Page |1

University of Santo Tomas College of Commerce and Business Administration España, Manila

PRIMER GROUP OF COMPANIES A Strategic Management Paper

Presented to: Mr. Real C. So

In Partial Fulfillment of the Requirements for the Course Strategic Management (Entre 7)

By: Mary Ann L. Mendoza 4M9

(Deadline of Submission)

Page |2

ACKNOWLEDGEMENTS This Strategic Management paper would not have been possible without the guidance and the help of several individuals who in one way or another contributed and extended their valuable assistance in the preparation and completion of this paper. After all of the hard work, and sacrifices that have made for this completion, it is just right to express my gratitude to the following people: First and foremost, to the Primer Group of Companies, for their complete information and warm welcome that they have given me and also to the Marketing Department for the support, assistance and significant data that they have provided. I would also like to extend my gratitude to my instructor of this Strategic Management subject, Mr. Real So, for guiding and being the inspiration of constructing this paper. He was abundantly helpful and offered invaluable assistance, support and guidance throughout the end. Special thanks also to all my graduating friends, especially to my 4M9 block-mates for sharing the literature and invaluable assistance. Not forgetting my bestfriend who has always been there. To my family, for their unending support, confidence and trust for showing me that no matter what happens they will be there for me. And lastly, to my beloved Almighty God, for giving me the knowledge of discernment to know what perseverance was all about and determination to finish this paper, this would not all be possible without my faith and strength to you. Everything that I did and will do is all for your glory.

Page |3

TABLE OF CONTENTS Acknowledgements -----------------------------------------------------------------------------Table of Contents -----------------------------------------------------------------------------1 2

I. Introduction/Executive Summary -------------------------------------------------II. External Environment

----------------------------------------------------------

Definition of Industry -------------------------------------------------------------------Analysis of Present Task Environment

------------------------------------------the Macro-environment ----------------

Analysis of Potential Changes in

Threats and Opportunities ------------------------------------------------------------Industry and Competitive Analysis
III. Internal Environment Analysis

-------------------------------------------

----------------------------------------------------

Overview of the Company ------------------------------------------------------------Financial Analysis ---------------------------------------------------------------------Value Chain Strengths Analysis and

------------------------------------------------------------Weaknesses ----------------------------------------------------

IV. Strategic Plan-------------------------------------------------------------------------------

Vision and Mission ---------------------------------------------------------------------Objectives ------------------------------------------------------------------------------of Present Corporate Strategies

Evaluation

Financial Projections ---------------------------------------------------------------------Probable Scenario ---------------------------------------------------------------------Best Case Scenario ---------------------------------------------------------------------Worst Case Scenario ------------------------------------------------------------- . Implementation ------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------- Analysis of Company’s Capabilities to Implement Managing Internal Organization for Strategy Execution VII.Page |4 ------------------------------------------------------------------------------------Competitive Advantage Proposed Corporate Strategies ------------------------------------------------------------- V. Functional Area Strategies ------------------------------------------------------------Marketing ------------------------------------------------------------------------------------------------------------------------------------------------------------- Operations Finance ------------------------------------------------------------------------------Human Resources ---------------------------------------------------------------------Information Technology VI.

Five years later. (UTCI) was established. Thailang with 100 free-standing concept stores and 600 consignment deals in the Association of South-East Asian Nations (ASEAN). Inc. The company continued to grow in the year 2000s. Philippines.. UniglobeTravelware Co. The . Ladybug. Later the same year. Bratpack and R. opening the Primer Group’s first retail concept store specializing in luggage. Primer recently opened its first retail and merchandising academy. Japan. Indonesia. Primer Group expanded business to its neighboring regions in Asia. In 1992.Page |5 INTRODUCTION/EXECUTIVE SUMMARY Primer Group of Companies is a Philippine company engaged in the retail sale and distribution of consumer brands and products. hip and bold generation today. the company distributes to HongKong.X. To date. the first Bratpack store was launched.O. Malaysia. Primer also operates its own lifestyle boutique which includes ResToeRun. a unique lifestyle concept store for young. importing seasonal. The Travel Club. the company Primer Group ventures into apparel licensing of Disney and Warner Bros. merchandise. Primer Group was founded in the Philippines on 1985. From a retail and distribution company in the Philippines. In addition to the retail and distribution. Singapore. It was formerly called Primer International Corporation (PIC) as a trading company. Travel Club. The company carries international brands mostly lifestyle products.

Sea to Summit and The North Face.). In the pursuit of continuous growth and excellence.I.I. Columbia. World Traveller.M. DEFINITION OF INDUSTRY RETAIL AND DISTRIBUTION INDUSTRY The Primer Group of Companies is a retail and distribution powerhouse engaged in the distribution and licensing of the world’s top consumer and industrial products. Nathan. EXTERNAL ENVIRONMENT ANALYSIS 1. Sledgers. Salomon. Kickers. Eagle Creek.). (S. Roxy.I. Native.I) and Union Inks and Graphics Philippines. Victorinox.G. Timbuk2.P. Primer Printing Services Inc.A.P.N. printing . the Primer Group of Companies is set to reach greater heights in the retail and distribution industry as it brings closer to Asia the world’s best consumer brands in Premium luggage and travel bags. Fitflop. (P. High Sierra. Quicksilver. South AmerAsia Chemical Corporation (S. Volcom. Coghlans. Malaysia. garment operations.C.Page |6 brands carried by Primer include DC.). Salvas.P. Eastpack. Boxfresh. Nalgene. outdoor wear and equipment.E. footwear and apparel. Tretorn. 600 doors in consignment all of which are in regional (ASEAN) operation across Asia. Outdoor Gear. Olukai. the Primer Group is rapidly flourishing in the retail and distribution business as it opened regional companies and concept stores in Japan. Network Philippines. Industrial products include Aircond. Hedgren. Stellar Equipment and Machinery. Sanuk.I. Delsey. Inc. with its 25 years of unparalleled growth and solid business foundation. Mendoza. Ace. Mountain Hardware.S. Indonesia and Singapore. Tough Jeansmith. Kangol. Design Go. Clearly. Brushstroke Creatives. The Primer Group has over 50 premium outdoor and lifestyle brands with over 100 freestanding concept stores. Bandals.). Steadily. Tumi. KruZin. Gaiam. Thailand. (A. with regional operations in the Manufacturing operations of industrial ink.C. (U. Gravis. Ellesse. the conglomerate diversified into several large scale businesses in industrial products and services. Hong Kong. Slendertone. Inc. Inc. Vietnam. JanSport.

The fact that growth took place at a time the government limited its expenditure indicates the domestic market’s potential for higher growth. distribution and maintenance of air conditioning and mechanical ventilation (ACMV) systems. Despite the global economic downswing that depleted gross domestic product (GDP) of many Asian economies last year. to other wholesalers.200 employees adhere to its five core values entrepreneurial spirit.000 square kilometres. beverages and tobacco classification. which covers only 636 square kilometres out of the country’s total land area of 300. exporters and importers. teamwork and self-discipline. and to government. accounted for 79 percent of GDP in 2001.6 billion or approximately US$1.75 billion. followed by retailers and wholesalers in dry goods. integrity.l the 3. as measured by personal consumption expenditure (PCE). thanks to 3. the Philippine economy expanded by 3. the National Statistics Office (NSO) defines wholesale trade as the “resale or sale without transformation of new and used goods to retailers. In the censuses and annual surveys. The government estimated that consumer spending. passion for excellence.Page |7 operations. commercial. Over 90 percent of establishments in the Philippine employ less than ten persons each. Most large establishments are concentrated in Metro Manila. The third most numerous retail and wholesale establishments are in . retail trade is defined by NSO as the “resale or sale without transformation of new and used goods for personal or household consumption” (NSO) There is a preponderance of retailers and wholesalers in the food. Truly enough.5 percent growth in consumer spending. to industrial. the Primer Group will continue its mission to bring the world closer to its customers as the company and its strong 1. with its network of companies across the ASEAN region multiplying in a pace never achieved before. institution or professional users.5 percent growth in consumer spending last year was equivalent to about P89.4 percentYoY. industrial distributors.” Likewise. the Primer Group of Companies is realizing its vision to become the LEADER in the global distribution and innovation of premium goods and services and with achievements and international retail commendations. textile and wearing apparel. PHILIPPINE RETAIL AND DISTRIBUTION INDUSTRY OVERVIEW The Philippine retail market is a growing market. wholesale merchant.

In 1997.7 percent on beverages and tobacco. clothing and housing is not surprising because they constitute the bulk of expenditures of a Filipino consumer.. wholesale trade not elsewhere classified. furnishings and appliances (625). textiles and wearing apparel (623). dealing of machinery and equipment (616). Metro Manila is not as dominant in retailing as in wholesaling. Metro Manila accounted for 60 percent of the country’s large wholesale firms and 47 percent of all the large retail establishments. although the share declines to 64 percent and 67 percent. retailing of books. gross value added and employment by industry in 1995. Nevertheless. particularly wholesaling of office and household furniture. especially for small retail establishments. furnishings and appliances (615). the region is still an important presence especially in the retailing of office and household furniture. 48.5 percent on housing. merchandise brokering. 13. beverages and tobacco as a share of total family expenditures was 68. Metro Manila accounted for 63 percent of total sales and 68 percent of gross value added in 1995 declined significantly to 50 percent for both gross sales and gross value added. respectively (NSCB).Page |8 the wholesaling and retailing of construction materials and supplies. Not surprisingly. suggesting that much of the returns of wholesaling in the country accrue to the Metro Manila large wholesalers. respectively.3 percent of the large retailers. Metro Manila accounted for 56. import and export (619).7 percent on clothing.5 percent of total family expenditures was spent on food. For the whole distribution sector. Metro Manila houses the majority of large wholesale firms. retail firms. retailing of transport machinery and . and 2. In 1995. The share of Metro Manila to gross sales. clothing housing. 3. i.9 percent of total family expenditures were on food. 43. office and school supplies (621) and retailing of dry goods. in 1995. retailing of books and office and school supplies (621). The dominance of Metro Manila in large wholesale and retail establishments is even more evident in terms of gross sales and gross value added. The preponderance of retailers and wholesalers in food. It shows that Metro Manila virtually monopolizes the large establishment segment in a number of industries. and even to some extent. In 1991.e. The share of Metro Manila in gross value added is generally higher than its share in gross for large wholesale enterprises. Metro Manila’s large wholesale and retail establishments accounted for 69 percent of gross sales and 75 percent of gross value added of all large wholesale and retail establishments in 1991.4 percent in 1991 and 64. In 1991. footwear and other wear.7 percent of the 15 country’s large wholesale establishments and 45.7 percent in 1997.

Page |9 equipment. and competitors. and retailing of construction materials and supplies (624). distributors. It is a simple tool for understanding where power lies in a business situation. The large presence of Metro Manila even in retailing systems from the fact that the region is the premier retail market in the country gicen its large population and higher capita income. . which the organization interacts directly and that have a direct impact on the organization’s ability to achieve its goals. The five forces determine the competitive intensity and therefore attractiveness of a market. Porter’s five forces is a framework for the industry analysis and business strategy development. 2. accessories and supplies (626). customers. ANALYISIS OF PRESENT TASK ENVIRONMENT Task Environment includes forces from suppliers. This is useful because it helps us understand both the strength of the current competitive position and the strength of a position you’re looking to move into.

. So for the retail industry. This manufacturers and retailers are able to build brand loyalty and image for the existing players. Product Differentiation Product Differentiation is a marketing process that showcases the differences between products. the harder it is for a newcomer to break into the marketplace. Potential entrants should establish manufacturing plants in countries that have low-labor cost such as China in order to achieve economies of scale. purchasing. thereby adding value to their company. The threat of entry to an industry depends on the barriers to entry that are present.P a g e | 10 THREAT OF ENTRY IS LOW Companies diversifying through acquisition into the industry from other markets often use their resources to cause a shake-up. high quality and trendy design products with a lowcost manufacturing process to increase operating profit. Though. The retail industry has economies of scale in producing their products due to its mass production. Potential entrants may find it moderate to penetrate the industry since the power of the internet has created also a venue for the manufacturer to double as a retailer. Within the industry of Primer Group of Companies. smaller entrants will have a tougher time entering the retail industry because the large players have the authority and have the cost advantage against new entrants to bid down costs from its suppliers. sales force utilization and distribution can be the key barriers to entry for a potential entrant in this industry. As a matter of fact. an economy of scale is also present in its market because of the volume of products produced in the market. Porter identified six major sources of barriers to entry: Economies of Scale Economies of Scale arise when the cost per unit falls as output increases. coupled with the reaction from existing competitors that the entrant can expect.The stronger the attachment of buyers to established brands. marketing. Economies of scale in production. research and development. The retail industry is composed of very large manufacturers and retailers. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. either multinational or local can be a potential entrant. the existing players have already achieved a cheaper. This means companies in the retail industry can produce more at a lower price and possibly sell more and eventually would help improve the profitability of the company. Thus acquisition into an industry with intent to build market position should probably be viewed as entry even though no entirely new entity is created. acquisitions of brands of the other companies.

then some internet users use this service where they can purchase the clothes or accessories they want without leaving their home. product differentiation is high because everybody buys different products and each brand has different value to different people. as customers view these products as unique or superior. high product differentiation is needed because consumers have strong brand identification and loyalty to brands. In the retail industry particularly in shoes. Wherein nowadays. new entrants may have to offer consumers discounted price or an extra margin of quality or service. Potential entrants will face a difficult undertaking because investing in building a brand name are particularly risky and they will have no salvage value if they fail. place it in carts. which determine how much liquidity is required to be held for a certain level of assets. poses a threat to new entrants because of their customers brand loyalty. So. a new entrant must persuade buyers that the brand is worth the switching costs. there is an increasing technological advance in the internet and production process which means that there is a small amount of capital needed to enter in the retail industry. where in the company usually place their products in malls or in retail boutiques. To overcome switching cost barriers. Being first in the industry. If . Capital Requirements Capital requirements are the standardized requirements for banks and other depository institutions. The major players are struggling in their shelves space to make their product more accessible and visible to the consumers. bags and clothes. These barriers discouraged new entrants since they act to boost financial requirements and lower expected profit margins. slippers. Another thing is that if it is difficult or costly for a customer to switch to a new brand. Retail industries recognized the importance of the internet and adapted to the internet to have their own websites. Nowadays.P a g e | 11 Successful product differentiation creates a competitive advantage for the seller. This threat would be brand loyalty. There are numerous players in the retail industry that offers similar products and service that most companies can produce. The major players in the retail industry have already established their distribution channel through the wholesalers and retailers. there are catalogues in their websites. Access to Distribution Channels Most of the company’s distribution channels in the retail industry access their products through retailing and distribution.

