OPERATION STRATEGIES: AS TO COMPETITIVE PRIORITIES AND

CORRELATION TO FINANCIAL PERFORMANCE OF

SELECTED FOOD-SERVICE MSME
IN IMUS CITY, CAVITE

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Undergraduate Thesis Outline
Submitted to the Faculty of the
Department of Business Management
Cavite State University
Imus City, Cavite
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In partial fulfillment
of the requirements for the degree of
Bachelor of Science in Business Management
Major in Finance
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Remy Conwie C. Badillo
Cristalyn Joyce B. Pre
Gerezpaul A. Sioson
November 2022
 TABLE OF CONTENTS

INTRODUCTION 3

Statement of the Problem 5

Objectives of the Study 7

Hypotheses 8

Significance of the Study 8

Time and Place of the Study 9

Scope and Limitations 9

Definition of Terms 10

Theoretical Framework 12

Conceptual Framework of the Study 13

REVIEW OF RELATED LITERATURE 14

METHODOLOGY 27

Research Design 27

Sources of Data 27

Participants of the Study 28

Sampling Technique 28

Data Gathering Procedure 28

Research Instruments 29

Statistical Treatment of Data 29

Ethical Considerations 31

REFERENCES 33
 OPERATION STRATEGIES: AS TO COMPETITIVE PRIORITIES AND
CORRELATION TO FINANCIAL PERFORMANCE OF
SELECTED FOOD-SERVICE MSME
IN IMUS CITY, CAVITE

1
2
3
Remy Conwie C. Badillo
Cristalyn Joyce B. Pre
Gerezpaul A. Sioson
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2
An undergraduate thesis outline submitted to the faculty of the Department of
Business Management, Cavite State University, Imus City, Cavite in partial
fulfillment of the requirements for the degree of Bachelor of Science in Business
Management major in Finance with Contribution No. ________. Prepared under
the supervision of Ms. Wylyn Salva.
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INTRODUCTION
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Micro, Small, and Medium Enterprises (SMEs) are vital contributors to most

economies and serve as an indication of an economy’s growth. Aside from being the

breeding ground for future corporations, MSMEs' superiority also lies in their ability to

provide employment and technical training for the growing labor force of a country,

stimulating economic growth in more rural areas, and reflecting the ability of the

general masses to turn small savings or family savings into investments (Keskin, et

al.,2010; Schumacher, 1973). The Philippines, in particular, can attest to said

advantages. In the most recent data provided by the Department of Trade and

Industries, more than 99% of businesses operating in the country belong to micro,

small, and medium enterprises (MSME) in 2020, generating 62.66% of the country’s

total employment and contributing 35.7% in terms of total value added. (DTI, 2021)

MSMEs belonging to the Philippine Food Service Industry, in particular, have

faced a sharp increase driven by rapid urbanization and nationwide expansion of

malls and commercial centers that host a plethora of food service establishments [2]
(Singian, 2020). It is also highly attributed to rising disposable income[3] , a shift to a

more hectic lifestyle, technological developments boosting efficiency and

convenience of service, and the constantly expanding diversity of food products

guided by trends and innovation (Pandey, et al., 2020; Singian, 2020; Lau and Ng,

2019).

However, despite the comparative ease in the formation of SMEs due its

smaller scale, the same advantage put a hindrance on the development of SMEs in

the economy. These constraints range from the rapidly changing market demand to

internal difficulties such as financial constraints, limited entrepreneurial know-how

and expertise, and increased market competition due to entry of large multinational

enterprises caused by globalization [4] (Yoshino and Hesary, 2016). Although

Governmental organizations have continuously made efforts to improve firm

performance by creation of programs and policies targeted in these challenges, most

of these efforts are focused on financial assistance, skills training, and guidance in

the necessary governmental process for the formation of the enterprise. However,

the businesses success or failure is still mostly reliant on the owner’s management

skills, adaptability, and strategy for growth which is crucial in a competitive market

(Ismail Albalushi and Naqshbandi, 2022[6];Cojocariu & Stanciu, 2012; Koyagialo,

2016[7]).

The market in the Philippine Food Service Industry is highly competitive and

dominated by large chain enterprises such as Jollibee Food Group and Mcdonalds,

while the market is continuously being saturated by international franchises[5]

(Statista, 2022). Although a competitive environment is often believed to induce

innovation and improvement in total factor productivity[8] (Nickell 1996), MSMEs

potential are often difficult to be fully realized as their capacity for R&D expenditure

and innovation (product, process, and organization) cannot be compared to larger

firms. This, in addition to economic shocks caused by pandemic and rise in

commodity prices brought about by the war between Ukraine and Russia that
impacted the oil price and global trade. The gross domestic product (GDP) shrank by

9.5 percent in 2021, and it was the lowest ever recorded since the government began

keeping data on it in 1946. The more than 2 years of lockdown substantially

disrupted cash flow and sustained costs, resulting in income losses for the

businesses (Juego, 2020) and was hit by the severe inflation in commodity prices just

about when the economy was on its process of recovery. With the difficulties brought

about by the unexpected crises, developing a strategy that will enable a business to

adapt and maintain a stable performance in the currently turbulent business

environment is a must.

Operations Strategy deals with plans and changes that can provide a

significant strategic impact to the business, developing the total business process so

that it can face current and future challenges brought by the ever-changing

competitive environment (Slack and Lewis, 2011). Practices such as comprehensive

quality management and just-in-time delivery for example have been viewed as a

strategy to improve operational performance and, eventually, financial performance in

the operations management area. (Duarte et al., 2011). The effectiveness of the

strategy, however, is reliant on its coherence to the firm's capabilities and competitive

priorities. Development of suitable competitive priorities that is strategically fitted to

the enterprise generates competitive advantages for the business that in turn bolster

the business into achieving better financial performance[9] (Diaz-Garrido, et al.,

2015).

With the intense competition in the food service market and surfacing

challenges brought by movements in the macro and micro environment, SMEs which

comprise the largest portion of enterprises in the country are likely to be affected.

Despite the importance placed by the government in the development of SMEs,

providing fiscal packages and learning seminars, formulation of strategy leading to

competitive advantage are still heavily reliant on the capability and resourcefulness of

its owners. Difference in point of view, discernment, and resources naturally will lead
to distinct strategies with particular focus and execution, that can therefore affect the

enterprise in terms of performance. With this reason in mind, this study aims to

determine the operations strategies practiced by MSMEs in the food service sector

and investigate its impacts, or none thereof, in the financial performance of the

selected enterprises.

Statement of the Problem

This research aims to answer the main question:

What is the Financial Performance based on the Operations Strategies of

Food-Service Micro, Small, and Medium Enterprises in Imus City, Cavite?

Specifically, it sought to answer the following questions:

1. What is the business operation profile of the respondents in terms of:

1.1 ownership type;

1.2 scale of Business Operations;

1.3 products offered;

1.4 services offered;

1.5 size of workforce;

1.6 length of business operations?

2. What are the business operations strategy in terms of:

2.1 strategy formulation;

2.2 strategy objectives;

2.3 competitive priorities;

3. What is the financial performance of the businesses in terms of:

3.1 within the first (1st) year of strategy implementation;

a. annual expenses;

b. expenses;

c. net profit;

d. current assets;
 e. current liability;

f. total assets?

3.2 after 1 Year up to the current year of strategy implementation;

g. annual expenses;

h. expenses;

i. net profit;

j. current assets;

k. current liability;

l. total assets?

4. Is there a significant relationship between the MSMEs business operations

profile and the degree of the operations strategy application in the business

processes?

5. Is there a significant relationship between the business operations strategy

and the financial performance of the enterprises?

6. Is there a difference between the selected Competitive Priorities and Financial

Performance of MSMEs?

Objectives of the Study

The main purpose of this study is to assess the Financial Performance based

on Operations Strategy of Food-Service Micro, Small, and Medium Enterprises in

Imus Cavite.

Specifically, the researchers aim to achieve the following:

1. To determine the business operation profile of the respondents in terms of:

1.1 ownership type;

1.2 scale of Business Operations;

1.3 products offered;

1.4 services offered;

1.5 size of workforce;

 1.6 length of business operations.

2. To find out the business operations strategy in terms of:

2.1 strategy formulation;

2.2 strategy objectives;

2.3 competitive priorities;

3. To determine the financial performance of the businesses in terms of:

3.1 within the first (1st) year of strategy implementation;

a. annual sales;

b. expenses;

c. net profit;

d. current assets;

e. current liability;

f. total assets.

3.2 after 1 Year up to the current year of strategy implementation;

a. annual sales;

b. expenses;

c. net profit;

d. current assets;

e. current liability;

f. total assets.

4. To find out the significant relationship between the MSMEs business

operations profile and the degree of the operations strategy application in the

business processes.

5. To determine the significant relationship between the business operations

strategy and the financial performance of the enterprises.

6. To compare the difference between the selected Competitive Priorities and

Financial Performance of MSMEs.

Hypotheses

This study is designed to examine the relationship between the business operation

profile of the SMEs, the operations strategies that they utilized, and their resulting

financial performance.

In light of the research problems presented, the study aims to test the

following hypotheses:

Ho1: There are no significant relationship between the business operation

profile and the operations strategy of the food servicing MSMEs in Imus Cavite.

Ho2: There are no significant difference between the operations strategy in

terms of competitive priorities and the financial performance of the food servicing

MSMEs in Imus Cavite.

Significance of the Study

This study will be conducted to provide information regarding the operations

strategy practiced by various food-service MSMEs located in City of Imus, Cavite and

their financial performance resulted by the strategies utilized and thus, results could

be of significant value to the following:

MSMEs/Participants. This study will give valuable data for business owners

currently participating in the food service industry and aspirant SME owners that are

planning to enter the market, as they deal with the current and future risks in the

highly competitive Food Service Market in the Philippines.

Government. The study can give a view of the current situation of its citizens

employed in small and medium enterprises that might help them formulate a solution

not only to the financial difficulties that these enterprises had but also create and

provide training and seminars that will enhance the owners’ literacy in business

operations function.
 Students. The study could present the students the significance of operations

strategy in a business operations function. This can give them an overview on how

the business industry operates and process of business operations function which

could give them an advantage if they decided to pursue the food service business or

a field in the operations.

University. The study could be beneficial for the University body, particularly

in providing reference or learning materials to the College of Business Department

regarding the business operations strategies of Food-Service SMEs in the City of

Imus, Cavite.

To Future Researchers The knowledge presented in this study may be used

as a reference in creating new research or in testing the credibility and validity of the

previous study and will be easier for future researchers to find accurate information

about the topic.

Time and Place of the Study

This study will be conducted from November 2022 with respondents

belonging to Micro, Small, and Medium Enterprises that belong to the Food-Service

Industry and operate within the City of Imus, Cavite.

Scope and Limitations

This study will solely focus on the financial performance based on the

operations strategy utilized by selected food-service MSME operating in Imus City,

Cavite in the year 2022, excluding food servicing that mainly operates through private

commissions and/or on an irregular and intermittent basis, businesses that mainly

caters special events/occasions, and MSMEs that are acting as a franchisee for

businesses that are beyond the defined limit of qualifications to be considered an

SME in the Philippines.

