4M5_INUMERABLE_ENTRE7_SUB5_CDOFOODSPHEREINC..docx

sl analyUniversity of Santo Tomas College of Commerce and Business Administration España, Manila

CDO FOODSPHERE, INC.

A Strategic Strategic Management Management Paper Paper

Presented to: Asst. Prof. Prof. Maria Paula Paula Joan Tiongco-Bautista Tiongco-Bautista

In Partial Fulfillment of the Requirements for the Degree of Bachelor of Science in Business Administration Major in Marketing Management

By: Inumerable, Ma. Charissa Valerie G. 4M5

2nd Semester, AY2017-2018

CERTIFICATE OF ORIGINALITY

I hereby declare that this submission is my own work. To the best of my knowledge and belief, it contains no material previously published or written by another/other person(s), nor material to which a substantial extent has been accepted for award of any other degree or diploma of a university or other institute of learning, except where due acknowledgment is made in the text.

I also declare that the intellectual content of this Strategic Plan is the product of my own work, even though I may have received assistance from others on style, presentation, and language expression.

Inumerable, Ma. Charissa Valerie G. Date: ____________________

I.

EXECUTIVE SUMMARY

SCOPE AND LIMITATIONS

The paper that follows shall be governed by the following academic parameters: 1. The paper shall shall present a Strategic Plan for CDO CDO Foodsphere, Inc. covering the calendar years 2017-2019. 2. The effective cut-of date for information to be included in the paper is April, 2017. As such, all developments beyond said date is no longer included in the scope of the study. 3. All industry and company information, and financial statements of the company and its competitors acquired from the Securities and Exchange Commission, CDO Foodsphere, Inc. itself, and other relevant industry sources are deemed accurate. 4. Responses to questions posed by the researcher to the officers and staff of the subject

company

are

presumed

accurate

and

free

from

omissions

and

misrepresentation. 5. When two or more information acquired by the researcher from secondary sources are seemingly contradictory, the writer undertook efforts within his capability to determine which of the information acquired is accurate and/ or is consistent with the logical course of events.

II.

TABLE OF CONTENTS

III.

ACKNOWLEDGEMENTS

S t r a t e g i c M a n a g e m e n t P a p e r o n C D O F o o d s p h e r e, I n c . |1

IV.

INTRODUCTION


V.

EXTERNAL ENVIRONMENT ANALYSIS

1. DEFINITION AND OVERVIEW OF INDUSTRY

PACKAGED FOOD INDUSTRY Packaged foods can be identified as raw materials or butchered meat that turned into a food for consumer’s consumption. These are frequently bought by final consumers for their meal preparations and business buyers or food service stores as part of their ingredient to their main product. CDO Foodsphere, Inc. belongs under the umbrella of Packaged Food Industry. 1 Shown below are the various segments under the Packaged Food Industry. SEGMENT Baby Food Baked Goods Biscuits and Snack bars Breakfast Cereals Confectionery Dairy Ice Cream and Frozen Desserts Oils and Fats Processed Fruit and Vegetables Processed Meat and Seafood Ready Meals Rice, Pasta and Noodles Sauces, Dressings and Condiments Soup Spreads Sweet and Savoury Snacks TOTAL 1

2015 PHP million 37,049.6 41,015.6

2015/2016 Value Growth 4.1% 5.4%

2016 PHP million 38.579.9 43,227.7

20,346.2

5.8%

21,520.8

4,690.7 35,108.4 82,352.7

7.2% 5.1% 3.4%

4,974.4 36,916.0 85,113.8

11,359.5

6.0%

12,043.5

46,591.0

6.5%

49,618.0

10,330.3

4.4%

10,786.0

77,892.5

7.7%

83,913.2

3,953.7

6.3%

4,202.8

40,107.4

7.5%

43,130.6

29,135.2

5.2%

30,646.3

1,855.2 3,764.5

5.2% 3.4%

1,951.6 3,891.3

60,448.4

7.4%

64,896.7

505,951.0

5.8%

535,412.5

http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab


Packaged Food Industry is fragmented by large companies. Almost 32 companies are competing but the major companies or leading National Brand Owners that leads in the Packaged Food Industry as of 2016 are the following: Universal Robina Corp, Nestlé Philippines Inc, Monde Nissin Corp, Purefoods-Hormel Company, Inc., San Pablo Mfg Corp, Alaska Milk Corp, Mead Johnson Philippines, Inc., International Oil Factory, Magnolia Inc., and CDO Foodsphere, Inc. Obviously, Universal Robina Corp dominates the Packaged Food Industry by being the leading player. Their wide product portfolio gives them edge to be the number one and these targets the mass consumers. They also have premium brands that are constantly growing and seem to like by middle class consumers. 2

Given that the industry is large, it has the capability to increase its budget for advertising activities that would be a big help in promoting their product offerings. Large companies have a huge cost advantage over small companies. Having a great amount of money will give a company more opportunities for technological advancement and economies of scale and, etc. This of course will help the company to lower the amount of doing business with others.

PHILIPPINE PACKAGED FOOD INDUSTRY OVERVIEW

Packaged Food Industry is expected to grow in terms of value because of the healthy types of packaged foods. Some of the healthy packaged foods that will contribute to the growth of the industry are corn oil, olive oil and shelf stable milk. This is due to the fact that there will be an increasing number of health conscious consumers. Store-based retailers, specifically supermarkets are said to be the remaining key distribution channel for packaged foods. 3 It means that they are the main buyers of these packaged foods because they want to make these products available to their market. Supermarkets has been continuous in purchasing these food products that contribute to value sales in the packaged foods.

There is an outlook for the industry of having a lot of opportunities and some threats by 2017 to 2050. The competitive forces are growing weaker because majority of the industry players offers the same line of products that is less differentiated. There will be 2

http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab

3


more favorable driving forces than unfavorable that can have an impact to the industry. Some of the driving forces that can be an opportunity to increase the industry’s profitability are brand with a cause which is the pairing of the product to some social welfare activities, increase in demand for variety, more Filipinos are now looking up to social media for recommendations, there is a boost in social networking activities, population in the Philippines is forecasted to reach 148,260,478 by the year 2050, unemployment rate in the Philippines is forecasted to increase, Philippine government is launching various plans for the improvement of food supply, inventory monitoring and control through computers or applications, the used of Food Processing and Preservation, increased in the Philippines consumer spending in 2016, Senate Bill No. 2612 (National Sustainable Sanitation Act of 2015), Senate Bill No. 583 (Nutrition Labeling Act), Senate Bill No. 2291 (Food Choking Prevention Act) and Gross Domestic Product (GDP) in the Philippines reached a high of 292.45 USD Billion in 2015. Furthermore, the degree of risk in the future is not that strong since there is only few threats such as inflation rate in the Philippines is forecasted to increase which means prices of goods and services will have an increase, governmental actions have an impact on the economy, pollution coming from food processing companies and etc.

Based on key trends and developments of the Packaged Food Industry, companies are employing various strategies that can help them to increase their market shares and one example of a strategy being implemented by established players is the expansion to new areas or categories. Another example is the used of premiumisation by CDO Foodshpere Inc. and Purefoods-Hormel Corp Inc. with their products. They are both introducing new line of premium meats that contains less preservatives like sodium, MSG, nitrates and artificial colours that can cause harm to consumers. It is because of the new trend in consumers of becoming more meticulous with the food they eat. 4

4



2. ANALYSIS OF POTENTIAL CHANGES IN THE MACRO-ENVIRONMENT MACRO-ENVIRONMENT

Macro-environment changes include all the factors that can indirectly affect a company and is beyond its control. It is externally-cause and can either be a threat or opportunity. For a company to address this situation, they are using a framework that would analyze and scan the changes in the external environment. This framework is called PESTLE Analysis and its letters stand for Political, Economic, Economic, Socio-Cultural, Socio-Cultural, Technological, Technological, and 5 Legal and Environmental segment. Companies are adopting this framework in order to analyze the current and future environmental changes that can affect their business operations. It is also efficient in strategizing plans and most importantly, to maximize opportunities and minimize threats in a company.

The four (4) levels of environment will be shown and discuss on the next page.

5

http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31


LEVELS OF ENVIRONMENT:

Shown below is the connection of the firm from the external environment that are beyond its control.

FIRM TASK

INDUSTRY ENVIRONMENT RELEVANT ENVIRONMENT MACRO ENVIRONMENT


Task Environment

It is the environment where participants in an industry should give more focus, time and effort to analyze and understand. It is because this environment can greatly affect a company in reaching its goals that can make them profitably competitive in the marketplace. Understanding this will help a company to identify the driving forces that affects the industry where it belongs.

Below is the framework of task environment and its four (4) factors including: Competitors, Customers, Suppliers and Distributors.

SUPPLIER

DISTRIBUTOR

COMPANY

CUSTOMER

COMPETITORS


Competitors can indirectly affect a company through its products offerings. If the competitor has same line of products, it is easier for the customers to switch since it is low cost and if these customers are price conscious. Increasing number of competitors in an industry can also yield to lower p rofits since they’re all competing for the same market. Second factor is the Customers. There are two types of buyers namely direct and intermediaries. Direct customers are the users of the product and they usually purchase in small quantity but they have power because they can switch anytime they want it and they can demand on what they want to see and buy. On the other hand, intermediaries are store-based retailers. They can affect the company since these are the usual places where end users can conveniently buy their product and making their products available to them can increase their sales and brand recall. So it is important to build good relationship to them. Third factor is the Suppliers. Maintaining a good company-supplier relationship is a must especially if the raw materials they are supplying with are rare, difficult to find or only few suppliers are supplying it. This makes them have a strong bargaining power. And lastly, are the Distributors. They also play a crucial role because they are the intermediary that helps in the distribution of a product. They made sure that tha t the company’s products are well -distributed to places where customers are commonly buying. 6

INDUSTRY ENVIRONMENT

Factors such as: Political-legal, Economic, Socio-cultural, Technological and Environmental segments greatly affect an industry. The movement of different industries depends upon the changes in the customer preferences, lifestyles shifts, trends and demographics that are commonly changing every year.

RELEVANT ENVIRONMENT

This would include all the external factors that are significantly important to a company. And factors that even though companies doesn’t have control, still positively contribute to the growth of it.

6

http://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/7289-task-environment.html


MACRO ENVIRONMENT

This is also known as the General Environment. It can indirectly affect a company through its trends and developments. It is consists of various various uncontrollable factors that can affect firms including competitors, changes in population, increased in inflation, pollution, climatic conditions, co nsumer’s changing lifestyle, government regulations, and etc.

Below is the PESTLE Analysis Framework and its letters stand for (1) Political, (2) Economic, (3) Socio-Cultural, (4) Technological, (5) Legal and (6) Environmental segment.

S t r a t e g i c M a n a g e m e n t P a p e r o n C D O F o o d s p h e r e , I n c . | 10

POLITICAL-LEGAL SEGMENT

This type of macro environment segment explains how government actions can indirectly affect business organizations. It is important to respond accordingly with government rules and regulations in order for a company to remain its operation in an industry. Companies need to strictly follow the legislations, laws or policies that the government is passing for them to operate in a legal manner. There are so many factors that can affect the participants in an industry including: tax policy, government spending, trading policies, government terms and change, corruption, inter-country relationships and conflicts, foreign trade policy, labour law, consumer protection and a lot more. 7

Governmental Actions

Factors like taxes being imposed to businesses and working individuals and government spending can greatly affect and stimulate the economy. Because sometimes Philippines government is not accurate with the things they do and this affects the manufacturing companies. Aside from that, Philippines is known for being one of the “corrupt” countries in the world. 8

Philippine Government Plans for the Improvement of Food Supply

We all know that rice is a staple meal especially for Filipinos. But some of our Filipino citizens cannot afford it because they lack the money to buy. In order to answer the needs of the people coming from lower-income class, the government decided to launch a program that aims to improve the rice supply in the Philippines. This plan will really help consumers who are in need of food supplies. This can have a possible effect for companies. 9

Senate Bill No. 2612 (National Sustainable Sanitation Act of 2016)

This bill was created to strengthen the sanitation programs in the Philippines that aim to have clean environment for every citizen’s safety and health conditions. Improvement of this will result to decrease in morbidity rate that is currently high in the country. One of 7

http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 http://pestleanalysis.com/political-factors-affecting-business/ 9 http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 8


the common causes of morbidity that is very usual in the Philippines is Diarrhea. The bill seeks to improve the sanitation programs so that sanitation-related disease such as cholera and amoebiasis can be prevented. The bill was introduced by Senator Cynthia A. Villar.10 Maintaining a clean environment in the factory and in the business office creates a positive image on the minds of the consumers giving them the assurance that the company who manufactures the product is well sanitized and has passed the standards of the DOH.

Senate Bill No. 583 (Nutrition Labeling Act)

This bill was introduced by Senator Miriam Defensor Santiago that aims to protect the Filipinos when it comes to the product ingredients. They have the right to know the accurate information regarding a product. The labelling must also be in print and easy to read for customer’s convenience. The product should be pack in a safe container that is not easy to break. 11 As part of a product’s product’s packaging, packaging, nutritional nutritional label is important important to costumers so that they will know whether the product’s in gredients are safe and healthy to eat or not. Providing the customers good information about your product will give them the perception that your products are good.

Senate Bill No. 2291 (Food Choking Prevention Act)

This bill is requiring every manufacturing company to put a choking hazard to their products because “choking” is one of the causes of death in children aged 5 years old. Every manufacturing company are required to follow this bill to avoid accidental death among children. They should mindfully place warning labels on the food they produce, not just for children but for everyone’s safety. T he bill was also introduced by Senator Miriam Defensor Santiago. 12 Food manufacturers should cite on their product labels if their product poses a high choking risk especially to children before the products go out of the factory and be distributed and sold to the market. The Office of Choking Hazard Evaluation (OCHE) together with the Bureau of Food and Drugs (BFAD) shall implement and monitor this act for the safety of everyone especially the children. 13

10

https://www.senate.gov.ph/lis/bill_res.aspx?congress=17&q=SBN-719 https://www.senate.gov.ph/lis/bill_res.aspx?congress=16&q=SBN-583 12 http://www.senate.gov.ph/lis/bill_res.aspx?congress=16&q=SBN-2291 13 Philippine Statistics Authority 11


ECONOMIC SEGMENT

These include factors that significantly affect on how a company operates, does business and how profitable they are to face a major or minor economic change that can also vary from one country to another. Its factors can either be a macro economical or micro economical. Macro is about the demands of the economy while micro is about how consumers spend their money. Inflation rate is one of the common examples of economic segment that greatly affects business organizations because increase in it causes a rise up in the cost of goods and services that negatively impacts them. Other important factors includes: employment and unemployment rate, GDP or Gross Domestic Product, Consumer Spending, Exchange rates, Monetary Policies, Economic Growth rates and so on. 14

Inflation Rate

Year 201215

Table 2.1 Inflation Rate, Philippines Inflation Rate (%) 3.2

201315 201415

3.0 4.1

201515

1.4

201615

2.6

2017 (Projected) 16 2018 (Projected) 17 2019 (Projected)

2.7 2.6 2.8

2020 (Projected) 18

3.8

As shown in table 4.1, 2017 inflation rate increases increases and the projected rates for the year 2018-2020 increases more compared to the previous years. If inflation rate will 14

http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 http://www.bsp.gov.ph/statistics/spei_new/tab34_inf.htm 16 https://ieconomics.com/philippines-inflation-rate-forecast 17 http://interaksyon.com/business/129479/bsp-cuts-2016-inflation-announces-2018-outlook 18 http://www.tradingeconomics.com/philippines/inflation-cpi/forecast 15


decrease, people will consume more goods as long as they can afford it. But if this continues, people spending will drop so the sales of goods will decrease also.

Inflation is the sudden increase of the prices of goods and services. 19 The continuous increase of the prices will affect the purchasing and consumption habit of the consumers because they would choose to save rather than spend. It doesn’t only affect consumers but also manufacturers, in terms of cost of production.

Unemployment Rate

Table 2.2 Unemployment rate, Philippines Year Unemployment Rate (%)

201420

6.7

201520

6.5

201620

4.7

2017(Projected) 21

5.3

Unemployment rate is the numbers of people who are currently do not have jobs. They may be looking for a job but still, they are considered unemployed persons. As shown in table 4.2, the unemployment rates between 2014 and 2015 have been dramatically high and it only decreases in the year 2016. But according to IECONOMICS, it will go up from 4.7% in the fourth quarter of 2016 to 5.3% in the first quarter of 2017. 22

19

http://www.investopedia.com/university/inflation/inflation1.asp http://www.tradingeconomics.com/philippines/unemployment-rate 21 https://ieconomics.com/philippines-unemployment-rate-forecast 22 https://ieconomics.com/philippines-unemployment-rate-forecast 20


Philippines Consumer Spending

Fig ure 2.1

As of 2016, consumer consumer spending spending increases from from PHP 1,421,707 to PHP 1,434,402. 1,434,402. The Philippines reach an all time high of spending during the fourth quarter of 2016 and experienced a low spending of 581662 PHP Million during the year 1998. 23 This means that the economy is improving as well as the citizens of the Philippines giving them big chance to enjoy life with their families.

Philippines Gross Domestic Product (GDP)

Fig ure 2.2

23

http://www.tradingeconomics.com/philippines/consumer-spending


“The gross domestic product (GDP) measures of national income and output for a given country's economy.” 24 Gross Domestic Product (GDP) in the Philippines reached a high of 292.45 USD Billion in 2015. 25 Positive economic growth has so many benefits and one of this includes having higher income of the consumers. This also has an impact on companies and industries. If consumers will have higher incomes, there will be an upgrade or improvement when it comes to their standard of living. They have the better chances to enjoy more goods and services since they have the money to afford it.