these organized bodies set regulations.P a g e | 12 the major players are already struggling for shelve space. Like the Bureau of Customs which check the proper and qualified items to sell in the country. it will be more difficult for new entrants for the fact that retailers and wholesalers may be reluctant to take on a product that lacks buyers recognition. This applies to companies. but they place a limit on profitability within the industry. advantages. in the form of government subsidies and experiences. access to raw materials. is whereby established companies already have product technology. Porter’s Five Forces Analysis of the Retail Industry There can be many substitute products within the retail industry. A substitute product involves the search for a product that do the same function as the product the industry already produces. purchasing raw materials to distribution and service that can lower costs. It should be noted. There can be also low switching costs for the consumers. where their products are manufactured overseas. testing and certification procedures such as ISO. Having no experience of new entrants will definitely inherent higher costs than established firms and they must bear heavy start-up losses from below or near cost pricing in order to gain such experience and having more experience with the new and late entrants. This advantage can also be associated with any business function. from marketing. managerial knowhow is an advantage for existing firms and most existing firms have already benefited from the learning curve. Government Policy Government policies and organized bodies such as World Trade Organization (WTO). Example of a substitute within the industry is Havaianas slippers for Sanuk sandals and Crocs for our brand Native. THREAT OFSUBSTITUTE PRODUCTS OR SERVICES IS LOW Substitute products are the natural result of industry competition. Cost Disadvantages Independent of Scales Cost Disadvantages Independent of Scale. standards. favorable sites. In the retail industry. Also. employees from existing company can already forecast trends that can add great significance to the company and benefit from key relationships with suppliers and people within the retail industry. and others create a barrier of entry in the retail industry. industry and trade associations. New entrants will take time to achieve these advantages. since majority of labor production is performed overseas. International Labor Organization (ILO). .

and the high industry exit. That is why. celebrities and models are used to influence customers to purchase products. The prices of the products of the firms within this industry are almost the same because they counter the price of each other. this presents very competitive pricing for the product. over capacity. it must perform the same function outside the industry. Threat of rivalry includes all stores that sell bags. Customers also might substitute brand other than those elements where they might substitute brand for preferences such as fit. lack of product differentiation. and many more. Other indicator that there is an active rivalry among industry members is that members are racing to differentiate their products from rivals by offering higher-quality products but in a cheap price and a wider product selection. often times in the retail industry. Competitors use means such as advertising. INTENSITY OF RIVALRY AMONG EXISTING COMPETITORS HIGH Rivalries naturally develop between companies competing in the same market. color. the intensity of this rivalry is the result of factors like equally balanced companies. The industry members are also . high-stakes investment. it shows striking signs of rivalry. consumer preference may be considered as a threat because not every customer is the same. sandals. When consumers establish brand loyalty. In the retail industry. clothes and many more. However. Toms. high fixed costs. Since there are so many stores that sell different brands in the retail industry. slow growth within an industry. In order for a product to be considered as a substitute. And when rival firms threaten existing firms. that these substitutes are within the industry only. diverse competitors. competitive moves by one firm have noticeable effects on its competitors and thus may incite retaliation or efforts to counter the move. that is. design and even price point. shoes. Some might prefer wearing slippers in summer over sandals or wearing tank tops over shirts during rainy season. To Porter. Nonetheless. firms are mutually dependent.P a g e | 13 however. Neither the profits of the producers of substitutes are on the rise nor are the producers of these substitutes moving to add a new capacity. Crocs. and price competition to enhance their standing and market share in a specific industry. Stores and brands are those such as Havaianas. more attractive customer service and warranties. One indicator of this is that there is a lively price competition. it reduces their economic profits. the sales of these substitutes are not growing faster than the sales of the retail industry. price-cutting. Another is that. rivalry is high and intense due to the similarities of the product being offered. The retail industry is comprised of several main rivals of equal size and each brand has their customer base. Potential substitute for these sandals are slippers. comfort. introducing new products.

BARGAINING POWER OF BUYERS HIGH Buyers compete with the industry by forcing down the prices. there are no substitute products. The buyer’s power is significant in that buyers can force prices down. and in essence. The bargaining position of buyer changes with time and a company’s competitive strategy. the retail industry buyer’s are as big as the population. even fashion trends in the said industry are dictated by the buyers. since our products are necessity for humans. the market is dominated by a few large suppliers rather than a fragmented source of supply. play competitors against one another. then there isn’t a threat of suppliers other than the materials it takes to produce their products. due to similarities of product being offered in the retail industry. a forward integration potential of the supplier group exists. and playing competitors against each other all at the expense of industry profitability. companies in the retail industry. BARGAINING POWER OF SUPPLIERS IS LOW The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services. Suppliers in the food processing industry can exert bargaining power over participants by threatening to raise prices or reduce the quality of purchased goods. The switching costs from one supplier to another are high. the supplier differ costs. Distributing own product of a company in . Also. The threat of buyers depends on the marketing efforts for the product. There are no substitutes for the particular input. The buying industry hinders the supplying industry in their development and the buying industry has low barriers to entry. Threat of Suppliers all depends on the amount of raw materials. Also. all resulting in potential loss of industry profits. demand higher quality products or services. In some cases. Supplier bargaining power is likely to be high when.P a g e | 14 pursuing their best efforts to build stronger dealer networks expanding their distribution capabilities and making more presence in the market. produces their own product. Suppliers have a great deal of influence over an industry as they affect price increase and product quality. If a company has good marketing strategy then customers are most likely to purchase their products. Every consumer is a buyer in the retail industry. The suppliers’ customers are fragmented so their bargaining power is low. A supplier group exerts even more power over an industry if it is dominated by a few companies. Labor supply can also influence the position of the suppliers. And often times. their product is essential to the industry. There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. bargaining for higher quality or more services. the threat of buyers can be greater. the industry is not an important consumer for the suppliers. Primarily. the buyer dictates the type of products sold because the firms are the one catering to their needs and wants.

trade barriers. It is sometimes referred to as an external analysis. Threat of Substitute Products 3.P a g e | 15 the retail industry is an advantage of the company because they don’t have to rely on other businesses to do it. Bargaining Power of Buyers High 5. These refer to government policy such as the degree of intervention in the economy. demographic change and government policy changes are all examples of macro change. • Political factors. ANALYSIS OF POTENTIAL CHANGES IN THE MACRO. Bargaining Power of Suppliers Low 3. Five Competitive Forces 1. The purpose of the Macro Environment Analysis is to identify possible opportunities and threats to the industry as a whole that are outside the control of the industry. Price increase of raw materials can be considered as a threat because if that is the case.ENVIRONMENT The Macro Environment Analysis is tradionally the first step of a strategic analysis. Tax changes. new laws. Threat of Entry 2. What goods and services does a government want to provide? To what extent does it believe in subsidizing firms? What are its priorities in terms of business support? Political decisions can impact on many . the threat of wages going up can be considered. Intensity of Rivalry among Competitors Intensity Low Low High 4. There are many factors in the Macro-environment that will affect the decisions of the managers of any organization.

For example. Technology can reduce costs. • • Technological factors. computer games. a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency. These include interest rates. economic growth. Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. Online shopping. Changes in temperature can impact on many industries including farming. the health of the nation and the quality of the infrastructure of the economy such as the road and rail system. tourism and insurance. Environmental factors include the weather and climate change. improve quality and lead to innovation. • Environmental factors. MP3 players.P a g e | 16 vital areas for business such as the education of the workforce. • Economic factors. inflation may provoke higher wage demands from employees and raise costs and higher national income growth may boost demand for a firm's products. These developments can benefit consumers as well as the organizations providing the products. higher interest rates may deter investment because it costs more to borrow. This has increased the costs for firms who are committed to pension payments for their employees because their staffs are living longer. Social factors. For example. In the Philippines. . inflation and exchange rates. taxation changes. online gambling and high definition TVs are all new markets created by technological advances. The ageing population also has impact on demand. New technologies create new products and new processes. demand for sheltered accommodation and medicines have increased whereas demand for toys is falling. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. bar coding and computer aided design are all improvements to the way we do business as a result of better technology. the population has been aging. for example.

g. In recent years in the Philippines there have been many significant legal changes that have affected firms' behavior. Legal changes can affect a firm's costs and demand.g.g. LOCAL POLITICAL Provision of services by local council NATIONAL Philippines’ government policy on subsidies Philippines’ interest rates Demographic change (e. internet .P a g e | 17 • Legal factors. Philippines’ online services GLOBAL World trade agreements e. availability of Digital TV TECHNOLOGICAL International technological breakthroughs e. further expansion of the EU Overseas economic growth Migration flows ECONOMIC SOCIAL Local income Local population growth Improvements in local technologies e.g.g. These are related to the legal environment in which firms operate. ageing population) Philippines’ wide technology e.

cause of the no movement of taxes and prices. studies etc. Philippines raises 2011 GDP growth goal to 7-8 percent An increase on the investments. The inflation rate in Philippines was last reported at 4. especially new ones to be able to replicate its products. This would cause the company to calm. due to the purchasing power of the peso is not anymore the same as before that would decrease sales for the company The company won’t be able to increase its prices if the possible cause is tax.5% . There might be an increase in trust and confidence of the investors.5 percent in May of 2011 There is a possibility that the consumer demands will decrease No new high tax measures A possible increase in consumer demands. unable to be distracted by local market. inside and outside of the country Reflection that there is no improvement on agriculture on the said country and they weren’t able to further invest on technology.P a g e | 18 ECONOMIC MACRO-ENVIRONMENT POTENTIAL CHANGE IMPLICATION EFFECT ON COMPANY Decrease sales revenue for the company. National Income Account on agriculture is down by 0.

even though that it is not felt that much we could tell that the economy is blooming and if the investors trust and confidence will be lift.that the government action towards the economy are moving in a good flow. with the statement “"We will refrain from imposing new taxes or increasing tax rates. Philippines raises 2011 GDP growth goal to 7-8 percent GDP is one of the indicators if one economy is growing or falling.20% inflation rate. this was a big change. consumption and government spending minus to the import and export of the country. . they might experience a little disappointment to the ability of their peso.5 percent in May of 2011 The inflation rate is one of the most important economic forces consistently weighing on the value of a nation's currency." With this promise he was able to impress different sector of the business community which means bigger profit for them. this computation of investment. And having an increase of one percent in our GDP means.20 from the last year’s computation. but compared to the percentage given to the 2009 computation which was 9.P a g e | 19 Inflation rate in Philippines was last reported at 4.In the Philippines the inflation rate has increase to 3. an 18. this would be gradually felt by the public. Other investors will also be allure on such offer to invest to the country." as what President Aquino have said” "I strongly believe that we can collect more taxes at the BIR (Bureau of Internal Revenue) and higher duties at customs if we become more serious in curbing and punishing tax evasion and smuggling. No new high tax measures One of the promises of the president was not to increase taxes on his term as what he have promised during the 2010 election to the Makati business club.80% from the 3.75% increase. For those who are buyers.

REPUBLIC ACT NO. Example rice we somehow import rice. but only they do provide a basis for the objective statement and assessment of economic policies. the government didn’t focus much on its Agricultural and Aquatic resources. This is not used to make decision. The addition of nutrients to processed foods or food products at levels above the natural state. 8976 (An Act Establishing the Philippine Food Fortification Program and for Other Purposes) . This would cost liability in the part of the company for importation of the products/ingredients that will be used for the said production. There will be an increase in sales especially when the health conscious people are aware of the nutrients that are found on food.P a g e | 20 National Income Account is down by 0. exportation and distribution of the product in the Philippines. Based on the latest NIA. as to where are the sectors of governance need focus. rather than agricultural or balance.5% A National Income Account provides a quantitative basis for choosing and assessing economic policies as well as making possible quantitative macroeconomic modeling and analysis. These would be their guide. POLITICAL-LEGAL MACRO-ENVIRONMENT LEGAL CHANGE IMPLICATION EFFECT TO THE COMPANY Philippines Product Registration. Importation and Exportation Obtaining the proper licensing and ensure legal compliance for importation. This would take as an opportunity for foreign investor. due to our focus on Industrial development.

that stated law sections that contains the things that should be imported and not to be imported. and are legal well paid on the taxes. but would give assurance to the customers that the ingredients that are used are Starbucks certified ingredients. people who are health conscious are being a trend to the society. 7 of this republic act “The agencies charged with the implementation of this Act shall establish a quality assurance system. This would cause increase the Taxes that are given to all consumer products that are being paid by the customers. One is which called Tariff law. the manufacturers and importers of processed foods or food products shall also establish their own quality assurance system in accordance with the quality assurance system of the implementing agencies.P a g e | 21 Execution of Value Added Tax An increase in consumer product taxes by 12%. According to Sec.” Meaning insurance that we eat and drink should be safe and clean for the consumer’s health benefits. These would cause liability to the company. 8976 (An Act Establishing the Philippine Food Fortification Program and for Other Purposes) Nowadays. Implementation of the Anti-Smoking Law including inside the hotels. The government should ensure that the process foods and food products be inspected for the safety of its users. Importation and Exportation There are certain laws that are being followed. shopping malls. REPUBLIC ACT NO. and buildings except for smoking areas that are approved by the city government Customers who are smokers will only dine at restaurants and delis with smoking areas Decrease in number of customers who are smokers Philippines Product Registration. Likewise. According Sec 602 of the Custom Law site the certain role of the Bureau of Custom on imported products/materials. the government could increase the necessary nutrients by the body. Execution of Value Added Tax . Through such republic act. which they are the one responsible on assessment of the revenue that would came out of such importation.

. raise the rate of value-added tax to twelve percent (12%). there are other elements that keep a person under that dreaded poverty line. They are imprisoned in economic and material hardship. They are their own slaves to their lack of confidence and motivation. They see themselves at the whim of wealthier people and at the mercy of those who drive society. or • National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1 1/2%). effective January 1. this would cause suffering to the market especially on these period that labor unemployment is increasing. SOCIO-CULTURAL MACRO-ENVIRONMENT Cultural Issue of the Philippines Many of those living near or below the poverty line in the Philippines experience constant hardship.Aside from being born into poverty. In which products. are given 12% taxes additional to its products. 2006. shall. One of the most important of these is poor education. and oppression. Because of their state of life. upon the recommendation of the Secretary of Finance. suffering. especially from the upper classes. that are carried by its consumers.One of the factors that greatly influence such low standards of living and sustenance is very poor self-esteem.P a g e | 22 This was enacted through the effort of Republic Act No. Their state of life prevents them from escaping societal evils such as oppression and abuse. The lack of sufficient academic foundations and work experience brings about the inability to perform higherpaying jobs. they tend to harbor derogatory feelings of inferiority.This factor cycles into limited freedom because of poverty. what results is poor motivation to try to work harder. Even those who receive small paychecks or wages cannot sustain their families with such meager incomes. Most of them remain homeless and without jobs. This relegates the poor to the level of unskilled laborers who finds themselves in the simplest and lowest-paying jobs around. 9337 provides that the President. from food to clothes. after any of the following conditions has been satisfied: • Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%). Thus. They remain powerless without any voice in matters that run their lives. They have resigned themselves to their lifestyles and intend to just live their lives like slaves.