 The results and inferences of the study will be discussed based on the

sample size, the research instruments, statistical tools, and the research design to be

used. The sample will be drawn from the population of registered SMEs in Imus, City

who have been operating for more than one (1) or more years in the stated place of

study and fits in the SME classification as defined by the Senate of the Philippines.

Enterprise By Asset Size By Number of Employees

Micro not more than P3,000,000 1-9

Small P3,000,001 - P15,000,000 10 - 99

Medium P15,000,001 - P100,000,000 100 - 199

Definition of Terms

The following terms are defined conceptually and operationally for a clearer

understanding of the terms and concepts in this study.

Asset. A resource having monetary worth that an individual, organization, or

country possesses or manages with the prospect of future profit. Assets are

disclosed on a company's balance sheet and are purchased or generated to raise the

worth of the business or to assist its operations.

Competitive Advantage. A competitive advantage is a favorable market

position that a company possesses, resulting in more consumers and profits. It is

what makes a brand, product, or service appear to be superior to its competitors.

Competitive Priorities. Competitive Priorities that serve as strategic

capabilities that can assist businesses in establishing, enhancing, and maintaining a

competitive advantage. Competitive priorities are the characteristics that a

company's production system must have in order to meet the expectations of the

marketplaces where the company intends to compete. Quality, Cost, Flexibility,

Delivery, and Customer Focus (Service) are five factors that serve as Competitive

Priorities.

Cost-effective. When the most advantage is obtained for a relatively low

cost, it is said to be cost-effective. The notion is widely used while deciding amongst

a number of investment options in order to create the highest possible return for the

amount invested.

Efficiency. Ability to avoid wasting energy, money, efforts, materials and time

in doing something or in producing a desired result. The ability to do things flawlessly

and without waste – the ability to do them well. Efficiency is all about making the best

possible use of available resources. Efficient companies maximize outputs from given

inputs, thus minimizing their costs. When a company’s efficiency improves, its costs

are reduced and its competitiveness enhanced, as long as the focus is also on

productivity.

Financial Performance. A subjective evaluation of a company's ability to

employ assets from its principal method of operation to create revenue. The phrase

is also used to describe a firm's overall financial health during a certain time period.

Internal and External Environment. Internal Environment refers to the

events occurring within an organization. External Environment is known as the

events that occur outside of the organization, and it is more difficult to predict and

regulate.

Liquidity. The quantity of money that is readily available to pay bills or invest

is referred to as liquidity. It shows how much cash is available and how quickly a

financial asset or security can be converted to cash without losing a lot of money. To

put it another way, the length of time it takes to sell.

Operations Strategy. A series of decisions made by a company about the

manufacturing and distribution of its goods.

Profitability. Profitability refers to a company's ability to earn revenue. A

profit is what remains after an enterprise has paid all expenses directly connected to
the generating of revenue, such as manufacturing a product, as well as other

expenses associated with the conduct of commercial activities.

MSME. Micro, Small, and Medium Enterprises (MSMEs) are any business

activity or enterprise engaged in industry, agribusiness, and/or services, whether

single proprietorship, cooperative, partnership or corporation whose total assets,

excluding land, are less than or up to P100,000,000 and an employment size of less

than 200 employees. Basing on these categories, it can be further classified as

micro, small, or medium, regardless of the type of business ownership. (R.A. 6977,

1991)

Solvency. A company's capacity to satisfy its long-term debts and financial

responsibilities. Solvency is an essential metric of financial health since it

demonstrates a company's capacity to manage its operations in the near future.

Strategy Formulation. The process of formulating a strategy involves using

the knowledge already at hand to record the anticipated course of an enterprise and

the practical procedures to achieve its objectives. This procedure is used to allocate

resources, set priorities, align the entire organization, and validate business

objectives.

Strategy Objectives. Strategy objectives are statements of purpose that aid

in developing a broad vision, setting goals, and outlining actionable measures for a

company to take in order to reach the intended result. A strategy objective is most

effective when it can be measured by statistics or other visible data.

Theoretical Framework

The study is anchored on the studies made by Diaz, et al. (2014), which

affirms the positive relation between establishment of competitive priorities and firm

performance, and Skinner (1969, 1974) which propose the establishment of a

competitive priority to which resources and efforts will be focused on in order to

develop assets and practices that helps the business reach its goals. Skinner also

proposed the trade-off model in a series of his researches, which emphasize that

companies should only focus on priorities one at a time, as each priority requires

different operational structures and infrastructures in support. Determination of

competitive priorities in line with strategic objectives creates a well positioned

company by developing a particular operational capability that generates competitive

advantage. Over the past decades, a relatively shared framework of the content of

operations strategy has emerged. with researchers viewing operations strategy as

defined by the relative weighting of business capabilities, including low cost, quality,

flexibility, and delivery (Skinner 1970). However, emergence and popularity of service

industries have prompted researchers to add responsiveness, innovativeness, and

customer service as additional priorities in developing the enterprise’s core

competency. Different terminologies were likewise developed and utilized as an effort

to widen the definition of certain priorities with one example of Phusavat and

Kanchana (2008) using the term “Service Provision” instead of “delivery” to include

the delivery in terms of agreed quantity and quality of the delivered product or

service, and not just timely delivery, also denoted as speed, as defined in earlier

studies.

a. Quality Importance. Quality has been identified as a key competitive

weapon in the global market, It engenders competitive advantage by

providing products that meet or exceed customer needs and

expectations (Lee and Zhou, 2000). As quality is defined using

different perspectives, it is a subjective goal that has indefinable

characteristics. Its earliest definition is that of “excellence” or “fitness

of use”, and therefore requires customers’ perspective to establish if a

particular product or service is of “quality”. Moreover, scholars have

 linked quality as that of a reflection of a business’s competitive

strategy seeing that quality is associated with both conformance to

specifications and critical customer expectations. In this context, a firm

which competes on quality can adopt a differentiation strategy and

position their products based on several attributes which will lead to

the ability to charge a premium price. Hence, quality helps firms to

enhance their competitiveness and promotes customer loyalty by

meeting customers’ expectations (Awwad, et. al, 2013). This leads to

quality being used as a competitive weapon and adopted as a

strategy focus with a major role in creating and sustaining a firm’s

competitive advantage. Several examples of Quality Importance

competitive strategy includes high product performance, high product

durability, high product reliability, ease to service product, promptness

in solving customer complaints, and conformance to design specs

(Ward et al., 1998).

b. Cost Importance. According to Ward et al., 1998, Cost Importance

competitive priority includes efficient management of production costs,

including labor productivity, capacity utilization, and reducing

inventory. Although the study was specifically focused on

manufacturing companies, the same can be applied to enterprises

centralized on providing service, food service industry in particular,

mainly on the concept of reducing cost in terms of production and

labor productivity. (Porter, 1980) had also mentioned the existence of

cost-focus strategies and considered it as one of the generic

competitive strategies used by businesses to compete in the market,

namely cost leadership. As the strategy directly involves managing the

funds for the operation, low cost production is usually the priority when
 profit margins are low. The logic behind linking a cost leadership

strategy to competitive advantage, as suggested by (Porter, 1980), is

that competitive advantage can be divided into two basic types: lower

cost than rivals, or the ability to differentiate and command a premium

price that exceeds the extra cost of doing so.

c. Flexibility Importance. Flexibility Importance competitive priority

includes large number of product features or options, new products

into production quickly, and design changes in production. This term

represents the ability to increase or decrease existing line-up of

products in response to changes in demand which are initiated

primarily by customers. Prioritizing flexibility in practice generates

competitive advantage by adapting to customers’ expectations and is

often done by providing either a larger array of products to cater wider

range of customers, or specialized batches that targets particular

customers or customer preferences. (Löfving and Winroth, 2008)

d. Service Provision. Phusavat and Kanchana (2008) have used the

term service provision, which includes the enterprise's dependability in

delivering the product to its customers at the agreed-upon time,

amount, and quality. According to Takala (2002), service provision

shows how an organization seeks to build an accountability

relationship with its customers. It relates to how quickly the business

reacts to customer requests, taking into account quantity and quality

as well. It gauges the business's capacity to fulfill its obligations to

customers. This includes completing the customer's request in

accordance with the type and specifications of the product and/or

services that the business is offering, whether it applies to MSMEs in

the food service industry.

e. Speed/Delivery Time Importance. Speed is a competitive priority

that branched from Delivery, one of the four most commonly referred

competitive priorities. It focuses on aspects and concerns regarding

the time between when an operation starts and its end. It is commonly

used externally (i.e. from a customer request until customer receives

it) or as an internal measurement (i.e. the time materials enters the

process until it has been completed). (Ward et al., 1996; Slack &

Lewis, 2011). Speed, or most commonly referred to as delivery

speed, refers to a company’s ability to respond and deliver products or

services faster than the competition

Conceptual Framework of the Study

Figure 2. The research paradigm of the study Financial Performance Based on the
Operations Strategies of Food-Service MSME in Imus City, Cavite

The main purpose of this study is to determine the Financial Performance

Based on the Operation Strategies of Food-Service Micro, Small, and Medium

Enterprises in Imus City, Cavite.

Figure 2 shows the conceptual framework for how financial performance

based on business operation strategies is affected by the respondent's business

operation profile, including ownership type, scope of operations, products and

services offered, and workforce size. Survey questionnaires will be handed out to

respondents from Food-Service Micro, Small, and Medium Enterprises in Imus City,

Cavite, as part of the data collection process to determine the degree of reliance of

the dependent on the independent variables. The researchers will compare

knowledge in order to comprehend financial conditions based on the respondents'

operation, marketing, and income approaches.

 REVIEW OF RELATED LITERATURE
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This chapter presents different literatures and findings from previous

researches that are related and relevant to the present study. An overview of the

market of food service industry and its state before and during recovery from the

pandemic, SMEs innovation and competitiveness, and different types of operations

strategies that enterprises in the industry have focused on.

Market Overview

The Philippines has a thriving food service business and has been

consistently on the uptrend since 2015, highly driven by urbanization, growing middle

class, and increased purchasing power and affluence of consumers who seek new

menus and wider dining options (Rubio, 2019). Filipino families’ fondness for dining

out as a way of bonding and celebrations also contributed to the growing amount of

revenue generated by the industry which peaked at more than US$15 billion in 2019.

Millennials consisting of a large portion of the Philippine population are also a

contributing factor to the fast development of the foodservice industry. The

generation, born from 1982 to 1996, are known to be big spenders and are willing to

spend more money eating out as long as their dining experience is convenient, fun,

exciting, has high-quality food and service, and is yet affordable. (Rubio,2019) As a

result, most food service businesses in the country are focusing on catering to said

customer demographic.

The onset of the COVID-19 pandemic, however, has greatly impacted the

industry, causing the once-vibrant sector’s revenue to plunge by more than half in the

following year. The pandemic not only changed Filipino customers' eating patterns

but also reduced the earnings of the foodservice industry. To cope, restaurants were

compelled to innovate in order to continue serving their customers, keep their

employees, and support their companies as well as the industry. (Statista, 2020)
 Despite the recovery in the Philippines foodservice market and expected

growth in CAGR by 4.67 percent between 2021 and 2026, enterprises belonging to

the market are still struggling to get back to their performance before the pandemic in

terms of their operation and finance.

