Internal Strengths
 
External Opportunities
1. Regional GRDP growth of 6%, investment growth of
15.4% and the annual population growth of 2.36% are
positive resulting in the thriving business landscape and market (O2, O4 - S1, S3, S4)
enlargement of the prospective commercial tenant market
in CAR/Baguio City (Economic/Social)
2. New business opportunities brought about by the upward - , S3, S4)
trend of tourism in Northern Luzon with its 22.8% growth
accelerated by government infrastructure projects such as tenant retention and increase occupancy rates (O1 - S2)
TPLEx (Social/Economic/Political)
3. Potential for more available real estate property
investment opportunities from the Baguio Comprehensive
Land Use Plan (CLUP) and the metropolitan BLSTT initiative
in areas outside of the crowded Baguio Central Business
District (Political-Legal)
4. Rising trend in mixed-use buildings and zoning in real
estate development (Economic)
External Threats
1. Prime real estate within the Baguio Central Business
District are extremely limited and expensive to acquire
constraining the growth and expansion potential of the
commercial leasing business of Garpaz Enterprises
(Economic) 2.
Competitors with superior buildings, facilities and marketing
capability may have resulted in the loss of prospective
tenants for Garpaz Enterprises (Economic)
3. Tenant backward integration and mixed-use
developments threaten to take away prospective tenants
from existing commercial buildings (Economic)
Internal Weaknesses
1. Strategic location of Garpaz Enterprises' existing building
assets within the Baguio Central Business District
(Marketing)
2. Low operating costs as indicated by the 3-year average
net profit margin of 40% allows flexibility for Garpaz
Enterprises to be price competitive with rental rates and has
contributed to positive net earnings for the company
(Finance/Marketing)
3. The Current Ratio of Garpaz Enterprises is 3.92 as of 2015
which demonstrates the availability of cash and equity
financing and that the company is solvent (Finance)
4. The debt & asset-to-equity ratios at 0.1 shows that
Garpaz Enterprises relies more on equity financing than
debt financing which implies financial stability. The
company has very low risk of non-payment of debts as
indicated in the liquidity, profitability and leverage ratios
and has good credit standing with financial institutions
(Finance)
SO Strategies
1. Convert Millennium building into a mixed-use mini hotel
with commercial areas to tap into the growing tourism
2. Locate and invest in real estate in emerging business
districts in the outskirts of Baguio City and CAR region (O1, O3
3. Implement rental price escalation deferment to promote
ST Strategies
1. Real estate investment in emerging business districts
outside of the Baguio Central Business District (T1 - S3, S4)
2. Boost competitiveness of the business and maximize the
revenue generating potential of existing building assets
through investments in renovation and upgrading services
and facilities (T2, T3 - S1, S3, S4)
1. Existing service facility assets of Garpaz Enterprises have
provisioning deficiencies such as water supply and backup
electricity that contribute to the loss of some prospective
tenants (Service)
2. Low demand for the 3rd and 4th level room spaces have
reduced occupancy rates down to 54% reducing the income
generating return on assets which lead to decreased rent
revenues by 21% in 2015
3. Garpaz Enterprises currently has no marketing activities
to actively pursue prospective tenants to fill in high vacancy
areas of the buildings (Marketing)
4. The firm infrastructure of Garpaz Enterprises is informal
and lacking in effective management systems
(Management)
 
WO Strategies
1. Develop and implement a market penetration strategy
involving advertising and promotional activities to increase
occupancy rates and reduce vacancy in existing buildings (O1
- W2, W3)
2. Utilize available spaces to establish own businesses (O1,
O2, O4 - W2)
 
WT Strategies
1. Overcome management weaknesses and improve
responsiveness to threats through reorganization and
professionalization (T1, T2, T3 - W4)
 
 SHORT TERM Strategies Duration Cost

1. Maximization of the revenue generating potential of existing fixed assets 18-24 months  
and boosting occupancy rates of buildings through investments in (construction) P15.1M
renovation and upgrading service facility provisioning.

