In partial fulfillment of the requirements for STRAMAN (Strategic Management) submitted to Mr. Francis Loseo
LEACHON, Rachel Caroline V. 11019492 ONG, Clarence Kane C. 11007672 REYES, Sedfrey C. 11031344 VICENTE, Mary Antonette D. 1101505
TABLE OF CONTENTS I.
Executive Summary
II.
Research Design Methodology
III.
Introduction
IV.
External Analysis
7
V.
Industry Analysis
19
VI.
Company Analysis
VII.
Strategy Formulation
VIII.
IX.
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a. External Factor Evaluation
45
b. Competitive Profile Matrix
52
c. Internal Factor Evaluation
63
d. SWOT
68
e. SPACE
71
f. I-E Matrix
74
g. Grand Strategy
75
h. Summary of Strategies
77
i. Quantitative Strategic Planning Matrix
77
Recommendations a. Strategic Objective
82
b. Recommended Strategies
83
c. Financial Projection
85
d. Departmental Programs
93
Evaluation and Success Indicators a. Balance Scorecard
100
b. Contingency Plan
102
X. References X.
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103
Appendix a. Financial Statements
106
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I.
Executive Summary Mang Inasal is the Philippine’s fastest growing barbecue fast food chains which serves chicken barbeque, pork barbecue and other delicacies that are Filipino favorites. Being the market leader in the barbecue fast food chain industry, Mang Inasal is in a good position. Mang Inasal ranked first in the CPM with the rate of 3.80, 0.85 more than the second placer. This means that Mang Inasal excels and has a strong position considering price competitiveness, marketing and advertising initiatives, market share, product and service quality, branding and image, and product variety as the key factors.
The trending barbecue industry is the reason for Mang Inasal’s continuous growth. However, with the presence of its competitors and as fast food industry becomes saturated, Mang Inasal needs to exert more effort to further its market share. Other opportunities for Mang Inasal are technological advancement in the field of poultry production, growing number of people who uses Internet and mobile phones, increase in potential franchisee and demand for packaged food products. Other external factors that Mang Inasal is facing are health risk of poultry products while Filipinos are looking for healthier lifestyle, increase in number of foreign and local competitors. Despite the threats, Mang Inasal still managed to respond to the different external factors in above average manner with an EFE rating of 2.75.
Internally, Mang Inasal is also doing good having a rating of 2.95 in the IFE. Being a market leader in barbecue fast food industry through being proactive in marketing and advertising, and having strategic locations for their restaurants and having partnership to different
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companies like Deco’s and Oracle, gave Mang Inasal a good rating. Despite their poor restaurant environment, inconsistencies in the distribution and quality of products, Mang Inasal still manage to respond well to the internal factors.
Market Development is the most suitable strategy of the business having a rating of 4.25 rating in QSPM supplemented by Market Penetration with a rate of 3.85 and Product Development with a rate of 3.80. Market development strategy is to branch out stores in Mindanao specifically in urbanized cities. Market penetration strategy includes 1)Hire new product endorsers 2) Increase brand visibility by taking advantage of advertising on mass transportation systems 3) Intensify social media marketing 4) Organize a Mang Inasal Franchise Summit to attract potential franchisees. Product Development Strategies are 1) Forming a department regulating and evaluating branches and employee performances 2) Set up a sanitation compliance team to ensure that sanitary standards are met for each branch 3) Conduct research through mobile and online surveys 4) O3 Build a smooth communication channel for faster distribution of products from the supplier to the branches.
With the use of these strategies, Mang Inasal will continue to exceed its competitors having a ratio of 0.79 in the return on equity compare to others.
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II.
Research Design and Methodology Research Design The macro economic data that was used in this paper are from reliable online media newspapers such as the Philippine Star, Manila Times and other websites as well. For the industry data, the Mang Inasal website was used and an interview from a Mang Inasal franchisee, Ms. Andrea Tan Lim. Her Mang Inasal branch is located at the Robinson’s Pioneer.
To compare the financial analysis of the firm’s different competitors as well as theirs, the audited financial statements were obtained from the Securities and Exchange Commission. In addition, some key factors of the competitors’ information were acquired in their respective main websites.
Scope and Limitation This paper will be about Mang Inasal and all of its branches nationwide. However, the data that were gathered are only limited because Jollibee Food Corporation owns 70% of the shares of Mang Inasal. This becomes a hindrance to collect management; marketing and financial data such as the financial statements and internal strategies of the company as handling the employees is different in every branch because of its many franchisees. Also, it is very hard to collate data from the Internet because of the sources found are not reliable. The audited financial statements that were gathered from the Securities and
5
Exchange Commission are only from 2008 to 2010. III.
Introduction
“Pang-masa ang lasa, affordable pa!”
Mang Inasal is one of the most prosperous fast-food chains in the Philippines. Founded by Edgar “Injap” Sia II, it started its operations in Iloilo City, Philippines, and the number of branches currently continues to grow in number. Right from the start, Mang Inasal was already able to catch the attention of the Filipinos since its products are mostly, if not entirely, Filipino in nature. Because of its increasing number of branches around the country, Mang Inasal provides numerous job opportunities to many, whether the available opportunities are on the supplier, the management, or the employees. Right from the very beginning, Edgar Sia already spurred Filipino’s interests in Robinson’s Place, Iloilo City, Philippines. What he did was he distributed this initial success in Iloilo City to TATC, Roxas City, Capiz (second branch), to Marymart Mall, Iloilo City (third branch), to Mall of Asia, Manila, and soon afterwards, to the rest of the Philippine Islands.
Mang Inasal is known for the “swiftness” and accuracy of its services, quality of its products, and its variety of food choices. The National Meat Inspection Service gave Mang Inasal a certified Double A on its commissaries (one in Iloilo and one in Manila), assuring safety when consuming their products. Apart from safety, Mang Inasal also allowed its Research and Development Department (RDD) to makes sure that all of its products are fresh and hygienic. The RDD also takes the responsibility of developing new products in Mang Inasal’s menu. In order to raise concerns in branches scattered everywhere within the
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country, Mang Inasal has its Support System to transmit to its main department and act upon giving remedial solutions. With cooperation between different departments, Mang Inasal remains to be one of the healthiest businesses in the Philippines.