In addition to the setbacks brought by the pandemic, the intense competition

also poses a major concern for the development of new food service enterprises in

the market. Despite the quickly expanding numbers of independent restaurants in the

Philippines Service Sector, leadership in the market is consistently held by major

chain brands such as Jollibee, McDonald's, and Starbucks who split the majority of

the market share.

MSME in the Philippines

The Micro, Small, and Medium Enterprises (SMEs) make significant

contributions to the majority of economies and are a good gauge of economic

expansion. In addition to serving as a nursery for future corporations, SMEs thrive at

fostering economic growth in more rural areas, supplying employment and technical

training for a nation's expanding labor force, and demonstrating the capacity of the

general populace to turn small savings or family savings into investments (Keskin, et

al.,2010; Schumacher, 1973). Particularly the Philippines can attest to said benefits.

According to the most recent information from the Department of Trade and

Industries, more than 99% of companies operating in the nation are Micro, Small,

and Medium-Sized Enterprises (MSME) in 2020, producing 62.66% of all

employment and 35.7% of all value added. (DTI, 2021)

Effects of MSMEs on the Economy

MSMEs have the remarkable ability to fuel economic growth. They create

many new job opportunities, drive the bandwagon of innovation, and expand the tax

base.
 As of 2020, the (Department of Trade and Industry, 2020) reported that the

MSME sector contributed 35.7 percent of the total value added, with manufacturing

accounting for the biggest proportion at 6.87 percent. Financial intermediation came

in second with a share of 6 percent, followed by wholesale, retail, and repair trades.

Small businesses made up the greatest portion of the sector, at 20.5%. Micro

businesses came in second with a stake of 4.9 percent, followed by medium

businesses with a share of 10.3 percent. Wholesale and retail trade and repair made

up the majority of small businesses' contributions, with a share of 4.07 percent,

followed by manufacturing with a share of 3.82 percent, and financial intermediation

with a share of 3.35 percent.

Manufacturing accounted for the largest percentage of medium-sized

businesses with 2.77 percent, followed by electricity, gas, and water with 1.92

percent, and financial intermediation with 1.87 percent. Wholesale and retail trade

and repair contributed the most to tiny firms, with 1.73 percent.

It acts as a cushion against recession by adapting and innovating as per the

changing circumstances. There is a significant connection between the various levels

of poverty, hunger, and economic well-being of society and the general condition of

various MSMEs in the country. MSMEs play a vital role in being service providers and

traders to the primary industry; they finish goods and services. According to

(Department of Trade and Industry, 2020), 25% of the country's total export revenues

come from MSMEs. Additionally, it is believed that 60 percent of all exporters in the

Philippines fall under the MSME group. MSMEs can contribute to exports by entering

into subcontracting agreements with big businesses or as suppliers to exporting

businesses.

Therefore, there is a reciprocal relationship between an SME and the

economy. Developing the economy ensures the creation of more SMEs, which

results in more SMEs and boosts the economy. Despite the Covid-19 pandemic

causing a recession in the Philippines, MSMEs still help compensate 99.5 percent of
all business enterprises. MSMEs accounted for 40% of the country's Gross Domestic

Product in previous years (United Nations Philippines, 2020).

Challenges faced by the MSMEs

The COVID-19 pandemic has had a catastrophic impact on our economy; the

gross domestic product (GDP) shrank by 9.5 percent in 2021, and it was the lowest

ever recorded since the government began keeping data on it in 1946 (Kapunan,

2021). Amidst the Covid-19 Pandemic the Philippine government implemented

different health protocols such as physical distancing, travel bans, and varying levels

of community quarantine and lockdowns are also being enacted, all of which have a

significant impact on sectors where micro, small, and medium enterprise operate

(MSMEs).

The Department of Trade and Industry (DTI) revealed that more than half of

these enterprises had to suspend operations within the first month of the enhanced

community quarantine (ECQ) implementation, substantially disrupting their cash flow

and sustaining costs, resulting in income losses. (Juego, 2020).

Furthermore, one of the most often mentioned issues encountered by SMEs

globally is access to funding. In the Philippines, SMEs frequently lack the collateral

needed to get loans, while financial institutions lack credit information that will assist

them in identifying credit-worthy SMEs (Philippine MSME Development Plan

2017-2022).SMEs experience challenges accessing additional funding sources, such

as leasing, in addition to loans, particularly in developing nations. Financial

institutions consider SMEs to be riskier to lend to than large corporations. (Harvie et

al. 2013). As a result, in the absence of suitable collateral, SMEs must rely on

personal savings, internal profitability, and informal borrowing (ADB 2015; Harvie et

al 2013).

Moreover, access to technology is another challenge to SMEs'

competitiveness. According to the Philippine SME Development Plan for 2017-2022,

one of the major reasons limiting SME production is a lack of awareness about

technology and innovation. Inadequate ICT infrastructure makes it difficult to link to

global and regional industrial networks (ADB 2015). Small and medium-sized

enterprises (MSMEs) usually lag behind major corporations in their use of information

and communication technology (ICT)-based platforms such as e-commerce (ADB

2015). These platforms would have enabled MSMEs to reach larger audiences, both

locally and internationally.

Market access is another difficulty that SMEs encounter. There are various

challenges with SME market entry; (1) Sectoral disadvantage, which happens when

too many SMEs are concentrated in a few industries with little development potential;

(2) Location, many SMEs are located in difficult-to-reach places, limiting market

access prospects: (3) SMEs must increase the quality of their products to compete in

other markets. (Rogerson 2013).

Strategic Thinking in Foodservice

The COVID-19 pandemic has highlighted the need for managers to better

understand the variables driving success in their organization. With businesses

shutting down on a regular basis, frequently for months at a time, hospitality

managers were forced to reinvent themselves in a short amount of time.

Nonetheless, while this has been an urgent requirement for practically everyone in

the sector, it is especially important for small and medium-sized firms (SMEs) in the

food and beverage industry, where companies are especially sensitive to changes in

their external environment (Johnson et al., 2017).

While the discipline of small company management strives to instill strategic

thinking in future SME managers and business owners, graduates frequently

complain that some of the tools utilized in class simply present a static image of the

firm (Morecroft, 2015).

 This is especially problematic for SMEs in the food and beverages industry

because change is a natural component of the industry (for example, food trends

change on a regular basis, and hyper-competition puts pressure on businesses to

innovate), and SMEs are by definition more vulnerable to changes in their

environment than larger firms.

Strategic Planning

Strategic planning is the process through which decision-makers in an

organization envision the future and create the necessary course of action to carry

out that vision. It is as well a process that aims to guarantee the accomplishment of

long-term organizational goals and objectives. According to (Michaluk, 2002), he

proposed that the process of figuring out what is necessary to accomplish a certain

goal is known as strategic planning. To make decisions and design actions that will

change the operations, the goals, and the nature of an organization in an effort to

assure its survival and growth, strategic planning is a professionally structured

process.

A formal strategic plan consists of six (6) components. These components are

the following: (1) mission statement; (2) environmental scanning; (3) establishment of

organizational goals and objectives; (4) strategy deployment; (5) strategy

implementation; and (6) process evaluation. These steps are frequently shared to

provide the strong basis of a strategic planning process (Germanos, 2011).

Operations Strategy Types and Competitive Priorities

Operations Strategy deals with plans and changes that can provide a

significant strategic impact to the business, developing the total business process so

that it can face current and future challenges brought by the ever-changing

competitive environment (Slack and Lewis, 2011). Practices such as comprehensive

quality management and just-in-time delivery for example have been viewed as a
strategy to improve operational performance and, eventually, financial performance in

the operations management area. (Duarte et al., 2011). The effectiveness of the

strategy, however, is reliant on its coherence to the firm's capabilities and competitive

priorities. Development of suitable competitive priorities that is strategically fitted to

the enterprise generates competitive advantages for the business that in turn bolster

the business into achieving better financial performance[9] (Diaz-Garrido, et al., 2015).

With the intense competition in the food service market and surfacing

challenges brought by movements in the macro and micro environment, SMEs which

comprise the largest portion of enterprises in the country are likely to be affected.

Despite the importance placed by the government in the development of SMEs,

providing fiscal packages and learning seminars, formulation of strategy leading to

competitive advantage are still heavily reliant on the capability and resourcefulness of

its owners. Difference in point of view, discernment, and resources naturally will lead

to distinct strategies with particular focus and execution, that can therefore affect the

enterprise in terms of performance. With this reason in mind, this study aims to

determine the operations strategies practiced by MSMEs in the food service sector

and investigate its impacts, or none thereof, in the financial performance of the

selected enterprises.

In 1969, Skinner introduced the concept of manufacturing strategy and

suggested that the manufacturing function can provide a firm with formidable

competitive potential. A similar conclusion is equally applicable to the service sector.

There are two types of (not necessarily mutually exclusive) operations

strategy. The first type of operations strategy involves decisions that relate to the

design of a process and the infrastructure needed to support the process. Process

design decisions involve the selection of technology, the capacity of the process, the

location and layout of the process, etc. The infrastructure decisions include the

development of the planning and control systems, quality management systems, the

organization of the OM functions, etc. The other type of operations strategy refers to
the firm's competitive strategy in which operations will play the key role. For example,

the so-called activities-based strategy, capabilities-based strategy, and time-based

competition (TBC) are considered operations strategies. (Chung, in Encyclopedia of

Information Systems, 2003)

Skinner (1974) extends his previous observations and states that

manufacturing and operations performance measures such as short delivery cycles,

superior product quality, and reliability, dependable delivery promises, ability to

produce new products quickly, amongst others, also necessitate trade-offs. That is,

tradeoffs represent the need for certain tasks and measures to be compromised to

meet other tasks and measures. Thus, his conclusion is that organizations must

become “focused” to develop strategic edges.

These focus are dimensions that a firm’s production system must possess to

support the demands of the markets in which the firm wishes to compete. The

concept of competitive priorities has been operationalized differently by many

researchers with commonly agreed-upon dimensions being cost, quality, delivery,

and flexibility (Beckman & Rosenfield, 2008). In addition to generally agreed on

competitive priorities, some researchers suggest other additional priorities such as

innovativeness and service (Beckman & Rosenfield, 2008) and time and

technological edge (Slack, 1994). However, there is a general agreement that the

major competitive priorities comprise the following elements: cost, quality, flexibility,

and delivery.

[a] Cost refers to the ability of a firm to reduce production costs including its

related aspects such as overhead and inventory, and value-added.

[b] Quality is a standard of maintaining low defect rates, high product and

customer service performance reliability, product certification and environmental

concern.
 [c] Flexibility means being able to adapt quickly to new circumstances as they

arise. In terms of the food service sector, this could both apply to issues in resources

or handling customer relations.

[d] Delivery in operations strategy is considered a time-based factor. This

implies the firm's capability to deliver the product or a service on the agreed time as

per the operation policy. This also incorporates the concerns of the proper time in

marketing new products.