This estimates the population growth for 1. the more they can send them to be victims of child labor and earn income for the family.614.957%. they have little discipline in them to enable them to tackle more complicated areas of work or longer shifts.04%. of which only about 10 are important regionally.Since English is widely spoken in the Philippines. which had at one time been an official language. it is common to hear Filipinos use a mixture English and Filipino words or phrases. They believe that the more children they have. known as "Taglish" (a mixture of English and Tagalog). The Philippines are the third largest group of English speaking people in the world. after the United States and the United Kingdom. A steadily dwindling minority still speak Spanish. the estimated population is 94. and other aspects of the population. Parents with notions that the child will study hard. the population of the Philippines was 88. The main demographic force that is essential in this paper is the population because people make up markets. health. The poor seldom have enough finances to bring into existence even a little business of their own. In most cases. As of 2010.574. but also hampers quality production. These. Demographics Demographics are records of human population in the country. . All of this backfires because the labor supply continues to shoots up. including its population density.P a g e | 23 Another major contributor to a low standard of living is the poor state of health that many of the poor experience.English is generally used for educational. This not only turns out progressively unskilled laborers. In spite of being the national language. it leads to abuse and neglect. This brings down the price of labor and allows huge capitalist organizations to take advantage of cheap labor. only about 55 percent of Filipinos speak the language. They are often placed under the iron fists of unfair employers who fail to take into account the welfare of their workers. According to the 2007 Census. Ailing workers lack motivation. the population growth is 2. in their everyday conversations. From 2000-2007. population growth. They abuse their kids to earn more and turn a blind eye to the rights of the child. The national Statistics Office is the office in-charge of taking note these data. governmental and commercial purposes and is widely understood since it is the medium of instruction in schools.The poor also lack knowledge in family planning. It is very common sight in the Philippines. In addition to Filipino are about 111 distinct indigenous languages and dialects.Another one of the major causes of poverty are low savings. and one day lift his or her parents from poverty.013. equate to low investments. education level.000 people. Languages in the Philippines Filipino is based on Tagalog and is the official language of the Philippines. in turn.

the consumption and demand for high quality goods will also increase. NSO predicted that by 2025 our population will be 163. When there is an increase of income. The age distribution is at most in the working age which is 59. .072.000 or almost double of the population this year. This means that almost half of the population is in the middle stage of their life. Although there is a high rate of urbanization in the country. this indicates that there can also be an increase in the people’s income.P a g e | 24 With the chart above. There is also rapid urbanization since urban areas comprise of 65% of the total population in 2008.2 in 2007. With the population growth rate. we can see that there is an increasing growth of our population. The rapid growth of the population and the urbanization are the major population issues of our country.

it is better to discuss the Filipino lifestyle in foods.P a g e | 25 Source: National Statistics Office. . Philippines Culture Lifestyle To further understand the factors that can affect the food processing industry.

P a g e | 26

Filipinos love to eat, and since they’re naturally hospitable and gregarious, food is the basis of their social life. Because the feeling of fulfillment after eating rice, their staple ingredient, is relatively short-lived, they eat three meals a day and two snacks in between. Filipinos, especially country folk, rise early. Some will eat a segundo almuerzo (second breakfast) around 10:30, plus a merienda, or mid-afternoon snack. Rural folk eat their main meal at midday, while city dwellers emphasize the evening meal. The diet of poor families is usually rice, fish, and vegetables, interspersed with starchy snacks. At fiesta time, all families try to eat meat. Filipino eating lifestyle is also shifting towards healthy foods because they are now conscious of their looks and figures. With the increasing awareness by consumers on healthy eating and a healthy lifestyle, food-processing companies continue to develop or add new products that cater to the demand of this growing segment. Beverages continue to be the trendsetter with new brands and/or variety of flavored waters, soy beverages, and yogurt drinks, energy drinks, and health drinks such as green teas. The marketing campaigns for the beverages emphasize “no sugar”, “natural”, “vitamin and fiber enriched”, “no fat”, “no cholesterol”. A highly competitive market place has led companies to seek out prime shelf space in supermarkets and convenience stores. In relation to the food processing industry, this Filipino eating lifestyle can be a basis for creatively innovate their products and marketing their products. For example, if Filipinos eat snacks in between of the main meals, companies in the industry, which produce snacks, can have a marketing activity via commercial airing at the afternoon where snacks are usually eaten. Education Filipinos have a deep regard for education, which they view as a primary avenue for upward social and economic mobility. However, according to the NSO data, there is a decreasing rate of Filipinos who can finish college. From the elementary stage to college level, the number of enrolees also decreased. It indicates that there is an issue with regards to the education of our country. One example is that middle-class parents make tremendous sacrifices in order to provide secondary and higher education for their children. Some universities were excellent; others were considered "diploma mills" with low standards. Public elementary schools often promoted students regardless of achievement, and students, especially those in poor rural areas, had relatively low test scores. (Please refer to the table below)

P a g e | 27

Source: National Statistics Office, Philippines DEMOGRAPHICS MACRO-ENVIRONMENT

POTENTIAL CHANGE

IMPLICATION

EFFECTS ON THE COMPANY

P a g e | 28

The current population of the Philippines as of 2009 is 92,226,600, and projected population on 2010 is 94.01million.

There is a competition on scares resources that are available in the market.

There are possibilities of increase of consumers of the product based on the increase on population.

The Philippine is made up of different ethnic groups that composed of 120170 different dialects.

A differ on dialects could bring a barrier for one to exchange goods/products

This would be a challenge for the company to serve different groups with different dialects.

80% of the Filipinos are Catholic 5% are Muslims and the 10% are Protestant and other religious group.

Being a colony of Spain for 300 years, this was one of their influences.

There would be less stress for Starbucks of discussing certain Ethical issues on their products.

Issues regarding overpopulation in the country There are many factors affecting this problem on overpopulation such as poverty, hunger, lack of job openings, lack of proper education, etc. many of which result from another. Regardless of what the true cause of the problem is, it all boils down to the creation and sustenance of life. Some studies claim that a baby is born every eight seconds and somebody dies every thirteen. Others might contest that a baby is born every three seconds. Although these studies may vary, the fact of the matter remains that the birth rate far outnumbers the fatality rate. This implies that there are an excessive number of people living in the world today. While there are many proposed solutions to this crisis that may have a high rate of effectiveness, such as the use of contraceptives and certain policies limiting the progeny of a couple, they are not highly encouraged or implemented here in the country. Due to the influence of the Catholic

and decrease waste. not only education is the cause. Other nations are one who benefits the ability of these individuals. that are using by hotels and restaurants are available strait from Competition on coffee making are intense. ITW FEG companies that support the sustainable initiatives of customers and end-users with new products and technologies that directly address their concerns about operations and the environment. Using or upgrading of current POS (point of sales) software Custom made to the company’s specification or need. consume less water and electricity. but with the computation on few slots that are available people are trying to attain what is the only option for survival. TECHNOLOGICAL MACRO-ENVIRONMENT POTENTIAL CHANGE IMPLICATION EFFECT ON COMPANY ITW Food Equipment Group Receives Highest Honor with 2011 ENERGY STAR Sustained Excellence Award ITW FEG is committed to supporting customers in their drive to cut costs. Easier and more convenient coffee makers.P a g e | 29 Church. In fact overpopulation is one of the reason why there is a large number of unemployed people. A software or equipment where the sale is made official Less time consuming work for the management to keep track of the company’s sales Availability of Commercial/Domesti c used coffee makers in the market. For those who cannot compete leaves the country. the availability of cheaper coffee makers make . the Government cannot easily impose certain regulations that might affect the country and the economy.

Laborers would rather find another job to increase their monthly salary or would seek opportunities abroad Employees would ask for increase or would lessen their performance if the demands are not attained . the equivalent of an electronic cash register. A "checkout" refers to a POS terminal or more generally to the hardware and software used for checkouts.P a g e | 30 your office and at home different shop cater to the demands of its customers. LABOR MACRO-ENVIRONMENT POTENTIAL CHANGE IMPLICATION EFFECT ON THE COMPANY Low wages are given to the Filipino Labor force that is not enough to their daily living. because everything is updated and would be able to change as long as a database is available. The POS makes everything easier for a store/company to audit and track the records of its inventory. with this stores won’t need any more to worry regarding lost inventories and changes in prices. Employing or upgrading of current POS (point of sales) software Majority of commercial food service companies nowadays make use of the POS (point of sale) technologyis the location where a transaction occurs.

With this kind of salary given to every Filipino Laborer it’s not enough for one’s family. that would result to underdevelopment Underemployment rate is 7. talent and education during college.26 increase as of last year underemployment rate A great indication that there is no growth in the economy and that poverty is increasing Companies should be able to find quality employees because of lack of employment in the country Issue of Low Wages in the Philippines The Philippine is one of the countries that has the lowest labor which is P389. was not the same profession that they were able to work on. Their skills.00P426. which they need to send to a decent school. some of these people are part of the mismatch labor force.30% as of 2011 a 2.4% of the total labor force. . meaning that their skills didn’t match the need of a company 19. That bothers many Filipinos especially if that person has a child.00 ( $ 9. These people are the one who are unsatisfied on their jobs and the one who cannot resign due to the crisis in our country. a decent life they need to save a couple of money to be able to do that.P a g e | 31 The issue regarding job mismatch is prominent to some companies today Many Filipinos are unsatisfied on their jobs due to this mismatch that would result on less performance and lack of ability for the said employee Companies would put these people on a low wage bracket especially it’s not their forte. Issue regarding Job Mismatch There are many Filipino workers who are underemployed.83) which is not enough to the daily cost of living of a typical Filipino family is around P800.

distributed mostly in the wholesale and retail trade. Occupation-wise. measured employment quality remained broadly stable at this stage. next by officials of government and special interest organizations. The unemployment rate continued its steady rise in 2009 (from 7. in December. motorcycles and personal and household goods. In addition to the market sales workers.5 percent of the total employed persons in 2009.5%). It again registered strong growth earlier this year but downside risk still lies on the scenario of deeper global downturn. One-third were own account workers while the rest (12%) were unpaid family workers. Surprisingly. and contracted by 5. About 35 percent of the employed were engaged in agriculture while the rest (14.7%). managing proprietors and supervisors (13. during these prosperous times.5% in 2009).4 percent on average per year. and even skilled (graduates) youth. Starting 2008. More than half of the total number of employed persons worked as wage and salary workers.3% in 2008 and 19.5%). the rapid expansion of the call centers or the BPO Industry constitutes a large percentage on this labor force. (iii) high informal sector (mostly in agriculture and services). Half of the estimated 35 million employed persons in 2009 were engaged in services. (iv) a rigid labor market environment (including an outdated and complex labor code). (v) and a falling trend in real wages since 2001. The service workers and shop and market sales workers accounted for 10. Nevertheless. the quality of the labor market is slowly weakening. managers. Notwithstanding the resiliency of the economy. Yet. The quantity of jobs lost is already large but difficult to fully capture. The underemployment rate remains below 20%. the economy grew at 5. Along with the slump in exports (annual contraction of about 40% in both January and February). data point to a particular worsening of the job market for unskilled workers. corporate executives. There is also an increase in the number of household with both parents working. the services sector continued to create jobs even as the economy slowed down.5%) worked in the industry sector. (ii) even higher underemployment rate (19.5% this January12). . followed by farmers. posting more than 100. the labor market was characterized by (i) a high unemployment rate (7.1% in 2009) with a high incidence among the youth. the manufacturing sector continued to shed jobs. Overseas employment an important safety valve given the rapid growth of the Filipino labor force also weakened in November.000 job losses in January. forestry workers and fishermen (16.4% in October 2008 to 7. the laborers and unskilled workers comprised the largest group (32.P a g e | 32 Employment and Unemployment Rate The quality of the Philippines labor market is already weak to start with.4% in 2008 and 7.8%. For the past seven years through 2008. repair of motor vehicles.

P a g e | 33 Net Job creation started deteriorating in July 2008 Unskilled workers are increasingly being hit by the crisis .

P a g e | 34 Job Quality remains broadly stable so far .

Total Number of Families. In real terms. The total annual family expenditure was approximately P2.18 trillion at 2000 prices. Family Income and Family Expenditure and Gini Coefficient: 2006 and 2009 . the total family income in 2006 would be valued at P2. Considering the inflation between 2003 and 2006. or P147 thousand per family on the average.86 trillion at 2000 prices.01 trillion in 2006 according to the final results of the 2006 Family Income and Expenditure Survey (FIES). the total income of families increased by 8. the total family expenditure in 2006 would be valued at P1.P a g e | 35 Consumer Spending Filipino families earned a total of P3. Distributing this total annual income among the estimated 17.4 million Filipino families in 2006 resulted in an average annual family income of approximately P173 thousand.5 percent while the total expenditure increased by 10.56 trillion. Likewise.5 percent between 2003 and 2006.

4 in 2006 to 42. 59. it can be attributed to the deployment of the OFW because there was a 15.2 percent from 41. there was an increase in food spending of 1. fuel. Consequently there was a decrease in tobacco. Basically.9 percent of all expenditures by this group were on food. . In totality of the income group. All other expenditures were increased or at par both in 2006 and 2009.1 percent in 2006. OFW Remittance There was a total increase of OFW remittance in all of the continents.P a g e | 36 Percent Distribution of Family Expenditure by Expenditure Item for Bottom 30 Percent and Upper 70 Percent Income Group: 2006 and 2009 There was a shift in the spending pattern of Filipino families particularly those in the bottom 30 percent income group because it slides towards more spending on food. In 2009.8 percentage points from 59. light and water expenditures. increased by 0.6 in 2009.1 percent change from 2008-2009.

P a g e | 37 There is also an increasing demand for the Filipino workers abroad since the government is intensifying their human resource development to improve the competitive advantage of the Filipino workers abroad. Remittances of Overseas Filipinos : 2003 .2009 (In Thousand US Dollars) Number of Deployed Overseas Filipino Workers by Type of Hiring: 2008-2009 .

beverages and tobacco (FBT).8 percent in October primarily due to the jump in the annual growth in fuel. . Excluding selected food and energy items.3 percent in October.0 percent from 8. light and water (FLW) index to 12. H&R and FLW index.0 percent in November from 2.2 percent in October.P a g e | 38 Inflation Rates The annual headline inflation rate at the national level went up to 3.6 percent in November from 2. Higher annual rates of price increments in housing and repairs (H&R) and services index also contributed to the uptrend. Inflation a year ago was 2.8 percent.5 percent in November from 3. the annual inflation rate in the National Capital Region (NCR) increased to 3.9 percent in October brought about by the deceleration in the annual price gains in FBT and H&R index.8 percent in November from 2. Annual inflation rate in Areas outside the National Capital Region (AONCR) continued to move at a slower pace of 2. Similarly. core inflation advanced to 3. It resulted from higher annual price adjustments in food.3 percent in October.