TECHNOLOGICAL SEGMENT

These refers to the emerging advancement and development in technology that helps companies to innovate and produce products that haven’t seen in the market yet and that could possibly answer unmet needs of consumers. Companies are into the used of latest technology because it can make their work easier, faster and as of good quality terms that can bring good results. Technological developments are focused not only on the internet areas but also in areas of production, logistics, manufacturing, distribution and marketing of goods and services that a company offers. 26

Inventory Monitoring and Control

The use of computers or applications is the easiest way to monitor your company’s inventory. It is faster than the manual traditional way in which a worker manually enters inventory using a pen and paper. If the products are unsold, it is easier for the company to know what products are near to their expiration. It is convenient to have this in every company to avoid inventory errors or problems. 27

Food Processing and Preservation

Food preservation is being done to every manufactured food products not just to sustain its flavour, quality and safeness but also to prevent the food from spoiling that are cause by microorganisms and oxidation. Each food product has differences in the amount of time for processing because it will depend on their acidity and density. Food processing

24

http://www.tradingeconomics.com/philippines/gdp http://www.tradingeconomics.com/philippines/gdp 26 http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 27 Reference for Business 25


and preservation covers three (3) main methods to which the products undergo and this includes the used of modern or traditional method such as freeze-drying, pasteurization, smoking, etc. followed by the insertion of protein and lastly, addition of food additives. 28

Boost in Social Networking Activities

Most of the people today are becoming technologically driven. There are a lot of applications that people are using for socializing with others. Social networking becomes a helpful tool especially to manufacturing companies in promoting their products worldwide. Technological advancement is one of the factors that make a company to produce or create a product that can lead them to the top position in the industry where they belong. It is also one of the key success factors that most of the companies considered. 29

ENVIRONMENTAL SEGMENT

This segment involves ecological factors that might affect business operations and the demand for its products or services. Some of the potential environmental issues that companies might face include: pollution from food processing companies, recycling, problems in waste disposal, limited natural resources, impact of weather conditions, sustainability and etc. 30

Pollution

Every manufacturing company that produce food products is facing difficulties when it comes to their production. It is important to take into account that improper ways of doing things can affect not only the environment but also the consumers. If this problem occurs, companies should think a solution that will help to solve it because it can affect everything. 31

28

http://www.fao.org/docrep/x5573E/-x5573e0e.htm http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 30 http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 31 http://www.unido.org/fileadmin/import/32129_25PollutionfromFoodProcessing.7.pdf 29


SOCIO-CULTURAL SEGMENT

This represents the lifestyles, cultures, attitudes and beliefs of the people living in a particular country that greatly influences their purchasing and consumption habit. If the consumer’s personal views about a certain company’s products are good, it will then benefit the company through increase in sales and demand for its products. There are so many factors that falls under this segment that really affects how a business operates. These factors can positively and negatively affect them. It is important to follow and adopt the demand of the consumers or the trends in them so that companies would prevent problems with their products. Some of the socio-cultural factors include the following: demographics, consumer buying patterns, ethical issues, advertising, living conditions, level of social class, level of education, ethical beliefs, accessibility and a lot more. 32

Brand with a Cause

It is also known as “Cause Marketing” Marketing” or cause-related marketing. It’s a type or marketing that aims to help a profit-organization or a non-profit organization with their current activities or social programs. Coordinating with these organizations should be aligned with the company’s product offerings so that consumers will not misunderstand the purpose of helping a specific organization. Companies must be mindful in choosing the right affiliations. Successful branding with a cause will not just gain high awareness but it will also contribute to the image of your products or brands. As well as, improve the company’s corporate social responsibility. 33 Brands that contribute positively to the environment, education, animal preservation, livelihood, poverty eradication, etc. are said to be more popular with consumers. Filipinos generosity and the intention to help others in any way fuel this kind of act. 34

Demand for Variety

Due to the growing economy and the increase in the income of Filipinos, people are becoming more aware of the products in the market. With the increase in purchasing power, Filipinos can now afford to buy other products and brands that they can’t afford before. There is a high demand for variety because of the unmet needs of these

32

https://processpolicy.com/pestle-analysis.htm https://www.entrepreneur.com/article/197820 34 http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 33


potential customers. And since they can now afford to purchase new items, they want a variety of choices to choose from. 35

More Filipinos are now looking up to social media for recommendations

According to Wave 7, a global study, Filipinos spend 53 hours a week on social media compared to the global average of 42 hours. Also, according to the survey 69% of Filipinos using social media have already joined brand communities and 85% of which said that they share this appreciation for the products with others using social media. 36

Meatless Monday

In order to prevent cardiovascular diseases and limiting greenhouse gas emissions, the Philippines has now joined the “Meatless Monday” movement which started in Tarlac State University. This aims to change the consumption habits of Filipinos particularly in their meat intake. Advocates will change their minds about vegetables and there could be a shift in lifestyle wherein Filipinos will have lesser demand for anything meat. 37

Convenience from Foodservice Outlets

Ordering from foodservice outlets is a more convenient way than preparing home cooked meals. They are also becoming a more affordable option to meals since purchasing powers of consumers also increased. This will negatively affect companies producing food products. 38

DEMOGRAPHIC SEGMENT

This refers mostly to people and the trends in the demographics that are constantly changing making companies to be affected. It involves different factors such as population growth rates, gender structure, age distribution, sex, race and occupation of the consumers. Companies should take into account that these people are the reasons why they exist and still continuous in their business. This segment is very crucial for the 35

http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 37 http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 38 National Philippines Statistics 36


companies in every specific industry because a certain change in demographics also means a change in markets which would lead to change the company’s strategies and objectives. 39

Philippines Population

Table 2.3 Philippines Population (5 year interval) 40 Year Population

2020

108,435,788

2025

116,151,399

2030

123,575,484

2035

130,555,573

2040

137,020,456

2045

142,920,700

2050

148,260,478

As shown in table 4.4, Philippines Philippines population population growth is continuous from 2020 up to 2050. The population is for all sexes and ages. As you can see, the forecasted population growth is continuous from 2020 up to the year 2050. This can have a positive and negative effect to the country.

Growth of Aging people

The increasing growth of people aging 60 years old and above has an effect to the company. It is because these people will be more health conscious and meticulous about the food they eat. These aging people tend to dislike food products that have preservatives because they believe that it has no good benefit for them. They selectively pick foods that can contribute to their health in a good way. These can negatively affect industries that produce meat products containing preservatives like sodium.41

39

https://marketing-insider.eu/macro-environment/ http://www.worldometers.info/world-population/philippines-population/ 41 http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 40


3. ANALYSIS OF PRESENT PRESENT TASK TASK ENVIRONMENT ENVIRONMENT

Analyzing Analyzing and understanding understanding the business environment environment are necessary. necessary. For a company to stay profitable, it is important that they consider the objectives or strategies of their competitors which can greatly affect them especially if they are competing with the same industry and offering the same product line. Carefully planning is indeed a must so that the company is prepared to whatever business shocks might happened. Considering the competitive environment, also called task environment or industry environment will help a company to distinguish its competitive position towards its competitors.

With the help of Michael Porter’s Five Forces, a company will have knowledge on where the power lies so they can see their weaknesses which they have to improve, their main strengths that make them have an edge and this also helps the company to avoid making the wrong decisions. It can analyze whether a new product or service will be profitable in the marketplace or not. This tool is simple yet powerful tool that can examined the competitive environment. 42 Porter’s Five Forces that helped analyzed the competition are competitive rivalry, bargaining power of customers, bargaining power of suppliers, threat of new entrants and threat of substitutes. 43

Shown in the next page is a diagram of Porter’s Five Forces Framework regarding the competitive analysis of the Packaged Food Industry.

42

https://www.mindtools.com/pages/article/newTMC_08.htm http://www.businessnewsdaily.com/5446-porters-five-forces.html

43


PACKAGED FOOD INDUSTRY

Threat of New Entrants WEAK

Bargaining Power of Suppliers

Intensity of Rivalry Among Competing Firms

Bargaining Power of Buyers

MODERATE

STRONG

MODERATE

Threat of Substitute Products STRONG


BARGAINING POWER OF BUYER – BUYER – MODERATE MODERATE

Buyers are considered the most important in order for a business to stay in the market. Without them, a company would not grow and earn. If taxes serves as the bloodline in a government, buyers serves as the bloodline in a business. For a business to continue, they have to keep their customers satisfied so that they can avoid problems like switching to other brands or becoming unloyal because of price concerns.

There are two types of customers in this industry: Direct or Intermediary. Direct customers are the target market of the product, for example, students or household members. When compared to the bargaining power of retailers, these direct customers only have lesser power because they often buy in bulk unlike large retailer. But they are strong because they have the power to switch to any brand whenener they like it and this becomes a threat to the company. On the other hand, intermediary interm ediary customers are the store-based retailers like Supermarkets, Convenience Stores, Hypermarkets, Grocery Store, etc. They usually purchased products in large quantities and then they sell it to the final consumers. It is given that they have strong bargaining power because they’re not just a small store and they are the usual places where final customers can purchase products. 44

Some of the companies under the Packaged Food Industry offers the same line of products that makes the competition tighter and stronger. Although there are some that offers differentiated products and focused only on one or two segments. Every company needs to consider their customer’s vital needs and wants so that they can attract and gain more loyal customers that can greatly constribute to their market share.

Therefore, Bargaining Power of Buyer is Moderate.

44



THREAT OF NEW ENTRANTS – ENTRANTS – WEAK WEAK

Entering an industry is not a smooth journey. There were a lot of barriers to pass on and it can either be a high barrier or a low barrier. Some of the barriers to consider when entering an industry are time and cost entry, specialist knowledge, economies of scale, technology protection and specialist knowledge. 45 It’s It’s not easy especially e specially if the company is not that big compared to other existing competitors. All potential competitors are not limited to the product they want to offer and in fact, they can also offer the same line of products that the existing companies are offering. They will just have differences when it comes to the quality, price, convenience, availability and other purchase drivers.

The threat of new entrants in the Packaged Food Industry is weak for the reason that aside from having multiple competitors that dominates the industry, these competitors have already established a name in the market. Meaning, many Filipinos trusted the brands or products that these companies offer because they have been existing for many years already. New entrants might also lack the economies of scale which large companies have. Government regulation can also be a problem to them because since they’re just starting to enter the industry, there will be rules and policies to follow. And if they don’t have money, policies will not be in their favor. It is also difficult to enter in this industry if the company’s capital is weak. 46

Another important factor to consider consider is brand image because because this can increase the barrier of entry. Sometimes, consumers prefer the brand that they have known well compared to new ones. It is because these brands have already established a name in the market. Some of the established players that are competing in the Packaged Food Industry are Universal Robina Corp, Nestlé Philippines Inc, Monde Nissin Corp, Purefoods-Hormel Company, Inc., San Pablo Mfg Corp, Alaska Milk Corp, Mead Johnson Philippines, Inc., International Oil Factory, and Magnolia Inc.

Therefore, Threat of New Entrants is Weak.

45

https://www.mindtools.com/pages/article/newTMC_08.htm https://www.quora.com/What-are-the-advantages-large-companies-have-over-smaller-companies

46


THREAT OF SUBSTITUTE PRODUCTS – STRONG – STRONG

Most of the companies are doing very well in producing subsititute products that are considered as more affordable compared to the original product being copied. Since most of the consumers that consume packaged foods are coming from the lowerincome class, these companies know what to target in order for their product to be recognized recognized by the consumers. According to Porter’s Five Forces, the competitive pressures from substitutes are stronger when they are easily accesible, low-priced, has little or no differences to the brand and lastly, consumer’s switching cost are low making it easier to replace the brand they’re currently using.

If the product you are offering are not available, consumers can look for another brand because there are a lot of alternatives since there are almost 32 companies that competes in the Packaged Food Industry. 47 Some of the alternative products also are at low cost so it is easier for the consumers to replace them.

Therefore, Threat of Substitutes is Strong.

47



INTENSITY OF RIVALRY AMONG COMPETING FIRMS – STRONG – STRONG

Competing with other established players in the industry is the strongest force of all. It is because both companies are seeing their products when being display in store-based retailers. They have the chance to study it so they can prepare for their next move that can make them have a competitive advantage over competitors. There is a strong rivalry because there are multiple competitors, the product offerings are less differentiated or mostly alike, aggressive moves of the competitors, customer’s switching cost are low and companies making new strategies.

Moreover, large companies are using various strategies to increase their market share but one of the strategies being used is the acquisition of existing brand for expansion because it is the easiest way to have a new market compared building a new brand name. Building a new brand name is not easy since you will start from scratch unlike buying existing brand that is already known by consumers. Another strategy is the used of premiumisation by CDO Foodshpere Inc. and Purefoods-Hormel Corp Inc. with their products. They are both introducing new line of premium meats that contains less preservatives like sodium, MSG, nitrates and artificial colours that can cause harm to consumers. 48

There is a strong competition in the Packaged Food Industry because different companies has been continuous in conceptualization and product development that will increase their market share. They are active in making improvements because the rivals products are less differentiated and it is not expensive to switch to other brands. Majority of the industry players offers the same line of products that makes them easier to compete with their co-competitors. Since promoting a product is not that effective today, companies are using their best marketing strategies to acquire new markets that will give them a wide product portfolio. 49

Therefore, Intensity of Rivalry Among Competing Firms is Strong.

48

http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab

49


BARGAINING POWER OF SUPPLIERS – MODERATE – MODERATE

Suppliers plays a big role in every business whether it is big or small. They contribute to a business by supplying the raw materials or components needed in order to finish a product that will be delivered to final consumers. They have the power to increase price in the materials or components they are selling. Suppliers can either be a threat or opportunity to a company. It is considered a threat if there are only few suppliers on a particular material and an opportunity if the switching cost to other suppliers is low.

Like firms, suppliers also have choices when dealing a business. They can look for another campany if the the other company that they’re dealing with didn’t agree with their proposal. As I said earlier, there were a lot of competitors in the industry so the suppliers can pick one or two companies where they can supply their raw materials that are needed for a business. Switching to another supplier is not that costly also especially if you buy in bulk.

When it comes to Packaged Food Industry, there are numerous suppliers and the raw materials being used are not difficult to find because mostly its meat. This makes the bargaining power of suppliers to this industry becomes moderate. Table 3.1

Competitive Force

Intensity

1. Threat of New Entrants

Weak

2. Threat of Substitutes

Strong

3. Intensity of Rivalry Among Existing Firms

Strong

4. Bargaining Power of Buyers

Moderate

5. Bargaining Power of Suppliers

Moderate


4. THREATS AND OPPORTUNITIES

Table 4.1 POTENTIAL CHANGES ON THE MACRO ENVIRONMENT  Government Actions  Government plans for the improvement of food supply  National Sustainable Sanitation Act of 2015  Nutrition Labelling Act  Food Choking Prevention Act  Increased in Inflation Rate  Increased in Unemployment Rate  Increased in Consumer Spending  Increased in GDP  Inventory Monitoring and Control  Food Processing and Preservation  Boost in Social Networking  Pollution  Brand with a Cause  Increase in Demand for Variety  Social Media Recommendations  Meatless Monday  Convenience from food service outlets  Population Growth Rate  Growth of Aging

SEGMENT

THREAT OR OPPORTUNITY

Political

Threat

Political

Opportunity

Legal

Opportunity

Legal

Opportunity

Legal

Opportunity

Economic

Threat

Economic

Opportunity

Economic

Opportunity

Economic

Opportunity

Technological

Opportunity

Technological

Opportunity

Technological

Opportunity

Environmental Socio-cultural

Threat Opportunity

Socio-cultural

Opportunity

Socio-cultural

Opportunity

Socio-cultural

Threat

Socio-cultural

Threat

Demographic

Opportunity

Demographic

Threat


People

THREATS


Government actions are considered as threat for the company because if this factor will have a negative impact on the economy, it will eventually result to a poor business performance. 50 If they would increase taxes and government spending, not just employed persons will suffer but also companies.

ECONOMIC SEGMENT

Increased of inflation can dramatically affect the consumer's buying habits. If there will be a continuous increase in the prices of goods and services, people’s consum ption will drop. During inflation, all the costs, including the production cost of goods, are high thus there will be a tendency that people's demands for food will dampen. It is a threat because consumers would choose to save rather than spend. If the consumption level of people is low, the sales of the companies can decrease. Inflation not only affects the consumers but also business owners because they will have a higher cost in terms of production.

ENVIRONMENTAL SEGMENT

Pollution is considered as threat for the company because sometimes manufacturing companies’ causes’ pollution causes’ pollution in water, air and land that makes it not safe to use for the people surrounding it. And most of the companies also have this kind of problem because of their company-owned factories where goods are being produced. 51

50

http://pestleanalysis.com/political-factors-affecting-business/ http://www.unido.org/fileadmin/import/32129_25PollutionfromFoodProcessing.7.pdf

51



The “Meatless Monday” movement is movement is a threat because if more people will advocate and support this, they can engage more and more people and in result, these people would avoid eating meat products that can cause a decrease in sales revenue, overall market share, and trial rate of the company.

Another threat for the company is the emergence of Foodservice Foodservice Outlets because buying in these stores is logically easier than preparing a meal. Here, consumers will just line up and then the meal they they want will will be serve serve to them right right away after after they order order making it more convenient for them. Some food outlets can also answer the emerging need for Filipinos to eat healthier food options.

DEMOGRAPHIC SEGMENT

The fast growth of the age group aged 60 years old and above is a threat for the company because it will be one of the causes of the decrease in sales of the companies under the Packaged Food Industry. Since their products are commonly known to have preservatives, this age group will automatically avoid buying those products and instead buy a healthier food.

OPPORTUNITIES


Philippines’ Government plan of launching programs that aims to give and help consumers who cannot afford to buy rice is an opportunity for the company. Aside from partnering with other charitable programs, the firm can also give them free rice supply along with the products. This would create awareness towards the people seeing it. 52

52



National Sustainable Sanitation Act of 2015 is an opportunity for CDO Foodsphere, Inc. because they have been already recognized by the Department of Agriculture as the cleanest meat processing plant in the Philippines. The company is also adopting the HACCP which stands for Hazard Analysis Critical Control Points. 53 It only proves that the company is producing every food products in a hygienic and safe environment. This factor will contribute to a positive image on the minds of the consumers resulting to an increase in sales because they can ensure that the company is well sanitized.