Ranking of these priorities often varied depending on the type of businesses

and the factors that affect the emphasis placed on these dimensions. In Boyer and

Lewis (2002) study on competitive priorities, the ranking of the priorities are quality,

delivery, cost, and flexibility in decreasing order of importance, whereas cost was

rank as first priority with quality and delivery following as second and third in a study

focusing on SME practices (Haleem et al.,2017).

Differences in weight placed in each competitive priorities lead to creation of

different types of operations strategies, catering to the firm’s goal, core values, and

restrictions. Below are some of the common type of operations strategies:

Customer-Driven Strategy: To meet the desires and needs of the target

customers, an operations strategy must include customer-driven approaches.

Organizations must continuously evaluate the changing business environment and

adapt to it. This helps them enhance core competencies and develop new strengths

regularly. Organizations must also monitor industry trends to avoid threats as well as

create new opportunities. Good customer-driven strategies ensure more clients by

improving the system of new and repeat customers by building loyalty and referral.

Product Strategy: A strategy for product development must aim to deliver a

compelling product or service that resonates with customers. But the job involves

more than releasing new products. Organizations also need to maintain and upgrade

their existing products for those who won’t buy the new ones. For example, even
though smartphone brands release new models every year, they continue to provide

low-cost upgrades and free patches to improve their existing models.

Market Penetration Strategy: Market penetration is an operational level

strategy that focuses on capturing a larger share of the target customer base in an

industry. Managers can choose strategies to target new users who have no

experience with the brand or lure customers away from industry rivals. They may use

multiple geographical locations to target a demographic. Adding value to existing

customers is also a great way to increase spending on products or on service

upgrades.

Supply Chain Strategy: This operations strategy deals with the process of

building superior delivery capabilities to create excellence. Organizations can take

many paths, such as minimizing product costs by making bulk purchases or

increasing customer value by offering product customizations while delivering goods

more efficiently. Improving the efficiency of delivery operations can involve changing

warehouse layout to reduce time and effort in fulfilling orders. For example, a

warehouse manager may decide to bring all frequently bought products to the front

and nearer the loading dock. This saves time for both customers and employees and

saves on labor by expediting the process.

An operations strategy which is clearly outlined, widely understood and allows

flexibility to adapt to changes in the environment creates a clear path towards the

firm's objectives. The strategy’s effectiveness not only relies on its appropriateness to

the business model (i.e., be well-fitted to its competitive environment) but also on

how it was efficiently communicated and widely understood throughout the

organization. (Boyer and Mcdermott, 1999)

Competitive Priorities and Business Performance

To satisfy its internal or external consumers today and in the future, a process

or supply chain must have competitive priorities as important operational dimensions

(Krajewski, Ritzman, & Malhotra, 2013).

Businesses can choose the best course of action for their process selection

with the aid of competitive priorities. The developed process must be reevaluated

and refocused to close the gap between them and the previously established

competitive priorities, or this must change the priority. Finding the best competitive

priorities takes time; many businesses struggle for years when choosing between

various competitive priorities.

Comparative research was conducted by Bouranta & Psomas (2017) on the

relationship between business performance and competitive priorities in the

manufacturing and service industries. They used financial and customer-focused

performance to measure a company's performance, while they used cost, quality,

delivery, innovation, and customer focus to operationalize competitive priorities. They

discovered that competitive priorities positively and considerably influenced the firm's

performance. Furthermore, they claimed that the manufacturing and service sectors

used the same competitive priorities.

According to Terjesen et al. (2011), the firm's financial performance was

considerably impacted by low-cost and high-quality products. Similarly, according to a

study by Luca Avella and Vázquez-Bustelo (2010), manufacturing

competence—which is operationalized as cost, quality, delivery, flexibility, and

environmental protection competence—and business performance are positively and

significantly correlated which measured in terms of sales turnover, sales turnover

growth, ROA, ROA growth. They emphasized the importance of considering

competitive priorities and their consistency with business strategy in determining

business performance.
Selection of Competitive Priorities

In Singapore's small- and medium-sized enterprises from a variety of

industries, Sum et al. (2004) aimed to establish the taxonomy of operations strategy.

Cost, quality, flexibility, and delivery were the primary competitive priorities measured

by their classification variable. Consequently, the study determined three operational

strategies. These strategies served as all-purpose innovators, differentiators, and

effective innovators.

According to a study of Phusavat and Kanchana (2007) on the competitive

priorities of Thai manufacturing companies, maintaining quality, customer focus, and

delivery standards are crucial to Thai manufacturers' ability to remain competitive.

Chavosh et al. (2011) found that there is a positive significant association

between quality and low cost and the success of the firms' exports based on their

survey of 36 semiconductor manufacturing enterprises in Singapore. They suggested

additional research be done to look into the relationship between the firm's success

and innovation, another widely acknowledged competitive priority. Additionally, they

advised further research in other fields and continents.

According to the enterprises' perceived competitive strength, Zhao et al.

(2002) investigated the significance of operational competitive priorities for 138

mainland Chinese enterprises. Quality, cost and price, delivery, flexibility, after-sales

services, and innovation were employed as the six competitive dimensions to

operationalize operational priorities. According to this study, Chinese enterprises' top

operational priorities in the following five years will be innovation, after-sales

services, quality, and flexibility.

An organization's competitive priorities are dynamic and change over time as

a result of changes in the competitive environment, such as e-commerce. Enterprises

actively pursue ways to stand out from the competition by creating distinctive

product-service bundles that are challenging to duplicate. In light of this, this study
aims to determine and assess the operational strategies as to the competitive

priorities and correlation to financial performance of food-service MSMEs.

Cost-effective and Operation-Driven Strategy

Micro, small, and medium enterprises, or MSMEs, is acknowledged as a key

driver of economic growth in most countries, therefore addressing their financial

management concerns is critical in any economy. MSMEs performed admirably in

terms of liquidity, activity, and leverage, but their profitability was low. MSMEs, as a

result, require strategic activities and directions aimed at increasing profitability.

(Mendoza, 2015)

Small and medium enterprises (SMEs) are the key engines of Thailand's

economic development. It is the primary instrument for bolstering the country's

economic prosperity by generating revenue. The Thai government recognizes the

importance of small and medium-sized businesses (SMEs) by consistently assisting

and developing them.

The strategic plan for small and medium enterprise development in Phuket

hotels and food services was divided into four strategies and 19 measures, with

Strategy 1: Strengthening the difference to attract consumers as a global travel

destination, Strategy 2: Promoting cluster integration of accommodation and food

service SMEs, Strategy 3: Adjusting funding measures to support economic growth,

and Strategy 4: Promoting SMEs entrepreneurs to the global market. According to

the present study, the tourism industry in Phuket offers a lot of potential for small and

medium enterprises (SMEs) that provide accommodation and food services.

(Sawangchai et al., 2018)

Adoption of operational practices such as quality management systems may

necessitate diverse processes for an enterprise. In fact, obscured signs and a lack of

communication among quality aspects may make it difficult to execute quality

management systems. One of the main objectives of this study was to see if
production flexibility had a favorable impact on firm profits. It appears that fewer sales

mismatches lead to higher profit margins. Enterprises with a shorter lead time (i.e.,

the ratio of accounts payable to the cost of goods sold) have a greater ROA. The

findings show that operational inventory improves financial performance by a

significant amount in terms of ROA, and inventory turnover enhances the ROA. (Liu

et al., 2020)

These businesses should make use of borrowed cash and determine how

best to structure their capital structures to optimize their worth.

As a result, MSMEs will continue to play a vital part in the economy's growth.

The risks associated with profitability highlight the necessity for entrepreneurs to

educate themselves on financial management tools and approaches. Furthermore,

entrepreneurs must relate financial performance to the business's larger external

environment. (Mendoza, 2015)

However, a good financial performance is correlated with good operation

strategies for long-term goals of the enterprises and its survivability. Small

enterprises in the food and beverage sector, including in Indonesia, are growing at a

rapid pace. Regrettably, many of these little enterprises are doomed to fail. Despite

being lower than international standards, Indonesia's survival rate is just 10% of the

whole small business population that appears each year.

Service innovation and product variables had a positive effect on Operational

Improvement with a p-value of 0.024, and Service Innovation and Products had a

positive effect on the Survival of SMEs. The variable Operational Improvement had a

positive effect on Survival, and Financial Performance had a positive effect on

Operational Improvement and Survival. When there was a larger level of

environmental uncertainty, the effects of Service and Product Innovation techniques

on Operational Improvement weakened in some SMEs.

 The study findings have implications for how Service Innovation and Products

might stimulate and maintain Operational Improvement, resulting in a long-term

competitive advantage. (Lussak et al., 2020)

Operational Objectives

Operational objectives that enterprises must meet in order to compete,

develop the necessary skills for the task at hand, and maintain their competitive

advantage are referred to as competitive priorities (Díaz-Garrido et al., 2011).

Competitive priorities are known as the methods by which the operations strategic

planning concentrates on the attributes of cost, quality, flexibility, delivery, and speed.

The emphasis placed on each of the competitive priorities will depend on the

business's customers (Drane & Faramarzi, n.d.).

Any business's main objective should be to expand and make profit. Their

next objective is to stabilize their earnings once they begin to turn a profit. Any

business's long-term stability strategy focuses on preserving the company's revenue

growth, profitability, and present and future market position. Such a long-term stability

approach places the company's attention on the current and prospective market and

the product.

If a company's product or inventory turnover is slow, it cannot establish stable

operations.. According to (Tarver, 2022), slow inventory turnover could indicate

ineffective management or ineffective purchasing methods. The industries with the

largest inventory turnover tend to be those with low margins and high volume. An

industry's overall strong sales or effective operations can be indicated by high

inventory turnover.

Customers would naturally pay it more attention if an enterprise has strong

branding than they would if it has an ineffective branding. If a brand's popularity is

monitored, it is possible to determine the returns on investment from brand

development. It can be used to explain how to improve a brand's positioning, what to

do about a brand portfolio that they are having problems with, what position to take in

a purchase or licensing negotiation, and many other applications (Haigh & Coruzzi,

2021).

If a company has a well-known brand, it will be simple for them to keep customers

coming back and making purchases. Enterprises may deliver and extract additional

value from their current customer base by using customer retention strategies to

keep customers have a pleasant buying experience, and continue to benefit from

their products and services (McEachern, 2020).

Competitive Advantage

Competitive advantage refers to variables that enable a corporation to

produce goods or services better or at a lower cost than competitors. These

elements enable the producing unit to create more sales or higher profits than its

competitors in the market. A range of characteristics, including cost structure,

branding, product quality, distribution network, intellectual property, and customer

service, are linked to competitive advantages.

Competitive Landscape

In the Food and Beverage business, things are changing quickly. Today's

executives are confronting new challenges as markets change to a more global,

omnichannel environment. The entrance obstacles have been lowered. Being the

biggest and leveraging size is no longer enough to compete. To stay ahead, even the

greatest corporations must innovate quicker than ever before. They must use all

available information to discover market possibilities and respond rapidly to dangers

posed by new entrants. They must innovate customer experiences by adding more
customization and technology into conventional offers, as well as rapidly deploy new

items into their global supply networks. (Jim et al., 2017.)

To wring out profits, they must continue to achieve even greater levels of

productivity, despite tight margins, global competition, and complicated quality and

regulatory demands.