00 million. Philippine Trade Performance in January-October: 2010-2009 . Total exports.556 billion in October 2009.573 billion recorded in September 2010.2 percent for merchandise exports was noted to $43. This is as quoted from Business Expectations Survey of BSP. Thus.911 billion. Quarter 4.e.888 billion from $3. exporters and those engaged in dual activities) have a positive but less favorable outlook relative to the previous quarter’s survey results due to expectations of low export demand on account of the slow economic recovery of international markets from the global financial crisis.9 percent from $4.776 billion from $3.084 billion in January to October of 2010 from $31. The balance of trade in goods (BOT-G) in October 2010 posted a deficit of $112.104 billion deficit in the same 10-month period last year. Total imports posted a 26.. total imports for October 2010 grew by 6.826 billion from $35. 2010.4 percent to $4.664 billion from $7.808 billion in October 2009.P a g e | 39 Import and Export Total external trade in goods for January to October 2010 reached $87.3 percent annual increase to $44. rose by 27.00 million compared to last year recorded deficit of $60. an increase of 37.742 billion during the 10-month period in 2010. on the other hand.9 percent to $9. importers. Philippine Import Annual Growth Rates: October 2009 – October 2010 Combined import and export merchandise trade for October 2010 was up by 27. a value lower than the $4.397 billion during the same period in 2009.4 percent to $4. Businesses involved in international commodity trading (i. On a month-on-month basis. Total merchandise imports increased at 28. Similarly.4 percent increment from $66.501 billion.748 billion in October 2009. a 31. the balance of trade in goods (BOT-G) for the Philippines registered a deficit of $1.897 billion registered during the same period in 2009.

export earnings and foreign investments. Value in Million US Dollars) Philippine Trade Performance in October: 2010-2009 (F. but the same factor provided support to the .O.139 of September 2009. US Dollar The Philippine Peso is continuing to appreciate though the rate is fluctuating. The increase in exchange rate of Peso and Dollar can definitely affect the import and export of the country. the exchange rate accounts to 44. The strengthening of the peso contributed to the lower confidence of respondents in the exports business. As of September 2010. Value in Million US Dollars) Exchange Rate of Philippine Peso vs.B. Despite of the financial crisis.31 compared to 48.B.P a g e | 40 (F.O. the Philippine Peso proved supple because of the OFW remittances.

However. Some say that the increase in the rate of Philippine Peso is good for the country’s economy especially to the importers.P a g e | 41 more sanguine outlook of importers given that a stronger peso reduces the cost of imports in peso terms. . it will have a great impact for the families of the OFW because they will have to undergo a decrease in their family income.

and (2) Nature – Flora and fauna. It can be broadly segmented into: (1) Physical – Land. many donors. In spite of all these efforts. Rapid conversion of forestlands and grasslands to urban use is depleting these natural systems. forest cover in the Philippines has certainly been significantly reduced over the last forty years. too. Reforestation efforts by the government have been erratic. The loss of forests and other critical habitats is also threatening the Philippines’ rich biodiversity. illegal logging. by formulating its own National Agenda 21. through a highly participatory process. Over the past decade. While estimates of deforestation differ. over-lapping institutional mandates. initiated at the Rio Earth Summit in 1992. due to increasing urbanization. the Land Bank of the Philippines. Although the number of protected areas has grown on paper. inadequate regulations. causing serious soil erosion. in 1996. with low tree survival rates. in recent years. the Department of Public Works and Highways. air. particularly in local government units. water. and by supporting innovative partnerships among them. the National Economic Development Authority. Management is hampered by inconsistent laws. rapid population growth.P a g e | 42 ECOLOGICAL MACRO-ENVIRONMENT The ecological environment involves the stock of the physical and natural resources within a region. In addition. However. and sea. capacity in environmental and natural resources governance still requires significant improvement. the Government of Philippines has tried to reverse environmental degradation by introducing innovative institutional and legal reforms. including the World Bank. NGOs. so have the rates of destruction and habitat conversion within them. the Laguna Lake Development Authority. local governments. have supported efforts to improve overall environmental governance in the country by building the capacity of the Department of Environment and Natural Resources (DENR). and local communities. urbanization and industrialization have far outstripped urban environment services and weak natural resource management systems have led to rapid degradation of those environments. despite its government’s good intentions. and population pressures are stimulating cultivation of fragile upland areas. Marine resources are heavily stressed by over-exploitation and pollution. The Philippines was one of the first countries to adopt the Agenda 21 process. weak enforcement and funding shortages. and forest fires. Agricultural yields in lowland areas are stagnating. .

with the following breakdown according to type: National roads .15%. Ormoc. the total length of the non-toll road network was reported to be 202. Parts of the road system are the jeepneys. .60%. City and municipal roads . Cagayan de Oro. a nautical system conceptualized under the term of President Gloria Macapagal Arroyo where land vehicles can use the roll-on/roll-off (Ro-Ro) ship service to traverse the different islands of the country at minimal costs. Road classification is based primarily on administrative responsibilities (with the exception of barangays). Butuan. Iloilo. both in the pier area of Manila. Air Transportation There are 76 total paved runways and 190 unpaved runways.e. Barangay (barrio) roads . but responsibility for maintaining these roads have now been devolved to the Local Government Units (LGUs). San Fernando. railways. Lucena. of which 39. Provincial roads . However. i. Puerto Princesa.249 miles) of roads. and a few are financed by the Department of Agrarian Reform and the Department of Agriculture.P a g e | 43 INSTITUTIONAL MACRO-ENVIRONMENT Transportation Road System The Philippines has 199. Iligan. which level of government built and funded the roads.601 miles) are paved. This can also be a mode of transportation of goods and other cargoes. Allen. Subic. despite having a large road network built over the country.13%. Ozamiz and Tagbilaran. As of 2004. Water Transportation he main gateway to the Philippines through the sea is through the Manila International Cargo Terminal and the Eva Macapagal Port Terminal. Most of these terminals comprise the Strong Republic Nautical Highway.950 kilometers (124. Cebu. large parts of the road network continue to be in poor condition (only 20 percent of the total road network is paved). Legazpi.590 kilometers (24. Davao.. buses.860 km. Farm-tomarket roads fall under this category. Most of the barangay roads are unpaved village-access roads built in the past by the Department of Public Works and Highways (DPWH).12%. Zamboanga. Jolo. Cotabato. Batangas City. There are also 13 airports on which there are domestic and international flights. Other cities with bustling ports and piers include Bacolod.

Underemployment rate is 7. No new high tax measures 2. An Act Establishing the Philippine Food Fortification Program and for Other Purposes 5. Philippines raises 2011 GDP growth goal to 7-8 percent 3.30% as of 2011 a 2. THREATS AND OPPORTUNITIES Potential Change in the Macro Environment 1.1 EFFECT OF POTENTIAL CHANGES ON THE TASK ENVIRONMENT . The issue regarding job mismatch is prominent to some companies today 9. National Income Account on agriculture is down by 0.26 increase as of last year underemployment rate 10.5% 4.P a g e | 44 4. Execution of Value Added Tax 6. ITW Food Equipment Group Receives Highest Honor with 2011 ENERGY STAR Sustained Excellence Award 7. Using or upgrading of current POS (point of sales) software 8. Issue Philippines of Low Wages in the Segment Economic Economic Economic Political-Legal Political-Legal Technological Opportunity or Threat Opportunity Opportunity Threat Opportunity Threat Opportunity Technological Labor Labor Opportunity Threat Threat Labor Threat 4.

2006.83) which is not enough to the daily cost of living of a typical Filipino family is around P800. shall. These people are the one who are unsatisfied on their jobs and the one who cannot resign due to the crisis in our country. or • National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1 1/2%). talent and education during college.4% of the total labor force. this would cause suffering to the market especially on these period that labor unemployment is increasing.00 ( $ 9. With this kind of salary given to every Filipino Laborer it’s not enough for one’s family. Their skills. effective January 1. Issue of Low Wages in the Philippines The Philippine is one of the countries that has the lowest labor which is P389. meaning that their skills didn’t match the need of a company 19. are given 12% taxes additional to its products. That bothers many Filipinos especially if that person has a child. Labor Issue regarding Job Mismatch There are many Filipino workers who are underemployed. In the retail industry.P a g e | 45 THREATS Political-Legal Execution of Value Added Tax This was enacted through the effort of Republic Act No. which they need to send to a decent school.00P426. from food to clothes. that are carried by its consumers. was not the same profession that they were able to work on. after any of the following conditions has been satisfied: • Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%). upon the recommendation of the Secretary of Finance. a decent life they need to save a couple of money to be able to do that. Employment and Unemployment Rate . raise the rate of value-added tax to twelve percent (12%). 9337 provides that the President. some of these people are part of the mismatch labor force.

repair of motor vehicles. corporate executives. followed by farmers. next by officials of government and special interest organizations. The underemployment rate remains below 20%.000 job losses in January. The quantity of jobs lost is already large but difficult to fully capture. One-third were own account workers while the rest (12%) were unpaid family workers. (ii) even higher underemployment rate (19. Economic . the manufacturing sector continued to shed jobs. (iv) a rigid labor market environment (including an outdated and complex labor code).5%). data point to a particular worsening of the job market for unskilled workers. distributed mostly in the wholesale and retail trade. and even skilled (graduates) youth. Surprisingly.7%). There is also an increase in the number of household with both parents working. the quality of the labor market is slowly weakening. (iii) high informal sector (mostly in agriculture and services). Starting 2008. and contracted by 5. Half of the estimated 35 million employed persons in 2009 were engaged in services. Along with the slump in exports (annual contraction of about 40% in both January and February).5 percent of the total employed persons in 2009.3% in 2008 and 19. the rapid expansion of the call centers or the BPO Industry constitutes a large percentage on this labor force. It again registered strong growth earlier this year but downside risk still lies on the scenario of deeper global downturn. forestry workers and fishermen (16. The unemployment rate continued its steady rise in 2009 (from 7.4% in October 2008 to 7. About 35 percent of the employed were engaged in agriculture while the rest (14.1% in 2009) with a high incidence among the youth. Nevertheless. motorcycles and personal and household goods.5% this January12).5%).5% in 2009).4 percent on average per year. managing proprietors and supervisors (13. in December.4% in 2008 and 7. the economy grew at 5. managers.8%. the laborers and unskilled workers comprised the largest group (32. the services sector continued to create jobs even as the economy slowed down. In addition to the market sales workers. The service workers and shop and market sales workers accounted for 10. For the past seven years through 2008. Yet.5%) worked in the industry sector.P a g e | 46 The quality of the Philippines labor market is already weak to start with. posting more than 100. Occupation-wise. measured employment quality remained broadly stable at this stage. Notwithstanding the resiliency of the economy. during these prosperous times. the labor market was characterized by (i) a high unemployment rate (7. More than half of the total number of employed persons worked as wage and salary workers. (v) and a falling trend in real wages since 2001. Overseas employment an important safety valve given the rapid growth of the Filipino labor force also weakened in November.

even though that it is not felt that much we could tell that the economy is blooming and if the investors trust and confidence will be lift. consumption and government spending minus to the import and export of the country. the government didn’t focus much on its Agricultural and Aquatic resources. And having an increase of one percent in our GDP means. Example rice we somehow import rice. due to our focus on Industrial development.P a g e | 47 National Income Account is down by 0." as what President Aquino have said” "I strongly believe that we can collect more taxes at the BIR (Bureau of Internal Revenue) and higher duties at customs if we become more serious in curbing and punishing tax evasion and smuggling. Other investors will also be allure on such offer to invest to the country. as to where are the sectors of governance need focus. with the statement “"We will refrain from imposing new taxes or increasing tax rates. .that the government action towards the economy are moving in a good flow.5% A National Income Account provides a quantitative basis for choosing and assessing economic policies as well as making possible quantitative macroeconomic modeling and analysis. Based on the latest NIA. 4. this computation of investment.2 THE RESULTING CHANGES IN THE PRESENT TASK ENVIRONMENT OPPORTUNITY Economic No new high tax measures One of the promises of the president was not to increase taxes on his term as what he have promised during the 2010 election to the Makati business club. Philippines raises 2011 GDP growth goal to 7-8 percent GDP is one of the indicators if one economy is growing or falling." With this promise he was able to impress different sector of the business community which means bigger profit for them. This would take as an opportunity for foreign investor. rather than agricultural or balance. This is not used to make decision. but only they do provide a basis for the objective statement and assessment of economic policies. These would be their guide.

We invite you to learn more about the history of our company. These were the ITW Food Equipment Corporation aim. The government should ensure that the process foods and food products be inspected for the safety of its users. A "checkout" refers to a POS terminal or more generally to the hardware and software used for checkouts. 8976 (An Act Establishing the Philippine Food Fortification Program and for Other Purposes) Nowadays. Likewise. According to Sec. the provided solutions to each of their customers. The POS makes everything easier for a store/company to audit and track the records of its inventory. Through such republic act. We do this by growing our business and making acquisitions that provide additional product solutions to our customers.P a g e | 48 Political-Legal REPUBLIC ACT NO. . the manufacturers and importers of processed foods or food products shall also establish their own quality assurance system in accordance with the quality assurance system of the implementing agencies.” Meaning insurance that we eat and drink should be safe and clean for the consumer’s health benefits. extending current products to new industries and acquiring businesses that improve customer offerings provide the foundation for continued success in the 21st century. the government could increase the necessary nutrients by the body. ITW Food Equipment During it’s nearly 100 years of existence. ITW's recipe for success has been focused on creating value-added products for key customers around the world. ITW’s proven strategies of increasing market penetration with product innovations. people who are health conscious are being a trend to the society. because everything is updated and would be able to change as long as a database is available. 7 of this republic act “The agencies charged with the implementation of this Act shall establish a quality assurance system. with this stores won’t need any more to worry regarding lost inventories and changes in prices. the equivalent of an electronic cash register. Technological Employing or upgrading of current POS (point of sales) software Majority of commercial food service companies nowadays make use of the POS (point of sale) technologyis the location where a transaction occurs.

and so on. regional. The quality is in terms of raw materials. exclusive or owned retail outlets. The dedication of their people is the basis for their success and longevity. but price is a distinct strategic variable that must be treated separately. credit.000 men and women who are focused on creating value-added products and innovative customer solutions. The choice of distribution channels ranging from company owned channels to specialty outlets to broaden line outlets. Understanding which companies are strongly positioned and which are weakly positioned is an integral part of analyzing an industry’s competitive structure. The degree to which it provides ancillary services with its product line. and so on. including whether the firm has captive distribution. Geographic Coverage Degree of vertical integration Product-line Breadth Use of Distribution Channels Degree of Service offered . INDUSTRY AND COMPETITIVE ANALYSIS Strategy of firms competing in the same industry varies. national or global. an in-house service network. The extent of value added as reflected in the level of forward and backward integration adopted. The exposure of a company in local. as in-house service network. Product line is how many products a firm has. features. This is also the market that a company caters to. specifications. 5. adherence to tolerances. its 825 decentralized business units in 52 countries employ approximately 60.P a g e | 49 Today. Listed below are the strategic dimensions or typical variables which can differentiate the competitive characteristics of firms in an industry: Variable Price/Quality Range Definition Its relative price position in the market. and so forth. Product line breadth is the extent on how narrow or wide the product categories of a firm are. Price position will usually be related to such other variables as cost position and product quality. such as engineering assistance.