IV.
External Analysis Economic Performance and Forecasts Market becomes saturated due to booming fast food industry
Food is one of the basic needs of every people, with these; food industry is growing as time pass by. Many people choose to put up or franchise different fast food chain as their business since this industry has a rapid growth.
No . o f Sto re s
Fast Food Stores in the Philippines (As of 2011) 800 700 600 500 400 300 200 100 0 Jolibee
Chowking
Mang Inasal
Greenwich
Mcdonalds
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As of 2011, the number of fast food industry in the Philippines continuous to grow with Jollibee has the highest number of branches in the country. Mang Inasal has 423 branches as of 2011 and still continues to grow this 2012.
Re1evance: As the market for fast food industry becomes more saturated, it means more competitors, direct or indirect, for Mang Inasal. Presence of more competitors means more choices for the people and it can take away the market share of Mang Inasal which may cause them a decrease in their sales.
High number of foreign companies entering the fast food market vs. local brands Passing of the Foreign Investment Act made the foreign investors to easily conduct businesses here in our country. The government gives incentives and other benefits that would encourage foreign investors to invest in our country. Some the reasons why foreigners invest in our country are low costs of doing a business. Wages are low compared to other countries like US. It is estimated that foreign investors can save 30%-40% in the cost of their business here in the Philippines. As the third largest English-speaking country in the world, it serves as an advantage for the Philippines as foreign investors can communicate with its employees easily. Another reason of foreign investors to invest in our country is that because of the tax benefits and incentives given by the government. Philippines also served as a strategic location for the reason of just few hours’ flight in the different major capital in the country and also reaching 500 million people of the Association of Southeast Asian Nation (ASEAN). Lastly, as Asian nation is starting to integrate a free trade between the countries of
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ASEAN, investors can take advantage of it and also capturing the ASEAN market.
As you can see from the graph that there is an increase of Foreign Investors here in our country. Though it decreases in the year 2007 because of the financial crisis happened and the decrease continued until 2009. However, investments increases at this time as some of the investors chose to invest in the country especially those who are based in Japan to have offices because of the fear of the tsunami incident in Japan last year.
Relevance: The presence of the foreign investors would more competitors for Mang Inasal especially if they engaged in a food service industry. Mang Inasal may lose some of it current market share as customers have more choices of fast food chain and restaurants in where they can dine in. Foreign businesses may exhibit better services, which can also be a factor of the loss of market share of Mang Inasal.
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Socio-cultural Factors Trending barbecue fast food industry According to Family Income and Expenditure Survey that 42.6 percent of the Filipino household’s income were spent on food. The increase in the number of workers who are engaged in business and administrative jobs and shifting consumers’ preferences towards leisure and convenience resulted to the rise in demand for fast food services. It is now became a trend and routine for middle class earners to eat at different fast food chain which causes the presence of 32,000 fast food outlets in the Metro Manila area only.
Today, the trend of barbecue fast food industry is in hype. As you can see in the graph that there are total of 604 branches of the top barbecue fast food chains in the country where Mang Inasal has the leading number of outlets nationwide, having 423 branches. 10
Relevance Mang Inasal, as a part of the barbecue fast food industry, can take advantage of the increasing trend for this industry. These would help them generate higher income and increase further its market share. They can also take this opportunity to attract more customers and outnumber its competitors.
Increase number of potential owners through franchising Filipinos now a days are engaging into franchising business since it requires less capital instead of making their own business. Actually, franchising contributes a lot in the growth of the Philippine Economy. According to the Association of Filipino Franchisers Inc. (AFFI), those there members increased to 130 from 75 during the year of 2010. At this moment, there 1000 brands that are being franchised in our country which are divided to five principal sectors: retail (clothing), cafes, cafes, fast foods, bakeshops, hospitality and wellness, and food carts. Around $6.6 billion of the Gross Domestic Product of the Philippines or 5% is contributed by franchising. Franchising also generates jobs for the Filipino people and therefore reduces unemployment.
The top industries in the Philippine franchises are water refill franchises since water is a basic necessity for every person, education and training franchises as fresh graduates looking for review centers for their licensure examination, bakery as bread has been a part of the Filipino culture especially pandesal, bar and café franchises, personal care franchises, service-type franchise, fast food chains, restaurants and food cart franchises as food is a basic
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necessity and Filipinos loves to eat.
Relevance: Mang Inasal also offers franchising to the community. In fact, it is one of the fastest growing franchises in our country. The fact it came from the fast food chain and restaurant franchises then it would continue to grow. A lot franchisee means more income for Mang Inasal and it will be introduce to different places especially to those areas where Mang Inasal is not present yet.
More Filipinos are moving to urban area as an increase in demand in packaged food products.
As more Filipinos migrate to urban areas for the reason of better job opportunities and a lot of people who are working and does not have the time to prepare their own food, it increases the demand for the packaged food products for an ease in meal preparation. This made them to eat in different fast food chains, restaurants and other independent food establishments like the carinderia for a cheaper food service.
CONSUMER FOODSERVICE MARKET SHARE BY TYPE 2005 2006 2007 2008 2009 Total 100 100 100 100 100 Independent Consumer Foodservice 65.3 64.7 64.3 63.6 62.7 Chained Consumer Foodservice 34.7 35.3 35.7 36.4 37.3 Fast Food 23.7 23.8 24.0 24.7 25.4
2010 100 61.3 38.7 26.3
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Full-Service Restaurants Cafes/Bars
28.4 26.6
28.0 26.1
27.6 25.6
27.3 25.0
26.7 24.2
26.2 23.5
Street Stalls/Kiosks
18.8
19.6
20.2
20.3
20.7
20.7
Pizza Consumer Foodservice
4.5
4.5
4.5
4.4
4.5
4.6
100% Home Delivery Take Away
2.6
2.6
2.6
2.6
3.0
3.2
As you can see form the graph that the market share of fast food industry continues to grow overtime and it grows faster during the year 2007 to 2010, which has the market share from 24% to 26.3%.