Brand owners, manufacturers, and retailers are confronted with a shifting

landscape that will result in a new competitive order, with some large established

organizations potentially losing favor to smaller, more nimble firms. To remain

competitive, food and beverage firms must raise the standard. More of the same will

not suffice.

Digitalization is the Survival Strategy; it is time for Food and Beverage

enterprises to migrate to the digital enterprise. In today's marketplaces, digitalization

is the key to innovation, consumer intimacy, and efficiency. A digital Food and

Beverage firm have a significant edge over its competitors since it can: 1: Quickly

develop innovative products and launch them flawlessly, 2: React to global trends

with products tailored to local preferences, 3: Reduce plant commissioning and

changeover times to drive productivity, 4: Marshal their manufacturing networks and

supply chain to rapidly capitalize on new opportunities, 5: Leverage information to

continuously identify and act on new opportunities ranging from new product

categories to improved plant performance.

Dine-In, Take Out and Delivery

Restaurant industry has seen a dramatic rise in off-premise sales. Takeout

and delivery were gaining popularity even before the COVID-19 Pandemic struck the

world in 2020, and pandemic-related closures only accelerated consumer trends

toward ordering food via mobile app and picking it up curb side rather than enjoying it

in a restaurant dining room (Brown, 2021). According to the National Restaurant

Association, nearly 70% of American adults are now more likely to order takeout than
they were pre-pandemic. This isn’t limited to quick-service restaurants (QSR) either:

a whopping 80% of fine dining and casual restaurant owners enhanced their takeout

options. People aren’t just more inclined to order takeout and delivery; they’re doing it

in real-time. Sixty percent of Americans order takeout or delivery at least once a

week, and that same figure represents the balance of takeout and delivery vs. dine-in

orders among millennials.

However, Dine-in is still alive and well, with a healthy number of consumers

going out for a full dining experience on a regular basis. However, reports covering

the state of the restaurant industry note that the majority of the growth lies with

off-premise sales. Restaurant owners and food service operators with a heavy

reliance on on-premise sales shouldn’t feel the need to make a dramatic shift toward

takeout or delivery. Still, they could benefit by taking note of these dine-in vs. takeout

trends, thinking about any changes or partnerships that may help boost their bottom

line.
 METHODOLOGY

This chapter outlines the method and procedures that will be employed in the

study and will be presented in the following sequence: (a) Research Design, (b)

Sources of Data, (c) Participants of the Study, (d) Sampling Technique, (e) Data

Gathering Procedure, (f) Research Instrument, (g) Statistical Treatment of Data, and

(h) Ethical Considerations.

Research Design

Descriptive Correlational design is used in research studies that aim to

provide static pictures of situations as well as establish the relationship between

different variables (McBurney & White, 2009). In correlational research, two or more

variables are studied to determine the presence and strength of the relationship

between the variables with a trend presented in either a positive or negative

direction.

Descriptive design will be employed to describe the respondents’s operational

strategy in terms of facilities, production, supply sourcing/procurement, customer

relations, and marketing. This will be followed by a Correlational approach which will

determine the relationship between the independent variables and its effects on the

financial performance of food servicing small medium enterprises in Imus Cavite.

Sources of Data

Data used in this study will be composed of information collected from two (2)

sources : (1) Primary Data and (2) Secondary Data. Primary data will come from

selected respondents’ answers collected through the selected research instrument

for the study while secondary data relevant to the study will be gathered from

statistics collected and presented by official databases regarding small and medium
enterprises. Other sources of information for the study also include books, journals,

and published research that are relevant to the subject of the study.

Participants of the Study

The study participants are the micro, small, and medium enterprises residing

in Imus, Cavite, who belong in the food servicing, operating for more than one year,

excluding the food services owned by private commissions that operate on irregular

days, caterers, and owners from franchises in which financial performance is based

on operations strategies are involved.

Sampling Technique

This study will use purposive sampling as its sampling technique. A purposive

sample is a non-probability sample that is selected based on population

characteristics and the study's objective. In this study, the specific respondents are

the food-service micro, small medium enterprises residing in Imus City, Cavite.

Data Gathering Procedure

As part of the procedure of the study, the researchers will use the primary

data to gather information about the business operation profile of food servicing

micro, small and medium enterprises in Imus City, Cavite. Prior to the date of the

survey, the researchers will request the list of registered MSMEs in the City of Imus

from the presiding local government unit. Next, the minimum sample size will be

computed. Respondents will be selected through given qualifications as stated in the

study’s scope and limitation with priority given based on the MSMEs proximity within

an area selected by the researchers to facilitate more efficient collection of data. On

the actual date of the survey, the researchers distributed personally to assist

respondents and support the data with an interview on the occasion that the

response given is vague or unclear. Last, once all respondents have completed the
questionnaires, the researchers through the help of their statistician will start

tabulating, scoring, and interpreting the data gathered.

Research Instruments

The study will utilize the usage of Survey Questionnaires to acquire primary

data from the respondents that will include the enterprise’ product and services

offered, size of workforce, production and questions in relevance to their financial

performance based on the operating strategies. Type of questions that will be used in

the survey includes Multiple Choice questions, and Likert Scale.

Likert Scale

A Likert Scale is a type of rating scale used to measure attitudes or opinions.

With this scale, respondents are asked to rate items on a level of agreement. This

will give a scale of one (1) to five (5) and one (1) to four (4) to analyze the different

opinions and knowledge of the participants.

Statistical Treatment of Data

Percentage and Frequency Distribution. This method will show the

frequency and percentage of respondents giving a particular response that can form

a trend in which an analysis can be made.

𝑃 = 𝑓 × 100
𝑛
Where:

𝑃= Percentage

𝑓 = frequency

𝑛= number of participants
 Mean. This method will be used to get the average of a set of values It

determines a center point of the set of scores that includes the value of every score

in the set.

𝑀 = Σ𝑥
𝑛

Where:

𝑀 = Mean

Σ = Summation

𝑥 = Data

𝑛 = number of participants/data

Standard Deviation (SD). Measures the amount of variation or dispersion of

a set of values. A low standard deviation indicates that the values tend to be close to

the mean of the set, while a high standard deviation indicates that the values are

spread out over a wider range.

Σ (𝑥 − 𝑥𝑖
𝑆𝐷=
𝑛−1

Where:

𝑆𝐷 = Standard Deviation

Σ = Summation

𝑥 = Data

𝑥𝑖= mean value of the data set

𝑛 = number of participants/data
Ethical Considerations

To ensure that the study follows the ethical guidance set by the University,

respect the rights of the respondents, and maintain confidentiality for both parties, the

following ethical considerations will be employed.

Informed consent. The researchers will present a written consent and

personally inform the respondents of the contents of the form including the purpose

of the research and the agreement between the parties as to the ethical practices to

be utilized in the process such as the confidentiality of information gathered from

participants, storage, and disclosure of results of the study. The researchers will

require the respondents, or in this study’s case the manager or owner of the SME, to

affix their signature as a sign of their voluntary agreement to participate in the study

and to complete their responses on the research questionnaires.

Confidentiality. No respondent will be identified individually and

codes/aliases will be used during discussion and presentation of results.

Storage. As data collection will be conducted through online survey forms,

research data will be converted into offline files and stored in a USB to prevent

unpermitted online access. Access on these forms will also be restricted to the

researchers only and all data will be permanently deleted after publication of the

study.

Usage. Data gathered will only be used for the purpose of this study. It will not

be used for any other purposes except as stated in Chapters 1-3

Disclosure. This study also ensures compliance on disclosure of data under

R.A. No. 10173 or Data Privacy Act of 2012. Raw data will only be seen by the

researchers. While, tallied data will be known to the statistician, and computed,

analyzed and summarized data will be shared to the research panel members
(research adviser, technical critic, department research coordinator, statistician,

department head, campus research coordinator and campus administrator). Cavite

State University-Imus and the participants may have a copy of the abstract of this

research upon request.

Lastly, the researchers make sure that the results presented in the following

chapters are not a portion or part of work of others.

 RESULTS AND DISCUSSION

This chapter contains a comprehensive presentation, discussion of the data,

and the results of this study. The research findings are organized under the following

three main headings: (1) business operation profile, (2) business operation

strategies, and (3) financial performance of Food-Service MSMEs in Imus City,

Cavite.

1.0 Business Operation Profile of the Participants

The following Tables exhibits the business operation profile of the Food

Service MSMEs in the City of Imus, Cavite.

Table 1. Business operation profile of selected MSME according to ownership type.

FREQUENCY PERCENTAGE
TYPE OF OWNERSHIP
n=100 (%)

Sole Proprietorship 78 78

Partnership 21 21

Corporation 1 1

1.1 Type of Ownership. The ownership type of the participants belong to three

categories, which are Sole Proprietorship, Partnership, and Corporation. Majority of

the respondent MSMEs are Sole Proprietorship totaling to 78 percent, followed by

Partnership with 21%, and Corporation with 1%.

According to (Kale, 2019), a large majority of Micro, Small and Medium-sized

Enterprises (MSMEs) are more evenly dispersed, with 65% of them being sole

proprietorships, 21% being private limited liability companies, 6% being religious

organizations, and 5% being partnerships.

Table 2. Business operation profile of selected MSME according to scale of business

FREQUENCY PERCENTAGE
SCALE OF BUSINESS
n=100 (%)

Micro 89 89

Small 11 11

1.2 Scale of Business. The scale of business of the participants are only Micro and

Small. Results show that 89 percent of the respondents are Micro enterprises, while

the remaining 11 percent are Small enterprises.

Based on the study of (Kale, 2019), Lagos, Nigeria, was the top SME state in

Nigeria with 11.5% of the country's 41, 543, 028 total enterprises, and the overall

results were 99.8% Micro Enterprise.

Kale, Y. (2019, July 11). MICRO, SMALL, AND MEDIUM ENTERPRISES (MSME)

NATIONAL SURVEY 2017 REPORT. Small & Medium Enterprises

Development Agency of Nigeria; National Bureau of Statistics.

https://africacheck.org/sites/default/files/media/documents/2021-05/SMEDAN

%20REPORT%20Launch%20Presentation%202017.pdf
Table 3. Business operation profile of selected MSME according to type of products
offered

FREQUENCY PERCENTAGE
TYPES OF PRODUCT OFFERED
n=100 (%)

Ala Carte 68 68

Combo Meal 66 66

Bread & Pastries 5 5

Beverages 44 44

Snacks 47 47

1.3 Types of Product Offered. Table 3 aims to know the types of products offered by

the Food Service MSMEs in Imus City, Cavite. The results show that most

Food-Service MSMEs in Imus offer Ala Carte or individually served dishes numbering

to 68 percent, and Combo/Set Meals, which 66 percent of participants offer in their

menus. Only 47 percent of the MSMEs offer Snack-type products, 44 percent offer

Beverages, while Bread & Pastries, or almost similar desserts, are the least offered

by respondents having only 5 percent.

Table 4. Business operation profile of selected MSME according to type of services
offered

FREQUENCY PERCENTAGE
TYPES OF SERVICES OFFERED
n=100 (%)

Dine In 78 78

Take Out 96 96

Delivery 45 45

1.4 Type of Services Offered. Table 4 shows the types of services offered by the

MSMEs in Imus City, Cavite. Result shows that most of the Food Service MSMEs in

Imus offer Take Out which has 96 percent. This is followed by Dine In services which

sums up to 78 percent of the participants. While only 45 percent of the MSMEs are

offering Delivery services in their business.