1. Repurpose and utilize available real estate assets to establish mixed-use 3 years  
facilities tapping into opportunities made available by the economic and (business plan, construction and P100+M estimated
tourism growth in the region launch)

LONG TERM Strategies Duration Cost

1. Professionalization of the business management and the organizational Up to 12 months  
structure (Short-term) P106,754
 
1. Market Penetration Strategy through advertising and promotions to    
increase prospective tenant awareness and attraction to increase Up to 12 months P15,770
occupancy rates in existing buildings (Short-term)
1. (Groundwork for long-term strategy) Maximization of the revenue 2-3 months  
generating potential and occupancy rates of existing building assets (Finalization of project plan & --
through investments in building renovation and upgrading services and negotiations with contractor)
facilities
1. (Groundwork for long-term strategy) Repurpose and utilize available real    
estate assets to establish mixed-use facilities tapping into opportunities 2-3 months --
made available by the economic and tourism growth in the region (feasibility study)
 
 7-S framework
Strategy:
• Professionalization and Market Penetration Strategies
Structure:
• Starting from the top, there should be a working and functional the Board of Directors
(BoD) that hold regular board meetings with the initial meetings should include the
self-assessment and orientation to corporate governance and strategic management.
• The BoD should be able to govern the organization by establishing broad policies and
strategic objectives, approve budgets and review and monitor overall performance
and finances.
• The present structure shall be reorganized with clearly defined positions at the board
level as illustrated in Figure 8, compliant with Article IV of the Articles of Incorporation
of Garpaz Enterprises, Inc. The President and CEO shall be in charge of the overall
business operations and report to the board of directors. The building administrator
shall perform the day-to-day property management duties and will report to the
President .
 7-S framework
Strategy:
• Professionalization and Market Penetration Strategies
Systems:
• The planning, policy and decision-making processes of the board
and administrator must incorporate the use of data and analysis to
supplement experience and intuition whenever possible. BoD can
use capital budgeting techniques in long-term investment
decision-making.
• Decentralize procurement and disbursement and establish
expenses cost authorization levels from the Administrator up to
BoD for approval in order to expedite tasks that need to be acted
upon at lower expense levels.
 7-S framework
Strategy:
• Professionalization and Market Penetration Strategies
Style:
• Open door policy for the president and administrator to communicate with
the employees in a 2-way feedback system for operational updates,
planning, coordination, and improvement of existing processes.
Staff:
• The small size of the organization requires only minimal staffing needs but
an additional office assistant or secretary may be hired if necessary to
assist in the activities of the professionalization and market penetration
strategies.
• Bring in consulting services for accounting, finance, legal, property
management and real estate investing matters as necessary.
 7-S framework
Strategy:
• Professionalization and Market Penetration Strategies
Super-Ordinate Goals / Shared Values:
• The company should have a dynamic and adaptive but focused organization with a
common commitment to the improvement of the business.
Skills:
• The Board of Directors also must be able to identify opportunities and define
objectives for the organization through group strategic thinking as part of a formal
strategic management process to define an overall direction to Garpaz Enterprises.
• The president and administrator must develop or improve business management,
leadership, communication, critical-thinking, financial/accounting skills and project-
management skills.
• Employees should have problem solving, verbal and written communication,
adaptability, and selling skills.
Proposed Strategy: Professionalization of the business management and the organizational structure
Activity Cost Personnel assigned Timeframe (Month 1-12)
Board of Directors
1. Scheduling and agenda setting of Annual and
Corporate Secretary Month 1
Quarterly Board Meetings
2. Annual Board Meeting session on self-
assessment, reorganization (election of offi cers
and appointments) and orientation on the
Facilitated by the
responsibilities and duties of the board directors Month 2
proponent
and strategic management principles
Board Per Diem Annual Meeting Compensation
₱ 15,000
(P3,000 x 5 members)
3. Quarterly regular board meetings with strategic
planning sessions for 2015-2016 Facilitated by the
Quarterly 2015-2016
Board Per Diem Regular Meeting Compensation Chairman of the Board
₱ 60,000
(P15,000 per meeting)
4. Full documentation of notices of meetings, Corporate Secretary
minutes of meetings and board resolutions of assisted by the offi ce Quarterly 2015-2016
board meetings secretary
Administration Office
5. Administration Offi ce operational log book is
Secretary Month 1-12
created and maintained daily
6. Creation of a basic policies and procedures file President
Month 2-3
for the Administration offi ce /Administrator
7. Administration Offi ce Employee orientation
sessions on policies, procedures, reporting, tasks, Facilitated by the
Month 3-4
duties, communication protocols and meeting President /Proponent
scheduling
8. Accounting/Finance consulting services
Accountant Month 3-5
Professional Fees (P10,200 x 3 months) ₱ 30,600
9. Implementing proper physical records President
management and basic management information /Administrator
systems Month 4-5
/Secretary
overtime pay (P38.46 x 15 hours x 2 employees) ₱ 1,154 /Admin Assistant
10. Ongoing daily or weekly offi ce
professionalization progress and performance President Month 5-12
monitoring
₱ 106,754
Financial Forecast and Financial Ratio Analysis
• In this section, a one-year financial forecast was
done to estimate the financial outcomes of the
short-term strategies to be implemented.
– Income statement
– Balance sheet
– Financial ratios
• Assumptions
 2016 2015 2014
(Projected)