Relevance: An increase in demand for packaged would also mean an increase in demand for fast food chain where Mang Inasal is a part of. More Filipinos moving to urban areas to look for job opportunities would be a factor to Mang Inasal since they can employ workers from these people.
Filipinos are looking for a healthier lifestyle Now a days, there is an increase in the of people who are facing obesity, heart problems, diabetes and other health-related issue which make them more conscious on what they eat.
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According to the World Health Organization that by 2012, there will be 2.3 billion adults who are overweight and more than 700 million are obese. In 2003, it is reported that 19.6% of the Filipino population are overweight and 4.9% are obese. The numbers continue to increase during these days. Consumers are becoming more health conscious looking for more healthier and organic products.
Relevance Most of the products of Mang Inasal are meat which has high saturated and transfat that can lead to obesity and heart disease. For customers who are looking for a healthier food, eating in Mang Inasal may not be a good option for them and this may lead to a decrease in the market share of Mang Inasal as people will shift their interest to those restaurants who offer organic foods.
Health Related risks of poultry One common disease that we can get from poultry, especially chickens, is bird flu, which is a disease caused by Type A influenza virus that mostly infect birds.
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As you can see from the figure that bird flu cases increases from 2003 to 2006 then it falls in 2007. Although the cases and deaths of bird flu falls down, people are still being caution especially if there is a bird flu scare in the country.
Relevance Since the major product of Mang Inasal is its Chicken Inasal, health related risks of poultry can decrease the sales of Mang Inasal as people will avoid poultry products because of the fear of having a sickness that they can get from it.
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Technological Factors Technological advancements in the field of production
Many producers are interested to other alternatives in raising their chickens and technological advancements can help with these problems. They are looking to a type of chicken, which can be more suitable for outdoor production and niche markets. Out with the conventional poultry industry and it is now genetically refined. Chickens now grow faster, has a broad breast and limited feather for easier plucking and other traits that are considered desirable for raising large number of birds. Chickens now reach five pounds in six to seven weeks due to their rapid growth.
Relevance Because of the new technologies that are discovered in order to grow more chickens than usual, supply of chicken would not be a problem for Mang Inasal since it is their major products. The genetically refined chickens would also be bigger than the conventional chicken which can be an advantage for Mang Inasal because they will be able to serve bigger chickens to their customers. This would mean higher satisfaction for the customers.
Growing number of people who uses Internet and mobile phones As the technology aged, there is an increase in the number of Internet and mobile phone users worldwide. Since Internet are more convenient to use compared to those conventional ways, people preferred them more and its users gradually increasing. The same as to mobile phone, which are easier to use in communicating with other people, user of mobile phone are also rising. According to the secretary general of the UN’s International Telecommunications 16
Union, at the beginning of 2000 there are only 250 million users of Internet and 500 mobile subscriptions globally. But when 2011 approaches, it grows to 5 billion mobile users and 2 billion Internet users worldwide.
As you can see from the two figures above that the trend for using the Internet and Mobile Phones is increasing rapidly. Though Internet users fall during 2007-2008 where there is an recession, it still managed to increase during the year of 2009 until now.
Relevance Through Negostar Deal Biz Loop 99, transactions of Mang Inasal were made easier and even reduce the cost of Mang Inasal which allows them to offer affordable prices to their customers. Negostar Deal Biz Loop 99 offers unlimited talk to Mang Inasal’s employees, franchisees and suppliers for just P99.00 per month. Mang Inasal was able to reach its connections in just an affordable price, which is an advantage to them.
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Legal Factor Compliance to sanitary standards According to the Chapter 3 of the Presidential Decree No. 856 which is the code of sanitation, that no one is authorized to operate a food establishment without securing a sanitary permit from the local health office. The sanitary permit should be posted in the visible part of the restaurant. Employees should also have a Heath Certificate issued by the local health authority. All foods should also come from suppliers or sources which are approved by the local health authority. The construction and location of the restaurant should also comply with structural requirement prescribed the code of sanitation. Other equipment and material used in the business should also follow the code of sanitation.
Relevance Mang Inasal, as a food establishment, should also abide with the laws provided in the sanitation code. They should also maintain cleanliness in their different branches in order to pass the sanitary test of the government. Sanitary standards are also important for the customers of Mang Inasal since they want to ensure that the food they are eating are safe.
V.
Industry Analysis a. Industry and Market Segments Food Service Industry
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Food Service Industry is one of the industries, which are in rapid growth as there are increase in number of people who wants to have a prepared meal in the short time and at most reasonable prices. Food Service Industry is an industry, which produces and sells foods and serves its consumers. There are different types of food establishment that are being set up in our country in our time now like big restaurants and fast food chain, small canteens and carinderias or even the in demand food carts.
Commercial Food Service Commercial Food Services are those eateries, which are engaged into business and profit. This is where Mang Inasal belongs. Part of the job of the owner is to control the expenses of the company, to set its profit and to plan the business growth. It is also the owner who sets the price of the food and services that they cater to the masses and value the place and economic level of their target customers. Competition in this type of food service is high since a lot of eateries are engaging in this type of business.
Welfare Food Service Welfare Food Services are those restaurants that are set up to serve a particular group of people like employees, students and patients. These are eateries that are commonly found in schools, office canteen and cafeterias in the hospital, which are managed by concessionaires. Competition in this type of business is low since the competition will only be inside the entire office building and hospital.