Making the nutritional label part of the company’s food products is necessary and will serve as an opportunity because if the company’s product offerings includes information such as (e.g. what are the ingredients, where it was manufactured, nutritional benefit, etc.), it can help to eliminate perceived risks and increase trial rate. It may result to a boost in sales plus having more loyal customers. Another opportunity is including the choking warning to the products which in turn can ensure the consumer’s safety. 54

ECONOMIC SEGMENT

Increased in unemployment rate is considered as an opportunity for CDO Foodsphere, Inc. because if more people will still be jobless, they will consume cheaper products. Instead of buying fresh meats, chicken or fish, they will switch to more affordable food products that our company offers.

It is also an opportunity for the company if the consumers spending increases because knowing that it rises up, it only means that their consumer’s bargaining power is at peak. They have strong buying power to purchase any product they need or want. Since the company is offering food products, it has a high chance that consumers will purchase or conduct trial to any of the product offerings.

Having an increased in the Philippines’ GDP is an opportunity for the company because it means that the economy is improving and growing. growing. This factor will will positively positivel y affect 53

http://www.cdo.com.ph/subpages/corporatenews/inaugurates_megaplant.aspx Senate.gov.ph

54


the company since their offerings are food products which are considered as necessity to live. 55


Branding with a cause can be an opportunity for the company to increase sales when partnered with the right organizations that has charitable and social welfare activities. Engaging with this kind of activities can gain more attention because seeing the company’s products to this activity will allow consumers to have a positive reaction to the brand which in turn can benefit the company. 56

Increase in demand for variety can also be an opportunity for the company to introduce new varieties that consumers haven’t seen in the market yet. This can attract new customers and can possibly help to increase sales. 55

Another opportunity opportunity for the company company is that more people people are now now relying relying to social social media for recommendations. This can help the company to increase its sales through online advertising which can be cheaper than most of the other advertising techniques like television commercials. 55

DEMOGRAPHIC SEGMENT

Growing of the population can be an opportunity for manufacturing companies that produce consumer goods. As the population expands, more people can purchase their product. If people’s consumption will be good, it wo uld contribute to a larger profit. 57

TECHNOLOGICAL SEGMENT

55

http://www.economicshelp.org/macroeconomics/economic-growth/benefits-growth/ http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 57 http://bizmology.hoovers.com/2012/04/global-population-growth-presents-business-opportunities/ 56


Used of computers and other latest applications can contribute a big help to companies. Time to time monitoring prevents the company from running out of stocks and that can lead to increase in sales revenue, availability, and distribution productivity.

Food preservation is also an opportunity for the company because it can contribute to the good quality and taste of the product which in turn can benefit the consumers. This will assure consumers that the food they eat is safe and has undergone proper methods. 58

Another relevant factor is the boost in social networking, networking, it is an opportunity opportunity for the company because by advertising and posting their products and services online, more people will be aware and it can easily spread since most of the people are into the used of different social media networks like Facebook, Twitter, and etc.

58

www.omfra.gov.ph


4.1 EFFECT OF POTENTIAL CHANGES ON THE TASK ENVIRONMENT

IMPACT ON BARGAINING POWER OF BUYER AND POWER OF SUPPLIER

Generally, both companies and consumers want a stable or low inflation. If inflation increases, it signals for a price increase and uncertainty. 59 Increased in inflation will mostly affect buyers coming from lower-income class. They tend to save rather than spend when there is an inflation crisis. On the other hand, suppliers are also affected because if there’s pri ce increase, automatically the raw materials that they are supplying with companies will also increase which will in turn affect firms because of the high cost attached. Buyers are also affected with the increased in unemployment, most especially if they belong to this. If there will be an increase in GDP, it also means that buyers are capacitated to buy goods and services. They have the chance to spend more and buy whatever they want.

IMPACT ON NEW ENTRANTS

Governmental action greatly affects the economy. Not only that, it also affects business operations and companies who wants to enter an industry. Before a new entrant get to finally enter an industry, they would first face high or low barriers. These barriers include governmental regulation, high capital requirements, and economies of scale, technology, and many more. There are also laws that affect the purchasing and consumption habits of consumers. If the new entrants are not following these kinds of law to their products, consumers might not buy or will shift to other brands. Some laws includes: Senate Bill No. 2612 (National Sustainable Sanitation Act of 2015), Senate Bill No. 583 (Nutrition Labeling Act) and Senate Bill No. 2291 (Food Choking Prevention Act). These laws are implemented for the consumer’s safety awareness. It is important to maintain a clean-working environment so that consumers are sure that the products they’re buying are all safe and free from hazardous chemicals. Increase 59

http://www.economicshelp.org/blog/1017/inflation/how-does-inflation-affect-firms/


in demand for variety will also affect the new entrants most especially if they only offer few product offerings. This would affect them by decrease in profits because consumers will shift to brands with more product offerings where they can choose what they want. IMPACT ON RIVALRY BETWEEN COMPETITORS

Some Filipinos being generous in nature wanted to have a product that doesn’t only satisfy them but are also engage with charitable or social welfare activities. CDO Foodsphere, Inc. is engaged with this kind of activity. They have “Run for Odyssey” event where in the money that they will be collected will go directly to their foundation which is the Odyssey Foundation Inc. 60 Brands that contribute positively to the environment, education, animal preservation, livelihood, poverty eradication, etc. are said to be more popular with consumers. Most of the people today are becoming technologically driven, so most of the responds of the companies are to be engaged with online marketing tools that can reach widely dispersed consumers. Since CDO is minimal with the used of this kind of tool, they are quite weak unlike other companies who are fond of using different online tools just to make sure that their products can be seen by consumers.

IMPACT ON NEW SUBSTITUTES

Due to the advanced technology, companies in the industry are continuous in innovating products that would give them high profits and that can steal the position of the rivals. The continuous change in the consumer preferences and lifestyle leads to the development of substitute products that will compete with the copied product in terms of price and other factors that would engage consumers to use the substitute instead of the usual product being used.

60

http://www.cdo.com.ph/subpages/corporatenews/brandNews68.aspx


4.2 THE RESULTING CHANGES IN THE PRESENT TASK ENVIRONMENT

Table 4.2 TASK ENVIRONMENT

INTENSITY

1. Threat of New Entrants

Low

2. Threat of Substitutes

High

3. Intensity of Rivalry Among Existing Existing Firms Firms

High

4. Bargaining Power of Buyers

Moderate

5. Bargaining Power of Suppliers

Moderate

FACTORS  High barriers to entry  Economies of scale  Government restrictions  Needs high capital  Advancement in technology  Multiple competitors  Substitutes are readily available  Consumer’s switching cost is relatively low  Almost the same quality  Sometimes more affordable  Multiple competitors  Product differentiation  Switching cost is low  New strategies/objectives  Purchase in large quantities (retailers)  Can switch to other brands (consumers)  Numerous product’s sellers  Unlimited demands  Presence of multiple suppliers  Easy to find materials


5. EXTERNAL FACTOR EVALUATION EVALUATION (EFE) MATRIX Table 5.1

KEY EXTERNAL FACTORS OPPORTUNITIES 1. Unemployment rate in the Philippines is forecasted to increase 2. Brand with a cause 3. Population in the Philippines is forecasted to increase 4. Boost in social networking activities 5. Increase in demand for variety 6. More Filipinos are now looking up to social media for recommendations 7. Philippine government government is launching various plans for the improvement of food supply 8. Inventory monitoring and control through computers or applications 9. Food Processing and Preservation 10. Increased in the Philippines Consumer Spending 11. Senate Bill No. 2612 (National Sustainable Sanitation Act of 2015) 12. Senate Bill No. 583 (Nutrition Labeling Act) 13. Senate Bill No. 2291 (Food Choking Prevention Act) 14. Increase in Gross Domestic Product (GDP) THREATS 1. Inflation rate in the Philippines is forecasted to increase 2. Governmental actions have an impact on the economy 3. Pollution coming from food processing companies 4. Meatless Monday 5. Rapidly increasing growth of people particularly aging 60+ and above

WEIGHT

RATING

WEIGHTED SCORE

0.03

2

0.06

0.06

4

0.24

0.05

3

0.15

0.06 0.10

3 4

0.18 0.40

0.06

3

0.18

0.03

3

0.09

0.03

3

0.09

0.06

4

0.24

0.07

3

0.21

0.04

4

0.16

0.03

3

0.09

0.03

1

0.03

0.06

2

0.12

0.08

4

0.32

0.03

2

0.06

0.04

3

0.12

0.03

1

0.03

0.07

2

0.14


6. Convenience sought from foodservice outlets 0.04 1 TOTAL 1.00 1 - The response is poor 3 - The response is above average 2 - The response is average 4 - The response is superior

0.04 2.95

6. INDUSTRY AND COMPETITIVE ANALYSIS Table 6.1

DIMENSION

Market Size and Growth

DEFINITION It refers to the value or volume of a company. It tells whether a company is large enough or small. As of 2016, 2016, the market market size size and growth growth of the Packaged Food Industry per segment garnered a total of 535,412.47. 61

Number of Rivals

This refers to the competitors that each company are competing with in a certain industry. The industry is fragmented by large companies and almost 32 established players are competing in. 62

It is the presence of a company in a certain area, it maybe local, regional, national, multinational or global. Geographic Coverage

61

Most of the company in the Packaged Food Industry compete locally but some are multinational like Universal Robina Corp63 and global like Nestlé because their company also expands in US, Eastern Europe and Asia. 64

http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab http://0-portal.euromonitor.com.ustlib.ust.edu.ph/portal/analysis/tab 63 http://www2.urc.com.ph/company_profile 64 http://www.nestle.com/aboutus/history/nestle-company-history#tab-1981

62


This refers to the differences and similarities of the company’s product offerings. Product Differentiation

Product Innovation

The products of the rivals are mostly differentiated because not all of them offered the same categories but there are some that has the same line of products.

Introduction of a new product or service that can answer the unmet needs or wants of the consumers.

It is a decision whether to higher or lower the prices of the goods. Increasing the price will also increase the quantity supplied. Demand-Supply Conditions

There’s no need for the companies to push their prices down because as long as consumers run out of food products, they have no choice but to buy these goods. Even though there are a lot of rivals in this industry, it is still up to the companies what would be the best pricing method to use.

“Technology is redefining how companies identify growth opportunities, operate their businesses, and manage risk . risk .”65 Technological Change

Vertical Integration

65

With the help of advanced technology, food products are being preserved and safely delivered to supermarkets for final consumers. It simply makes all things easier and faster.

Stages of operations of the companies and whether they have their own people or use outsourcing.

http://www.forbes.com/sites/daniellegould/2013/08/16/technology-will-drive-food-industry-growth-finds-kpmg survey/#828d6201f568


Some of the companies in the Packaged Food Industry are using two or more vertical integration namely production, manufacturing and distribution. Economies of Scale

Distribution Network

Price/Quality Range

Cost advantage of large-scale firms over small-scale firms.

It is also known as the ‘Distribution Channel’ Channel ’. This includes regional distributors, intermediaries, agents, wholesalers and store-based retailers that help in the distribution of a product.

Price range refers to its competitiveness among competitors while quality is in terms of the raw materials used to create the product.

6.1 STRATEGIC MAP Table 6.2

COMPANY

DESCRIPTION Purefoods-Hormel Company Inc. is a business arrangement between two companies, Purefoods and Hormel. They are both producing quality meat products like sausages, hams and hotdogs. The acquisition of Hormel Foods International in Purefoods gives the company an opportunity to introduced Hormel products in the Philippines. In 2001, San Miguel Corporation acquired Purefoods and these two have been continues in innovating and producing high standard products that makes them very effective towards the youth today. Some of its popular products are Purefoods tender juicy hotdog, Purefoods corned beef and Purefoods fiesta ham. These products have build strong brand recall and consumer loyalty that


gives the company a sustainable advantage over its competitors. 66

competitive

Century Pacific Food, Inc. was established by Mr. Ricardo S. Po, Sr. Its original company name was Century Canning Corporation but in 2014, they renamed it into Century Pacific Food, Inc. This company focuses mainly on tuna processing because of its plenty supply that can get in the Philippines. Now, the company has different brands that have different categories namely: Argentina, 555, Century Quality, Swift, Birch Tree, Angel, Blue bay, Wow, Fresca, Lucky 7, Shanghai, HomePride, Kaffe de Oro and Proteus. 67 Century Pacific Food, Inc. also has three advocacies that focus mainly on hunger to feed children who have nothing, education for the students who wants to study but cannot provide themselves and the care for the environment. These programs have been serving the country through partnerships with other 81 countries nationwide. 68

Monde Nissin is the company behind the popular snack products being enjoyed by kids and adults today. Some of its best-selling products are Lucky Me which is a noodle with a wide variety of flavour, Nissin yummy wafers, Voice and Bingo that has different flavours also. 69 It is the company that encourage every Filipino family to have lunch and dinner together with their kids because there’s a study that shows children who have meal time with their parents at home are less likely to go into trouble such as illegal using of drugs, tobacco and worst, being involved in pre-marital sex at a young age. This family advocacy of Monde Nissin has been supported by our former President of the Philippines, Benigno Aquino III to reduce the number of children being involved in wrong acts.70 The Filipino snack foods that the company offered are also present in 30 different countries that make them globally competitive. 71

66

http://www.sanmiguelpurefoods.com/page/our-company http://www.centurypacific.com.ph/webcontent.php?d=cD0yJnBjPTAmYmQ9MTk5 68 http://www.centurypacific.com.ph/webadvocacies.php?d=cD01JnBjPTAmYmQ9MTk5 69 http://www.mondenissin.com/products 70 http://www.mondenissin.com/company/heart 71 http://www.mondenissin.com/export 67


Universal Robina Corporation (URC) is founded by John Gokongwei Jr. and it has been in business for over 50 years. It is the leading company when it comes to snack foods and beverages in the Philippines. URC’s wide product portfolio, wide distribution channel and premium brands has been evidence why they lead in the Packaged Food Industry. They have been operating not just in the Philippines but also in Asia. Some of its best known products are Piattos, C2, Cloud9, Quake and Nova. 72

Nestlé Philippines Inc. began in 1866 when Henri Nestlé created infant food and the company that he created has been merged with Anglo-Swiss to build this company named Nestlé Group. Today, the company is more than 150 years and is still leading in producing nutritious food products that target all walks of life including babies, mothers, adults and, etc. Some of its best known products are Nescafe, Nido, Milo, Chuckie, Nesfruta, Nesvita and Bear Brand. 73

Magnolia is known for its delicious and creamy ice cream products. It is a subsidiary of San Miguel Purefoods Company Inc. They have been in business for over 30 years but still, they are continuous in developing best quality products using their best technologies. The company is also granted to use the acronym HACCP. Aside from that, they are the first dairy company to be granted with International Standard Organization ISO 22000:2005. Some of their best selling products are Magnolia Cheeze spread, Magnolia Purefresh milk, Magnolia Nutri-oil, Magnolia Jellyace snackers, and Magnolia All purpose cream. 74

72

http://www2.urc.com.ph/company_profile http://www.nestle.com/aboutus 74 http://www.magnolia.com.ph/page/about-us 73


Strategic Group Map of Selected Food Companies in the Packaged Food Industry

Fig ure 6.1

As shown in the figure above, above, the closest food food companies to CDO Foodsphere Foodsphere,, Inc. are Purefoods-Hormel Corporation Inc. and Century Pacific Inc. that both produce quality food products. Monde Nissin Coporation is also near to CDO Foodsphere, Inc. but they have different product offerings because Monde focuses mainly on snack foods while CDO is on meat products. As of 2016, Universal Robina Corporation (URC) is the leading company in the Packaged Food Industry, having a large market share compared to other competing companies. 75

75



7. COMPETITIVE PROFILE MATRIX (CPM)

Table 7.1

CDO Foodsphere, Inc.

PurefoodsHormel Corporation Inc.

Century Pacific Food, Inc.

Weight

Rating

Score

Rating

Score

Rating

Score

0.15

4

0.60

4

0.60

3

0.45

0.05

2

0.10

3

0.15

1

0.20

Operation Distribution Network Marketing

0.15

3

0.45

3

0.45

4

0.60

0.15

3

0.45

4

0.60

3

0.45

0.10

2

0.20

3

0.30

4

0.40

Brand Image

0.05

3

0.15

4

0.20

3

0.15

Price Food Quality Total 1 – Major weakness 2 – Minor weakness

0.10 4 0.40 0.25 3 0.75 1.00 3.10 3 – Minor – Minor Strength 4 – Major – Major Strength

2 4

0.20 1.00 3.50

3 3

0.30 0.75 3.15

Critical Success Factors Technological Advancement Financial Position


VI.

ANALYSIS OF INTERNAL ENVIRONMENT

1. COMPANY OVERVIEW

CDO Foodsphere, Inc. is a locally known meat processing company in the Philippines. The company was originally based in Valenzuela City. It was founded on June 25, 1975 by 2009 Ernst and Young Women Entrepreneur of the year, Corazon Dayro Ong. Today, the company has now expanded its business in Malvar, Batangas and Valenzuela; it has 7 branches and 10 factories. The company is known for its best selling products including CDO Karne Norte, CDO Corned beef, Funtastyk Young Pork Tocino, CDO Bibbo cheesedog and San Marino Corned Tuna. These products are being advertised by famous celebrities in today’s generation that helps the company to gain public attention.

It all started due to the cooking hobby of Corazon Dayro Ong. The food she made has been loved by her family and neighbours that is why she decided to make money out of it. They began the business with a P60,000 start-up capital and longganisa and tocino served as their leading products that time. During the year 1987, the company experienced a tragedy that tests their family business. A fire ruins their processing plant and unfortunately, that time, they were already producing 5,000 kilos of longganisa, tocino and hotdogs. Nonetheless, Corazon Dayro Ong together with her family eagerly makes a solution and tried to fix it within 2 days. And at the year 1990, the husband and eldest son of Corazon Dayro Ong finally get involved in running the business and in fact, they were leading the manufacturing processes, systems and technology, human resources, sales, distribution and marketing of the product. The continuous grow of the company has lead them to have their first ever television commercial to promote their


products and this was aired during 1995. The medium helps the company to gain public attention and it contributes a lot to increase their sales. 76

The successful years of CDO Foodsphere, Inc. doesn’t stop them from innovating and producing high quality products that will fit to everyone’s palate. They are continuous in giving satisfaction to every Filipino nationwide. The advance technology, high-capacity production and advanced storage plants of the company will guarantee everyone that the food they produced are all safe, free from microorganisms and perfect for daily meal preparations.