Rent Revenue 15,103,745.92 11,708,330.17 14,886,188.00

Operating Expenses
Salaries and Wages 1,427,492.98 2,716,653.00 1,351,151.00
PHIC & SSS Premiums 103,840.26 205,941.00 100,523.00
Employee Benefits 188,951.63 658,387.00 182,915.42
Operating Supplies 541,204.32 538,562.10 509,129.18
Repairs & Maintenance 658,773.79 581,442.00 1,907,787.23
Fuel & Lubricant 280,568.49 196,226.57 263,940.25
Security Services 184,310.42 182,056.39 173,387.04
Janitorial Services 246,254.58 254,826.00 231,660.00
Other Service Fees 140,826.24 145,728.00 132,480.00
Insurance 111,627.38 101,829.12 105,011.65
Business Taxes & Licenses 585,314.48 607,890.10 550,625.10
Real Property Tax 121,656.88 117,506.34 114,446.74
Travel & Transportation
Expenses 187,660.99 44,124.00 105,984.00
Communication Expenses 131,893.55 126,346.78 124,076.72
Utility Expenses 455,358.46 459,268.56 428,371.08
Depreciation Expenses 516,671.29 362,423.00 385,700.00
Donation/Contribution 60,000.00 60,000.00 60,000.00
Miscellaneous Expenses 72,605.04 41,608.98 53,466.64
       
Total Operating Expenses 6,015,010.79 7,400,818.94 6,780,655.05

Operating Income 9,088,735.13 4,307,511.23 8,105,532.95

Other Income (Expenses), net 385,364.07 92,375.03 87,146.25

Earnings before Taxes 9,474,099.20 4,399,886.26 8,192,679.20

Provision for Income Tax 1,817,747.03 861,502.25 1,621,106.59

       
Net Income 7,656,352.17 3,538,384.01 6,571,572.61
 2016 (Projected) 2015 2014
ASSETS      
Current Assets
Cash & Cash Equivalents 2,938,024.15 1,593,640.03 1,678,870.94
Accounts receivable 105,056.73 11,434.50 80,812.87
Supplies 3,735.38 1,350.00 3,514.00
Prepaid Insurance 89,301.91 67,886.08 84,009.32
Total Current Assets 3,136,118.17 1,674,310.61 1,847,207.13

Long-term Investments 19,268,203.55 12,042,627.22 6,891,098.07

Property, Plant and Equipment 25,316,893.41 25,833,564.70 23,964,300.00

Less: Accumulated Depreciation (1,699,794.29) (1,183,123.00) (820,700.00)
Total Property, Plant & Equipment 23,617,099.11 24,650,441.70 23,143,600.00
       
Total Assets 46,021,420.83 38,367,379.53 31,881,905.20

LIABILITIES AND EQUITY      

Current Liabilities
Accounts payable 17,188.91 15,131.08 87,584.55
Salaries payable 59,844.73 113,193.88 56,297.96
Unearned rent 347,421.99 298,441.55 368,982.28

Total Current Liabilities 424,455.63 426,766.51 512,864.79

       
Non-Current Liabilities      
Total Liabilities 424,455.63 426,766.51 512,864.79

Equity      
Paid-up Capital 1,000,000.00 1,000,000.00 1,000,000.00

Retained Earnings 44,596,965.20 36,940,613.02 30,369,040.41

Total Equity 45,596,965.20 37,940,613.02 31,369,040.41

TOTAL LIABILITIES AND NETWORTH 46,021,420.83 38,367,379.53 31,881,905.20

 2016
(Projected) 2015 2014
Liquidity Ratios      
Current Ratio 7.39 3.92 3.60

Profitability Ratios      
Operating Margin 60% 37% 54%
Net Profit Margin 51% 30% 44%
ROA 0.17 0.09 0.21
ROE 0.17 0.09 0.21

Leverage Ratios      
Debt-to-Assets 1% 1% 2%
Debt-to-Equity 0.01 0.01 0.02

Activity Ratios      
Fixed Assets Turnover
Ratio 0.64 0.47 0.64
Total Assets Turnover
Ratio 0.33 0.31 0.47