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Market Segment and Trends Segmentation through Economic Classification Company Jollibee Chowking Mang Inasal McDonald’s KFC Goldilocks Wendy’s
Budget Food Items Rice Meal 39ers, Value Meals Value Kings, Combo Kings Sulit Meals, Bulilit Meals Value Meals, M2ecSaver Meals, Everyday McSavers Wow Burger, Wow Sulit Meals Sarapinoy Meals Super Value Menu
Price (PHP) 39.00-55.00 29.00-87.00 49.00 25.00-55.00 30.00-89.0 49.00 37.00-62.00
Famous fast food chains offer affordable prices for the masses and even cater budget meals, which are more affordable. The segment share of the middle income to this type of industry is large compared to people with larger income beside from the affordable prices it offers, it is also a factor that the food they offer is for the masses.
Segmentation through Source of Income For the year 2009, 42.6% of the total expenditures are spending on food and 6.1% of these are food consumed outside home. This provides an avenue for the industry to increase its sales and to further increase its market growth since people who eat outside their houses are gradually increasing throughout the years. Customers are made-up mostly of workers, especially during lunch, whom are not able to eat in their house. Students are also one of the main customers of this industry. Others are composed of families eating outside especially during weekends.
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Pricing Pricing will depend on the target market of the fast food companies. There are food chains which have higher prices compared to others which are affordable by middle to low income household. Prices will also depend on the products served by the different fast food companies. It will also depend on the bulk of your orders for the reason that fast food companies offers meals with lower prices but the serving is also small compared to the products in their normal price. Fast Food Mang Inasal Bacolod Chicken Inasal Chic-Boy Distribution Channels
Farmers/ Growers
Price Range P 49.00-99.00 P 49.50-99.50 P 49.00 – 99.00
Manufacturers
Distributors
Consumers
Food Chains
The common distribution channels for food service industry is that it started with farmers and growers of the raw materials or supplies that the food chains will need in order to produce their products. Some of these materials will go to manufacturers to produce other products which will also be used by different fast food chains such as
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goods like dairy products and the like. After that, these products will go to different distributors or the suppliers of the products of these food chains. Fast food companies have lots of different suppliers whom to supply the ingredients for their products. They will have a different supplier or every ingredient of their products. After the delivery of their supplier, then it will be given to the different branches of the company for cooking and serving its customers. Products are only distributed through the different branches of the company nationwide or globally.
Advertising and Promotion Advertising and Promotion is a way for a company to penetrate the market and to increase further it sales. This is also a means in order for a company to attract more customers and introduce to the public the products it caters. Media, playing a part in consumers’ decision in choosing a good, is an advantage for different firms. The presence of television, radio, Internet, newspaper, magazines and other reading materials, and the rampant billboards on different roadways are means for firms to promote its products. Different fast food chains even made websites in order to post updates about the company and its products. Mang Inasal, compared to its competitors, has been very proactive in advertising its product in utilizing the media in informing the public the different promos it caters to the public.
b. Porter’s Five Forces
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Potential Entrants- STRONG
In recent years, starting a fastfood business has never been easier. Mang Inasal is one of the numerous fastfood chains that expanded their number through franchising. Mang Inasal’s founder and CEO Edgat “Injap” Sia divulged in an interview that more than 90% of Mang Inasal branches in the Philippines are owned by Mang Inasal franchisees. However, as a franchiser Mang Inasal is able to earn income through royalty fees and other fees required to start the Mang Inasal franchise. Many people are attracted to start a franchise because brands like Jollibee, Mcdonald’s and Mang Inasal already have a customer base and marketing initiatives, and business strategies. According to an interview with Ms. Andrea Tan Lim, a franchisee of Mang Inasal, It is easy to enter the industry but the hard part is maintaining the business because of the presence of competitors.
Bargaining Power- WEAK Mang Inasal has been very successful acquiring and distributing supplier for their branches. According to Ms. Andrea Tan Lim, a franchisee of Mang Inasal, they have a lot of suppliers they have different suppliers for chicken, drinks, utensils, etc. One of the main reasons for their success is that Mang Inasal employs and has developed commissaries. They have recently constructed a commissary at Taguig, which is compliant with a Triple A meat processing plant standards and equipped with a state-ofthe-art testing laboratory and a modern metal-detector or a device to check meat quality.
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Threat of Competition- STRONG The number of fastfood chains in the country is rapidly increasing. Aside from direct competitors, Mang Inasal will also face indirect competitors such as Mcdonald’s and KFC. The fastfood industry in the Philippines has been one of the tightest industries. Ms. Andrea Tan Lim, a franhisee of Mang Inasal, admitted that it is very difficult to maintain the business because of tight competition.
Purchasing Power of Consumers- STRONG Referring to our Competitive Profile Matrix, Mang Inasal got the highest mark regarding price competitiveness. Mang Inasal’s products ranges from P49-P99. Most of their customers are students and people part of the labor force. Students and workers usually have a tight budget. Threat of Substitution- STRONG Besides from the famous chicken inasal, Mang Inasal has a variety of food products to choose from. To keep up with the trends, Mang Inasal expanded their product line. Also, the soy garlic chicken industry (e.g. Manang’s & Bonchon) is getting popular in the country.
VI.
Company Analysis
a. Vision and Mission of the Company Vision Statement and Evaluation The vision statement of Mang Inasal is: “To be the preferred quick service restaurant of every pinoy everywhere!”
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http://www.manginasal.com/about.html
Vision Statement Evaluation Parameter Does it clearly answer the question: What do we want to become? Is it concise enough yet inspirational? Is it aspirational? Does it give clear indication as to when it should be attained?
Yes/No Why? Yes Mang Inasal aims to become the best fast-food barbecue food chain in the Philippines. Yes Yes No
The vision statement promotes the company to be chosen as their favorite restaurant. Mang Inasal aspires to be Filipino’s most favored quick-service restaurant. The vision statement is not time-bound. It fails to mention when the company wants to achieve their goal as the most favored restaurant by Filipinos.