Table 5. Business operation profile of selected MSME according to size of workforce

FREQUENCY
SIZE OF WORKFORCE PERCENTAGE
n = 100

1 to 2 employees 44 44

3 to 4 employees 30 30

5 to 6 employees 16 16

7 employees and above 10 10

1.5 Size of Workforce. The size of workforce of the MSME participants ranges from

having one (1) worker up to employing more than seven (7) individuals. A large

proportion of the participants employs a smaller number of workers in their enterprise

with those who only have 1 - 2 employees consisting 44 percent, and 3 -4 employees

30 percent of the respondents. While enterprises that have more than seven (7) take

up the least portion, totalling to only 10% of the respondents.

In accordance with (RA. 6977, 1991), the number of employees for micro

enterprises requires 1 to 9 employees in which as of 2021, Department of Trade and

Industry (DTI) reported that 90.54% of MSMEs are micro enterprises. Therefore, the

possible number of workers employed in Micro Enterprise has less than 9

employees.

Table 6. Business operation profile of selected MSME according to length of

business operation

FREQUENCY PERCENTAGE
LENGTH OF BUSINESS
OPERATION
n=100 (%)
 Less than 3 years 18 18

3 years to less than 5 years 55 55

27
5 years or above 27

1.6 Length of Business Operation. The respondents length of business operation

ranges from less than three (3) years to five (5) years and above. 18 percent of the

participants are operating their business for less than three (3) years, participants

who have operated their business for more than three (3) years but less than five (5)

years consist the majority of the total respondents, forming about 55 percent of the

participants, while the remaining 27 percent of the participants have been in

operation for more than five (5) years.

According to the study of (Sherly et al., 2020), out of 240 participants, it

resulted that 97 MSMEs had business operations that lasted less than a year, 78

enterprises had operations that lasted between one (1) and three (3) years, 53

enterprises had operations that lasted between four (4) and six (6) years, and 12

enterprises had operations that lasted longer than six (6) years. However, this study

requires at least a minimum of 3 years per enterprises to identify the comparative

assessment on the financial performance in the first year of operation and the

subsequent year.

Sherly, S., Halim, F., & Sudirman, A. (2020). THE ROLE OF SOCIAL MEDIA IN

INCREASING MARKET SHARE OF MSME PRODUCTS IN

PEMATANGSIANTAR CITY. Jurnal Manajemen Dan Bisnis, 9(2), 1–12.

https://doi.org/10.34006/jmbi.v9i2.206
2.0 Business Operations Strategy

Strategy Formulation

Table 7. General rating on the implementation of strategy formulation.

STANDARD VERBAL
MEAN
STRATEGY FORMULATION DEVIATION INTERPRETATION

There is an operation strategy 3.63 0.849 Agree

formulated and is currently
being implemented for the
business

A scanning was performed on 3.54 0.958 Agree

the internal and external
environment of the business in
the formulation process of
operation strategy

The person assigned for 3.37 1.002 Neither

strategy formulation has Agree/Disagree
experience/ expertise regarding
business strategy

Grand Total 3.51 0.745 Moderately

Implemented

Legend    
1.00 – 1.79 Strongly Disagree Not Implemented
1.80 – 2.59 Disagree Slightly Implemented
2.60 – 3.39 Neither Agree/Disagree Somewhat Implemented
3.40 – 4.19 Agree Moderately Implemented
4.20 – 5.00 Strongly Agree Highly Implemented

2.1 Strategy Formulation. Table 7 shows the participants agreement upon the

following statements during the formulation phase of their business strategy. The

mean score of the participants agreement when questioned of their awareness on

the existence and implementation of a strategy utilized by the business is 3.63 with a

standard deviation of 0.849, exhibiting moderate or neutral results with close

distribution of data. Meanwhile, questions on the existence of environmental

scanning during formulation of strategy garnered a mean score of 3.54 and SD of

0.958, signifying positive agreement and closely distributed responses. Results on

the presence of educational background and field expertise in the management is

3.37 which is somewhat lower than the previous factors albeit only by a very small

margin, yet still illustrating positive results.l

Grand total mean resulted in a score of 3.51 and a standard deviation of

0.745, showing that Strategy Formulation was Moderately Implemented by

participants.

The results corroborated with the study conducted by Mashingaidze et al

(2021) which revealed that the majority of MSMEs understand strategy formulation

and are greatly involved in the process. However, the study revealed that strategy

formulation is not logically and systematically done thus does not resemble the

conventional textbook strategic formulation models.

Strategy Objectives

Table 8. General rating on the extent of consideration/focus of the following

objectives in the formulation of current strategy.

STANDARD VERBAL
STRATEGIC OBJECTIVES MEAN
DEVIATION INTERPRETATION

Finance      

Increase sales by 25 - 30% on the 3.32 0.649 Strongly Agree

succeeding year(s)

Increase profit margin by 3.16 0.762 Agree

managing cost to be as low as
25% of sales

Generate other income from other 2.54 1.039 Agree

sources for maximization of cash
inflow.
Total 3.01 0.570 High

     
Training

Increase quality of service by 2.60 1.035 Agree

providing at least 1 week training
for newly hired staffs before
deployment

Maintain high work efficiency by 2.32 1.034 Disagree

implementing strict requirements
for skills of prospective staff

Increase efficiency of management 2.69 0.884 Agree

by conducting leadership training
for manager(s)

Total 2.54 0.802 High

Operations      

Create an assessment that defines 2.93 0.769 Agree

the quality of the products and
services.

Purchase of necessary equipment 2.98 0.696 Agree

to increase production of goods.

Simplify processes to decrease 2.91 0.753 Agree

production time without sacrificing
quality.

Total 2.94 0.535 High

Customer Relation      

Increase number of loyal 2.89 0.931 Agree

customers by offering Rewards,
Promo or Vouchers

Develop excellent customer 3.01 0.810 Agree

service that lowers amount of
customer complaints and boost
customer satisfaction

Attract more customers through 3.01 0.893 Agree

competitive pricing by developing
low-cost quality products.

Total 2.97 0.638 High

Growth      

Increase the area and customers 2.58 1.112 Agree

covered by the business by
branching out to different locations
 Increase brand awareness and 2.74 0.960 Agree
popularity by marketing the
business’s products in different
media

Expand the store’s space to 2.29 0.832 Disagree

accommodate bigger processes of
the business

Total 2.54 0.699 High

Grand Total 2.80 0.449 High

Legend      
Strongly
1.00 – 1.74 Very Low
Disagree

1.75 – 2.49 Disagree Low

2.50 – 3.24 Agree High

3.25 – 4.00 Strongly Agree Very High

2.2 Strategic Objectives. Table 8 shows the participants assessment through the

consideration/focus of the following objectives in the current strategy formulation. The

grand total mean is 2.80 and the standard deviation is 0.449. In Finance, the total

mean is 3.01 and the standard deviation is 0.570. Most of the participants have

agreed to increase profit margin by managing costs to be as low as 25% of sales

and generate other income from other sources for maximization of cash inflow with a

mean 3.16 and 2.54 (SD = 0.762 and 1.039). While some of the participants have

strongly agreed to increase sales 25 - 30% in the succeeding year(s) with a mean

3.32 (SD = 0.649).

In Training, the total mean is 2.54 and the standard deviation is 0.802. Most of

the participants have agreed to increase quality of service by providing at least 1

week training for newly hired staff before deployment and increase efficiency of

management by conducting leadership training for manager(s) with a mean 2.60 and

2.69 (SD = 1.035 and 0.884). While some of the participants have disagreed with

maintaining high work efficiency by implementing strict requirements for skills of

prospective staff with a mean 2.32 (SD = 1.034).

 In Operations, the total mean is 2.94 and the standard deviation is 0.535. All

participants have agreed to create an assessment that defines the quality of the

products and services, purchase of necessary equipment to increase production of

goods, and simplify processes to decrease production time without sacrificing quality

with a mean 2.93, 2.98, and 2.91 (SD = 0.769, 0.696, and 0.753) respectively.

In Customer Relation, the total mean is 2.97 and the standard deviation is

0.638. All participants have agreed to increase number of loyal customers by offering

rewards, promo or vouchers, develop excellent customer service that lowers amount

of customer complaints and boost customer satisfaction, and attract more customers

through competitive pricing by developing low-cost quality products with a mean

2.89, 3.01, and 3.01 (SD = 0.931, 0.810, and 0.893) respectively.

In Growth, the total mean is 2.54 and the standard deviation is 0.699. Most of

the participants have agreed to increase the area and customers covered by the

business by branching out to different locations and Increase brand awareness and

popularity by marketing the business’s products in different media with a mean 2.58

and 2.74 (SD = 1.112 and 0.960). While some of the participants have disagreed to

expand the store’s space to accommodate bigger processes of the business with a

mean 2.29 (SD = 0.832).

Table 9. Summary of the General rating on the area of consideration/focus

of the following objectives in the formulation of current strategy.

STRATEGIC MEAN STANDARD VERBAL RANK

OBJECTIVES DEVIATION INTERPRETATION

Finance 3.01 0.570 High 1st

Training 2.54 0.802 High 4th

Operations 2.94 0.535 High 3rd

Customer Relation 2.97 0.638 High 2nd

Growth 2.54 0.699 High 4th

Table 9 displays the summary of the general rating on the area of consideration/focus

of the following strategic objectives in the current strategy formulation. The result

indicates that all strategic objectives got a high verbal interpretation. It shows that

Finance ranked as the first (1st) strategic objective with a mean of 3.01 and a

standard deviation of 0.570; Customer Relation ranked as the second (2nd) strategic

objective with a mean of 2.97 and a standard deviation of 0.638; Operations ranked

as the third (3rd) strategic objective with a mean of 2.94 and a standard deviation of

0.535; and Training and Growth ranked as the fourth (4th) strategic objective with a

mean of both 2.54 and a standard deviation of 0.802 and 0.699 respectively.

Competitive Priorities

Table 10. Distribution of selected MSME owners according to competitive priority.

COMPETITIVE PRIORITIES FREQUENCY PERCENTAGE RANK

n = 100

Quality 49 49 1st

Cost 17 17 3rd

Flexibility 11 11 4th

Service 19 19 2nd

Speed 4 4 5th

2.3 Competitive Priorities. Table 10 indicates the distribution of respondents’

according to their priorities. From the computed results, Quality ranked highest

among the competitive priorities, taking up 49 percent of the total participants. It was

followed by Service with a score of 19 percent, Cost at third with 17 percent, and

Flexibility at the fourth rank with 11 percent. Only 4 percent answered Speed as their
priority, making it the competitive priority with the least score and placing last in the

rank in terms of prioritization.

According to the enterprises' perceived competitive strength, Zhao et al.