This is useful in comparing the market positions of each firm separately or for grouping them into like positions when an industry has so many competitors. Since SM Retail is focusing in other goods.SM RETAIL GROUP 2.GEOGRAPHIC COVERAGE .RUSTAN’S RETAIL GROUP 3. It is a local company and marketing the Filipino consumers who are working in the Philippines.PRODUCT LINE BREATH GC. GC 3 2 1 PLB Both Primer and Rustan’s have the same geograpgic goverage since they offer their products not only in the Philippines but also in Asia and other parts of the world. these two firms are in the stage of introducing their products in other countries.1 STRATEGIC MAP The best technique for revealing the market positions of the firms in an industry is through strategic group mapping. its product line is growing.P a g e | 50 5. LEGEND 1.PRIMER GROUP OF COMPANIES PLB.

Henry T.Sy who is regarded as the visionary of Philippine Retail envisioned a chain of shoe store. SM was founded as a shoe store by Mr. Sy Sr. particularly SM Megamall opened in 1990’s giving rise to what is known as the malling phenomenon in the Philippines. Having different international brands competes with the increasing number of competitors in the country. becoming one of the pioneers in the new urban center when it opened bigger shoe outlets at the Makati commercial center in 1963. in October 1958. In the seventies. real estate and tourism development. SM. SM RETAIL INC. and in Cubao in 1967. The company carries international brands mostly lifestyle products. a name that has been synonymous with one-step shopping excitement had positioned itself for growth in the 80’s. Its vision is to become one of the leading distributors of consumer goods in the country. as well as the many customers that have made it part of their lives. More malls. in SM Manila in Echague and later. with SM Makati. along Rizal Avenue. diversifying into the supermarket and appliance store businesses.P a g e | 51 PRIMER GROUP OF COMPANIES Primer Group of Companies is a Philippine company engaged in the retail sale and distribution of consumer brands and products. The Philippine’s leader in the retail industry approaches its milestone with a new vitality and energy to serve a new generation of shoppers. . the first shoe store. each characterized by a distinct merchandising layout never attempted before in the country. SM is a dynamic group of companies with core businesses in retail merchandising and shopping center and complementary businesses in financial services. SM City in North Edsa. Today. SM Shoemart. SM worked a shift from a shoe store to a department store. In the 60’s. Later in 1985 marked the opening of its first shopping mall. Mr. the company expanded its shoe store chain.

It has just as easily become the place to find the best products of the Philippines as well. lifestyle products and outdoor gears. INDUSTRIAL . we have created a niche in marketing travel goods. the group soon expanded and later diversified to what we now call Primer Group. Tiffany to ErmenegildoZegna. And as the business flourished. Today. COMPANY OVERVIEW Our Primer story began with a simple trading venture of a group of friends working hard to make it prosper. RUSTAN'S in the Philippines is considered the ultimate source for giftgiving as well as the only place for fashion options and accessories for the art of living. Sonia Rykiel to Estee Lauder.from Cartier to Mikimoto. Nina Ricci to Alfred Dunhill. A place in the RUSTAN'S hearth is one of the best credentials with which to enter this booming market. to name a few of the stores-within-a-store concepts that it has pionered. brands and companies wishing to make inroads into the upbeat Asia Pacific market realize that RUSTAN'S is a major force and player to contend with. VI. RUSTAN'S remains the exclusive address of note of many of the world's most famous names and signatures . ANALYSIS OF INTERNAL ENVIRONMENT 1.P a g e | 52 RUSTAN’S COMMERCIAL CORPORATION Considered as the country's most prestigious retailer. Primer’s businesses can be classified in three groups: CONSUMER Retail and distribution are Primer’s core competency and through the years. in the competitive environment of world marketing. And for the consumer.

accounting and legal services. SHARED SERVICES Our in-house Strategic Business Partners support our requirements for infrastructures. Primer has grown from the original five partners to close to 900 employees in the Philippines alone and has continuously expanded its business activity in the region that includes Singapore. Thailand. Hong Kong. Vietnam and Indonesia. Primer Group has now expanded its reach primarily across the Southeast Asian region with a vision to be the global leader one day. warehousing and logistics. manufacturing of industrial inks and the integration of creative and design services. The company has successfully replicated the Primer Management System on its business activity in the region. thereby maximizing the efficiency and synergy of its business practices that mutually benefit our principals and partners. . information and communication technology and general administration. Over the years. Malaysia. This division also provides import and export services that complement the Primer business. With our headquarters bases in the Philippines. people and financial resources.P a g e | 53 Primer’s diversifications include our joint ventures with foreign partners engaged in sales and service maintenance of air conditioning units.

P a g e | 54 OUR PARTNERS .

P a g e | 55 OUR CREATION Innovation defines how we evolved our business. Primer takes risk in developing unique retail concepts that define the new Asian retail landscape. .

ENRIONMENTAL CONSERVATION We have partnered and supported several environmental organizations and individual conservation scientists conducting scientific expeditions in the Philippines. Our scientists have discovered new species and racing against time to preserve endangered species of our once rich flora and fauna. . Philippines. Our contribution to the environment is beyond tree planting and coastal cleanup. we support scientific studies and advocate the deeper issues of biodiversity conservation. Wildlife scientists Carmela Espanola (seated). Primer advocates and acts on environmental conservation issues and contributes to nation building through our unique and pioneering way. We are proud to be on the forefront of major issues and advocacy of our time.P a g e | 56 The commitment of Primer does not cease on business activity alone. co-discoverer of Calayan Rail bird in Babuyan island.

P a g e | 57 Our sponsored scientist works on the last few remaining forest of the Philippines to study its biodiversity in hopes of its conservation and rehabilitation. Primer through its CORE program (Center for Outdoor Recreation and Expedition) has been managing several athletic expeditions that inspire our countrymen to achieve what seems impossible. NATION BUILDING Our contribution to nation building is uniquely focused on building the morale of our citizens and developing a responsible tourism industry in our country that will directly benefit the local communities. .

For more than two decades. Primer has built its business on trust and good relationship with its partners. The Primer Management System has a solid foundation on the fundamental of a dynamic business practice with emphasis on the value for our people and customer as a source of our inspiration and continuous innovations. Teamwork and Self-Discipline.P a g e | 58 2. . Integrity. Passion for Excellence. people and customer. CORPORATE VALUES Our Core Values are: • • • • • Entrepreneurial Spirit Passion for Excellence Integrity Teamwork Self Discipline PRIMER MANAGEMENT SYSTEM The Primer Management System is anchored on its Core Values of Entrepreneurial Spirit.

This feature of Value Chain Analysis lends to its completeness. Specifically. It emphasizes on the diverse interrelationships among market opportunities. it treats the enterprise not as a singular entity. VALUE CHAIN ANALYSIS The essence of Value Chain Analysis is to improve strategic learning in enterprise development. constraints. as a strategic tool in exploring different alternative strategies for poverty reduction. from which specific value addition takes place. and directives at various levels of the supply chain and at different levels of influence. but as part of an integrated chain of economic functions and linkages across geographic boundaries.P a g e | 59 3. .

. Inbound Logistics refer to management of production and processing units. and how much products to be delivered. whereas outbound logistics pertain to product distribution from point of production to final consumption. market information and finance play a pivotal role in the movements of products as these factors send signals of when. The activities involve here are the physical creation of the product and its sale and transfer to the buyer as well as after sale assistance. Finally. human resources. Primary Activities Primary Activities are those functions which are directly involved in the production. and various firm wide-functions.P a g e | 60 A company’s value chain consists of two broad categories: (1) the primary activities that are foremost in creating value for customers. where. Furthermore these build into the system responsiveness and flexibility to address the dynamic end-user preferences. These activities may fall among the following: Inbound Logistics. Production and Processing and Outbound Logistics. and (2) and the requisite support activities that facilitate and enhance the performance of the primary activities by providing purchased inputs. technology. and distribution of the product. processing. The seamless flow of market information and efficient financial delivery are very important elements in further enhancing the efficiency of supply chain activities and in potentially controlling demand for major marketing services such as transportation and storage. how. The production and processing component is involved in the actual manufacture of products ready for sale.

Since the products are manufactured outside the Philippines and most of the products are imported.P a g e | 61 Retail Value Chain • Inbound Logistics Activities include the receiving. These products are measured by tons and have imposed taxes and tariffs. loyal agencies will be the one who will directly forward it to the warehouses. and inventory control of input materials. • Operations . These warehouses are taken care of the employees in the specific location. Goods are moved around the organization. They are stored until they are needed on the production or assembly line. warehousing. When it comes to distribution. Here goods are received from a company's suppliers. Consequently when products arrived at the airport. they have loyal agencies that supply to them their products. There are also taxes and duties settlement in which the logistics take a big part of. Primer Group of Companies has warehouses in parts of Metro Manila. Primer distributes their products through third party agencies like FedEx many more.

In terms of the printing equipments. . • Outbound Logistics The activities in the warehouse and distribution of finished goods and they need to be sent along the supply chain to wholesalers. the productivity of their equipment is efficient because they can deliver. What to Assess  Timeliness and efficiency of delivery of finished goods and services Efficiency of finished goods warehousing activities Distribution and Location is part of Primer Group of Companies Supply Chain Management. equipment maintenance. These warehouses are taken care of the employees in the specific location. Individual operations could include room service in an hotel.P a g e | 62 This is where goods are manufactured or assembled. games by an online retailer. costs. offer products simultaneously. When it comes to distribution. packing of books. assembly. retailers in the final consumer. and assets associated with converting inputs into final product from production. they ensure that the equipment has full supply of inks before using the machine. or the final tune for a new car's engine and activities. and environmental protection. there are protocols that all employees must follow. The equipments of Primer Group of Companies are aligned with all of its subsidiaries therefore they achieve maximum efficiency. In Primer Group of Companies. Since Primer Group of Companies main office includes its warehouse. Primer distributes their products through third party agencies like FedEx many more. The owners of the company ensure that the rules are followed by the employees. This reminds the employees that they must follow it in order for them to achieve maximum procedures and safeties. With regards to equipment maintenance they have certain procedures before and after they use the equipments to ensure that the equipment is in its best performance. Primer has warehouses in parts of Manila are only in the Philippines and has other warehouses in other parts of Asia. videos. packaging. quality assurance. facilities operations.

market research and planning. As a matter of fact. and assets related to sales force efforts. and disseminating incoming goods or material for use and Activities. Fitflops the brand turned around with a largest market share in the retail industry. costs. costs. maintenance and repair. such as installation. advertising and promotion. spare parts delivery. and dealer/distributor support. Native. storing. and assets associated with providing assistance to buyers. With the brand promotion of Sanuk. technical assistance. Primer is thinking of making a loyalty card for .P a g e | 63 What to Assess Means to solicit customer input for product improvements Promptness of attention to customer complaints Appropriateness of warranty and guarantee policies Quality of customer education and training Ability to provide replacement parts and repair services • Marketing and Sales The activities of receiving.  Effectiveness of market research to identify customer segments and needs  Innovation in sales promotion and advertising  Evaluation of alternate distribution channels  Motivation and competence of sales force  Development of an image of quality and a favorable reputation  Extent of brand loyalty among customers  Extent of market dominance within the market segment or overall market What to Assess Primer Group of Companies marketing department played a major role in increasing Primer brands and company as a whole. Understanding consumer insights is very important to the marketing department because it is in here that they can get ideas for their marketing campaigns. Victorinox was also launched successfully before and made a foray into the mainstream luggage category. complaints handling. The service that Primer Group of Companies gives is with their key accounts and territory distributors. buyer inquiries and complaints. after-sales service. • Service This includes all areas of service such as installation. training and activities.

these activities have critical impact on the efficiency of production and distribution. not only adequacy of transportation mode is important but also the coordination of these transports systems. These support activities include: Policies. • Infrastructure and Enterprise Development Facilities Transportation infrastructure is an important key to the fast and on time delivery of goods which is vital in preserving product quality and value. can be seen from policy directions as contained in its medium term development program as well as in the number and quality of laws and regulations that tend to create a business environment conducive for growth in the value chains of the retail industries. maintenance and operations costs. Infrastructure and Enterprise Development Facilities. they were all given seminars to be followed inside the premises of the company. and Regulations Laws and regulations govern standardization of their supply chain services. Research and technology. This means that Primer provides quality service to their customers not only by this program but also in a way that Primer is prompt in their customers’ needs and complaints. in general. and Socioeconomic and Cultural Considerations. quality deterioration and wastage. all the employees are following the rules and guidelines in the company. inventory.P a g e | 64 their customers that intends to help their customers in their business by having rewards and it gives and provides also discounts for all their brands. In Primer Group of Companies. For multimodal delivery systems such as Primer Group of Companies. Mostly. Rules and Regulations. Before they start in the company. and technology and capacity investments are all important in improving the company’s policies. type and capacity of transport. An efficient transport system can translate to savings in delivery cost. • Policies. The commitment of government to supply chain development of the retail industry. schedule of deliveries and responsiveness to customers’ requirements and preferences. Supporting Activities While support activities are not directly involved in the manufacture and movement of the product. Rules. Support activities serve as the value chain’s enabling environment. . This helped Primer Group of Companies customers because most of the products are expensive and it gives privileges for their loyal customers.

P a g e | 65 The fast and reliable movement of products is a function of transport infrastructure. and other Institutional Services Research and Development institutions. packaging and other processes that will allow better handling. R&D institutions are important in coming up with innovations in product development. • Success of research and development activities in leading to product and process innovations . storage and transport. However. In this meeting. sales and ongoing projects. • Research and Technology. Primer Group of Companies already built their public image as an excellent firm because of what they offer and their corporate social responsibility. the management will tackle about their strategies and this also for the evaluation of the past projects. and industry associations play indirect role in how the supply chain performs. processing infrastructures such as stores in malls. present projects. What to Assess • Capability to identify new-product market opportunities and potential environmental threats • Quality of the strategic planning system to achieve corporate objectives • Coordination and integration of all value chain activities among organizational subunits • Ability to obtain relatively low-cost funds for capital expenditures and working capital • Level of information systems support in making strategic and routine decisions • Timely and accurate management information on general and competitive environments • Relationships with public policy makers and interest groups • Public image and corporate citizenship The general management of Primer Group of Companies always make sure that they will plan ahead of time by having strategic planning meetings every first day of the week. financial institutions. They don’t forget to give back to those families who are in need and those who helped them in achieving their success. kiosks and packaging facilities are equally important in achieving transportation efficiency and preserving the potential quality of the products.