Mission Statement Analysis and Evaluation The mission statement of Mang Inasal is: “To consistently provide our customers a great pinoy dining experience.”
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Mang Inasal intends to give its customers an amazing Pinoy dining experience. The firm competes in the Philippine fast food market and is currently one of the most prosperous fast-food chains in the country. Throughout the years, Mang Inasal gives the customers their best product and service quality to gain their customers’ desires for their product. By means of their effective implementation, Mang Inasal intends to gain customer dependence for the company’s survival, growth, and profitability in the long run. Unlike other fast-food chains, Mang Inasal has an efficient method for serving their customers, focused mainly on refilling its customers’ plates (unlimited rice, free soup, etc.). With these traits together with their large workforce and developed processing system, Mang Inasal has an exceptional competitive advantage. Also stated in the company’s vision, Mang Inasal provides job opportunities for jobless people, as well as available suppliers, giving it a good public image. In accordance to law, Mang Inasal gives employee benefits to its workers. b. Recommendations Recommended Vision • By 2017, Mang Inasal will be the preferred quick service restaurant by Filipinos everywhere in the Philippines. Parameter 1. Customers 2. Products & services 3. Markets 4. Technology 5. Concern for survival, growth, profitability 6. Philosophy 7. Self-concept 8. Concern for employees 9. Concern for public image 10. Concern for nation building
Yes/No If yes, which part of the statement Yes … provide our customers Yes … great pinoy dining experience No No No No No No No No
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The new vision now indicates a clear indication when will it be attained. In five years, Mang Inasal will be have every branch in the Philippines as it continues to grow every single day. The old vision is vague as it just answers “everywhere” and does not indicate whether it is outside or inside the Philippines.
Recommended Mission • To consistently provide Filipinos with a variety of pinoy foods to choose from especially our famous chicken inasal. Moreover, we are committed to provide our customers a great pinoy dining experience, to achieve growth by having more branches, to take care of our employees, to take care of our environment and to also give something back to society. As leading in the barbeque fast food industry, our company promotes Integrity, Honesty and welfare of every individual working in Mang Inasal.
The old mission was too short; the new mission indicates that the firm will provide its customers variety of pinoy foods with a great dining experience. The new mission also mentions about having growth, concern for employees, image and society. Furthermore, by having the firm to promote Integrity, Honesty and welfare of its employees, this will help Mang Inasal to grow and develop new things in the future.
Internal Audit Management Audit The company uses basic strategic management concepts like the Backward
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Integration, by getting raw materials and products from their suppliers. Although the firm uses this, some of its franchises don’t have Certified Public Accountants in managing their financial statements. This means that they do not have standardized management strategies in all of its franchises and this is very hard for them to fully organize the business.
The firm’s objectives and goals are measurable and well communicated to its employees, managers and franchisees. They see to it that they have the same ideas and intentions for Mang Inasal to develop.
The employee turnover in company is moderate as the firm has many employees in each of its branches in the country. Absenteeism of employees is low but from time to time there are still some employees who do not go to work. The company follows the standard sick leave and vacation leave with all of its employees. Marketing Audit Segmentation of Markets Mang Inasal is a nationwide company. The target market of the company is the Filipino people. As stated in the vision statement of the company, they will be the preferred restaurant of every pinoy everywhere in the Philippines. Also, students and workers are the main customers of the company because of its very affordable products that fit to the budget of the Filipinos. Positioning As Jollibee Food Corporation (JFC) is known to have the most branches of its fast food chain in the Philippines; it is now a part owner of Mang Inasal. JFC
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improved the position of Mang Inasal being the 3 rd fast food chain to have the most number of branches in the country. Fast Food Chain Jollibee Chowking Mang Inasal Greenwich Mcdonalds
No. of Branches 686 431 423 330 325
Market Shares The company’s market share is still the leading fast food chain with the development of JFC. The firm outnumbered its competitors by having four times the number of branches it has in the country. Barbeque Fast Food Chain Mang Inasal
No. of Branches 423
Reyes Barbeque
90
Chic-Boy
71
Bacolod Chicken Inasal
20
Sales and Distribution System The company has its own commissary system that is found in Metro Manila and Iloilo and easily distributes its goods and products to its nearby branches. However, the firm is having a hard time in distributing goods and products in the provinces. So the branches outside the Metro purchase their supplies in the nearby stores, which is more costly. The company sale from 2009 is 850 M. In 2010, the company sale increased by 36% from 2009 that is 2 B. The company sales still exceeded the cost of sales, operating and other expenses, so it still enable to generated a vast amount of net income during
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the years.
Product The company has a limited variety of products to choose from. Since the barbeque fast food industry is trending, its competitors and other businesses entering the market easily imitate the products of Mang Inasal. However, the firm is still leading because of its fast services in delivering the food to its costumers. Pricing The price of the products of the firm fit aptly. The products are very affordable that entices the customers to by from them. Nevertheless, its key competitors also imitate the prices of their products as they follow the firm. Promotions Capability The company proactively promotes its products as people can see in billboards and tv advertisements of Mang Inasal everywhere. The firm spends a lot on promotion and advertising their products in order for them to have more customers. Also, the firm has a famous endorser that also made Mang Inasal more popular and increasing the company’s profit.
Financial Audit Growth Sales Growth The increase in the sales of the company grew significantly. As the business
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continues, it will have more sales as more stores of Mang Inasal open nationwide.
Revenue Growth The revenue growth of the company grew 97% from 2008 to 2009. The sales compensate the operating expenses, taxes and other expenses in gain more than enough to sustain the business. From 2009 to 2010, the revenue grew 62% and in the upcoming years, the revenue will still continue to significantly grow.
Comparative Growth Rate Comparing the company to its key competitors. Mang Inasal is still leading at a faster rate of 73% in the sales and 62% growth in the net income. Chic-Boy is next to the
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company as more of its stores are opening. Bacolod Chicken Inasal has a 49.73% sales growth but it did not compensate the net loss of the company.