76

http://en.wikipilipinas.org/index.php?title=CDO_Foodsphere%2C_Inc.


CDO FOODSPHERE INC. BRANDS AND PRODUCT OFFERINGS



2. CORPORATE VALUES

CDO Foodsphere, Inc. is not just a manufacturing firm that produces food products to satisfy people’s palette. It is a company that is built with different fundamental values to guide each and every one of them to deliver a remarkable work that will make their customers truly satisfy. All the employees in different departments are following these values so that they are in line with their goals of not just to exceed customer’s expectations but also to do the right thing at all times.

The company is embodied with seven (7) core values and this includes the following: Customer Driven, Entrepreneurial Spirit, Love of God, Commitment, Integrity, Teamwork and Excellence. 77 CDO Foodsphere, Inc. is engaged to a customer driven pricing method. Meaning, their product’s prices ar e ar e based on the willingness to pay of the consumers to a certain product. The reasonable price of the products makes them to target the mass consumers. The company has an Entrepreneurial Spirit because they are not waiting for a change; rather, they are seeking for it to have a continuous improvement with their products. Every business that they take is all guided because of their Love of God. They are sharing their blessings to their foundation, which is the Odyssey Foundation Inc. CDO Foodsphere, Inc. has shown its commitment to deliver a quality product to its customers. They don’t stop innovating and searching that would lead the company to discover new products. Each department are having one goal and mission. Because of their teamwork, they are able to deliver high-quality products that are made with excellence. All these guiding corporate values contribute to the sustainable growth of the company.

77

https://careers.cdo.com.ph/#/p/about


3. VALUE CHAIN ANALYSIS

Value Chain Analysis (also known as Generic Value Chain) is a process where a company is engage with to create a product beginning from input (raw materials) into outputs (finished product). It focuses on the company’s internal activities that can be divided into two (2) primary activities and support activities. The two activities works together to deliver a satisfying product that will give the company a competitive and sustainable advantage towards its competitors. The main purpose of this analysis is to identify where the fundamental strengths or advantages of the company can be found and where poor execution takes place so that it can improve and enhance.

The given value-chain analysis is just made by me, but the listed primary and support activities have been gotten on the official website of CDO Foodsphere, Inc. As you can see below, their primary activities are composed of five (5) activities while the support activities are only three (3).



PRIMARY ACTIVITIES

S UP P L Y C HA IN MA NA G E ME NT

It is a series of processes that involves different activities that help companies to take raw materials (inputs) into a final product (output). It mainly involves the handling and receiving of raw materials or components coming from the supplier moving to the manufacturer to wholesaler to retailer, and finally to consumer. One of the main objectives of a supply chain management system is to reduce inventory or to keep products available that is enough for the consumers need. Successful supply chain will not just give companies a competitive advantage but it will also help to meet customer’s demand, on-time deliveries and reduce cost in excess products. 78

This system involves actors that play a big role in processing inputs into outputs for consumer’s consumption. The supply chain begins with the Supplier. He/she supplies the raw materials that will be needed in order to create the final product. And then it will move to the Food Processors that makes the supplied raw materials into a consumable product ready for purchase. The processes being used by the Food Processor is also called Food Manufacturing. After making the product ready in the market, the stage will move to the Distributors and Retailers. Distributors are the actor that helps in the distribution of a product. They usually buy in large quantities and place it in Store-Based Retailers such as Supermarkets, Grocery stores, Convenience stores and etc. where final consumers commonly buy products. These supply chain actors will all lead to Consumers who is the reason behind the creation and production of the products. 79

78

http://searchmanufacturingerp.techtarget.com/definition/supply-chain-management https://www.koganpage.com/media/project_kp/document/food-supply-chain-management-and-logistics-samplechapter.pdf 79


The above process also applies to CDO Foodsphere, Inc. It also begins with the Producer or the supplier of the raw materials, followed by the Food Processor that process the raw materials into a final product ready for consumer’s consumption. After finalizing the product, it will go directly on a company owned warehouse that is then distributed to various regional distributors. These distributors will help the company to distribute its products to various places where customers can buy the products. They have built good relationship with their suppliers who gives them discounts when they purchased raw materials or components that are part of their products. This helps the company to make their CDO products at low cost.

OPERATION

This refers to the planning of the company on how they will devise a product that is aligned with the marketing concepts made by the Sales & Marketing department. This is designed to effectively allocate resources that will be used in the production of inputs into outputs. Carefully planning will help a company to maximize its resources while minimizing the cost in doing business. 80 This involves a lot of activities such as converting inputs into final product from production, assembly, packaging equipment, maintenance, facilities, operations, quality assurance, and environmental protection. So the whole company must be mindful when it comes to their operation to avoid waste of money and resources. The conversion of raw materials into a finished product will take place here.

80

http://www.businessdictionary.com/definition/operations-strategy.html


PRODUCTIVITY OF MACHINERIES

CDO Foodsphere, Inc. is engaged with the used latest technology that makes their work easier and faster. Because of this, they are able to produce tons of hotdogs per hour and loads of canned meat products and fish every month. The high-technology that the company is using makes their work productive and to meet the deadlines on time. Despite having multiple competitors, they still have the edge when it comes to their production.

QUALITY ASSURANCE

CDO Foodsphere, Inc. was one of the first companies to first use the acronym HACCP or Hazard Analysis Critical Control Points that made sure their produced food products were safe. In connection with this, the Department of Agriculture also recognized CDO as the cleanest meat processing plant in the Philippines which gives them a competitive edge over other existing companies in their industry. All the CDO products are guaranteed safe from hazardous chemicals and microorganisms that can cause harm to consumers because it has undergone product quality assessment like product traceability, Physico- chemical test/analysis and stringent lab tests and procedures. 81

81

http://foodservice.cdo.com.ph/subpages/services.aspx


DISTRIBUTION

It is the flow or movement of the finished products from the manufacturing company up to the buyers: Consumers, Business buyers, Institution and Retailers. After the production of a product, it is now ready for consumption. In order for consumers to purchase it, it will be delivered to various stores-based retailers where consumers can conveniently buy products. The distribution of the product will include the following: finished goods warehousing, order processing, order picking, packing, shipping, delivery vehicle operations, and establishing a working of dealers and distributors.

EFFICIENT MOVEMENT OF GOODS

Once the product is done, it will go directly to the company-owned warehouses. Major distribution channels that make up CDO Foodsphere’s distribution network are: Store based Retailers, Agents, Wholesalers, CDO Foodstores, and Food Service. Storebased Retailers are the grocery stores, convenience stores, Hypermarkets, Supermarkets, Independent small groceries, moms and pops, etc. These are the common places where final consumers and business buyers can purchase different CDO products. Meanwhile, Agents and Wholesalers are intermediaries that help in the distribution of CDO products. They can directly connect the company to retailers or to the final consumers. CDO Foodsphere, Inc. also has Food stores that offer all the CDO’s product offerings and these are located at Shaw Blvd, McArthur Highway, Pedro Gil, Commonwealth Ave., etc. Aside from that, the company is also supplying their food products to known Fast Food Chains including: Pizza hut, Taco Bell, KFC, Long John Silver, Silver, Greenwich, Jollibee, Shakey’s and Max’s Restaurant. The company is also exporting its products to three different countries namely Malaysia, Qatar and USA. Shown below is the current distribution network of the company.


CDO FOODSPHERE, INC. DISTRIBUTION NETWORK

S A L E S & MA R K E TING TI NG

It is a simultaneous activity that needs to unite and work together as one. The Sales & Marketing of CDO Foodsphere, Inc. is a joined department for them to easily interact and communicate the things that they need to know because if the other one is gone, the other part will will suffer and vice versa. Sales is an activity that involves interpersonal communication in order to close a deal and make the signed agreement between the company and its clients whereas Marketing refers to the persuasion of consumers and how they can reach them through various online marketing tools that will engage them to support the company and its products or services. They also function as the team


that seeks the needs of the market. The success of the company cannot be fully achieved without the help of these two activities. 82

ESTABLISHED NAME

CDO Foodsphere, Inc. is one of the top key players in the Packaged Food Industry. As of 2016, the company ranks 10 th with with over 32 competitors. For over 40 years, the company has been continuous in producing quality products that will not just satisfy the means of the consumers but can also exceed their expectations. The company’s products are at reasonable prices making it fit for the mass consumers. The idea of CDO Foodsphere, Inc. started from just simple hobby that grows into a successful brand that most Filipino loves. It has also received various Consumer and Trade awards that give the company a competitive advantage over competitors.

82

https://www.thebalance.com/marketing-vs-sales-what-is-the-difference-2294827


Consumer Awards:

Trade Awards:

SUCCESSFUL ADVERTISING CAMPAIGNS

One of the recent successful products of CDO Foodsphere, Inc. is its CDO Funtastyk Young Pork Tocino which is being endorsed by the famous “Yaya Dub” or Maine Mendoza in real name. The company uses an out-of-home advertisement which is the Billboard Ad and a Television Commercial making it easier to reach the mass consumers. This medium has been used by CDO Foodsphere, Inc. to capture a wide range of customer attention, especially in places that has high foot traffic. Other successful product offerings are CDO Karne Norte, CDO Idol Cheesedog and San Marino Corned Tuna which is endorsed by Daniel Padilla and Kathryn Bernardo. The commercial was also aired on TV and it also has a billboard ad. CDO Foodsphere, Inc.’s other media choices are in the forms of television commercials, posters, out-ofhome advertising, and social media. CDO Foodsphere, Inc. has also been using posters that are commonly placed on supermarkets so that people will be aware of CDO’s new product offering, current sales promotions, upcoming events, and other important announcements. announcements. Aside from the abovementioned, abovemention ed, they also have a Facebook page and Twitter account where event announcements, online advertisements, and other consumer focused posts can be found. But the company is very minimal in using advertisements and other promotional methods. They’re just using it to selected products.


KNOWN FOR VARIETY OF PRODUCT OFFERINGS

From a household-made tocino and longganisa, the company now have various product offerings. CDO product offerings have two segments: Processed Fruits and Vegetables and Processed Meat and Seafood. Under the Processed Fruits and Vegetables are kaong, nata de coco, red mung beans and white beans. And under the Processed Meat and Seafood are hotdogs, cheese dogs, corned beef, sliced hams, luncheon meat, meat loaf, tuna, nuggets, ulam burger, and etc. With the used of advertisements, some of CDO products are very popular in the market today. Some known products are CDO


Karne Norte, Bibbo Cheesedog, CDO hotdogs, CDO meat loaf and CDO ulam burger. These are all perfect for kids.

S E R V IC E

This refers to the assistance given by companies to their clients who buys their products and services. Providing assistance to buyers might be through installation, spare parts delivery, maintenance and repair, technical assistance, buyer inquiries and complaints. It is important to take good care of the customers especially the loyal customers because they’re the one that contributes to the growth of a company. And without them, the business is nothing. Providing them support is essential because they will feel that the company is giving them the right treatment that they deserved. It can makes them to enjoy the product more and to less likely switch to other brands which can be a threat to a company if that happens.

FOOD SERVICE

Even after you close a deal, it is very necessary that companies should keep in touch with their clients. CDO Foodsphere, Inc. is not just known for its brands and product offerings, but it also has Foodservice where its main customers are known fast food chains and restaurants including: Jollibee, Greenwich, Shakey’s, Pizza Hut, Taco Bell, Max’s Restaurant, Philippine Airlines and etc. CDO Foodservice has been providing finest food products that are processed in high-class manufacturing machineries and


undergo undergo to a process called ‘quality assurance system’ making the food products at its best for the customers. 83

SUPPORT ACTIVITIES

PR ODUCT ODUCT R&D, TECHNOLOGY TECHNOLOGY , AND SYS TEM DEVE LOPMENT LOPMENT

These involves activities relating to product R&D, process R&D, process design improvement, equipment design, computer-software development, telecommunications systems, computer-assisted design and engineering, database capabilities and development of computerized support system. (R&D) is really an important factor in companies because they are the group that conceptualize and research for a new product that can be helpful to the consumers. They are continuous in studying to have a successful innovated product that consumers will purchase and consume. Coming up with a great new to the market product can boost sales and lead to the growth of a company’s company’s revenue and market share.

83

http://foodservice.cdo.com.ph/subpages/about.aspx


According to Patrick Dolan, “Technology is redefining how companies identify growth opportunities, operate their businesses, and manage risk – and the companies that adopt and utilize these tools most effectively are positioned to capitalize on improving business conditions.” conditions. ”84 Technology is just another important factor that drives every company. With the help of advanced technology, foods are being preserved and safely delivered to supermarkets for final consumers. It simply makes all things easier and faster.

CONTINUOUS PRODUCT DEVELOPMENT

CDO Foodshpere, Inc. is engaged in an extensive high quality research to improve their existing product offerings and also to discover a product that can beat competitors. The company’s successful years in business don’t stop them from innovating but instead, it serves as a motivation to be perfectly consistent in developing quality food products at a lower price that would answer the needs and wants of the customers. 85

84

http://www.forbes.com/sites/daniellegould/2013/08/16/technology-will-drive-food-industry-growth-finds-kpmg survey/#828d6201f568 85 http://www.cdo.com.ph/subpages/Profile/profile.aspx


HIGH-CAPACITY PRODUCTION AND MACHINERY

As part of the product’s improvement improvement of CDO Foodsphere, Inc., they invest invest in the latest technological advancements. With this, they are able to deliver a product that are considered as best shelf stable products and processed meats to their customers. The company also has advanced continuous cookers that can produce tons of hotdogs, highly developed and complex machineries that are able to produce loads of canned meat and fish product every month. Through the use of their emulsification system, the processing of raw materials into food products becomes extremely faster and better giving the company an edge that contributes to their success. 86

86

http://www.cdo.com.ph/subpages/Profile/profile.aspx


ADVANCED STORAGE AND WAREHOUSES

To preserve the quality of every product that they produce, CDO Foodsphere, Inc. use blast freezing method to freeze all the frozen meat products and place it in cold warehouses to keep the quality at a right temperature level before delivering it to the wholesalers, distributors or intermediaries up to the final consumers. 87

HUM HU MAN RE SOURCE MANAG EMENT

The function of this department is to provide employment for selected applicants that are fitted for a certain job inside a company. This involves recruiting, hiring, training, development and compensation of all types of personnel. It supports both primary and supporting activities and the entire value chain. The Human Resource members are providing necessary tools to the employees in order for them to deliver a successful work that would give the company an edge. 88

87

http://www.cdo.com.ph/subpages/Profile/profile.aspx https://www.thebalance.com/what-is-human-resource-management-1918143

88


PROCESS OF HIRING AND SELECTION OF EMPLOYEES

CDO Foodsphere, Inc.’s hiring process is just a usual set up of hiring or recruiting employees. The hiring process begins with the submission of application wherein the job applicant needs to submit their job application application through online or whatever whatever the company prefers, second is the online assessment wherein the applicant is given some questionnaire or some sort of examination that will measure their skills and capabilities, third is the initial interview wherein the applicant needs to go to the company and this serves as their first step to the company, fourth is the final interview and finally, the job offer that will be based on the applicant’s skills. 89

The company is posting job opportunities through their official career website (https://careers.cdo.com.ph/#/p/professionals) . All the information regarding job vacancies or position, job description, job specification, requirements, required competencies, etc. can be seen in their website. 90 Interested applicants can send their resumes through these emails: Valenzuela Plant: [email protected] and Batangas Plant: p3recruitm Plant: p3recruitment@cd [email protected] o.com.ph.. And they can just fill up the application form that is posted also on the company’s website. CDO Foodsphere, Inc. doesn’t only accept job applicants but they’re also accepting on -the-job trainees. The application process begins with the submission of application, screening of the on-the-job trainee and the

89

https://careers.cdo.com.ph/#/p/professionals https://careers.cdo.com.ph/#/p/professionals

90


internship offer that will based on the student’s course program. They can be assigned in Sales & Marketing, Finance, Supply Chain or even Human Resources Department. 91

EMPLOYEE MOTIVATIONAL METHODS

The company is placing great importance when it comes to their employees because form them; they are the recipe for CDO’s success. It wouldn’t be successful without these people that place great effort and hard work in every work they do. Aside from the financial rewards including salaries, wages and social security contributions, they are using non-financial rewards to motivate their employees. The company is giving recognition or appreciation award to the employee that has the most contribution in every work work or project they’re doing. 92

GE NER AL A DMINI DMINISTR STR ATION ATION / FIRM INFR INFR AS TRUCTUR TRUCTUR E

These include the organizational structure, control systems, company cultures, etc. that makes up the company. 93 They give support for all the primary activities that the company is doing. It is consist of different activities such as general management, planning, accounting, and finance, legal, government affairs and quality-control mechanisms. Unlike other support activities, infrastructure supports the entire chain and not individual activities.

91

http://www.cdo.com.ph/subpages/careers.aspx https://careers.cdo.com.ph/#/p/events 93 http://www.businessnewsdaily.com/5678-value-chain-analysis.html 92


CORPORATE CITIZENSHIP OR ETHICS PROGRAM

Odyssey Foundation, Inc. (OFI) is a non-profit organization created by CDO Foodsphere, Inc. It is the arm of the company for its corporate social responsibility. It is created for the purpose of helping the less fortunate children and to give assistance to various Filipino communities that are experiencing difficulty with their everyday lives.