Social and economic concerns and cultural antecedents drive these factors may hinder effective communication and efficient bargaining among the agents. They also allocate their financials in R&D to help the company offer quality products at the least possible cost and at the most ideal state. packaging infrastructure. With access to finance. The Research and Development department of Primer Group of Companies is always ahead in delivering and offering products to customers. different agents in the supply chain also interact based on social. Industry associations on the other provides the means of integrating industry goals not merely on policy advocacy but in furthering technology transfer and adoption. collective strategy in enhancing existing markets. This is why Primer Group of Companies is also known as one of the leaders in the retail industry. STRENGTHS AND WEAKNESSES 4. 4. the other players in the supply chain can adequately enhance infrastructure requirements and establish communication systems.P a g e | 66 What to Assess • Quality of working relationships between R&D personnel and other departments • Timeliness of technology development activities in meeting critical deadlines • Quality of laboratories and other facilities • Qualification and experience of laboratory technicians and scientists • Ability of work environment to encourage creativity and innovation Financial institutions are conduits for capital investments for transportation and processing. developing and entering new market frontiers. and cultural nuances. These factors affect the level of participation of supply chain agents. economic.1 DESCRIPTION OF THE STRENGTHS AND WEAKNESSES . • Socioeconomic and Cultural Considerations Aside from market signals and financial flows.

• FINANCIAL STRENGTH Since Primer has companies inside the Philippines and Asia .P a g e | 67 Strength is defined as something a company is good at doing or a characteristic that gives it enhanced competitiveness while weakness is something a company lacks or does poorly or a condition that puts it at a disadvantage. Wide market means more profit and brand equity for the business. • CONCENTRATION ON THE YOUNG MARKET Primer Group of Companies targets consumers in different areas. One reason that it is strength for them is that they can execute lots of marketing promotions both above and below the line just for them to make the brand be known. Focusing on the young market can be an advantage for them because they can swiftly follow the trends of their market. it means that they also have various markets which can contribute to the profitability of the business. they target consumers ages 40 and up while in Sanuk. Thus. they cannot have big returns and profits in their business. When a company has a wide scope. One example is that in World Traveller or in Travel club which they sell luggages. majority are 5-20 years old. It indicates that Primer’s young market is the largest market in the country. Fitflops and Native they target consumers that are in ages 20 to 40. Strengths • WIDE GEOGRAPHIC SCOPE Primer Group of Companies has a wide geographic scope. financial resources is not a problem for them. this will further add equity in the brand portfolio. Eventually. If their market is only is the NCR area only. Marketers in Primer are creative thinkers and young. This can bring value to the company. In the demographics of the Philippines. • DIVERSE RANGE OF LEADING BRANDS . This will also be a strength for the company because they can be known well inside the Philippines and outside the world and can reach millions of consumers simultaneously. This is true with Primer because their market is all over the Philippines and even in Asia. This a strength for most of the multinational companies because they are already stable in all aspects of their business. almost all of the employees working in Primer are mostly young professionals.

P a g e | 68

The brand portfolio of Primer has already built their standing in the market. Most of their brands are market leaders for their own category. One example is Sanuk, where in they are the first in the market to sell sidewalk surfer shoes. This means that they can have less marketing efforts to make the consumers aware of it. It helps the company by spending less on awareness thus they can concentrate on new promotions and maintaining the brand equity. • FOCUS ON RESEARCH AND DEVELOPMENT

Primer Group of Companies is known to be the excellent in research and development system in the retail industry. While R&D is often thought of as synonymous with hightech firms that are on the cutting edge of new technology, many established consumer goods companies such as Primer spend large sums of money on improving products. The resources and experience of Primer in the field of research enable the Philippines to establish efficient research and development system. This helps the company distribute and offer quality products at least possible cost and at the most ideal state.

Weaknesses
• MORE EXPENSIVE PRICE RANGE RELATIVE TO COMPETITION

Products prices higher relative to the competition may be considered as a weakness for Primer. In the Philippines, only World traveller is their main brand and manufactured only in this country. This means that the rest of the products offered to the market have been imported from other countries. This imposes higher costs to the company and it shall at the same time reflect on how the products are being priced. In a country where there is limited disposable income and there are available cheaper alternatives in a very price sensitive market, such products priced higher than the alternatives may suffer in this environment.

4.2 STATE THE BASIS OF EACH STRENGTH AND WEAKNESSES 5. FINANCIAL ANALYSIS

P a g e | 69

FINANCIAL STATEMENTS STATEMENTS OF INCOME FOR THE FISCAL YEAR ENDED MARCH 31, 2007, 2008, 2009, 2010 & 2011
Statement of income 2011 2010 2009 2008 2007

Sales COGS Gross Profit Interest Income Other Income Total Income Distribution Costs Admin Expense Finance Costs Other Expenses PBIT

766,897,718 422,016,779 344,880,939 150,707

525,299,237 301,601,900 223,697,337 128,530

449,681,048 256,093,357 193,587,691

346,050,618 201,920,535 144,130,083

255,147,388 148,621,077 106,526,311

100,151 345,031,646 212,562,060 111,172,958 3,045,112 223,825,867 140,204,611 65,871,454 5,296,891 193,687,842 132,532,037 51,572,094 6,784,103

112,568 144,242,651 97,005,698 43,299,666 1,684,881

303,601 106,829,912 75,343,771 26,236,916

679,461 18,251,516 12,452,911 2,799,608 2,252,406 4,569,764

Income Tax Expense Current Deffered Total Profit for the Year 6,189,100 740,207 5,448,893 12,802,623 4,490,760 777,539 3,713,221 8,739,690 927,862 1,871,746 1,482,778 769,628 1,543,630 3,026,134

5.1 FINANCIAL RATIOS

PROFITABILITY RATIO PROFITABILITY 2007 2008 2009 2010 2011

P a g e | 70

RATIOS Gross Profit Margin Operating Profit Margin Net Profit Margin ROA ROE .42% .07% .01% 4.78% 13.75% .42% .025% .004% 0.57% 3.28% .43% .016% .004% 1.06% 6.16% .43% .078% .017% 3.44% 22.35% .45% .07% .017% 3.34% 24.66%

The high gross profit margin shows that the company’s revenues are sufficient to cover operating expenses and yield profit. It reached its peak during 2006 with 82%. The same goes with operating profit margin with almost consistent digits for the past six years. LIQUIDITY RATIO LIQUIDITY RATIOS Current ratio 2007 1.5327806 2008 1.57106992 2009 1.50002913 2010 1.34669956 2011 1.93192886

Working Capital

22,015,645

49,043,447

58,643,028

65,474,517

185,175,704

The ratio is mainly used to give an idea of the company's ability to pay back its shortterm liabilities debt and payables with its short-term assets cash, inventory, receivables. The higher the current ratio, the more capable the company is of paying its obligations. A ratio under 1 suggests that the company would be unable to pay off its obligations if they came due at that point. While this shows the company is not in good financial health, it does not necessarily mean that it will go bankrupt as there are many ways to access financing but it is definitely not a good sign. The current ratio can give a sense of the efficiency of a company's operating cycle or its ability to turn its product into cash. Companies that have trouble getting paid on their receivables or have long inventory turnover can run into liquidity problems because they

14 Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to measure its ability to meet financial obligations. The components of current ratio (current assets and current liabilities) can be used to derive working capital (difference between current assets and current liabilities).50 2011 0.99 .88 2008 0.P a g e | 71 are unable to alleviate their obligations. Because business operations differ in each industry.74 2009 0. buying fixed assets and using derivatives.17 .03 2008 2.56 2009 2.35 . which is working capital as a ratio of sales. In finance. depending on the company and the industry.86 6. There are several different ratios.83 4.79 2010 0. Fixed and variable costs are the two types of operating costs. LEVERAGE RATIO LEVERAGE RATIOS Debt-to-Asset Ratio Debt-toEquity Ratio Capital Ratio 2007 0. Working capital is frequently used to derive the working capital ratio.56 2010 2.07 2011 1.17 . leverage is a general term for any technique to multiply gains and losses.15 . giving an idea of how changes in output will affect operating income. it is always more useful to compare companies within the same industry. Common ways to attain leverage are borrowing money. ACTIVITY RATIO ACTIVITY RATIOS Total Assets Turnover 2007 4.83 4. This ratio is similar to the acid-test ratio except that the acid-test ratio does not include inventory and prepaid as assets that can be liquidated. A ratio used to measure a company's mix of operating costs.65 1. assets and interest expenses.85 5. equity.39 . the mix will differ. but the main factors looked at include debt.

04 17.98 Accounting ratios that measure a firm's ability to convert different accounts within their balance sheets into cash or sales. For employees. By crafting a clear mission statement and vision statement.62 10. you can powerfully communicate your intentions and motivate your team or organization to realize an attractive and inspiring common vision of the future. it gives direction about how they are expected to behave and inspires them to give their best.20 21.19 12.19 10. Vision Statements also define the organizations purpose. VII. The vision statement communicates both the purpose and values of the organization.45 8. STRATEGIC PLAN 1.P a g e | 72 Fixed Asset Turnover Accounts Receivable Turnover 22. Companies will typically try to turn their production into cash or sales as fast as possible because this will generally lead to higher revenues. values are guiding beliefs about how things should be done.52 17.76 12. Such ratios are frequently used when performing fundamental analysis on different companies. A Mission Statement defines the organization's purpose and primary objectives. Shared with . but this time they do so in terms of the organization's values rather than bottom line measures. The asset turnover ratio and inventory ratio are good examples of activity ratios. VISION AND MISSION Vision Statements and Mission Statements are the inspiring words chosen by successful leaders to clearly and concisely convey the direction of the organization. Its prime function is internal to define the key measure or measures of the organization's success and its prime audience is the leadership team and stockholders.85 13. Mission Statements and Vision Statements do two distinctly different jobs.

After 25 years of continuous and steady growth. Their vision tells the world their employees.“ The Primer Group’s network of companies is multiplying in a pace never achieved before. retail and maintenance of ACMV and HVAC units with after-sales services and creative graphic design and services. The company is set to reach greater heights through its numerous milestones and marketing commendations locally and abroad. 100 freestanding concept stores and over 600 consignment doors in the ASEAN region. it shapes customers understanding of why they should work with the organization. consumers and the communities where they make and sell our products what they care about. its retail authority has grown to over 50 premium brands.P a g e | 73 customers. Present Vision and Mission Statement Vision Statement: “We at Primer will be the leader in the global distribution and innovation of premium goods and services. The company is now realizing its vision to become the LEADER in the global distribution and innovation of premium goods and services across the ASEAN region. Most recently.” Core Values . customers. We are also proud to have expanded our business portfolio in the area of industrial products and services through the production and distribution of chemical printing products. The Primer Group of Companies is a consortium mainly engaged in the retail and distribution of the world’s top consumer brands and products. Mission Statement: “To bring the world closer to our customers. the company also opened its first professional retail and merchandising academy.

they must continue to achieve this . The strategic intent of a technologically innovative company may be to create a new product. exercising technological leadership. Small companies determined to achieve ambitious strategic objectives exceeding their present reach and resources. These two objectives will help any company to survive and maintain their competitiveness. The strategic intent of an up-and-coming company may be to overtake the market leaders.P a g e | 74 In Primer Group of Companies. The corporate values are EPITS which stands for: E-ntrepreneurial Spirit P-assion for Excellence I-ntegrity T-eamwork S-elf Discipline 2. cash-rich companies with modest strategic intents. In line with this. Primer Group of Companies still experiencing revenue growth for the past years. and capturing attractive growth opportunities. they already achieved a 10% revenue growth and became a Billion Peso company. The strategic intent of a small company may be to dominate a market niche. gaining a sustainable competitive advantage. Although the current ratio and debt to equity ratio are not optimistic. A company exhibits strategic intent when it pursues ambitious strategic objectives and concentrates its competitive actions and energies on achieving that objective. personal values are always applied. The financial objective set for Primer Group of Companies is in line with the financial growth they are experiencing right now. often prove to be more formidable competitor than larger. achieving lower overall costs than rivals. Strategic objectives need to be competitor-focused and strengthen the company’s longterm competitive position. boosting the company’s reputation with customers. winning a stronger foothold in international markets. OBJECTIVES: STRATEGIC AND FINANCIAL There are two (2) objectives that every business organization should strive for: outstanding financial performance and excellent strategic performance. overtaking key competitors on product quality or customer service or product innovation. Strategic objectives focuses on winning additional market share. During 2010. Financial objectives A strategic market objective focuses on the company’s intent to sustain and improve the organization’s competitive strength and long-term market position through creating customer value.

compete effectively. and stock price appreciation. The strategic objective which aims Primer to be recognized as a leader in global distribution and/or innovation will also be in line with the proposed vision. gain market share. EVALUATION OF PRESENT CORPORATE STRATEGIES A business strategy represents the game plan that your company will use to run its business. Primer Group of Companies will never cease to innovate their products in response to the changing needs and wants of their consumers. and accomplish managerial objectives.P a g e | 75 kind of financial objective for them to attain their vision as the leading food company through striving for a revenue growth of 12% annually. 3. long-term health. and conduct operations. This plan of action determines how the company appeal to and satisfy customers. There are many variations in the competitive strategies that companies employ because each approach entails custom-designed actions to fit its own circumstances and industry environment. At the end of the day. According to Porter. earnings growth. The Strategic objective for Primer Group of Companies for the next 5 years is to be recognized as a leader in global distribution and innovation of goods and services all over the world. their consumers are still their bosses so they must continue to give delight to them by their innovations. Financial objectives signal commitment to such outcomes as good cash flow. dividend growth. and ultimate survival. competitive strategy concerns the specifics of management’s game plan for competing successfully and achieving a competitive edge over rivals. creditworthiness. Developing a strategy should mean there is a managerial dedication to follow a specific group of actions that will advance the company's financial market performance and increase its bottom-line. and an acceptable return on investment. Most companies aim to do a better job of providing what buyers are looking for and thereby gain the upper hand over rivals. Strategic objectives Financial objectives focus on achieving acceptable profitability in a company’s pursuit of its mission/vision. The five approaches are illustrated below: The Five Generic Competitive Strategies .

P a g e | 76 In developing the overall strategy. and whether the company is pursuing a competitive advantage linked to low costs or product differentiation.concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals’ products. the target is to have the lowest best costs and prices compared to rivals offering products with comparable upscale attribute. A best-cost provider strategy. • • • . The biggest and most important differences among competitive strategies boil down to whether a company’s market target is broad or narrow.giving customers more value for the money by incorporating good-to-excellent product attributes at a lower cost than rivals.seeking to differentiate the company’s product offering from rivals’ in a way that will appeal to broad spectrum of buyers. A broad differentiation strategy. A focused or market niche strategy based on lower cost. These are the following description of each of the five generic competitive strategies: • A low-cost provider strategy. the company is beginning its pursuit for a competitive advantage. usually by under pricing rivals.striving to achieve lower overall costs than rivals and appealing to a broad spectrum of customers.