Profitability Margin Growth In 2009, the margin growth of the company is at its highest and it decreased in 2010.
Comparative Margins Chic-Boy has a higher gross profit margin than Mang Inasal. However, Mang Inasal has a higher operating profit margin and net income margin compared to Chic-Boy 32
but it is still close.
Return on Assets The return on asset of the company improved from 26% in 2009 to 33% in 2010. The company’s competitors are far behind with an 8% of Chic-Boy and -1.19% of Bacolod Chicken Inasal.
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Return on Equity Mang Inasal’s return on equity decreased from 79% in 2008 to 69% in 2009. The 10% decrease was not a hindrance to the company as it increased 129% in 2010. The return on equity of its competitors is -28.5%.
Activity and Efficiency Inventory Turnover Mang Inasal is better in efficiently selling its inventory compared to Chic-Boy. Bacolod Chicken Inasal has no inventory turnover. Mang Inasal has its worst inventory turnover in 2008 but it improved in 2009 by 17.38%.
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Asset Turnover A decrease of 1.7 in 2009 in the asset turnover is the worst rate. However, it grew 3.77 in 2010, as it is a good sign that the company is using its assets in generating sales. The key competitors’ average is still lower than Mang Inasal only 2.47 asset turnover.
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Liquidity Mang Inasal is still leading as the most liquid in terms of current and quick ratio. Despite this, there is still a decline in the current ratio and quick ratio of Mang Inasal 2009 and 2010.
36
Cash Flow Investing activities mainly provides the company’s cash. In 2008, cash was provided in the operating activities of the business. There is no amount of financing activities in 2008 and investing activities in 2010.
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Working Capital The working capital of the company increases every year. In 2010, it has a 98.36% growth from 2009 and due to this, the company can cover the company’s liabilities during the year. Working Capital 2008 2009 2010
Amount 717,282.30
Growth 69.65%
3,107,207.4 7 185,894,260
81.25% 98.36%
Solvency Leverage Ratio Bacolod Chicken Inasal is the most highly leveraged compared to the other companies. This can lead to the insolvency of the business if this still continues. Mang Inasal is least leveraged compared to its key competitors with a debt ratio of 0.28.
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Production Audit The company has very fast service in delivering food to the table of its customers. The employees are organized and efficiently work to be able to maintain its fast services. The facilities and amenities of the company are in good condition that enables the employees to work in a healthy environment. The company’s firm are strategically located almost everywhere as the branches can be seen where there are many people, which gains the firm a lot of attention. The company has advanced internal operating system that is very easy for the managers and owners of the firm to monitor every branch in the country.
Information Systems In 2009, Mang Inasal partnered with Oracle, which is the “most complete, open and integrated business software and hardware systems, with more than 370,000 customers” globally. Oracle will helps Mang Inasal’s efficiency in running the business. In addition, Oracle has state of the art multiple operating system options
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that gives customers unmatched benefits from industry-leading products and low total cost of ownership.
7S FRAMEWORK Strategy The company proactively promotes their products, which is in line in the trending barbeque fast food industry that attracts many customers and made Mang Inasal popular. The numerous branches of the company also made Mang Inasal very successful as people can see the fast food chain almost everywhere in the country.
The integration strategy of the company is the turning point of success. Jollibee bought 70% of the shares of Mang Inasal made the firm more popular and Jollibee is known to be one of the best in promoting their products and leading fast food industry in the country.
Based from the Porter’s Five Forces, the purchasing power of consumer is strong as the products only ranges from P49 to P99. The company generates a big amount of income as more customers buy products from Mang Inasal branches nationwide that is cost affordable.
Evaluation: Effective Capitalizing on advertising the company that shows their products are delicious yet very affordable and increasing number of branches are the advantages of Mang Inasal from its competitors, as more customers will buy from them. In addition, the public
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admired the company as Jollibee bought 70% of the shares of the company. This made the Mang Inasal worthy that caught the attention of one of the biggest company in the Philippines and considers buying the business. Shared Values The mission statement does not state any core values of the company. However, the company shows compassion by helping alleviating the unemployment of the country since it provides job opportunities to Filipinos. Also, the company provides job opportunities in certain areas to community members as they provide supplies for the company to operate.
Evaluation: Needs Improvement The company lacks in presenting their core values, as it is not stated in the mission statement. Nevertheless, the company still shows their concern to the society by having projects helping the poor and providing job opportunities to the unemployed Filipinos. Structure Edgar J. Sia II Chairman/CEO
Ferdinand J. Sia President/COO
// //
OPERATIONS Elmer Hementera VP-Operations
BUSINESS FINANCE AND COMMISSARY TREASURY HUMAN RESOURCE MARKETING Enri Ruiz De DEVELOPMENT CONTROLLERSHIP James V. Dy Shella A. Sia Jess Nemenzo Marvin Ramos Venancio C. Parcon VP-Commissary EVP-Treasury Corporate HR Manager Luzuriaga Marketing Manager BDD Head VP-Finance
The company organizational structure is hierarchal with each 41
of the departments of the company has its main functions. All of the information regarding the management of the company disseminated from the chairman all the way to its employees. The construction of the business development department, which its main objective is to improve and create new stores, made a big impact on the company’s growing status as it continuously creates new Mang Inasal branches nationwide.
Evaluation: Good The company has a good organizational structure especially when company created the business development department that is they key of the success of the business, as its main objective is to build more branches of Mang Inasal. Systems The company’s information dissemination is good as employees and staffs are well informed of the new projects and business plans that the company has in store for its customers. Each department does their roles effectively in making the business successful. The heads of the different departments see to it that their staffs do the tasks assigned to them and able to manage their own departments. Before the franchisees manage their own branch of Mang Inasal, they are first instructed of how to manage and operate their own branches for it to be successful. The company promotes consistency with all of its branches so that it will be managed well.