ONE GOAL OF EACH DEPARTMENT

CDO Foodsphere, Inc. has (6) major departments including: Sales & Marketing, Finance, Engineering & Information Technology, Supply Chain Management and Human Resource Management. All these departments have different functioning but only have one goal or purpos e which is “to be the best in what it does”. Each department are composed of talented and driven people that continuous in working to deliver a product that would not just answer the stated needs of the customers, but will also exceed their expectations. 94

94

http://www.cdo.com.ph/subpages/Profile/profile.aspx


EVALUATION OF PRIMARY ACTIVITIES

Table 3.1

PRIMARY ACTIVITIES 



Soundness of material and inventory control systems Efficiency of raw material warehousing activities Development of alternate sources for inputs to minimize dependence on a single supplier Procurement of raw materials (1) on a timely basis, (2) at lowest possible cost, (3) at acceptable levels of quantity Procedures for procurement of plant, machinery and buildings Development of criteria for lease-versuspurchase decisions Productivity of equipment compared to that of key competitors Appropriate automation of production processes Effectiveness of production control systems to improve quality and reduce costs Efficiency of plant layout and work-flow design Timeliness and efficiency of delivery of finished goods and services Efficiency of finished goods warehousing activities 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 favourable reputation Extent of brand loyalty among customers Extent of market dominance within the market segment or overall market Means to solicit customer inputs 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

  

        

       

POOR

AVERAGE

EXCELLENT

                       


EVALUATION OF SUPPORT ACTIVITIES

Table 3.2

SUPPORT ACTIVITIES   

  



      

    

Effectiveness of procedures for recruiting, training and promoting all levels of employees Appropriateness of reward systems for motivating and challenging employees A work environment that minimizes absenteeism and keeps turnover at desirable levels Levels of employee motivation and job satisfaction Relations with trade unions Active participation by managers and technical personnel in professional organizations Capability to indentify new-product market opportunities and potential environment threats Quality of the strategic planning system to achieve corporate objectives Coordination and integration of all value chain activities among organization 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 Success of research and development activities in leading to product and process innovations Qualification and experience of laboratory technicians and scientists Quality of working relationships between R&D personnel and other departments Ability of work environment to encourage creativity and innovation Timeliness of technology development activities in meeting critical deadlines Quality of laboratories and other facilities

POOR

AVERAGE

EXCELLENT

                  


4. FINANCIAL ANALYSIS

It is the process where companies conduct an examination to identify its major financial strengths and weaknesses that can affect their business operations. An analysis of this will tell whether a company is profitable or not. When analyzing the financial analysis of a company, these are the financial statements that are needed to be ready: Income Statement and Balance Sheet. The Income Statement, commonly called as Profit and Loss Account, shows the company’s revenue, expenses, gains and losses. On the other hand, the Balance Sheet shows the financial position of the company. 95 The Financial Statements of CDO Foodsphere, Inc. are as follows:

Financial Ratios

Financial Statements

FINANCIAL ANALYSIS

Vertical Analysis

Horizontal Analysis

95

https://www.linkedin.com/pulse/20140806181716-59817714-financial-analysis-a-short-note-on-tools-andtechniques-of-financial-analysis


STATEMENTS OF COMPREHENSIVE INCOME CDO Foodsphere, Inc. Statement of Income96 For the Year Ended December 31, 2013

Net Sales

P 8,690,332,206.73

Cost of Sales

(7,020,158,336.38) (7,020,158,336.38 )

Gross Income

1,670,173,870.35

Other Income

213,370.06

Administrative Administrative Expenses Expenses

(1,443,243,809.41) (1,443,243,809.41)

Other Expenses

(24,444,981.11)

Income Before Income Tax

202,698,449.89

Income Taxes

(60,766,647.58)

Net Income

141,931,802.31

Other Comprehensive Income

(1,498,106.95)

Total Comprehensive Income

140,433,695.36 ============

96

Securities and Exchange Commission, Current Report of CDO Foodsphere, Inc. for the year 2013


CDO Foodsphere, Inc. Statement of Income97 For the Year Ended December 31, 2014

Net Sales

P 10,831,556,699.68

Cost of Sales

(8,817,806,233.66) (8,817,806,233.66 )

Gross Income

2,013,750,466.02

Other Income

570,349.80


(1,779,923,813.87) (1,779,923,813.87)

Other Expenses

(14,212,595.41)


220,184,406.54

Income Taxes

(68,176,039.05)

Net Income

152,008,367.49


(14,089,189.95)


137,919,177.54 =============

97



CDO Foodsphere, Inc. Statement of Income98 For the Year Ended December 31, 2015

Net Sales

P 12,838,956,273.11

Cost of Sales

(10,549,146,862.23)

Gross Income

2,289,809,410.88

Other Income

4,451,274.55


(1,947,807,550.46) (1,947,807,550.46)

Other Expenses

(15,854,570.25)


330,598,564.72

Income Taxes

(99,020,536.17)

Net Income

231,578,028.55


(10,429,458.86)


242,007,486.86 =============

98



HORIZONTAL ANALYSIS CDO Foodsphere, Inc. Statements of Income Horizontal Analysis For the Years Ended December 31, 2011, 2012, 2013, 2014 and 2015

2010-2011

2011-2012

2012-2013

2013-2014

2014-2015

Net Sales

53.79%

16.75%

6.99%

24.64%

18.53% = average of net sales: 24.14

Cost of Sales

59.23%

14.08%

9.86%

25.61%

19.63%

Gross Income

34.73%

27.79%

(3.68%)

20.57%

13.71%

33.30%

32.15%

(3.73%)

23.33%

9.43%

(16.82%)

(8.17%)

(52.95%)

(41.86%)

11.55%


88.11%

9.84%

11.63%

8.63%

50.15%

Net income

85.19%

9.73%

11.61%

7.10%

52.35%


85.19%

9.73%

10.44%

(1.79%)

75.47%

Administrative Administrative Expense Expense Other Expense


VERTICAL ANALYSIS CDO Foodsphere, Inc. Statements of Income Vertical Analysis For the Years Ended December 31, 2011, 2012, 2013, 2014 and 2015

2011

2012

2013

2014

2015

Net Sales

100.00%

100.00%

100.00%

100.00 %

100.00%

Cost of Sales

80.52%

78.67%

80.78%

81.42%

82.17%

Gross Income

19.48%

21.32%

19.22%

18.59%

17.83%

Other Income

0.01%

0.007%

0.002%

0.05%

0.03%

16.31%

18.46%

16.61%

16.43%

15.17%

Other Expense

0.81%

0.64%

0.28%

0.13%

0.12%


2.38%

2.24%

2.33%

2.03%

2.57%

Net Income

1.67%

1.57%

0.70%

0.63%

0.77%


1.67%

1.57%

1.62%

1.27%

1.88%

Administrative Administrative Expense Expense


BALANCE SHEET


STATEMENT OF CASH FLOWS


STATEMENT OF CHANGES IN EQUITY


4.1 FINANCIAL RATIOS


Financial Ratios are used strategically by firms to tell whether the performance of their organization becomes profitable or not. When we say r atio, r atio, it’s about comparing numbers or figures to another. This will involve the comparison of the numbers or figures that can be seen on the company’s financial statement. It will also serve as an interpretation rather than a simple computation. Comparing of this will lead to some information that can be really useful to companies to identify their performance in terms of profitability, shareholder-return, market evaluation, liquidity, asset utilization and leverage. 99 These financial ratios should be carefully examined by companies in order to bring a positive outlook.

Activity Ratio

Liquidity Ratio

Leverage Ratio

Profitability Ratio

FINANCIAL RATIOS

PROFITABILITY RATIOS

99

http://www.referenceforbusiness.com/management/Ex-Gov/Financial-Ratios.html


Profitability or operational efficiency is the ultimate objective of every companies competing in an industry. Without this, no company will survive the competition. It is used to measure how efficient is the company’s resources that they’re using in their production or operations of products or services. It is necessary to compare the company’s profitability with its rivals in the industry so that you know whether you’re more or less profitable than them. It will also help a company to make adjustments with their strategies that can positively or poorly contribute to their performance. The more profitable the company has, the better because it only means that the company is improving and somehow can compete with its rivals. Furthermore, changes in the company’s profit ratios will identify whether a company’s performance is good or not. 100

Table 4.1

RATIO

Gross Profit Margin

Operating Profit Margin

Net Profit Margin or Net Return On Sales

Net Return on Total Assets (ROA)

FORMULA

Gross Profit/ Sales Net Profit Before Income Tax/Sales Net Income After Tax/ Tax/ Sales Net Income After Tax/Total Assets

2015

2014

2013

17.83%

18.59%

19.22%

2.57%

2.03%

2.33%

1.80%

1.40%

1.63%

2.78%

1.92%

2.05%

The table above shows that CDO Foodsphere , Inc.’s gross profit margin is decreasing from 2013 to 2015. There is a continuous slowdown on the company’s gross profit on the following years. By computing the gross profit margin, it will tell how much money is 100

Strategic Management Financial Ratios


left for the company to meet the expenses in its operations or production, distributions, liabilities and other miscellaneous expenses. The operating profit margin is also computed to identify what pricing strategy will be used by the company. As of 2015, CDO Foodsphere, Inc. has 2.57%. It only means that for every peso of sales, they have P0.257. The net profit margin is also computed so that the company knows how much revenue is left after paying all the company’s expenses. The net profit margin of the company experiences a decrease in 2014 but suddenly increase in 2015 by 1.80%. This is a good sign because increase in the net profit determines how effective a company in converting sales into profit. The return on assets (ROA) is being computed also because it determines how effective and efficient a company is in using its assets to generate profit that will lead to increase in market share. Last 2015, the company has earned a percentage of 2.78% from its investment which is not bad at all.

LIQUIDITY RATIOS

Every company must closely monitor their ability to pay off their short-term obligations or debt because these are typically due in one year or less. The liquidity ratio will serve as a measurement to tell whether a company has the ability to repay debts. 101 Companies must be mindful on this because if they didn’t follow the reminders or contract of the creditors, other companies will less likely lend them money to borrow since they do have a background of not following debt paying rules. Assets that are convertible into cash are usually the common payment for this. Some of the examples of liquid assets are cash, checking account, savings account, EE Savings Bonds, U.S. Treasury Bills, and Certificates of deposit.

Table 4.2

FORMULA 101

2015


2014

2013


RATIO

Current Ratio

Working Capital

Current Asset/ Current Liabilities Current Assets – Assets – Current Liabilities

1.00

1.01

0.95

11,634,384.4

34,187,174.02

280,826,017.5

Current ratio is computed to identify the capability of a company in paying its short term or long term liabilities. The table above shows that as of 2015, the company has a ratio of 1.00. The ratio is poor and financially unhealthy to pay its debts. There is an acceptable ratio to be considered as healthy and capable to pay debts and sadly, the ratio of CDO Foodsphere, Inc. does not able to reach the acceptable level which is 1.5 to 3.00. As you can see, the working capital of the company in 2013 seems very good but in 2015, it decrease from 280,826,017.5 to 11,634,384.4. This drastic change really affects the company in terms of its day-to-day operations because the income that is needed to operate new or current activities becomes lesser making it difficult for the company to adjust.

LEVERAGE RATIOS

Leverage ratio is also known as Capitalization ratio. It measures the company’s debt financial structure. The measurement of this ratio is practically important to companies because this is where potential creditors look. This would tell a company’s ability to pay off the interest and principals payments of the debt. Analysts of a company should closely monitor its debt situation because debts are very risky. If the profit of the company is not enough to pay all the interest payments covered by the debt, bankruptcy can occur and we don’t want this to happen. 102

Table 4.3

FORMULA 102

2015


2014

2013


RATIO

Total Debt-To-Assets Ratio

Long-Term Debt-To-Capital Ratio

Total Debts/ Total Assets Long Term Debt/Total Equity

0.94

0.95

0.93

16.47

19.91

13.00

The total debt-to-assets ratio is computed by a company to measure how many assets are being financed by creditors instead of investors. If majority of the company’s assets are financed by creditors, it only means that it is supported by borrowing. As shown in the table above, the debt to assets ratio of the company between 2013 to 2015 did not experience a greater than 1. It only means that the company has more assets than liabilities because its ratios are all less than 1. In other words, CDO Foodsphere, Inc. is financially healthy and can pay its debts. On the other hand, the company has a high ratio in terms of long-term debt-to-capital ratio. From 13.00 in 2013, it increases at 16.47 in 2015. It is not good for the company because increase in ratio means a high degree of risk. This will affect investors and lender’s decision about a company. The difference between the two is that, total debt-to-assets ratio measures all the debts of the company while the long- term debt-to-capital ratio only measures the long-term debts.

ACTIVITY RATIOS

Activity ratio shows the company’s investments in a specific type of asset and how well they are in using these assets. It is one of the financial tools used by companies to measure if they have an ability to meet their objectives . Rapid conversion of company’s assets, liquidity or capital accounts into sales, signals that the company is using its resources well. Comparing activity ratio to the industry or competitors will tell whether the company is doing well or not in the competition. 103

Table 4.4

103

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RATIO

Days of Inventory

Inventory Turnover

Average Collection Period

FORMULA

365 days/ Inventory Turnover Annual Sales/ Inventory Account Receivable /Average Daily Sales

2015

2014

2013

139.31

165.91

197.30

2.62

2.20

1.85

2.95

2.79

2.82

As shown shown in the table table above, above, the days days of inventory inventory is computed computed to identify the number number of days the company holds its products before selling it in the market. It has seen that the company’s good days of inventory are between 2013 to 2014. In 2015, the company experience a low days of inventory with 139.31 days only. It is not a good sign because low days of inventory means that the company frequently run out of stocks and this could lead to decrease in profit. The inventory turnover is also computed to measure how fast a company is selling its supply of products and how many times it is needed to be replaced. replac ed. CDO Foodsphere, Inc.’s inventory turnover is only 2.62 times a year. Although it increases increases from 1.85 in 2013 to 2.62 in 2015, it is still considered considered as a low turnover. The low ratio indicates that the company have weak sales and has an excess inventory of products. It is also important to calculate the average collection period because this will determine the time that the company will receive its money that they invested for the accounts receivables.


5. STRENGTHS AND WEAKNESSES/ COMPETITIVE ADVANTAGE

Strength is internal in nature. It is company caused and essentially controllable. It is a factor that is favourable to the success of the company and where it enjoys superiority over its competitors. Weakness is also internal in nature, company caused and essentially controllable but unlike strength; it brings unfavourable condition to the company.

Table 5.1

STRENGTHS

WEAKNESSES

Established Name

Lack of Marketing Efforts

Continuous Product Development

Employee’s reluctance to accept new job opportunities

Advanced Advanced Storage Storage Plants and Warehouses

Rank 10th only in the Packaged Food Industry

High-capacity Production and Machineries

Low Working Capital Ratio

Food Quality Assurance


Nationwide Distribution Availability Availability in all leading store-based store-based retailers Affordable products Known For Variety of Product Offerings Employee Motivational Methods


5.1 DESCRIPTION OF THE STRENGTHS AND WEAKNESSES

The following are considered as STRENGTHS of CDO Foodsphere, Inc.:

ESTABLISHED NAME

CDO Foodsphere, Inc. is one of the top key players in the Packaged Food Industry. As of 2016, the company ranks 10 th with with over 32 competitors. For over 40 years, the company has been continuous in producing quality products that will not just satisfy the means of the consumers but can also exceed their expectations. The company’s products are at reasonable prices making it fit for the mass consumers. The idea of CDO Foodsphere, Inc. started from just simple hobby that grows into a successful brand that most Filipino loves. It has also received various Consumer and Trade awards that give the company a competitive advantage over competitors. This is strength for CDO Foodsphere, Inc. because they have been known and trusted by many Filipinos for four decades now. Aside from that, their products are locally made and delicious making it more close to the heart of the Filipinos. This can be used by the company as their competitive advantage among its rivals.

CONTINUOUS PRODUCT DEVELOPMENT

CDO Foodshpere, Inc. is engaged in an extensive high quality research to improve their existing product offerings and also to discover a product that can beat competitors. The company’s successful years in business don’t stop them from innovating but instead, it serves as a motivation to be perfectly consistent in developing quality food products at a lower price that would answer the needs and wants of the customers. This is strength for CDO Foodsphere, Inc. because with the use of advanced technology, they can innovate new to the market products that would fit to the needs of the consumers today and they also have the chance to improve their existing products to be more appropriate with the changes in the market.


ADVANCED STORAGE PLANTS AND WAREHOUSES

To preserve the quality of every product that they produce, CDO Foodsphere, Inc. use blast freezing method to freeze all the frozen meat products and place it in cold warehouses to keep the quality at a right temperature level before delivering it to the wholesalers, distributors or intermediaries up to the final consumers. This is strength for CDO Foodsphere, Inc. because if they are able to keep their products at a right temperature, the quality and goodness of the product will be maintained and stored until it reaches the final consumers.

HIGH-CAPACITY PRODUCTION AND MACHINERIES

As part of the product’s improvement improvement of CDO Foodsphere , Inc., they invest in the latest technological advancements. With this, they are able to deliver a product that are considered as best shelf stable products and processed meats to their customers. The company also has advanced continuous cookers that can produce tons of hotdogs, highly developed and complex machineries that are able to produce loads of canned meat and fish product every month. Through the use of their emulsification system, the processing of raw materials into food products becomes extremely faster and better giving the company an edge that contributes to their success. This is strength for CDO Foodsphere, Inc. because high-capacity of production means that the company is able to deliver more than what their buyers or customers are expecting to give them. It also means that they are able to meet deadlines on time because of their capacity to produce more. This will prevent the company to run out of stocks.

FOOD QUALITY ASSURANCE

CDO Foodsphere, Inc. was one of the first companies to first use the acronym HACCP or Hazard Analysis Critical Control Points that made sure their produced food products were safe. In connection with this, the Department of Agriculture also recognized CDO as the cleanest meat processing plant in the Philippines which gives them a competitive edge over other existing companies in their industry. This is strength for CDO Foodsphere, Inc. because if all their products are guaranteed safe from hazardous


chemicals and microorganisms, the company will have a positive image on the minds of the consumers and the consumers will have no doubt but to buy their products.

NATIONWIDE DISTRIBUTION

CDO is manufactured in the Philippines and is being distributed in all leading Supermarkets, but aside from its availability throughout this country, it is also exported to three different countries namely Malaysia, Quatar and U.S. This is strength for CDO Foodsphere, Inc. because they have the chance to be recognized by not only Filipinos, but also by international consumers. CDO products will be known to other countries and not just here in the Philippines.

AVAILABILITY IN ALL LEADING STORE-BASED RETAILERS RET AILERS

Aside from the nationwide nationwide distribution of CDO products, products, it is also conveniently available available and accessible to various store-based retailers including Supermarkets, Hypermarkets, Modern Grocery stores, Convenience stores and other places where finals consumers make frequent purchase for their daily, weekly or monthly food supply. This is strength for CDO Foodsphere, Inc. because making your products available in these stores can increase brand awareness, and it gives consumers the convenience since it is the nearest places where they can buy CDO products and it prevents them from the hassles of finding a product since it can be found anywhere.