Based on the 13 dimensions of competitive strategy.P a g e | 77 • A focused or market niche strategy based on differentiation. Push Versus Pull Primer Group of Companies is making use of the push strategy since they want their products to be available to the consumers directly. With their wide product line. With the aggressive marketing campaigns. due to competition. Primer Group of Companies geographic market served is national. Primer research and development department still study quality products that could also be offered because the consumers wants the best product in the market.concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rivals’ products. Primer Group of Companies has adopted the broad differentiation strategy. Primer’s products should also keep in abreast especially when it comes to advertising and pricing. With the factors mentioned above. Primer has the following applications in their business: Specialization Primer Group of Companies product line is wide starting from footwear to clothing and to different categories. it can be concluded that Primer adopted the broad differentiation strategy. Although they are known as one of the big distribution company. Brand Identification Since Primer Group of Companies has companies in different parts of the world including Asia. they have a cost advantage because of their economies of scale. However. Primer is more focus on their downline channels because they need to target people who could have the best products in so expensive way of buying it. in-store checking and many more. Since Primer Group of Companies is a multinational company. the brand identification for their products is strong. Example of the push strategy of . Primer Group of Companies is making sure that they will be able to provide their customer what they want with different variety of products that customers can choose from. in-store executions and focusing promotions. Among the five generic strategies aforementioned. their target customer segments also vary from the high-end consumers to down line consumers but mostly they offer their products to customers in the upper classes. Obviously. Primer is conducting consumer immersions for them to further know the qualities that consumers perceives as best and at the same time they ask consumers on how they want products to be offered for them through surveys. As of now. The strategies of companies competing in the industry vary.

Product Quality Primer as a global brand is well-known for their product offerings in high quality. deadline and performance requirements. Service The accounts serve as the customers of Primer Group of Companies. due to the high quality products. Vertical Integration Primer make use of third party agencies especially in house to house mailing of loyalty cards.art technologies and the “systems” approach integrates the understanding of customer expectations with cost. Expertise in state-of-the.P a g e | 78 Primer is their in-store promotions on which they give incentives to the winners. kiosks. retailers and many more the choice of their distribution channel is broad-line outlets. by meeting their need for product solutions and helping them make their lives easier by integrating Primer brands into their everyday lives. Primer Group of Companies is always a leader in innovation. Primer is achieving economies of scale on which facilitate their low cost position in delivering the goods to end-users. They practice vertical integration to offer the tasks easier for the employees and gain access to different suppliers that could also be an effective customer. Primer develop sustainable relationships with their most valuable consumers. Channel Selection Since Primer Group of Companies products are mostly available in the malls. well in fact it is at par with the competition. Through these equipments. Filipino down line consumers perceived it as a costly. Price Policy . At some point. Primer is one of the few companies in the Philippines capable of combining flexibility and expertise in complex systems. Cost Position The investment of Primer Group of Companies in cost-minimizing facilities and equipment in delivering helped them to be efficient and effective. Programs are created because they want their brands to be available to the consumers and they could easily access to the products they offer. Technological Leadership In line with their mission and vision.

P a g e | 79 The price position of Primer products is at par with industry average making the competition more intense. The strategies. This same goes with their operational leverage because they need to distribute large number of products. goals and values are also practiced by Primer since it is engaged in all of the subsidiaries of Primer Group of Companies all over the world. mission. Relationship with Parent Company Primer Group of Companies is a fully-owned by the Chinese businessmen. filing of required documents (such as financial statements submitted to SEC) and remitting of contributions to varios government agencies. Relationship to Home and Host Government In order to maintain a good relationship with the Host government. vision. Leverage Since Primer Group of Companies is a full-size company on which they really have to operate with accounts payable. PRESENT CORPORATE STRATEGIES . they have high financial leverage. Primer makes sure that they comply with their due taxes on time.

• Reasonable cost that gives high standard quality goods For Primer. But they are also always looking for ways to reduce costs. This gives Primer an advantage that other competitors simply can’t match. • Reframe our categories Primer Group of Companies markets many of the world’s leading and most beloved brands. One factor in establishing a strong and sustainable company is continuing to look for talented persons that can help the company as a whole. Primer has one of the largest and most powerful sales forces. so they can invest more in making delivering quality products that people love. product quality always comes first to their customers. In the distribution industry. luggage and many more. The continuous search of Primer for the best is one way of transforming the organization. They are also their competitive advantage so they make sure that their people have the right compensation and benefits. PROPOSED CORPORATE STRATEGY The present strategies of Primer Group of Companies need not be changed. To make Primer’s products available and accessible in all of the most possible touch points of the consumers. • Sales forces to reach targeted consumers Primer Group of Companies is taking full advantage of their size and broad reach. These products are made with excellent quality to give consumers millions of smiles every day. Primer is doing this by focusing on building a global powerhouse in footwear. In relation to this. Primer has a simplified organization that puts local business units at the heart of the company so decisions are made closer to the consumer. Primer Group reframed their company as a whole and made a centralized strategy that the . This is the main focus of the sales force of Primer and they are doing all ways to reach these points. 4. clothing.P a g e | 80 • Establish a strong and sustainable company The first strategy is all about Primer’s employees.

A resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. Primer sees that quality is a driver of growth because the consumers nowadays are more into products that are worth their money. In cooperation with R&D. the firm is said to possess a competitive advantage over its rivals.P a g e | 81 subsidiaries will also use. The goal of much of business strategy is to achieve a sustainable competitive advantage. Primer products are already in maturity market and experiencing a slow growth in the industry. They continue to develop and introduce new products that the consumers will have a difference day when they had it. 5. a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. Michael Porter identified two basic types of competitive advantage: • • Cost advantage Differentiation advantage A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost. Primer is always building new or more capabilities. With these four corporate strategies. Cost and differentiation advantages are known as positional advantages since hey describe the firm’s position in the industry as a leader in either cost or deifferentiation. they still have to make sure that quality is not compromised by having trade checks. the consumer insights department gives them on what the consumers want in a product and in return will develop a product that the consumers will value. In this situation. COMPETITIVE ADVANTAGE When a firm sustains profits that exceed the average for its industry. Despite the fact that Primer product prices are higher than competition. Thus. Primer is now the best distribution company not only in the Philippines but also in the global market. or deliver benefits that exceed those of competing products. The diagram combines the resource-based and positioning views to illustrate the concept of competitive advantage: .

Without the superiority.P a g e | 82 A MODEL OF COMPETITIVE ADVANTAGE Resources and Capabilities According to resource-based view. The following are some examples of resources: • • • • • Patents and trademarks Proprietary know-how Installed customer base Reputation of the firm Brand equity Capabilities refer to the firm’s ability to utilize its resources effectively. . Resources are the firm-specific assets useful for creating a cost or differentiation advantage and that few competitors can acquire easily. the competitors simply copuld replicate what the firm was doing and any advantage quickly could disappear. Such capabilities are embedded in the routines of the organization and are not easily documented as procedures and thus are difficult for competitors to replicate. in order to develop a competitive advantage the firm must have resources and capabilities that are superior to those of its competitors. An example of a capability is the ability to bring a product to market faster than competitors.

there is no need to change it. However.2 PROPOSED COMPETITIVE ADVANTAGE Primer Group of Companies is achieving their success because of the people behind their strategies and processes. quality. Since their competitive advantage is working enough to achieve the company’s success. These copmpetencies enable innovation. the following demonstrates how Primer Group of Companies employ their competitive advantage in contributing to their success: • Investment in Renewal Primer will invest in renewal by constantly looking for fresh ideas in the improvement of their brands. communicate aspirations and work in complex relationships and not primarily on how big their budget or the technologies that support their products. and other benefits that will definitely make the employees feel secured and cared for. Hence. 5. The company’s success really depends on how the system works in the company and their employee’s performance. 5. it shall target on customers that can easily see the good quality of products . competencies and skills. Using the Wharton Competitive Advantage Cycle. Primer intends to keep making a difference in many aspects in the workplace so that employees can perform their tasks and responsibilities in the best way they can. communities and other companies in the world. Primer Group of Companies led by their senior leadership team which consists of the SBU heads and the brand managers are committed to learning and development that are also the best example for all of the Primer employees. all of which can be leveraged to create a cost advantage or a differentiation advantage. partnerships. competitive benefits. the right and talented persons must be retained by the company. incentives. and customer responsiveness. The company is proud of its people and committed to their growth they are the key to the company’s success. caring assistance.P a g e | 83 The firm’s resouces and capabilities together form its distinctive competencies. their ability to generate commitment and trust. The company ensures that their employees receive excellent premiums. workplace. attitudes. efficeincy.1 PRESENT COMPETITIVE ADVANTAGE Primer Group of Companies present competitive advantage is basically its system and employees. helpful programs. comfortable allowances.

Fairness is an essential element of trust. and reducing effectively and efficiently on operating costs. . This approach makes Primer workplace safer and more efficient. making a greater investment in human resources. which is not the right thing to do. race. talent. ethnicity. providing more resources for experimentation. it’s good for the bottom line. using minimal controls. their employees are their competitive advantage. The company won’t permit discrimination or harassment based on factors like age. • Sources of Advantage Sources of competitive advantage have shifted from financial resources to technology resources and now to human capital. In Primer. management must make decisions about people based solely on merit. and appraising performance for its long-run implications.P a g e | 84 that the company offers. The company empowers its customers by selecting highly skilled individuals. The company wants to be the employer of choice and attract the best candidates. giving employees more discretion. Career success at Primer comes from hard work. allowing and even rewarding occasional failure. They should also be effective in implementing supply chain management and through looking at cost effective ways to market the business like ensuring that the company’s software is not costing them in the long run in hidden costs. or any other legally protected status. sex. It also helps keep Kraft Foods employer of choice. and a commitment to the company’s values nothing else. increasing customer retention through improved customer care. For employees to trust that they’ll be treated fairly at work. Primer prizes a diverse workplace and benefit from it as a business.

supply. A comprehensive and systematic master plan is needed to effectively manage a largescale effort. Key to the success of a supply chain is the speed in which these activities can be accomplished and the realization that customer needs and customer satisfaction are the very reasons for the network. warehousing. while still keeping the company’s costs down. This exclusive management transformation program creates a master plan that systematically enacts supply chain agility. assembly. product availability and customer satisfaction are all benefits which grow out of effective supply chain management. FUNCTIONAL AREA STRATEGIES 1. Effective management must take into account coordinating all the different pieces of this chain as quickly as possible without losing any of the quality or customer satisfaction.1 Target Market Segments . There is a need for the company to definitely be spending big to protect against potential unknown intruders. The company’s supply chain provides state-of-the-art technical application tools and emphasizes a continuous improvement approach. It encompasses the full supply chain from customer through production. especially considering the high value of data to competitors and others. The intrusion threat is very real. The company therefore has a strong orientattion in addressing the distinct needs of its customers. lower operating costs.P a g e | 85 • Positional Advantage Realized Primer has a wide distribution reach nationwide. Marketing 1. Reduced inventories. break-ins would in fact be one of the biggest piracy threats. VIII. and distribution. • Competitive Dynamics Eroding Present Advantage Employee piracy and intrusion are the factors that may erode Primer present competitive advantage.-piracy.

Another thing is that.2 Marketing Objectives Improving the brands’ positioning by creating effective and efficient methods and strategies of brands in different areas for exposure to reach the brand’s target consumer in relevant aspects. Teenagers can easily adapt to the changes and new offered products because of the new technology and fashion statements launched nowadays. this will further add equity in the brand portfolio. 1. Focusing on this segment can be an advantage for the company especially in increasing its sales and profit since they can swiftly follow the trends of their market. Thus.P a g e | 86 Primer Group of Companies shall focus belonging to all ages because of their wide variety of products offered nationwide.3 Marketing Plan Product • Enhancing portfolio consistently to offer leadership in their market segments • Maintaining market share of the company by meeting competitor prices Price . 1. Providing insightful analysis of media environment and competitive activities that impact on strength of the product or brand. Primer should also focus on expanding more on their distribution of products in the downline market which by fact drives most of their sales because many consumers are fond of buying cheaper products.

2.1 Objectives . Promotion • Securing leadership by managing brand portfolio in continuous airing of products to consistently visible in the market. operations and production costs. Operations 2.P a g e | 87 • Achieving price stability. or maintaining public image without compromising cost Place • Add and enhance the in-store promotions in malls. • Primer’s downline channels are responsible for the products that carry to different areas to make it accessible for the consumers.2 Plan . To achieve cost advantage in assembly. To minimize the time in purchasing of products and orders. 2.

To protect and strengthen the bases of financing the organisation's activities and to provide efficient and comprehensive financial accounting and reporting for these activities. To ensure that work is expedited through efficient financial and administrative procedures while at the same time ensuring adequate financial controls. evaluating and maintaining to meet the standards of the company.1 Objectives Marking down costs without reducing the quality of materials used. • Teamwork can be very useful in monitoring. for improvement of Capacity Standard • Maintaining the standards of the facilities of the company by following the guidelines and procedures implemented by the company. . Finance 3.P a g e | 88 Scheduling • Providing a monthly or weekly schedule to plan the time of delivery of products and orders to customers. • Applying new technology development plan. Control 3. 3 to 5 persons per group can be assigned to different areas for controlling. • Innovating new machines that can help in minimizing the production of goods in an efficient and effective way.

• Assessing where prices can be increased on a regular basis to maintain or increase profitability. • Seeking financial solvency by driving down costs and improving earnings for company’s growth. Solvency Profitability 4. 4.2 Plan .1 Objectives To hire reasonable applicants and retain the excellent employees in the organization. • Reviewing the profitability of the company’s various products.P a g e | 89 3. Human Resources 4.2 Plan Liquidity • Expand the company’s liquidity through assessing over head costs and looking for opportunities to decrease them. Unproductive assets should also be decreased. To build HR’s organizational capability.

Appraisal • • Reduce regrettable attrition rate by implementing appropriate programs. • Giving recognition like trophies and plaques for employee titles Training and Development • Design a core training curriculum linked to career stages • Conducting seminars once every quarter for company’s overall improvement • Develop a succession planning process to identify and promote development of talent • Ensure 100% completion of Primer Group of Companies training calendar 5. indirect Recognition financial. Information Technology 5. career and work content. • Recruit and bring new employees Identify skill gap areas and develop on these gaps. direct financial.P a g e | 90 Selection • Hire applicants that are suited in the position of vacancy • Develop talents of employees by joining organizations and social interactive media to boost self-confidence and increase awareness to possible clients. Rewards and • Ensure total employee rewards from affiliation.1 Objectives .

5. Provide more advanced web tools and materials to enhance and attract more potential consumers and meet community’s changing needs. Analysis of Company’s Capabilities to Implement The McKinsey 7S model involves seven interdependent factors that are categorized as either "hard" or "soft" elements: Hard Elements Strategy Structure Systems Soft Elements Shared Values Skills Style . • Information Management will leverage existing.P a g e | 91 Identify emerging and mainstream technologies.2 Plan Strategic Information System • Innovate or enhance the website of Primer Group of Companies that can be easily access and visit by the consumers. emerging. and streamline business processes. improve. Information Management IX. • Obtain feedback from users on satisfaction levels and desired new services and implement changes accordingly. and innovative technologies to enhance. IMPLEMENTATION 1.

organization charts and reporting lines. However. The businesses have been structured in a hierarchical way with several divisions and departments. changes in its external environment. each responsible for a specific task such as human resource.The structure of the company dictates the way it operates and performs. can be more difficult to describe. . on the other hand. or anticipation of. production or marketing. "Soft" elements. Strategy. Structure.Strategy is the plan of action an organization prepares in response to.P a g e | 92 Staff "Hard" elements are easier to define or identify and management can directly influence them: These are strategy statements. Tactics or operational actions differentiate it by its nature of being premeditated. these soft elements are as important as the hard elements if the organization is going to be successful. and are less tangible and more influenced by culture. and formal processes and IT systems. well thought through and often practically rehearsed.

