IX. ACTION PLANS AND DEPARTMENTAL PROGRAMS

Objectives Key Result Program Activities Key Performance Performance Target Key
Personnel
Area Indices

Objective 1: Penetrate the >tap distributors >increase in market share >3% increase in sales per >marketing
To be able to market year department
become the
leading
brownies
product
selling
business
 Objective 2: local >to be known locally >increase in sales and >1% increase in profit per >marketing
advertisement department
To be able to profit year
Develop
Business
Status with
public
relations

X. STRATEGY EVALUATION/MONITORING AND CONTROL

Balance Scorecard as strategy evaluation tool, it will allow the organization to evaluate
from the following perspectives: Financial Performance, Customer Knowledge, Internal Business
processes and Learning and Growth.

Strategy Department Measure of Target Time

Expectation
1. Market 1. Marketing, Finance, Establishment of distributors 2-3 years
development Production

2. Market 2. Marketing, Management, Increase in market share 2-3 years

penetration
Production

3. Marketing, Production Use of modern technology for 2-3 years

3. Product customization

development
References

Fred R. David. Strategic Management: Concepts and Cases, 11th

Edition.Fred, David. Strategic Management. 7th edition. 2009.Kotler, Philip & Keller, Kevin.
Marketing Management. 4th Edition.