AFFORDABLE PRODUCTS

Included in the mission of CDO Foodsphere, Inc. is to provide “ high high quality nutritious 104 food products at reasonable prices .” The company is known not just for its popular product offerings but also because of its affordable prices that fits the mass consumers. This is strength for CDO Foodsphere, Inc. because majority of the consumers that purchase products in the Packaged Food Industry are belonging in the lower-income class. This gives CDO a great chance to be the top choice when it comes to food of the 104

http://www.cdo.com.ph/subpages/Profile/MissionVision.aspx


lower-income class since CDO Foodsphere, Inc. offers products at a more affordable price compared to its competitors like Purefoods and Century.

KNOWN FOR VARIETY OF PRODUCT OFFERINGS

From a household-made tocino and longganisa, the company now have various product offerings. CDO product offerings have two segments: Processed Fruits and Vegetables and Processed Meat and Seafood. Under the Processed Fruits and Vegetables are kaong, nata de coco, red mung beans and white beans. And under the Processed Meat and Seafood are hotdogs, cheese dogs, corned beef, sliced hams, luncheon meat, meat loaf, tuna, nuggets, ulam burger, and etc. This is strength for CDO Foodsphere, Inc. because having multiple product offerings with already established brand names can engage customers to try the product and gives the company a competitive advantage towards it competitors. It will also help the company to increase revenue and market share and in turn, contribute to its financial position in the industry.

EMPLOYEE MOTIVATIONAL METHODS

The company is placing great importance when it comes to their employees because form them; they are the recipe for CDO’s success. It wouldn’t be successful without these people that place great effort and hard work in every work they do. To motivate or reward their employees, the company is giving recognition or appreciation award to the employee that has the most contribution in every work or project they’re doing . This is strength for CDO Foodsphere, Inc. because if they are giving importance and care with their employees, their people will have the motivation to improve more on what they’re doing. This will lead them to excel more because their excellence in work are being recognized which can increase their self-f ulfilment self-f ulfilment or believe on one’s self.


On the contrary, the following are considered as WEAKNESSES of CDO Foodsphere, Inc.:

LACK OF MARKETING EFFORTS

Despite having successful advertisements, CDO Foodsphere, Inc. is very minimal on the use of sales promotions and advertisements that can give them more public attention, awareness and customer traffic especially if it is a new product. They seldom used TV commercials despite its wide reach. The company must give focus on this area because this is a crucial aspect that can give them success in terms of the growth of their market share. This is weakness for CDO Foodsphere, Inc. because their competitors are very active in promoting brand awareness through posters, television ads, radio ads, and other sales promotions. If the company will not take an action regarding this matter, competitors might engage its existing customers to switch to their products.

EMPLOYEE’S RELUCTANCE TO ACCEPT NEW JOB J OB OPPORTUNITIES

Some of the company’s internal internal employees are not willing or open to try new job opportunities. There are some who just wants to remain on what they’re doing and do not want to change their positions because they think that bringing you into a better or higher position is equivalent to a big risk or another responsibility to face. This is weakness for CDO Foodsphere, Inc. because if they will not be able to convince or motivate their employees to accept new job opportunities, the company will only have few skilled skilled and professional workers. It’s because the employees are not open to new challenges that can enhance their skills, abilities or even talents which in turn, can benefit the operation of the whole company. There are some that instead of becoming proud because they got promoted, they do not accept it and just stick to whatever their position is which is not good for the company. It is important for a company to know that their employees are growing also.


RANK 10th ONLY IN THE PACKAGED FOOD INDUSTRY

Packaged Food Industry is fragmented by large companies. Almost 32 companies are competing but the major companies or leading National Brand Owners that leads in the Packaged Food Industry as of 2016 are the following: Universal Robina Corp, Nestlé Philippines Inc, Monde Nissin Corp, Purefoods-Hormel Company, Inc., San Pablo Mfg Corp, Alaska Milk Corp, Mead Johnson Philippines, Inc., International Oil Factory, Magnolia Inc., and CDO Foodsphere, Inc. This is weakness for CDO Foodsphere, Inc. because it only rank 10 th in the Packaged Food Industry. Meaning, its above competitors has the higher market share or profit compared to the company. Some of its competitors have more product/brand offerings that are considered superior making them to the top position.

LOW WORKING CAPITAL RATIO

The working capital of the company in 2013 seems very good but in 2015, it decreases from 280,826,017.5 to 11,634,384.4. This drastic change really affects the company in terms of its day-to-day operations because the income that is needed to operate new or current activities becomes lesser making it difficult for the company to adjust. This is considered as weakness of the company.

LONG-TERM DEBT-TO-CAPITAL RATIO

Despite having good measures in the total debt-to-assets ratio, the company has a high ratio in terms of long-term debt-to-capital ratio. From 13.00 in 2013, it increases at 16.47 in 2015. It is not good for the company because increase in ratio means a high degree of risk. This is a weakness for CDO Foodsphere, Inc. because it will affect investors and lender’s decision about a company. The lender might not allow the company to borrow money from them or the investors might double his mind about buying shares. share s. The difference between the two is that, total debt-to-assets ratio measures all the debts of the company while the long- term debt-to-capital ratio only measures the long-term debts.


5.2 STATE THE BASIS OF EACH E ACH STRENGTH AND WEAKNESS

Table 5.2

STRENGTHS

WHAT IS YOUR BASIS?

Established Name

Value Chain Analysis – Analysis – Sales Sales & Marketing

Continuous Product Development

Value Chain Analysis – Analysis – Product Product R&D, Technology, and System Development

Advanced Advance d Storage Plants and and Warehouses Warehouses

Value Chain Analysis – Analysis – Product Product R&D, Technology, and System Development

High-Capacity Production and Machineries

Value Chain Analysis – Analysis – Operations/Product R&D, Technology, and System Development


Value Chain Analysis – Analysis – Operations Operations

Nationwide Distribution

Value Chain Analysis – Analysis – Distribution Distribution

Availability Availabi lity in all leading store-based store-based retailers retailers

Value Chain Analysis – Analysis – Distribution Distribution

Affordable Affordab le products products


Known For Variety of Product Offerings


Motivational Methods

Value Chain Analysis Analysis – – Human Human Resource Management

WEAKNESSES

WHAT IS YOUR BASIS?


Lack of Marketing Efforts

Employee’s reluctance to accept new job opportunities


Value Chain Analysis Analysis – – Human Human Resource Management

Rank 10th only in the Packaged Food Industry

Euromonitor International 2016, Packaged Food Industry

Low Working Capital Ratio

Financial Ratios – Ratios – Liquidity Liquidity Ratios


Financial Ratios – Ratios – Leverage Leverage Ratios


VII.

INTERNAL FACTORS EVALUATION (IFE) MATRIX

Table 6.1

KEY INTERNAL FACTORS

WEIGHT

RATING

WEIGHTED SCORE

STRENGTHS

1. Established Name 0.10 4 2. Continuous Product Development 0.10 4 3. Advanced Storage Plants and 0.07 3 Warehouses 4. High-capacity Production and Machineries 3 0.08 5. Food Quality Assurance 0.06 3 6. Nationwide Distribution 3 0.07 7. Availability in all leading store-based 0.11 4 retailers 8. Affordable products 0.11 4 9. Known For Variety of Product Offerings Offerings 0.08 3 10. Motivational Methods 0.04 2 WEAKNESSES 1. Lack of Marketing Efforts 2 0.04 2. Employee’s reluctance to accept new job 2 0.04 opportunities 3. Rank 10 th only in the Packaged Food 2 0.04 Industry 4. Low Working Capital Ratio 0.03 2 5. Long-Term Debt-To-Capital Ratio 0.03 2 TOTAL 1.00 1 - The response is poor 3 - The response is above average 2 - The response is average 4 - The response is superior

0.40 0.40 0.21 0.24 0.18 0.21 0.44 0.44 0.24 0.08 0.08 0.08 0.08 0.08 0.06 0.06 3.28


VIII.

SWOT/TOWS MATRIX

INTERNAL

Strengths 1. 2. 3. 4. 5. 6. 7. 8. 9.

EXTERNAL 10. Opportunities 1.

Unemployment rate in the Philippines is forecasted to increase 2. Brand with a cause 3. Population in the Philippines is forecasted to increase 4. Boost in social networking activities 5. Increase in demand for variety 6. More Filipinos are now looking up to social media for recommendations 7. Philippine government is launching various plans for the improvement of food supply 8. Inventory monitoring and control through computers or applications 9. Food Processing and Preservation 10. Increased in the Philippines consumer spending 11. National Sustainable Sanitation Act of 2015 12. Nutrition Labelling Act 13. Food Choking Prevention Act 14. Increase in Gross Domestic Product (GDP)

Established Name Continuous Product Development Advanced Storage Plants and Warehouses High-Capacity Production and Machineries Food Quality Assurance Nationwide Distribution Availability in all leading store-based retailers Affordable products Known for Variety of Product Offerings Motivational Methods SO

Product Development Make a continuous improvement with the existing product offerings by making it meatier and juicier; or add flavour (S2, S3, S4, S5, O5, O9)

Weaknesses 1. 2.

3. 4. 5.

Lack of Marketing Efforts Employee’s reluctance to accept new job opportunities Rank 10th only in the Packaged Food Industry Low Working Capital Ratio Long-term Debt-To-Capital Ratio

WO Market Penetration Utilize the use of Integrated Marketing Communications (e.g. advertisement, sales promotion, cause-related marketing) (W1, O2, O4, O6) Rewarding Systems Enhancement of the Employee’s Reward Systems (W2, O1, 03)

S t r a t e g i c M a n a g e m e n t P a p e r o n C D O F o o d s p h e r e , I n c . | 96 Threats 1.

2. 3. 4. 5. 6.

Inflation rate in the Philippines is forecasted to increase Governmental actions Pollution Meatless Monday Growth of aging people Convenience sought from foodservice outlets

ST Product Development Introduce new categories of product offerings (e.g. healthy snacks and beverages) (S2, S4, S5, T4, T5)

WT


IX.

STRATEGIC PLAN

1. VISION AND MISSION

VISION STATEMENT

A Vision Statement is commonly a short phrase sentence sentence that describes what the company wants to achieve in the future. Vision is the dream or goal of the company. All the things that the company will be doing should be in accordance with their vision in order to achieve the desired position. It will serve as the company’s guide to the right path or direction. 105

CDO FOODSPHERE, INC.’S PRESENT VISION STATEMENT

“We shall continue to be a leading and growing company whose products shall be present in every household household .” .”106

CDO FOODSPHERE, INC.’S VISION INC.’S VISION EVALUATION

CDO Foodsphere, Inc.’s vision statement is somehow valid for the following reasons:

It is practically short and easy to communicate (only one sentence with 18 words) It is graphic, focused, desirable, and answers the question “What do we want to become?” (“We shall continue to be a leading and growing company...”) It is directional and feasible to what they want to achieve (“...whose products shall be present in every household.”) The vision statement is flexible because it is not time bounded, which means that they are willing to adapt if the market preferences change.

 





105

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106


The company is also focused on producing high quality yet affordable food products that customers are looking for.



However, the current vision lacks the creativity or wide imagination that is needed for the future of the company.

PROPOSED VISION STATEMENT

To be one of the global players that serves freshly cooked products not only within the “ To boundaries of the country, but also in the international and foreign marketplace. ”

CDO FOODSPHERE, INC.’S PROPOSED INC.’S PROPOSED VISION EVALUATION

 



 

It is still short and easy to communicate (only one sentence with 28 words) It is graphic, focused, desirable, and answers the question “What do we want to become?” (“To be one of the global players that serves freshly cooked products...”) It is directional and feasible to what they want to achieve (“... products products not only within the boundaries of the country, but also in the international and foreign ) marketplace.” The proposed vision statement is flexible because it is not time bounded The proposed vision statement involves the creativity of the minds

MISSION STATEMENT

A Mission Statement defines the reason of the company’s existence. It is the action planning process where the company states its objectives, approaches, and purposes in doing a specific business. It answers questions on why the company exist: “What it does?”, “Who it does it for?” and “How it does what it does?” 107

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CDO FOODSPHERE, INC.’S PRESENT MISSION STATEMENT

“We exist to provide total satisfaction to the Filipino consumers through the development, manufacturing, and marketing of high quality nutritious food products at reasonable prices. We are committed to do this at all time through continuous product development, technological advancement, organizational efficiency, and excellent customer service.” service .”108

CDO FOODSPHERE, INC.’S MISSION STATEMENT EVALUATION

The current mission statement of the CDO Foodsphere, Inc. includes the following components:

1. Customers Who are the firm’s customers? (“We exist to provide total satisfaction to the Filipino consumers through the...”) 2. Concern for Survival, Growth, and Profitability Is the firm committed to growth and financial soundness? (“...development, manufacturing, and marketing of high quality nutritious food products at reasonable prices .”) 3. Technology Is the firm technologically current? (“...continuous product development, technological advancement, organizational efficiency, and excellent customer service .”)

108

http://www.cdo.com.ph/subpages/Profile/MissionVision.aspx


However, the CDO Foodsphere, Inc.’s mission statement is deficient because it lacks the following aspects:

1. Markets Geographically, where does the firm compete? 2. Products or services What are the firm’s major products or services? 3. Philosophy What are the basic beliefs, values, aspirations, and ethical priorities of the firm? 4. Self-concept What is the firm’s distinctive competence or major competitive advantage? 5. Concern for Public Image Is the firm responsible to social, community, and environmental concerns? 6. Concern for employees Are employees employees a valuable valuable asset asset of the the firm?

PROPOSED MISSION STATEMENT

We exist to provide total satisfaction to the Filipino consumers globally through the “ We development, manufacturing, and marketing of high quality nutritious food products like tocino, hotdogs and longganisa at reasonable prices. With God’s guidance, we are committed to do this with excellence and being environmentally sensitive through continuous product development, technological advancement, organizational efficiency, and excellent customer service by competent employees. ”


CDO FOODSPHERE, INC.’S PROPOSED MISSION STATEMENT EVALUATION

The proposed mission statement becomes more effective by typically including the nine (9) essential elements:

1. Customers Who are the firm’s customers? (“We exist to provide total satisfaction to the Filipino consumers through the...”) 2. Concern for Survival, Growth, and Profitability Is the firm committed to growth and financial soundness? (“...development, manufacturing, and marketing of high quality nutritious food products at reasonable prices .”) 3. Philosophy What are the basic beliefs, values, aspirations, and ethical priorities of the firm? (“…With God’s guidance, we are committed to do ...”) 4. Technology Is the firm technologically current? (“...continuous product development, technological advancement, organizational efficiency, and excellent customer service .”) 5. Markets Geographically, where does the firm compete? (“...globally...”) 6. Products or services What are the firm’s major products or services? (“...high quality nutritious food products like tocino, hotdogs and longganisa...”) 7. Self-concept What is the firm’s distinctive competence or major competitive advantage? (“...excellence...”) 8. Concern for Public Image Is the firm responsible to social, community, and environmental concerns? (“...and being environmentally sensitive ...”)


9. Concern for employees Are employees employees a valuable valuable asset asset of the firm? (“...excellent customer excellent customer service by competent employees...”)

BRAND VALUES

When we say food, CDO Foodsphere, Inc. is one of the recognized food companies in the Philippines that are widely known by consumers in all income levels. It is known for its quality and variety of product offerings and affordable prices that fits the mass consumers. It is perfect for everyday household meal preparations to all family. For over 40 years, the company has been continuous in providing quality products that would answer and satisfy the needs of the market. Many Filipinos recognize the company as a food manufacturer that creates delicious food products with an affordable price. Since money is a major problem among many people, the company uses this strategy to compete with its rivals and to gain a competitive advantage. All of this contributes to the sweet success of the company.


2. OBJECTIVES: STRATEGIC AND FINANCIAL

OBJECTIVES

Objectives are the goal of the company. It is what the company wants to achieve in a specific time frame with an available resources. This will include the specific statements that the company wants. Some objective examples include: expansion, maximize profits, minimize loss, or to increase revenue or market share. It is important to have these because it will serve as a guideline to be consistently aligned with the company’s purpose.

STRATEGIC OBJECTIVES

Strategic Objectives serves as the foundation of a company and it helps to assess its current, present and future health condition. It is broader compared to a usual objective because this is an essential component to a company in order to achieve a successful strategy. This would probably be considered as the highest goal of a company. The strategic objectives must have a connection with its company’s vision and mission.

FINANCIAL OBJECTIVES

Financial Objectives are the goals of a company in terms of returns in order to be profitably competitive in the long term. This is very vital because without money, a firm will not run. This is measured in monetary terms like increase in revenue or increase in profits. Achieving the specific financial goals will contribute to the success of the company in the long run.


PRESENT FINANCIAL AND STRATEGIC OBJECTIVES


1. To double the sales from 2015-2020


1. To maximize profitable growth potential 2. To efficiently drive widest distribution reach 3. To establish journey towards preferred supplier status 4. To develop future-ready, execution-centric systems & processes 5. To develop future-ready, high performance leaders & teams


PROPOSED FINANCIAL AND STRATEGIC OBJECTIVES

These are the proposed financial and strategic objectives of CDO Foodsphere, Inc. for the next five (5) years.


1. To have a 5% increase in the Gross Profit Margin 2. To have a 2% increase in the Net Profit Margin 3. To increase inventory turnover of 5


1. To establish a leading brand on food products that are globally known 2. To create a new and improved product 3. To utilize the use of different marketing tools 4. To establish job satisfaction among employees

The proposed financial objectives of CDO Foodsphere, Inc. are derived from the 2015 Financial Ratio Analysis. It is based on the company’s latest 3 years Financial Statements. The proposed objectives will focus on where the company has weak executions to enhance and solve it. By focusing on these parts, the company can increase profits and can cope with its past losses.

On the other hand, the proposed strategic objectives of CDO Foodsphere, Inc. are based on its past performances. It will focus on Marketing since it is seen that they have poor executions on this part. They are very minimal on the use of different marketing tools that can increase their sales.