This may be to make money or to achieve excellence in a particular field.This helps in identifying the basic set of skills that each employee has within the organization. These values and common goals keep the employees working towards a common destination as a coherent team and are important to keep the team spirit alive. It also entails the way managers interact with the employees and the way they spend their time. beliefs and norms.All members of the organization share some common fundamental ideas or guiding concepts around which the business is built. and pushing their staff to limits in achieving professional excellence. and this forms the basis of these organizations' strategy and competitive advantage over their competitors. Shared Values. which develop over time and become relatively enduring features of the organizational life. These processes are normally strictly followed and are designed to achieve maximum effectiveness. knowledge. Traditionally the organizations have been following a bureaucratic-style process model where most decisions are taken at the higher management level and there are various and sometimes unnecessary requirements for a specific decision to be taken. Staff. providing them with rigorous training and mentoring support. Style. It includes the dominant values.All organizations have their own distinct culture and management style. Skills. Strategy 1: Establish a strong and sustainable company .P a g e | 93 Systems. All leading organizations put extraordinary emphasis on hiring the best staff. This includes specific type of expertise.Organizations are made up of humans and it's the people who make the real difference to the success of the organization in the increasingly knowledge-based society. talent or competency required to perform organizational tasks and roles become skills requirements.Every organization has some systems or internal processes to support and implement the strategy and run day-to-day affairs. The businesses have traditionally been influenced by the military style of management and culture where strict adherence to the upper management and procedures was expected from the lower-rank employees.

Through the brands offered by the company. Employees must be given the time to grow in different areas in order for them to excell and enhance their abilities. They should train more their employees for better improvement so that they can be able to adapt to the changes of their environment. employees should seek more of the advantages that it offers to them. Through teamwork. Staffing Primer Group of Companies environment is different from other retail companies.P a g e | 94 Structure Primer Group of Companies should conduct a board meeting every month to open and see the growth of their company. Strategy 2: Reframe Our Categories . Skill Shared Value Primer has corporate values that meet and must exceed their goals to continue to aim for a better improvement of the company. They must be given the chance to show better than those that are not managed by their leaders. they could practice the values that are into them. The benefits that the company is giving in helping them to be creative and confident in their field of work. Style Primer should use management styles for leading their employees. System Primer set operations for different areas in their department. This must be accomplished through the weekly supervision of the leaders and managers of different departments. They should set procedures and processes that can move them in a better innovation and changes for the positive outcome of the company. All of their staffs and employees shoul make a step in improving and developing their company.

they must have a BOD meeting wherein they could report directly to the board of directors to present the System . Primer’s employees must communicate the plan to the other departments and establishes systems for implementation and better movement. Style Staffing Skill Shared Value Strategy 3: Sales forces to reach targeted consumers Structure The sales team of Primer must negotiate to the different brands to gain new learning’s and opportunities for the organizations’ wealth.P a g e | 95 Structure Reaserch and Development department gives new informations and ideas for each set of departments. Every month. Primer experts at team collaboration in creating innovative solutions and ideas in developing a new structure of the company. Values helps them to attain and improve the categories through conitnuous innovation and development. Every Monday. They should give procedures on how this guidelines can help them. System Human resorce department supervise the employees in the problems they encounter more especially in the job related exposure of the employees. each department must conduct a meeting to see the growth and changes in the profits of the company. Acknowleding the new innovation in strengthening the companies growth to exell through investments and contracts for different branding techniques. It gives hints on how the company will expand more to achieve its quotas.

Staffing Skill Shared Value Strategy 4: Reasonable cost that gives high standard quality goods Structure The companies operations works in handling the products and dealing to the customers. customers and ultimately. Primer’s salesmen should ask their clients. The team must govern the processes through weekly visitation of stores and implementation of the guidelines of the company. Employees must work more closely and efficiently with suppliers. Primer’s sales team should be very approachable and goaloriented in dealing with their customers. This leads to improvements in customer collaboration and allows them to effectively discuss the features and benefits of their product and service that most relate to each customer. Style Sales team must get the other known brands for product expansion of the business and must use different management styles in order to regain and have a position in the marketplace.P a g e | 96 whole increase in the profit of each departments and discuss the internal and external issues regarding the management. with consumers. The most common drive to uplift Primer’s sales is to expand the company’s reach to grow market share for the positive outcome of the company. customers and prospects good quality questions to fully determine their situation and buying needs. This System Style . They should go to different malls to see and check if the amployees are performing well. They should assure that these customers are happy and must transact to them with legal documents and achievable time frame.

Skill Shared Value 2. Balance Scorecard Framework The Balanced Scorecard is a strategic performance management framework that has been designed to help an organization monitor its performance and manages the execution of its strategy. . In its simplest form the Balanced Scorecard breaks performance monitoring into four interconnected perspectives: Financial.P a g e | 97 leads to being able to drive sustainable savings. the Balanced Scorecard was found to be the sixth most widely used management tool across the globe. Customer. which also had one of the highest overall satisfaction ratings. Primer must invest and get brands that can be profitable for them. In a recent worldwide study on management tool usage. Primer should always keep an eye on keeping costs down through offering promotions and incentives but not at the expense of lowering the quality of materials used in the production of the goods they offer. but also helps planners identify what should be done and measured. It enables executives to truly execute their strategies. Through this. The “new” balanced scorecard transforms an organization’s strategic plan from an attractive but passive document into the "marching orders" for the organization on a daily basis. Staffing Primer should cultivate an environment wherein team members can collaborate and work together in a flat hierarchy. The balanced scorecard has evolved from its early use as a simple performance measurement framework to a full strategic planning and management system. Internal Processes and Learning & Growth. It provides a framework that not only provides performance measurements. employees have superior technical expertise in performing their jobs and are cross-trained for other roles. They must choose brands that offers good quality of products with low costing so that customers can buy these products with minimal and less complaints.

organizational culture. market share goals as well as product and service attributes. systems and databases. The Internal Process Perspective covers internal operational goals and outlines the key processes necessary to deliver the customer objectives. organizational capital and information capital including skills. . The Customer Perspective covers the customer objectives such as customer satisfaction. leadership.P a g e | 98 The Financial Perspective covers the financial objectives of an organization and allows managers to track financial success and shareholder value. training. The Learning and Growth Perspective covers the intangible drivers of future success such as human capital.

Providing insightful analysis of media environment and competitive activities that impact on strength of the product or brand. ProfitabilityReviewing the profitability of the company’s various products. Primer’s down line channels are responsible for the products that carry to different areas to make FINANCIAL (Finance) • • • • • • • • CUSTOMER (Marketing) Improving the brands’ positioning by creating effective and efficient methods and strategies of brands in different areas for exposure to reach the brand’s target consumer in relevant aspects.P a g e | 99 OBJECTIVES MEASURES TARGETS INITIATIVES X. • Customer satisfaction. or maintaining public image without compromising cost PlaceAdd and enhance the in-store promotions in malls. loyalty and profitability Improve brand image Improve brand position Create effective strategies Percentage of sales from new products Number of employee efforts • • • • • Customer Feedback Test returns Repeat Purchase Brand recall Brand loyalty • • • • • • • • • • • .expand the company’s liquidity through assessing over head costs and looking for opportunities to decrease them. Assessing where prices can be increased on a regular basis to maintain or increase profitability. To ensure that work is expedited through efficient financial and administrative procedures while at the same time ensuring adequate financial controls. FINANCIAL PROJECTION • Marking down costs without reducing the quality of materials used. Unproductive assets should also be decreased SolvencySeeking financial solvency by driving down costs and improving earnings for company’s growth. To protect and strengthen the bases of financing the organization’s activities and to provide efficient and comprehensive financial accounting and reporting for these activities. ProductEnhancing portfolio consistently to offer leadership in their market segments PriceMaintaining market share of the company by meeting competitor prices Achieving price stability. • Increase shareholder value Operating costs Return on investment Product cost • • • Asset Utilization Revenue Growth • Liquidity.

74 21.00 31894279.054.3 88 29.6 69 15. BEST CASE SCENARIO NET SALES COST OF GOODS SOLD GROSS PROFIT INTEREST INCOME TOTAL INCOME OPERATING EXPENSES PROFIT BEFORE INJCOME TAX INCOME TAX EXPENSE CURRENT DEFFERED PROFIT FOR THE YEAR 2011 168.502 .9 43 1000366.41 0 227.116 42. 59 42.5 193803540 .582.6 54 2.955 . 46 81922.322 . It is assumed that there will be a decrease of 10% in the OPERATING EXPENSE annually. 66 2619663.958.45 4 2012 184.9 54 37.1 91 8. 77 31. 93 53.785.792 .350.14 28704851.7 149651892 .474.38 2015 246069814 .695 52 47.26 2014 223699831 163120563 60579268.044 .776.587 .61 1.580. 02 72695.82 7 4617543.85 16092289.572 .7 71 1794304.83 Assumptions: • • It is assumed that there will be an increase of 10% in NET SALES annually.515.908 11 53.965.788. 94 8282247.01 20330965.821 .95 2016 270676795 .875.963 .783 1.579 .89 3 137295314 . 09 64453.959.9 76873254.54 23250929.080 55 68.4 47.905 56 76.54 25834366.881.375.P a g e | 100 A. 73 4404594.1 07 39.199.764 .714.947.637.161.121 63 60. 004 42. 6 12.30 35438088.9 91 51.909. .393. 33 3486308.1 33 22.7 68268400.111 .60 57096.70 Best Case 2013 203363482 .409. 64 92247.109.651. 994 125.1 177801413 .7 53711590.975 .15 12091981.201 .068.676 .

41 0 227.4 2015 2329198 78 1778014 14 5511846 4 66142.161.7 2201625 .783 1.6 54 2.5 1022878 .4 32 5898522 4 3898346 9 2000175 4 7570664 .45 4 1.958.4 57843.9 2014 2146726 98 1631205 63 5155213 5 61862. 994 125.7 53 55 4511361 4826097 6 3 3929690 3921830 3 9 5816712 9042663 .959. 004 42.P a g e | 101 B.1 1640143 .109.068.8 476970.3 8775547 .1 57 5518460 6 3906159 3 1612301 4 6102560 .9 .054.9 91 51.116 42. 42 6361513 .375.9 1407123 4 Assumptions: • • It is assumed that there will be an increase of 8.1 07 39. WORST CASE SCENARIO NET SALES COST OF GOODS SOLD GROSS PROFIT INTEREST INCOME TOTAL INCOME OPERATING EXPENSES PROFIT BEFORE INJCOME TAX INCOME TAX EXPENSE CURRENT DEFFERED PROFIT FOR THE YEAR 2011 168.1 1134254 0 2016 2527180 67 1938035 41 5891452 6 70697.5 3422648 .2 741498.5% annually in the NET SALES It is assumed that there will be a decrease of 2% annually in the OPERATING EXPENSES .785. 46 4092057 .5 62 5161399 8 3913987 2 1247412 6 4721456 .7 1322087 .82 7 Worst Case 2012 2013 1823548 1978550 58 21 1372953 1496518 14 93 4505954 4820312 4 9 54071.

0 61137.P a g e | 102 C. 994 125.783 1.054.82 7 Probable Case 2012 2013 1836153 2005997 76 98 1372953 1496518 14 93 4632006 5094790 2 6 55584.4 74 87 4637564 5100904 6 3 3701311 3479232 5 8 9362530 1621671 .9 2740413 0 Assumptions: • • It is assumed that there will be an increase of 9.45 4 1.109.8 75 6169968 0 3074250 1 3095717 9 1171729 2 2538488 .068. 53 6586540 .9 1645990 9 2015 2394271 43 1778014 14 6162572 9 73950.785. It is assumed that there will be a decrease of 6% in the OPERATING EXPENSES annually.959.375. 004 42.25% in the NET SALES annually.7 2177837 6 2016 2615741 54 1938035 41 6777061 3 81324.958.9 91 51.161.9 1918567 .7 35 6785193 7 2889795 1 3895398 7 1474408 4 3194226 . .7 1329770 .116 42.9 5 3543717 .6 1140845 9 2014 2191552 80 1631205 63 5603471 7 67241.41 0 227.9 767727.1 07 39.6 6 5610195 8 3270478 8 2339717 0 8855828 . PROBABLE CASE SCENARIO NET SALES COST OF GOODS SOLD GROSS PROFIT INTEREST INCOME TOTAL INCOME OPERATING EXPENSES PROFIT BEFORE INJCOME TAX INCOME TAX EXPENSE CURRENT DEFFERED PROFIT FOR THE YEAR 2011 168.6 54 2.5 6138026 .

Thai. Invest time and money more to study and forsee the fashion trends more on adding new brands to the company because this will be a good help in expanding and increasing the company’s revenue.P a g e | 103 LETTER TO THE CEO Mr. In case you want to know the result of the study. Primer Group of Companies to comply in one of the requirement in my Strategic Management Class. In this case. I’ve learned that your company focus different strategies in order to grow and develop their skills in achieving the company’s goals. And by considering Research and Development. you are allowing your company to go beyond and prepare for the future nuisance. The propose method for developing the current strategy must be taken with the full compliance of all the people involved in the company. please allow me to share with you the significant findings in regards to your present corporate strategies. it is good to know that Primer Group of Companies is one of the strongest and fastest growing retail companies here in the Philippines. Developing the process or expanding the operation is also part of R&D that may contribute a big part in experiencing future growth of the company. The company must be ready enough to adopt and take challenge brought by the proposed development strategies and certain evaluation is needed to verify the effectivity of the suggestes strategies. The making of this paper is very enriching for me because I learned a lot in your company. Using strategies is a robust one since it can help the company in attaining the desire goal in terms of financial and strategic goals. I was able to get to know the deeper startegies that you use in order to . After carefully studying the external and internal environment. First thing that I would propose to further develop the strategies is to engage in an extensive Reasearch and Development. you are investing to your company’s future for its vital to continued growth and prosperity. I believe that without the teamwork and hand in hand work of your employees. I would like to inform you that I use your company. Jimmy Thai Chief Executive Officer Primer Group of Companies Dear Mr. this company will not be possible and successful as it is right now.

It also help me to choose the right company for me wherein I can stay for good and also to work with your employees. Thank you very much and more power! Sincerely yours. Mary Ann Mendoza Marketing Intern . The culture of the company is quite different from the other ordinary companies because of the time and approach of the employees as well as the comfy attires of all the people working in your company.P a g e | 104 maintain the company in a good position. I hope that by this study I was able to share my knowledge and hoping to help for the improvement of your company. It was a great experince working with all your staffs. They already became close to my heart.

tradingeconomics.com/philippines/inflation-cpi Source: National Statistics Office. Philippines .P a g e | 105 BIBLIOGRAPHY http://www.

Sign up to vote on this title
UsefulNot useful