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Evaluation: Good Consistency is one of their priorities in managing the company. As the number of branches of the company is increasing, they see to it that they provide outstanding and exceptional products and services to its consumers in every branch that they own. Style The company’s success is attributed to its high standards. It can be summarized into “F.S.C.” The company believes that every food (F) served to their customers must meet the standards set by the company. Excellent customer service (S) is one of the backbones of the company, where the employees are expected to deliver with a fast and courteous service at all times. Cleanliness (C) is very important for Mang Inasal both inside and outside the store as the employees clean the restaurant and they themselves have presentable appearance at all times.
Evaluation: Helpful The high standard of the company is the main reason why Mang Inasal is very successful. The company sees to it that they have the utmost services, operation and management of the business. The employees are trained well in serving its customers and they must comply with the fast services that the company promotes.
Staff Employee growth is supported through series of trainings that the company provides. In March 2010, the company has a new training center, which has a mock-up of a typical Mang Inasal store. The training center is a part of the company’s drive in improving its services, management, services and food quality. This is a certification
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program for all of its employees and soon it will become a requirement prior to the opening of new Mang Inasal stores. The company has good compensation and benefit package to encourage their employees to work their very best. The company also provides career pathing of its employees that provides opportunities for them to pursue a higher career in the company. Evaluation: Effective The certification program for the employees is an effective way to promote the consistency and to have better operations in the company. This will not only serve as a growth of the company but also to its employees. The employees are given opportunities to grow and excel in their careers as the company gives them a chance to prove themselves that they are qualified in earning a higher position in the company.
Skills The company has intensive trainings for its employees to be efficient and promote the company’s high standards. The managers also trained and continuously learn the latest systems in operating the store and people management skills.
Evaluation: Good The skills are in line with the goals of the company to be the best and have the fast services in delivering food to its customers. The company is able to attain their goal through managing and training the employees.
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VII.
Strategy Formulation
a. External Factor Evaluation 1. Opportunities and Mang Inasal’s responsiveness
O1 Trending barbecue fast food industry (Socio Cultural) http://www.philstar.com/Article.aspx?articleId=764743&publicationSubCategoryId=108
Rating 3 - This helps promote the firm to expand more branches across the Philippines, as many customers are fond of the growing barbecue fast food industry. Mang Inasal is leading with 423 branches nationwide as the number 1 barbecue fast food chain. It also ranked 3rd, as the biggest fast food industry in the Philippines.
Number of Stores of Mang Inasal 50 100
2008 2009
423 300
2010 2011
O2 Technological advancements in the field of poultry production (Technological) http://www.ublcorp.com/broilers.html
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Rating 2 - There are some recent studies that will help in producing poultry faster through poultry genetics. Ultra Natural Plus is a poultry feed additive containing more than 20 enzymes combined with beneficial organic plant extracts of natural origin in a concentrated, easy to use and mix liquid form. Used as a poultry drinking water additive for poultry broilers, layers and turkey grower applications. Although it is still not available in the Philippines, this will help the firm to produce more food in a short period of time. This will help the sales of Mang Inasal to grow and generate more income in the future.
O3 Growing number of people who uses Internet and Mobile Phones (Technological) http://business.globe.com.ph/sme/news/mang-inasal-opens-300th-branch
Rating 2 - Globe Business opens Globe Negostar, which aims to aid small and medium enterprises (SME), to help them cut on cost of operations and boost productivity. Mang Inasal uses this as it helps them expand more branches and easily communicate with its employees, suppliers and franchisees through the services of Globe.
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No. of People
No. of Internet Users 10,000,000 5,000,000 0 2000
2002
2005
2007
2008
2009
Year
O4 Increasing number of potential owners through franchising (Socio-cultural) http://franchisephilippines.org/8-best-philippine-franchises/
Rating 3 – People today recognize franchising as a new way of starting a new business instead of thinking their own concept. Franchising is very easy because many businesses accept franchising their products and services. Although franchising can be costly, but there are many benefits like the brand name and they can assistance with the management of the firm to help them put up a successful business.
O5 Increase in demand for packaged food products due to more people moving to urban areas http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Food-andbeverage/Pages/Food-and-beverage-market-in-the-Philippines.aspx
Rating 2 – More Filipinos are expected to move to urban areas because of better work opportunities so that they can provide for their own families that they cannot sustain
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living in rural areas. This will increase the demand for packaged food products. However, affordability will remain an important factor due to the limited disposable income of most households. Mang Inasal offers affordable meals that will pass the budget of most Filipinos.
2. Threat and Mang Inasal’s responsiveness T1 Large number of direct and indirect competitors (Economic) http://www2.pse.com.ph/html/ListedCompanies/pdf/2011/JFC_17A_Dec2010.pdf http://www2.pse.com.ph/html/ListedCompanies/pdf/2011/AGI_17A_Apr2011.pdf
Rating 3 - Annual reports of Jollibee Food Corporation and Alliance Global Group, INC., These companies control more than half of the fast food industry market share. It describes how saturated the market is.
Barbecue Fast Food Industry in the
Number ofPhilippines Stores of Mang Inasal (As of 2011) No. of Stores
500 400 300
50
2008
100
423
2009
423
200 100
2010
300
0 Mang Inasal
90 Reyes Barbecue
71 Chic-Boy
2011 20 Bacolod Chicken Inasal
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Fast Food Stores in the Philippines (As of 2011) 800
No. of Stores
700 600 500 400 300 200 100 0 Jollibee
Chowking
Mang Inasal
Greenwich Mcdonalds
T2 Decline of Palay Production that may lead to inflated rice prices (Economic) http://countrystat.bas.gov.ph/ Rating 1 – Serving unlimited rice has captures a lot of customers for Mang Inasal. However, due to the declining Philippine agriculture, rice prices have plummeted to nearly P60 per kilo last 2008. Palay production must be stable and consistent to obtain price stability for rice.