3. EVALUATION OF PRESENT CORPORATE STRATEGIES

The 13 dimensions of competitive strategy that are presently using by CDO Foodsphere, Inc. are the following:

1. PRODUCT AND SERVICE SCOPE

CDO Foodsphere, Inc. offers a known variety of product offerings. It is focused of on two segments namely processed meat and seafood and processed fruits and vegetables. Under the Processed Fruits and Vegetables are kaong, nata de coco, red mung beans and white beans that can be used as an ingredient to make a dessert. And under the Processed Meat and Seafood are hotdogs, cheese dogs, corned beef, sliced hams, luncheon meat, meat loaf, tuna, nuggets, and ulam burger that are perfectly matched for daily meal preparations of the family.

2. GEOGRAPHIC SCOPE

Major distribution channels that make up CDO Foodsphere’s distribution network are: Store-based Retailers, Agents, Wholesalers, CDO Foodstores, and Food Service. Store-based Retailers are the Grocery stores, Convenience stores, Hypermarkets, Supermarkets, Independent small groceries, moms and pops, etc. CDO Foodsphere, Inc. also has Food stores that offer all the CDO’s product offerings. It is located at Shaw Blvd, McArthur Highway, Pedro Gil, Commonwealth Ave., etc. Aside from that, the company is also supplying supplying their food products to known Fast Food Chains including: Pizza hut, Taco Bell, KFC, Long John Silver, Greenwich, Jollibee, Shakey’s and Max’s Rest aurant. The company is also exporting its products to three different countries namely Malaysia, Qatar and US.

3. SPECIALIZATION

CDO Foodsphere, Inc.’s main specializations are Processed Meats and Seafood. They offer a wide variety of canned and frozen meat products. The company is


known for its best selling products including CDO Karne Norte, CDO Corned beef, Funtastyk Young Pork Tocino, CDO Bibbo cheesedog and San Marino Corned Tuna.

4. BRAND IDENTIFICATION

CDO Foodsphere, Inc. is one of the recognized food companies in the Philippines that are widely known by consumers in all income levels. It is known for its quality, variety of product offerings and affordable prices that fits the mass consumers. It has already established a name in the industry making it more acceptable to the consumers. The company is also known for its low prices compared to its competitors like Purefoods-Hormel and Century Pacific Inc. CDO Foodsphere, Inc. has been in the business for over 40 years.

5. PUSH VERSUS PULL STRATEGY

CDO Foodsphere, Inc. is manifesting the use of Push strategy rather than Pull strategy. As I said earlier, the company seldom use marketing efforts towards its products. Even though they uses, they are very minimal on it and it can be seen on selected CDO products only like Funtastyk Young Pork tocino, CDO cheesedog and San Marino Corned Tuna that has both billboard ads and television commercials. The company is using a push strategy to take its products to the customers. They want to make their products available and easily accessible in places where final consumers frequently purchase consumer goods.

6. CHANNEL SELECTION/LOCATION

The company is distributing its products to Store-based Retailers, Agents, Wholesalers, CDO Food stores, and Food Service. CDO Foodsphere, Inc. ’s ’s Head Office is located in #560 West Service Road, Paso de Blas, and Valenzuela City. They have multiple CDO Food Stores located in different areas of Caloocan City, Las Pinas City, City of Manila, Pasig City, Mandaluyong City, Quezon City, Marikina City, Muntinlupa City, Meycauayan City, Taguig City, Pampanga, Paranaque City


and Valenzuela City. The company also have 2 production facilities: It’s first ever Manufacturing Plant is located in Valenzuela while the second one is the newest and biggest Food Manufacturing Plant located in Malvar, Batangas.

7. PRODUCT QUALITY

For over 40 years in the business, CDO Foodsphere, Inc. has been continuous in making improvements with their products to satisfy and exceed both the needs and wants of its customers. The quality food products of the company that are processed through advanced and high-tech machineries and supported by world-class Quality Assurance Assurance system have have made them them to be in rank rank 10 th in the Packaged Food Industry 2016. The company’s products become part of every meal preparations because of its quality taste at a reasonable price.

8. TECHNOLOGICAL LEADERSHIP

To make a continuous improvement with their products, CDO Foodsphere, Inc. invests in latest technological advancements. With this, they are able to deliver a product that are considered as best shelf stable products and processed meats to their customers. The company also has advanced continuous cookers that can produce tons of hotdogs, highly developed and complex machineries that are able to produce loads of canned meat and fish product every month. Through the use of their emulsification system, the processing of raw materials into food products becomes extremely faster and better giving the company an edge that contributes to their success. They also have advanced storage plants and warehouses that help to preserve the quality of every product that they produce.

9. VERTICAL INTEGRATION

CDO Foodsphere, Inc. is using two or more vertical integration namely Production, Manufacturing and Distribution. They have their own food manufacturing plant which is located in Malvar, Batangas. They also have their own Food Stores that sells all


the CDO’s products and are located all over the Philippines and company’s reg ional distributors that help in the dissemination of the products to reach end users.

10. COST POSITION

CDO Foodsphere, Inc. is using a Cost Leadership Strategy. Compared to its competitors in the Packaged Food Industry, the company’s products is one of th e low cost making it attractive to the mass consumers. This strategy is one of the reasons why CDO Foodsphere, Inc. is popular among the people. Majority of the consumers that purchase products under the Packaged Food Industry are belonging in the lower-income class and the cost strategy that the company is using has been clearly shown an advantage to them.

11. SERVICE

CDO Foodservice is under the Sales Division of CDO Foodsphere, Inc. The company is not just known for its brands and product offerings, but it also has Foodservice where its main customers are known fast food chains and restaurants including: Jollibee, Greenwich, Shakey’s, Pizza Hut, Taco Bell, Max’s Restaurant, Philippine Airlines and etc. CDO Foodservice has been providing finest food products that are processed in high-class manufacturing machineries and undergo to a process called ‘quality assurance system’ making the food products at its best for the customers. From a small business enterprise to a big business, the foodservice is able to establish a name not just in the Philippines but also outside the country. They are operating the business for more than 35 years. 109

12. PRICE POLICY

From the start up to now, CDO Foodsphere, Inc. always thrives to deliver a satisfying product that is affordable to mass market. They are using a cost-

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competitive pricing method so that their products are reasonably priced and are fitted to all social levels.

13. RELATIONSHIP TO BOTH HOME AND AND HOST GOVERNMENT

CDO Foodsphere, Inc. has become one of the leading food company known for its quality food products with affordable prices. They have been in business for over 40 years and it only means that they have already established a name in the industry. During their past and present operations, their relationship with the Philippine Government has been good because they did not encounter any problems linked with them. This means, the company is following government rules and policies and is paying tax obligations on time.


DISTRIBUTION

• Distribution Distribution of products to all store-based retailers • The used of Push strategy • Installing of CDO Foodstores • Food export in three countries: Malaysia, USA and Qatar

OPERATIONS

• High-capacity and productivity of the machineries • Strict implementation with regards to the product quality

SALES & MARKETING

• Used of advertisements and commercials to selected product offerings • Supermarket displays • Posters

PRODUCT R&D, TECHNOLOGY, AND SYSTEM DEVELOPMENT

GENERAL ADMINISTRATION

HUMAN RESOURCE MANAGEMENT

• Investing in the latest technological advancements • Advanced Advanced storage storage plants and warehouses warehouses

• Creation of a non-profit organization namely, Odyssey Foundation Inc. (OFI) • Open communication among employees

• Reward system • Motivational Motivational methods


IS THE EXISTING STRATEGY ANY GOOD?

Distribution

Operations

Sales & Marketing

Product R&D, Technology, and System Development

The current distribution channel of the company was excellent. All the products are widely accessible and available to multiple store-based retailers such as Supermarkets, Grocery stores and other Convenience stores. The company is implementing the used of push strategy in order to push their products to chosen stores where consumers commonly purchase CDO products. They also have Food Stores that offers all the CDO products; these are geographically dispersed along Manila. The company is also exporting its products to USA, Malaysia and Qatar making it recognizable by other foreign consumers. The latest and advanced machineries and facilities of the company were excellent because through these things, they’re able to produce tons of hotdogs per hour and loads of canned meat products and fish every month. This helps them to become productive and also to meet deadlines on time that are given by their clients/suppliers. The company seldom use marketing efforts towards its products. Even though they uses, they are very minimal on it and it can be seen on selected CDO products only like Funtastyk Young Pork tocino and San Marino Corned Tuna that has both billboard ads and television commercials. They are more on the use of point of purchase displays to Supermarkets and other grocery stores. They also placed posters on different locations to create awareness on people’s minds. CDO Foodsphere, Inc. has invests with the used of latest technological advancements so that they can have a continuous improvement and development with their products. These strategies were excellent because they are able to produce the best shelf stable and processed meat products for their customers. They also have advanced storage plants and warehouses that help to preserve the quality of every product that they produce.


General Administration

Human Resource Management

The company created a non profit organization that aims to help the less fortunate people with their needs. This is a good strategy because it doesn’t only contribute to the brand image of the company but also it helps the society with their basic needs such as shelter, food and education. To motivate or reward their employees, the company is giving recognition or appreciation award to the employee that has the most contribution in every work or project they’re doing. doing . This is a good strategy because by doing this, their employees will feel that the management is placing great importance to them and this can motivate employees to work harder.


WILL THE EXISTING STRATEGY BE GOOD IN THE FUTURE?

Distribution

Operations

Sales & Marketing




The existing distribution strategy is still applicable and good for the future transaction. Given that all the products are available and accessible in almost all places where final consumers usually purchase products, it is good for the company because it can lead to product demand and increase sales. The existing operations or production strategy is still good for the future because knowing that all their machineries are latest and high-tech, it will contribute to a fast and efficient production of products. The push strategy and posters are still a good strategy for the future marketing of products because through these, consumers can become aware with the products they sell and offer. There is only a problem with the use of their advertisement and commercials because they seldom use it which can be a great loss to them. They use it to selected products only. The company’s investment with the latest technological advancements is still a good strategy for the future because this can lead them to create a new and innovative product that can answer the stated needs and wants of the consumers. The existing corporate social responsibility or (CSR) of the company is still a good strategy for the future. Aside from gaining a positive brand image from this, the company also contribute to the society by giving a helping hand to those less fortunate children and people who are having difficulties with their lives. The motivational methods for the employees are still a good strategy for the future but there is a need for enhancement when it comes to their reward systems like bonuses and other employee financial benefits because these can lead them to be more productive with the assigned works. This can also encourage them to strive harder.


IS THERE A NEED TO CHANGE A STRATEGY?

Distribution

Operations

Sales & Marketing




The existing strategy will be maintained since they have built a good distribution network where products are almost available and accessible everywhere where finals consumers can purchase CDO products. The existing strategy will be maintained and no need to change since they are efficiently and effectively using their high-tech machineries and facilities in producing different products. Other strategies will be maintained but areas in using marketing tools need to be enhanced. If before they seldom use billboards and commercial ads, now they need to use it more often because most of the consumers today rely on what they see on their environment. Effective use of these marketing efforts will also give success to the company especially if the product becomes a hit to the market. Their investment with the latest technological advancements was an excellent strategy and it will be maintained. These will lead them to come up with a new product concept and develop it through the use of hightech machineries. It will also benefit them by having a continuous improvement with their existing product offerings. The existing CSR will be maintained and no need for a change since the non profit organization that was created by CDO Foodsphere, Inc. targets all kinds of people may it be children, women or men. The existing strategies will be maintained but the company’s reward system needs an improvement or it should be supplemented like giving monthly bonuses, compensation or giving other kinds of financial/monetary benefits which can uplift the employee’s lives.


4. PROPOSED CORPORATE STRATEGIES

The table below shows the following proposed strategies that will be added to the existing strategies that the company is currently using.

PROPOSED STRATEGIES

Product Development Make a continuous improvement with the existing product offerings by making it meatier and juicier; or add flavour

Market Penetration Utilize the use of Integrated Marketing Communications (e.g. advertisement, sales promotion, cause-related marketing)

Rewarding Systems Enhancement of the Employee’s Reward Systems

Product Development Introduce new categories of product offerings (e.g. healthy snacks and beverages)


4.1 DESCRIPTION OF THE STRATEGY

Make a Continuous Improvement with the existing Product Offerings by making it Meatier and Juicier; or Add flavour

Since the company is continuous on product development, it will make an improvement on its existing product offerings to be more likable to the mass consumers. The food products will have a better version by making it meatier and juicier. Consumers always want to get more than what they paid for. They can perceive the meatiness and juiciness of the meat products products as the value of the money money they’re paying. This can be an advantage for the company because there are some products that are very dry when cooked. In addition, the company also wants to add flavours with its classic meat products. Canned products like luncheon meat and canned loaf that only has an original flavour will be having a new variant or flavour now. Some of the flavours that can be added with these products are hot & spicy flavour, smoked bbq flavour, cheese flavour, teriyaki flavour, garlic flavour, and or a less sodium luncheon meat. All of these can impart the taste and smell of the products. Adding flavours to the product will give consumers an option whether to choose the classic or the original flavour or the flavourful one. Having flavours also can prevent consumers to use condiments when eating and it gives them excitement. This is also a good opportunity for the company because there is an increase in demand for variety. There’s a great chance that the improved product will click in the market and in return earn profits. The new and improved product will be distributed to all store-based retailers throughout the country.

Utilize the Use of Integrated Marketing Communications (e.g. Advertisement, Sales Promotion, Cause-related Marketing)

In the Value Chain Analysis – – Sales & Marketing, I mentioned that CDO Foodsphere, Inc. have already launched successful products with the help of advertisements like billboards and television commercials. But despite of this context, the company is very seldom in using different marketing tools and at some point, they lacked it. They are just selecting products that will be having advertisements including Funtastyk Young Pork Tocino, Bibbo Idol Cheesedog, CDO Karne Norte, CDO Corned Beef and San Marino Corned Tuna.


With the proposed strategy, CDO Foodsphere, Inc. will launch different types of advertisements for every product offerings so that each product can have an appearance not just in Supermarkets, but also on other areas that can easily catch consumer’s consum er’s attention such as billboard ads, television commercials, promotional activities, and being engaged with social welfare activities or cause-marketing. The products will use sales promotional techniques like free samples, coupons, discounts and bonus pack pa ck deals. These consumer’s price deals can save them from paying the original price of the product. All of these can encourage product trial, increase product demand, helps the company to clear out inventories, and eventually will lead to increase sales. 110 The processed fruits products that are not advertise even once should use commercials so that consumers will be aware that the company is also offering that kind of product. On the commercial, it should state there the uses of the product like it can be an ingredient in making a dessert and can be bought at a very low price. There is also an opportunity for branding with a cause and boost in social networking. Different online marketing tools can also be used by the company including Facebook, YouTube and Twitter because it is less costly, can generate sales, and can reach diverse internet users all over the world. Aside from that, the products can also be paired with other charitable programs or environmental events as a support for the needy. The company will find an appropriate social activity that is match with the product. And then the products will be donated on them to show love and support. This will give the company a positive brand image on the minds of its customers.

Enhancement of the Employee’s Reward Employee’s Reward Systems

Part of the company’s main events was the Awards Night or Recognition Day that highlights the excellence of its employees on every work or project that they’re assigned with. They are giving appreciation award to those employees that excel with their job. This has been done also to make them more dedicated and focused with everything that they are doing. But aside from this, the company needs an enhancement when it comes to their reward system. The company will propose a new strategy that can uplift the lives of its employees but also help the company to achieve its ultimate goal. This strategy will be focusing on the improvement of the reward system. Aside from the awards that are given to the most outstanding employee, they will also increase the bonus of each and every worker and will improve or enhance the employee benefits that the employees can receive aside from their monthly salaries. The employee reward systems will focus on the needs of the employees such as health insurance, free sack 110

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of rice and etc. This strategy can be an effective move since it targets the major needs and wants of their employees. It will not only benefit the employees but also their families. These benefits will push them to be more responsible, organize, and focus with their work and if these happen, it can result to the success of the business.

Introduce New Categories of Product Offerings (e.g. Healthy Snacks and Beverages)

CDO Foodsphere, Inc. will introduce new categories of product including healthy snacks and beverages. Through the advanced and high-tech facilities of the company, we will make it to happen. The healthy snacks can be biscuits and wafers that contain less sugar and sodium. The biscuits will be plain, white and has an ingredient of wheat while the wafers will have a milk filling. This will be made to answer the stated needs of the growing aging people aged 60 years old and above. The healthy biscuits and wafers can be a good substitute for meat and rice. Since the aging people are very prone to different diseases, they avoid eating too much meat because it is relatively high in fats and cholesterol which are not good for their health. The company will also create a healthy drink such as milk and juices. These two will be a ready-to-drink milk and juice so that it is more convenient for the aging consumers. Both of them will be packed on a rectangular packaging. The development of the healthy snacks and drinks will be the answer to the increasing number of aging people and to the threat of the company which is the “Meatless Monday”. The products will be distributed on the same distribution channel of other existing CDO products. It will be distributed to all storebased retailers and it will have advertisements for fast brand awareness.

Since the company is focused on processed meat and seafood, launching a new category of product can be an opportunity for them. This can help them to increase sales and profit, encourage product trial, and to get new customers particularly the health conscious consumers.


4.2 BASIS OF THE CORPORATE STRATEGY

PROPOSED STRATEGIES

BASIS

 

Product Development Make a continuous improvement with the existing product offerings by making it meatier and juicier; or add flavour

 



Opportunities Increase in demand for variety Food Processing and Preservation



Weaknesses Lack of Marketing Efforts




  



Rewarding Systems Enhancement of the Employee’s Reward Systems

 


Strengths Continuous Product Development Advanced Storage Plants and Warehouses High-Capacity Production and Machineries Food Quality Assurance

 

Opportunities Brand with a cause Boost in social networking activities More Filipinos are now looking up to social media for recommendations

Weaknesses Employee’s reluctance to accept new job opportunities Opportunities Unemployment rate in the Philippines is forecasted to increase Population in the Philippines is forecasted to increase

Strengths Continuous Product Development High-Capacity Production and Machineries

S t r a t e g i c M a n a g e m e n t P a p e r o n C D O F o o d s p h e r e , I n c . | 121 


 

Threats Meatless Monday Growth of aging people


5. CORPORATE SOCIAL RESPONSIBILITY

Corporate social responsibility (CSR) is often referred to as “Corporate Citizenship”. It is a business practice that involves taking the responsibility of helping the society. This practice is not made to financially benefit the company but rather, to support the needs of the society through social welfare activities including conducting charity events, community developments, promoting environmental change, or being a volunteer to help and show support to typhoon victims. Doing all these good deeds will contribute to the company by having a positive image on the minds of its consumer.