(2002) investigated the significance of operational competitive priorities for 138

mainland Chinese enterprises. Quality, cost and price, delivery, flexibility, after-sales

services, and innovation were employed as the six competitive dimensions to

operationalize operational priorities. An organization's competitive priorities are

dynamic and change over time as a result of changes in the competitive

environment, such as e-commerce. Enterprises actively pursue ways to stand out

from the competition by creating distinctive product-service bundles that are

challenging to duplicate.

3.0 Financial Performance

Table 11 shows the perceived status of financial performance of the

participants after the strategy implementation within the first year of operation and

after one (1) year up to the current financial performance.

Financial Performance within the First (1st) Year of Implementation.

Participants have collectively shown positive scores in the first year of implementing

their particular strategies. Annual Revenue garnered a mean score of 3.91 and SD of

0.77. The rest of the financial indicators, apart from Current Liabilities, have also

shown similar trends with small disparities. Expenses received a mean of 3.83, Net
profit 3.89, Current Assets 3.64, and Total Assets with 3.82, all signifying an increase

of about 10 - 25 percent in financial performance. Meanwhile, Current Liabilities have

received a mean score of 3.07, being the only one whose score indicates Unchanged

or almost unnoticeable fluctuations.

Financial Performance (After 1 Year up to the current year of strategy

implementation). In comparison to the first data of the participants’ financial

performance, a few changes can be observed on the financial indicators after the first

after the first (1st) year up to the current operating year of the respondents, albeit in

smaller margins. Annual Revenue have decreased to Apart from Expenses, Annual

Revenue, Net Profit, Current Assets, Current Liability, and Total Assets have

decreased with mean values of 3.86, 3.80, 3.50, 3.05, and 3.51 respectively.

Meanwhile Expenses have risen up to 4.12 in mean score.

Table 11. General rating on the perceived status of financial performance of the
businesses after the implementation of strategy.

FINANCIAL PERFORMANCE STANDARD VERBAL

MEAN INTERPRETATION
DEVIATION

Within the first (1st) year of strategy implementation

Annual Revenue Increased (by 10% -25%)

3.91 0.77

Expenses Increased (by 10% -25%)

3.83 0.65

Net Profit Increased (by 10% -25%)

3.89 0.69

Current Assets Increased (by 10% -25%)

3.64 0.67

Current Liability Unchanged (change is

3.07 0.33 too minimal)

Total Assets Increased (by 10% -25%)

3.82 0.72
 After 1 Year up to the
current year of strategy
implementation

Annual Revenue Increased (by 10% -25%)

3.86 0.57

Expenses Increased (by 10% -25%)

4.12 0.73

Net Profit Increased (by 10% -25%)

3.80 0.64

Current Assets Increased (by 10% -25%)

3.50 0.56

Current Liability Unchanged (change is

3.05 0.33
too minimal)

Total Assets Increased (by 10% -25%)

3.51 0.69

Legend

1.00 – 1.79 Largely Decreased (by more than 50%)

1.80 – 2.59 Decreased (by 10% - 25%)

2.60 – 3.39 Unchanged (change is too minimal)

3.40 – 4.19 Increased (by 10% -25%)

4.20 – 5.00 Largely Increased (by more than 50%)

MSMEs Business Profile and Operations Strategy

The following tables show the relationship between the business operations

profile and the operations strategy of the Food Service MSMEs in Imus Cavite,

divided into strategy formulation and strategic objectives.

 Table 12. Test of relationship between the MSMEs business operations profile and
the degree of the operations strategy application in terms of strategy formulation

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient

Weak Positive
Ownership type 0.211* .035 Reject Ho
Correlation

Scale of
Weak Positive
Business 0.182 .070 Accept Ho
Correlation
Operations

Number of Weak Positive

0.117 .245 Accept Ho
Services offered Correlation

Number of
Moderate Positive
Products 0.296** .003 Reject Ho
Correlation
offered

Size of Weak Positive

0.234* .019 Reject Ho
workforce Correlation

Length of
Weak Positive
business 0.166 .098 Accept Ho
Correlation
operations
**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Coefficient Correlation Strength

0.00 No Correlation

0.01 - 0.09 Non-significant Correlation

0.10 - 0.29 Weak Correlation

0.30 - 0.49 Moderate Correlation

0.50 - 0.69 Strong Correlation

0.70 - 0.89 Very Strong Correlation

>0.90 Almost Perfect Correlation

Profile and Strategy Formulation. Table 12 exhibits the value of correlation

between the participants’ business profile and Strategy Formulation. Using

Spearman’s Rank Correlation Coefficient, only Ownership Type, Number of Products

Offered, and Size of Workforce have shown acceptable P- Value of less than 0.050,
providing evidence of relationship between two variables. Scale of business, number

of services offered, and length of business operations resulted in P-values that are

beyond the acceptable range with 0.070, 0.245, and 0.098 respectively. With the said

variables’ P-values representing no presence of a relationship, correlation coefficient

signifying strength of correlation is therefore ignored . Due to this, the hypothesis

theorizing the lack of relationship between said profiles and the participants’ strategy

formulation were accepted.

Ownership Type, Number of Products Offered, and Size of Workforce on the

other hand received P-Values that are within the acceptable range, having values of

0.035, 0.003, and 0.019, showing semblance of a relationship between two variables.

As for the strength of correlation between said profiles of participants and their

strategy formulation, the variables have received the following coefficients:

Ownership Type 0.211, Number of Products offered 0.296, and Size of Workforce

0.234. Despite showing positive correlation, the coefficients are considered to be on

the lower side of the spectrum, and can only signify weak correlation between the

particular profile and strategy formulation of the participants. Only Number of

Products Offered have shown a slightly stronger relationship with Moderate Positive

correlation at two-tailed decimal. This means that as the value of the three variables

mentioned above increased, level of implementation of strategy formulation are also

likely to increase.

Table 13. Test of relationship between the MSMEs business operations profile and
the degree of the operations strategy application in terms of strategic objectives

FINANCE

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient

Ownership Non-significant
-0.142 .160 Accept Ho
type Negative Correlation
Scale of
Non-significant Positive
Business 0.003 .978 Accept Ho
Correlation
Operations

Services Non-significant Positive

0.086 .396 Accept Ho
offered Correlation

Products Non-significant Positive

0.080 .429 Accept Ho
offered Correlation

Size of Non-significant
-0.061 .545 Accept Ho
workforce Negative Correlation

Length of
Weak Positive
business 0.179 .075 Accept Ho
Correlation
operations

TRAINING

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient

Ownership Non-significant Positive

0.043 .674 Accept Ho
type Correlation

Scale of
Weak Positive
Business 0.189 .060 Accept Ho
Correlation
Operations

Services Non-significant Positive

0.016 .875 Accept Ho
offered Correlation

Products Non-significant Positive

0.091 .368 Accept Ho
offered Correlation

Size of Weak Positive

0.263** .008 Reject Ho
workforce Correlation

Length of
Weak Positive
business 0.187 .063 Accept Ho
Correlation
operations

OPERATIONS

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient

Ownership Non-significant Positive

0.064 .527 Accept Ho
type Correlation

Scale of
Weak Positive
Business 0.100 .325 Accept Ho
Correlation
Operations

Services Weak Negative

-0.188 .061 Accept Ho
offered Correlation
Products Non-significant
-0.072 .475 Accept Ho
offered Negative Correlation

Size of Weak Positive

0.183 .068 Accept Ho
workforce Correlation

Length of
Non-significant
business -0.031 .763 Accept Ho
Negative Correlation
operations

CUSTOMER RELATION

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient

Ownership Non-significant Positive

0.001 .990 Accept Ho
type Correlation

Scale of
Non-significant Positive
Business 0.018 .859 Accept Ho
Correlation
Operations

Services Non-significant Positive

0.042 .675 Accept Ho
offered Correlation

Products Moderate Positive

.307** .002 Reject Ho
offered Correlation

Size of Weak Positive

0.103 .307 Accept Ho
workforce Correlation

Length of
Non-significant Positive
business 0.073 .473 Accept Ho
Correlation
operations

GROWTH

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient

Ownership Non-significant Positive

0.053 .601 Accept Ho
type Correlation

Scale of
Weak Positive
Business 0.213* .033 Reject Ho
Correlation
Operations

Services Non-significant Positive

0.096 .344 Accept Ho
offered Correlation
 Products Non-significant Positive
0.097 .337 Accept Ho
offered Correlation

Size of Weak Positive

0.130 .198 Accept Ho
workforce Correlation

Length of
Non-significant
business -0.007 .945 Accept Ho
Negative Correlation
operations

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Strategy Objectives. Table 13 exhibits the value of correlation between the

participants’ business profile and Strategy Objectives in terms of Finance, Training,

Operations, Customer Relation and Growth. Using Spearman’s Rank Correlation

Coefficient, in terms of Finance, the profile has shown P-Value of more than .050. As

none of the profiles is within the acceptable P-value which is less than .050, it's

proving that there is no relationship between two variables.

As for training, only the Size of Workforce has shown an acceptable P-value

of less than .050, providing evidence of a relationship between two variables.

Ownership, Scale of Business Operations, Number of products offered, Numbers of

services offered and Length of Business Operations resulted in P-Values that are

beyond the acceptable range with .674, .060, .875, .368, and .063 respectively. With

the said variables’ P-values representing no presence of relationship, correlation

coefficient signifying strength of correlation is therefore ignored.

As for Operations, the profile has a P-Value of more than .050. As none of the

profiles is within the acceptable P-value which is less than .050, it's proving that there

is no relationship between two variables.

 As for Customer Relation, only the Number of products offered have shown

an acceptable P-value of less than .050, providing evidence of relationship between

two variables. Ownership, Scale of Business Operations, Numbers of products

offered, Size of Workforce, and Length of Business Operations resulted in P-Values

that are beyond the acceptable range with .990, .859, .675, .307 and .473

respectively. With the said variables’ P-values representing no presence of

relationship, correlation coefficient signifying strength of correlation is therefore

ignored.

As for Growth, only the Scale of Business Operations has shown an

acceptable P-value of less than .050, providing evidence of a relationship between

two variables. Ownership, Numbers of products offered, Number of services offered,

Size of Workforce, and Length of Business Operations resulted in P-Values that are

beyond the acceptable range with .601, .344, .337, .198 and .945 respectively. With

the said variables’ P-values representing no presence of relationship, correlation

coefficient signifying strength of correlation is therefore ignored.

Table 14. Test of relationship between the MSMEs business operations profile and
the degree of the operations strategy application in terms of overall strategic
objectives.

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient

Non-significant
Ownership type -0.001 .995 Accept Ho
Negative Correlation

Scale of Weak Positive

0.150 .136 Accept Ho
Business Correlation

Non-significant
Services offered -0.005 .960 Accept Ho
Negative Correlation

Weak Positive
Products offered 0.127 .209 Accept Ho
Correlation
 Size of Weak Positive
0.172 .088 Accept Ho
workforce Correlation

Length of
Weak Positive
business 0.134 .185 Accept Ho
Correlation
operations

Table 14 exhibits the value of correlation between the participants’ business profile

and overall Strategy Objectives. Using Spearman’s Rank Correlation Coefficient, the

profiles have shown P-Value of more than .050. As none of the profiles is within the

acceptable P-value which is less than .050, it's proving that there is no relationship

between two variables, while correlation coefficient signifying strength of correlation

is therefore ignored.