Vision “Odyssey Foundation, Inc. (OFI) is envisioned as the corporate social responsibility arm of food manufacturing firm Foodsphere Inc. As a CSR unit, OFI serves as a catalyst of social development that benefits the less privileged and marginalized members of our society.” 111

Mission “OFI is mandated to develop programs concerning children nourishment, childcare and education, livelihood enhancement and health and nutritional advocacy, and to generate funds via solicitations and fund- raising activities to support its programs.” 112

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Odyssey Foundation, Inc. (OFI) is a non-profit organization created by CDO Foodsphere, Inc. It is the arm of the company for its corporate social responsibility. It is created for the purpose of helping the less fortunate children and to give assistance to various Filipino communities that are experiencing difficulty with their everyday living. Odyssey Foundation, Inc. main social activities that respond to the demand or needs of the community are the following: a) child and youth welfare development, b) livelihood enhancement programs, and c) health and nutrition advocacy and promotion. This foundation is supporting every Filipino people who cannot afford to finance themselves. With the help of the Department of Social Welfare and Development (DSWD), Odyssey foundation can grant the less fortunate ones with financial aids, loans and donations that can be really helpful in their everyday living. 113

The foundation aims to have a social development program that would benefit the less fortunate. They have five pillars that are equivalent to five programs that answers the needs of these less privileged people. These are the following: Gabay Nutrisyon (Supplemental Feeding Program) which provides nutritious foods for the malnourished children, Gabay Edukasyon (Educational Assistance Program) which provides educational assistance for students who cannot afford to study, Gabay Kalikasan (Environmental Awareness Program) which encourage every citizen to take care of the environment and not abuse it, Gabay Hanapbuhay (Livelihood Assistance Program) that helps mothers of a family to be productive in any way they can to earn additional income that would help their family and lastly, Gabay Lingkod (Community Outreach Program) that answers the stated needs of the people in a community. 114 All of these contribute to the good of not just the citizens but also the environment.

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X.

IMPLEMENTATION AND CONTROL

1. McKinsey 7-S FRAMEWORK


7-S FRAMEWORK

STRUCTURE

SHARED VALUES

STAFFING

SKILLS

STRATEGIES

SYSTEMS

STYLES

It is the organizational chart of the company. This element represents how the departments or divisions in a company work together to achieve a common goal. A clear organizational structure will allow each employee to know their responsibilities with the company. This will also show where employees report their daily, weekly or monthly progress activities. Structure is one of the easiest elements to change. These are the core values of a company. It serves as a guide to each employee to be aware a ware of their actions and behaviours that they’re going to show in the workplace. Every employee and company’s actions must be in accordance with their fundamental values. This element is primarily concerned with the people that are going to be part with the company. It is common with what the HR does because it talks about how a company will recruit a particular type of person, select, hire and trained employees that will be working in the company. These include the knowledge, expertise, abilities, capabilities and competencies of each employee working in the company. The success of a company depends on the underlying skills and abilities that its employees possess. These are the plans that are organized by companies for them to maintain their position in the industry or to cope with the unlimited threats and growing competition. The success of the company lies with the strategies that are going to implement. A well-devised strategy gives company a sustainable competitive advantage. This element is the area of the company where different activities, processes and procedures take place in order for a work to get done. Managers must have a weekly or monthly monitoring in this area so that every activity undergoes to an evaluation to see whether the work is done correctly or not. They must give focus on their systems because the desired result that every companies wanted will depends on this. This element represents how top- level managers or CEO’s managed or run an organization. Through their management’s style, a company can either be competitive or cooperative. Their acts are the one that is followed by the employees. An effective leadership style will help a company to build a strong working relationship with its subordinates and to successfully achieve the desired goal in work.


STRATEGY NO.1

Product Development Make a continuous improvement with the existing product offerings

Since the company is continuous on product development, they will make an improvement on its existing product offerings to be more likable to the mass consumers. The food products will have a better version by making it meatier STRATEGY and juicier. Some of the classic products that do not have any flavour yet will be developing to have a more exciting flavourful taste. Every product will not be made possible without the Manufacturing Department. Under this department, there are managers who carefully study their jobs in order to properly execute a product. There is a Research and Development Supervisor who is responsible for the development of a new product that can somehow answer the needs of the consumers. They ensure that every product that they create undergo to a strict food test to guarantee STRUCTURE that it is safe to eat. Aside from the R&D, the company also have a Quality Assurance Assurance Assistant, Assistant, Internal Quality Auditor and a Production Production Line Auditor. All of them coordinate coordinate with each other to properly properly develop a product that is align with their objectives. After they finalize the strategy, it will be reported to the CEO and a meeting with all the departments is a must also. CDO Foodsphere, Inc. has invested with the latest technological advancements to have a continuous improvement and development with its existing products. The Manufacturing team is continuous in finding the right SYSTEMS formula that will lead them to create the best shelf stable and processed meat products. Each department is committed to have a continuous improvement with the products to make it better and fitted to the changing market trends. The SHARED VALUES company wants to provide excellence and total satisfaction for the consumer’s needs and wants. CDO Foodsphere, Inc.’s Manufacturing Department are emphasizing a democratic leadership style wherein employees are given equal opportunities to voice out their ideas that can be very useful in the product development STYLE but the final decision will still rests on the team leader. The manager acts like a coach/mentor more than a team leader and this makes employees to become comfortable to speak up. Employees under the Manufacturing Department have a Bachelor’s Degree major in Food Technology, Nutrition and Dietetics, Microbiology and other majors related in food. Some of their capabilities are problem analyzing and STAFF solving, food experiments, product development and formulation, and the testing and inspection of the quality of the food. The employees under the Manufacturing Department is its strongest skill because they are the team that make sure that every product they create is SKILLS of high quality and safe from microorganism that causes spoilage to the food.


STRATEGY NO.2


CDO Foodsphere, Inc. will launch different types of advertisements for every product offerings so that each product can have an appearance not just in Supermarkets, but also on other areas that can easily catch consumer’s attention STRATEGY such as billboard ads, television commercials, sales promotion activities like coupons and discounts, and being engaged with social welfare activities or causemarketing. Sales & Marketing Department is responsible when it comes to marketing and promoting a product. They have a Brand Manager who is responsible for the creation and formulation of marketing plans and strategies of a product. The proposed strategy that will be implemented can be done with the help of this department and the coordination of other departments in a company. There is also a Sales Manager that checks if their budgets are aligned with the approved STRUCTURE strategies and plans. The two managers coordinate with each other and after they come up with a final decision, it will be reported to the President or CEO of the company for the approval of the proposed plan. Under this department, there are plenty of people who decide to which kind of marketing tool they will use on a certain product. This includes a Trade Marketing Category Specialist, Events Specialist, Distributor Sales Specialist, Customer Care Supervisor and an Export Sales Specialist. There is a weekly meeting for the Sales & Marketing Department in order to devise new plans that can meet the changing demands of the market and to manage ontime deliveries to the suppliers and other clients. The meeting will talk about the SYSTEMS possible moves that they will make for their next product’s advertisement or promotion. The company do not stop in finding ways on how they can boost their product’s SHARED sale. They want to actively promote their products in every way they can that will VALUES not cost them a lot. Under the Marketing Department, they implement a democratic or participative leadership style wherein each employee is given privileges to have a say in their meeting. The leader in each team encourage every members to speak up and be STYLE open on what they think because if all ideas will be combined together, they can come up with a creative idea for their chosen marketing tool. Employees under the Sales & Marketing Department have a Bachelor’s Degree in Business Administration. They ensure that every product is present and available in the assigned channels, and they also conduct regular fieldworks so that they are aware with the possible actions that their competitors might do. Employees under STAFF this can work well in teams; know how to manage under pressure time and the one that develops the design, packaging, logo, brand name and promotional plans of the products.


SKILLS

The Sales & Marketing Department have different skills and abilities that benefit the company. Employees under this are excellent at interpersonal communication, negotiation skills, have a creative mind and can speak both English and Filipino fluently. All these skills are very essential in order for a team to close a sale with the clients.

STRATEGY NO.3

Rewarding Systems Enhancement of the Employee Reward Systems

The proposed strategy will not only uplift the lives of its employees but it can also help the company to achieve its ultimate goal. This strategy will be focusing on the improvement of the reward system. Aside from the awards that are given to STRATEGY the most outstanding employee, they will also increase the bonus of each and every worker and will improve the employee benefits that the employees can receive aside from their monthly salaries. The employee benefits will focus on the needs of the employees such as health insurance, free sack of rice and etc. The highest position in CDO Foodsphere, Inc. is the Chief Executive Officer or the CEO. Under the CEO are the Vice Presidents of Sales & Marketing, Human Resource Management, Manufacturing, Finance, Engineering and IT, and the Supply Chain Management. These departments have their own people and these people help them to accomplish their tasks or projects. The proposed strategy regarding the employee reward systems will be on the hand of the CEO. But, its STRUCTURE different departments help her to decide the right reward systems that will not only benefit its employees, but will also make them happy with their work. The CEO, together with its departments will have a meeting towards this matter. They will review first the existing reward system to know the missing benefits that can motivate employees more. Coordination of the top-level managers is a must in order to assess and fill the right needs of the employees. Applicants Applicants can apply a job online because the company has their own career website which is convenient for the applicant and the HR management. management . The applicant needs to comply with the following requirements before they get hire by SYSTEMS the company: submission of job application, online assessment and the initial and final interview. If the applicant will pass these stages, he/she can become part of the company. CDO Foodsphere, Inc. is not just committed to create and develop high quality SHARED food products, but they want also to help uplift the lives of each and every worker VALUES that are part of the success of the company. CDO Foodsphere, Inc.’s Human Resource Department is emphasizing a transformational leadership style wherein the team leader motivates its employees to be productive and responsible with their assigned work. This will let STYLE the department to achieve their goal that will benefit the whole company and its underlying employees.


STAFF

SKILLS

Employees under the Human Resource Department have a Bachelor’s Degree in HRD, Psychology or Behavioural Science. They specialize in developing the character and competence of each and every employee. They don’t just hire people; they choose and hire the right people that have the knowledge and skills to contribute success to the company. The employees are strong at written and interpersonal skills, can screen and analyze a person well, can manage different changes in work or in short, can ‘multitask’, and lastly, they have the skills of mediation because sometimes, the HR are the one being called if there are problems regarding employees or anything work-related.

STRATEGY NO.4


Through the advanced and high-tech facilities of the company, it will create a healthy product category. The healthy snacks can be biscuits and wafers that contain less sugar and sodium. The biscuits will be plain, white and has an ingredient of wheat while the wafers will have a milk filling. The company will also STRATEGY create a healthy drink such as milk and juices. These two will be a ready-to-drink milk and juice so that it is more convenient for the aging consumers. The development of the healthy snacks and drinks will be the answer to the increasing number of aging people and to the threat of the company which is the “Meatless Monday”. Monday”. Every product will not be made possible without the expertise of the Manufacturing Department. The people under these include the R&D Supervisor and Assistant, Internal Quality and Production Line Auditor, and a Quality Assurance Assistant. Before implementing it, they will set a meeting to discuss the pros and cons of the STRUCTURE proposed strategy. They will have to study the market, the customers and their preferences. After the long process of research and study, the Manufacturing Team Leader will discuss it with the CEO for its approval. Its approval will be the signal that the strategy will begin to implement. Part of the Manufacturing is the R&D Team; they are continuous on research and studies to come up with a concept that can answer the needs of the consumers. The latest and high-tech machineries and facilities of the company make SYSTEMS everything possible, from a product concept into a successful new product that fits the needs of the mass consumers. The company is committed and driven to produce new product concept that can SHARED answer the stated needs of the consumers. VALUES CDO Foodsphere, Inc.’s Manufacturing Department are emphasizing a democratic leadership style wherein employees are given equal opportunities to voice out their STYLE ideas that can be very useful in the product development. All ideas are collected and it undergoes to an extensive research and study to come up with a feasible or


STAFF

SKILLS

realistic product that can be marketed to the consumers. The manager acts like a coach/mentor more than a team leader and this makes employees to become comfortable to speak up. Employees under the Manufacturing Department have a Bachelor’s Degree major in Food Technology, Nutrition and Dietetics, Microbiology and other majors related in food. They are responsible for the execution of activities, product conceptualization, food quality inspection, and product development and improvement. The R&D team of the company is very good at critical thinking skills. They develop a new product concept that they think is fitted to the trends in the market. In other words, they are an observant person. They don’t just focus on the internals of the company but also on the externals because these are the things that they do not have control with.


2. THE BALANCE SCORECARD

Balanced scorecard is a strategic planning and management tool that is used by businesses, organizations and companies to improve their internal and external functions. With the use of a balanced scorecard, the company can see all the areas or perspectives of the company where they need to implement a new strategy and add more value. It is also use to develop company plans, initiatives and objectives that are align with the company’s vision and strategy. By analyzing the four (4) areas in the balanced scorecard, the company can strengthen good behaviours and it can also track the factors that are hindering the company from achieving its goal. These four areas can be use to create an effective strategic objectives that are beneficial for the company.


MISSION

“To be one of the global players that serves freshly cooked products not only within the boundaries of the country, but also in the interna tional and foreign marketplace.”

VISION

“We exist to provide total satisfaction to the Filipino consumers globally through the development, manufacturing, and marketing of high quality nutritious food products like tocino, hotdogs and longganisa at reasonable prices. With God’s guidance, we are committed to do this with excellence and being environmentally sensitive through continuous product development, technological advancement, organizational efficiency, and excellent customer service by competent employees.”


CUSTOMER PERSPECTIVE   

Objectives

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Measures

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Targets   

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Initiatives

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Attract and acquisition of new customers Retention of existing customers Increase customer loyalty Delight the customer To have a lower lower prices than competitors Introduce new and improve product offerings Introduce new categories of products World Class Quality Standard

Customer Satisfaction Index (CSI) Profitability Market Share in value and volume Repeat Purchase Percentage of sales from new products Brand Awareness Service Levels

To increase the number of customers by 60% in the year 2017-2020 To have an 80% customer satisfaction in the year 2017 To achieve an increase in profit by 50% in the year 20172020 To remain 80% of the existing customers To increase the number of loyal customers by 50% To become one of the world class product by the year 20182020

Conduct Usage, Attitude and Image Survey to know the current trends or demands of the consumers Conduct Concept Test Survey to know the customer’s most preferred product innovation Develop and train employees to be responsive to the needs of both the clients and customers Weekly meeting of the Sales & Marketing Department regarding new product concepts


INTERNAL BUSINESS PROCESSES PERSPECTIVE   

Objectives

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Measures

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Targets

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Initiatives

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Excellence in manufacturing and production of products Continuous product improvement and development Minimization of product’s reworks On-time deliveries Engagement with with the latest technology and facilities Committed and motivated workforce Good working environment Quality assurance in every products Better Supply Chain Management

Process Improvements Process Alignments Product Quality Optimization Capacity Utilization Rework time and cost Bottlenecks or shortages Cycle Plan Assessment of internal quality system and information system

To achieve a zero (0) rate when it comes to defective products (e.g. packaging or spoilage) To achieve a 95% on-time deliveries of products in the year 2017 To reduce the number of reworks by 50% To achieve a smooth manufacturing of products by 70% To develop at least 40% of the new concepts

Conduct various training programs to improve or develop the skills and abilities of the employees Giving recognition or employee rewards so that the company’s employees will be motivated to work hard and strive more. This way, they can feel that the company is placing great importance to them Allow and give give employees the right to make a decision regarding important matters. Letting them to voice out their ideas Engage with an extensive research to find a new and updated technology that can lead us to productivity Monthly or weekly weekly meeting of all the team leaders along with with their subordinates to make things align Monitoring quality control to avoid or prevent unnecessary costs that can cause burden to the company.


LEARNING AND GROWTH PERSPECTIVE 

Objectives

Measures

To develop the necessary skills of employees that are needed to contribute success in the company  To shape and empower employees to become professional  To be updated in the latest technological advancements to make the employees work easier and efficient  To identify new job opportunities for the employees

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Employee Job Satisfaction Employee Retention Employee Productivity Employee Turnover  Employee skills and abilities  Performance Management Scores  Number of times of promotion

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Targets

To improve employee’s reward system in the year 2017 -2020 To nurture and develop the skills of more than 70% of the employees  To provide employees with the right knowledge and skills to face unnecessary situations by the year 2017-2020  To decrease the turnover rate of employees by 20%

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Initiatives

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Conducting events like Recognition Day to give awards to the most valuable or outstanding employees. Giving financial rewards or motivational methods to employees including bonuses, compensation, pay raises or giving company product offerings. Encouraging employees to attend work-related seminars that would be necessary to improve their skills that are needed in the business. Selecting the best employees that contribute a lot in the success of a product and give them a promotion in return. Weekly meeting of each department.


FINANCIAL PERSPECTIVE

Objectives

Measures

Targets

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Minimization of cost Maximization of resources or assets Reduce inventory expenses  Higher profit margin  Sales in new product offerings  Lower short and long-term loans

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To have a 5% increase in the Gross Profit Margin To have a 2% increase in the Net Profit Margin To increase inventory turnover of 5 To have an increase in sales revenue by 20% in the year 2017  To decrease the percentage of loans by 30% 2017  To reduce inventory expenses in the year 2017

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Initiatives

Sales Growth Cash Flow from operation Return on assets (ROA) Operating Income

Establishing good company-supplier relationship so that CDO Foodsphere, Inc. can acquire lower cost of raw materials that are needed in their production.  Monthly meeting of the Executive Board for the company’s financial obligations  Effective planning and selection of marketing tools that can be use to market a product. Choosing the right tool can contribute to increase in product’s sales and company profitability.


XI. Financial Projections

4M5_INUMERABLE_ENTRE7_SUB5_CDOFOODSPHEREINC..docx

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