Table 15. Test of relationship between degree of business operations strategy in

terms of strategy formulation and the financial performance of the enterprises

Correlation Verbal
INDICATORS P-Value Remarks
Coefficient Interpretation
Moderate
Annual
0.361** .000 Reject Ho Positive
Revenue
Correlation
Weak Positive
Expenses 0.142 .159 Accept Ho
Correlation
Weak Positive
Net Profit 0.287** .004 Reject Ho
Correlation
Weak Positive
Current Assets 0.244* .014 Reject Ho
Correlation
Weak Positive
Current Liability 0.148 .141 Accept Ho
Correlation
Weak Positive
Total Assets 0.279** .005 Reject Ho
Correlation
*. Correlation is significant at the 0.05 level (2-tailed).

Table 15 presents the results of the correlation analysis between the degree of

business operations strategy formulation and the financial performance of the

enterprises. A Spearman test demonstrates that there is sufficient evidence to

invalidate the null hypothesis that Annual Revenue, Net Profit, Current Assets, and
Total Assets have weak positive correlations in strategy formulation and P-Values

less than 0.05, apart from Annual Revenue, which had a moderately positive

correlation. Although there was a weak positive correlation between expenses and

current liabilities, the P-value is more than 0.05, which is considered acceptable.

Table 16. Test of relationship between degree of business operations strategy in

terms of overall strategy objectives and the financial performance of the enterprises

Correlation
INDICATORS P-Value Remarks Verbal Interpretation
Coefficient
Weak Positive
Annual Revenue 0.120 .233 Accept Ho
Correlation
Non-significant Negative
Expenses -0.056 .581 Accept Ho
Correlation
Weak Positive
Net Profit 0.165 .100 Accept Ho
Correlation
Weak Positive
Current Assets 0.160 .113 Accept Ho
Correlation
Weak Positive
Current Liability 0.206* .040 Reject Ho
Correlation
Non-significant Positive
Total Assets 0.097 .335 Accept Ho
Correlation
*. Correlation is significant at the 0.05 level (2-tailed).

Table 16 displays the correlation results between the MSMEs' financial performance

and the level of the overall business operations strategy objectives. Although there is

a weak positive correlation, according to Spearman's Rank Correlation Coefficient,

there is not enough evidence to reject the null hypothesis on the significant

relationship of strategic objectives and financial performance with a P-value of more

than 0.05. Only current liability, on the other hand, rejected the null hypothesis with a

weak positive correlation and a P-value of 0.040.

Table 17. Analysis of difference between the level of financial performance and
competitive priority of MSMEs business

Kruskal-
Financial Competitive Mean
Mean Wallis P value Remarks
Performance Priority Rank
Statistics

Quality 4.00 56.46

Cost 3.79 46.21

Annual Accept
Flexibility 3.59 37.36 5.703 0.222
Revenue Ho
Service 3.87 48.63

Speed 3.75 40.75

Quality 3.90 48.03

Cost 4.21 61.09

Accept
Expenses Flexibility 4.09 52.55 3.793 0.435
Ho
Service 3.87 45.26

Speed 4.13 55.00

Quality 3.88 52.42

Cost 3.79 47.82

Accept
Net Profit Flexibility 3.64 40.36 2.324 0.676
Ho
Service 3.89 52.03

Speed 4.00 59.00

             

Quality 3.59 50.70

Cost 3.76 63.41

Current Accept
Flexibility 3.41 42.68 6.010 0.198
Assets Ho
Service 3.47 45.47

Speed 3.38 38.50

 
           
 Quality 3.08 52.43

Cost 3.09 51.41

Current Accept
Flexibility 3.09 54.05 3.832 0.429
Liability Ho
Service 2.97 43.71

Speed 3.00 45.50

             

Quality 3.80 54.87

Cost 3.62 49.47

Accept
Total Assets Flexibility 3.55 44.86 3.331 0.504
Ho
Service 3.50 46.74

Speed 3.38 34.75

Competitive Priorities and Financial Performance.

 SUMMARY, CONCLUSION, AND RECOMMENDATIONS

This chapter presents the summary, conclusion and recommendation based

on the data analyzed in the previous chapter. This includes the demographic profile,

strategy formulation, strategy objectives and competitive priorities in relation to the

financial performance of the food-service MSME in Imus City, Cavite.

Summary

The study was conducted to evaluate the relationship between operation

strategies as to competitive priorities and the financial performance of numerous

MSMEs in Imus City, Cavite, focusing on those belonging in the Food-Service

Industry. Scope and Delimitations were provided in order to filter out enterprises that

do not qualify as respondents as well as those that can potentially skew the results.

The researchers gathered such data using both primary and secondary

sources. Survey questionnaires were provided to qualified respondents as listed from

data given by the City Government of Imus. This study determined the business

demographic profile of food-service MSMEs including the ownership, type of food

services that they offer, workforce, and length of business operations. However, the

major objective of this study was to determine the MSMEs’ respective operation

strategies, specifically objectives and competitive priorities, and financial

performance to ascertain if a correlation exists between the two variables, conducted

through likert and rating scale survey questions.

The results indicate that among 100 participants, the majority were in Sole

Proprietorship and Micro Enterprises which serve A la Carte as a product offered and

Take Out as a service offered with 1 to 2 staff employed and 3 years to less than 5

years length of the business operation. MSMEs agreed that they have strategy

formulated and implemented for the business and examined the internal and external

environment of the location before operating. While MSMEs neither disagree or

agree that the assigned person for strategy formulation has enough experience or

expertise to develop a business strategy. Among five (5) strategic objectives, Finance

rated as the highest focused of MSMEs utilized for business strategy. Quality was the

top-most competitive priority of MSMEs. The results between the financial

performance of MSMEs from the first year of strategy application to the subsequent

year was mostly stable or only slightly changed, with generally no impact on the

business operating strategy.

The Spearman's Rank Correlation Coefficient was utilized to summarize the

intensity and direction, positive or negative, of a relationship between two variables.

This study has determined that among all strategic objectives, only current

liability has a significant relationship on the financial performance of food-service

MSMEs with correlation coefficient of 0.206.

Conclusion

From the findings in the study, it can be concluded that among the Micro,

Small, and Medium Enterprises in Imus City, Cavite, the number of Food Service

businesses are dominated by Micro enterprises in terms of quantity, with a sparse

amount of Small enterprises in between. Although medium enterprises are present in

the population, majority are franchisees of large corporations.

Analyzing the responses of the participant MSMEs, it can be seen that the

MSMEs have awareness and participation in the operation strategies of their

respective enterprises. However, the establishment of the framework in the planning

process is not as systematic and sophisticated as those curated by larger enterprises

or those that exemplifies the textbook definition of operation strategy. This can be

seen in the score received by strategy formulation being only “moderate”, which is

more attributed to the MSMEs rating their “educational background” in the

management lower compared to other aspects of the formulation. Creating and

identifying the business’s objectives are also more by “necessity” rather than initiated
as seen by the correlation between the profile and objectives (i. e. Targeting Training

in response to increase in workforce, Targeting Customer relation with increase of

product offered, and Targeting Growth in response to increase in Size of Business).

Despite having differences in Competitive Priorities, with Quality having the

highest score by taking 49 percent of the participants, the difference between the

financial performance of those who have prioritized a particular Competitive Priority

over the other is not as drastic as what the researchers expected. This is attributed to

the fact that despite the potential competitive advantage brought by a certain

Competitive Priority chosen by the enterprise, most of the time, this only takes effect

when supported by a well structured planning process and subsequent business

decisions. The absence of notable difference or relationship between competitive

priorities and the participants financial performance are also associated with the

MSMEs lack of expertise in creating a suitable, systematic, and well-planned strategy

that can generate competitive advantage and remarkable results.

Overall, the researchers conclude that the first hypothesis nullifying the

relationship between MSMEs business profile and operations strategy is rejected.

This is because there is evidence proving that the profile of the enterprise has a

certain effect on their decision in terms of formulating or choosing a strategy, albeit

weak. Researchers associate this to the fact that almost 90% of the participants

belong in the Micro which usually has comparatively lower requirements in

management compared to its larger counterparts. As for the second hypothesis

suggesting no relationship between Operation Strategy in terms of Competitive

Priorities and Financial Performance, the researchers analyzed it as accepted. This

is due to the fact that results proved that the competitive priority does not directly

reflect on the financial performance of the enterprise. Competitive priorities, as stated

by Skinner (1970), are mainly dimensions in which the enterprise chose to compete

in line with their policies and constrictions, thus only considered as pathways. The

degree of successfulness still relies on the decisions that will support the strategy, the
capability of the management, and the consistency of support and evaluation of the

strategy. Therefore, Competitive Priorities can be a factor that affects performance of

an enterprise, however, it is not the main indicator of an enterprise success or failure

in performance.

Recommendations

Based on the results of this study, the researchers recommend to the Food

Service MSMEs to consider having a structured and well-planned strategy that suits

resources and capabilities, all the while highlighting their strengths and minimizing

their weaknesses. The researchers also advise upcoming MSME owners that

although adapting strategies proven to be useful by already operating business has

logic, it is much preferable to dissect and analyze the strategic framework, if possible,

to assess its compatibility before utilizing said strategy instead of following trends or

selecting a random strategic path to compete in. As there is evidence from the results

that there is a relation formulation phase, which includes the managements

awareness and knowledge in managing the business, and financial performance, the

researchers deemed it beneficial for the owners or managers to improve their skills

and enrich their experiences by attending training programs and seminars that can

improve their business-related skills. Although some organizations require monetary

payment for the offered programs, it can also serve as a long term investment for the

enterprise and its management.

Due to the results gathered regarding competitive priorities, the researchers

recommend to the owners and/or managers of the MSMEs to not only select a

competitive priority, but to be specific in how the priority will be followed through in

the business process, as to maximize its effectiveness in their financial performance.

 For the future researchers, we recommend the following as to improve and/or

refine the study regarding operation strategies and financial performance

performance of MSMEs:

● Increase the scope of study in terms of area covered. As seen in the

result in Table 2, the majority of the respondents belong in the Micro category

with none under the scale of Medium. The largest contributing factor is the

imbalance of the numbers between the three categories as well as the

researchers delimiting the study to those that are not a franchise of large

corporations, which makes up a large portion of the targeted population that

belong under Medium category. The researchers believed that increasing the

area covered, much preferably to highly urbanized areas, will allow the study

to receive a more balanced data distribution in terms of the respondents

demographic.

● Adapting a more systematic matrix for measuring operation strategy. As

the researchers target the participants' choice in competitive priority rather

than their specific decisions and operation practices, the data that was

collected by the study lean into a more general direction rather than

determining each participant’s specific strategy process. In response to this,

we recommend that future researchers adopt a matrix that scrutinizes how

MSMEs apply their chosen competitive priority to their business process, the

consistency and organization of the strategic framework in response to said

priority, and its subsequent effect on the participants’ financial performance.

● Using exact value for Financial Performance. If future study will retain

financial performance as one of its main variables, we suggest to future

researchers to use, as much as possible, exact values detailing the

participants financial performance, as to receive more accurate values may it

be for the usage of calculating correlation or comparative analysis.

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