Palay Production Growth Rate 10.00% 5.00%
Palay Production Growth Rate
0.00% 2005 2006 2007 2008 2009 2010 2011 -5.00%
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T3 Filipinos are looking for a healthier lifestyle (Socio-cultural) http://www.allaboutdiabetes.net/promoting-filipino-healthy-lifestyle/
Rating 2 - As we all know, Mang Inasal offers unlimited rice for most of its meals. However, more and more Filipinos are leaning towards a healthier lifestyle for longevity and tranquility.
T4 Health related risks of poultry (Socio-cultural) http://www.birdlife.org/news/news/2007/03/avian_flu_report.html
Rating 3 - Mang Inasal's most famous product is chicken. The article above describes how avian fluenza or bird flu moves and being transferred from imported frozen poultry to humans. It discusses the danger of catching the said disease through imported frozen poultry.
T5 High number of foreign companies entering the fast food market vs. local brands (Economic) http://www.tripleiconsulting.com/main/philippines-business-registration/find-out-why Rating 3 – Many foreign companies enter in the Philippines because of the low cost and high income in doing business in the country. Also, globalization is happening worldwide, especially in the Philippines. Filipinos widely accept products and services offered by foreigners and oftentimes, they prefer these to local brands. Mang Inasal will
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have a hard time in selling their products, as many competitors will enter the country in the future.
3. EFE Matrix
Key External Factors
External Factor Evaluation Matrix Source Weight
OPPORTUNITIES O1 Trending barbecue fast food industry
Rating
Weighted Score
Socio-cultural
0.2
3
0.6
O2 Technological advancements in the field of poultry production O3 Growing number of people who uses Internet and Mobile Phones O4 Increasing number of potential owners through franchising O5 Increase in demand for packaged food products due to more people moving to urban areas THREATS T1 Large number of direct and indirect competitors T2 Decline of Palay Production that may lead to inflated rice prices T3 Filipinos are looking for a healthier lifestyle T4 Health related risks of poultry
Technological
0.10
2
0.2
Technological
0.10
2
0.2
Socio-cultural
0.10
3
0.3
Socio-cultural
0.05
2
0.1
Economic
0.15
3
0.45
Economic
0.05
1
0.05
Socio-cultural
0.05
2
0.1
Socio-cultural
0.10
3
0.45
T5 High number of foreign companies entering the fast food market vs. local brands Total
Economic
0.10
3
0.3
1
2.75
b. Competitive Profile Matrix As an established industry, Fast Food service has been a nest for a number of companies and choosing key competitors for Mang Inasal would have been very difficult.
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Fortunately, Mang Inasal is part of an another branch for fast food service simply because their products, pricing and level of quality are different from the key players of the Philippine Fast Food Industry- Jollibee Food Corporation and Alliance Global Group, Inc (the master franchise holder of McDonalds in the Philippines). Key competitors of Mang Inasal were limited to three- Chicboy and Bacolod Chicken Inasal. These companies along with Mang Inasal have the same product line (barbeque or grilled food) and pricing is almost identical.
1.1 Key Competitors of Mang Inasal Competitor #1 Chic-Boy According to their web site, Chic-Boy™ is a new trademark and business model of Pier One Bar and Grill Holdings Corporation, the company behind the successful Pier One Bar and Grill restaurant chain in the Philippines. Having first tried the delicious and tasty lechon manok and lechon liempo in Cebu and the Chicken Inasal of Bacolod, Pier One Bar and Grill Holdings Corporation saw its business potential and the opportunity to tap into the lechon manok, lechon liempo and chicken inasal industry and therefore, brought the secret recipe to Manila. Chic-Boy™ opened its first Dine- In store last 05 May 2010 and began offering its Dine-In store concept for franchise. In just 1 year and 3 months since we opened our first franchised store in Molito Alabang, we have grown into a total of eighty five (85) dine- in stores, eighty one (81) units of which are franchised. Fortyfour (44) more franchised stores are under construction.
Chic-Boy has been constantly growing and it is the archrival of Mang Inasal for
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it also offers the same level of quality in all aspects, i.e. food and service. Chic-Boy also offers an unlimited rice and unlimited iced tea, which Mang Inasal pioneered in the Barbeque Fast Food Industry.
Competitor #2 Bacolod Chicken Inasal According to their web site, Bacolod Chicken Inasal is owned and managed by the sisters and brother team of Rose, Bing and JM Tanalgo, Bacolod Chicken Inasal opened its first take out and delivery counter in 1993. It was a small take out spot at EDSA Central Complex in Mandaluyong City with delivery services to the Ortigas and Mandaluyong areas. The Tanalgo siblings opted to start out with a small stall to first have a feel of the market in Manila.
Bacolod Chicken Inasal is the oldest of the four but its slow growth and expansion has been the biggest factor of their small market share even though they are the pioneer of serving chicken inasal in the metro.
1.2 Critical Success Factors CSF #1 Price Competitiveness Price is very important especially for fast food businesses because the threat of substitutes is strong. Filipinos are very price sensitive and an increase in price will turn them off. Price competitiveness is not a matter of the cheapest price but it is about being able to deliver delicious and high quality products while the consumers pay affordable and justified prices. In Filipino terms “sulit”.
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Importance Weight: 30%
CSF #2 Marketing and Advertising Initiatives In an industry where competition is tight, marketing and advertising your products will help your company have an advantage over competitors. Some firms perceive marketing as an expense and they fail to see the value of marketing and advertising. Marketing is an investment for the firm’s future. Importance Weight: 20%
CSF #3 Market Share Having a bigger market share assures the firm profit and longevity. The percentage of an industry or market's total sales that is earned by a particular company over a specified time period. Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. This metric is used to give a general idea of the size of a company to its market and its competitors. A larger market share assures the firm the driver seat of the industry. Importance Weight: 10%
CSF #4 Product Quality Price competitiveness assures you of customers. However, loyal customers are achieved through high quality products. Consumers are very particular with product quality- one mistake they may never buy again. Importance Weight: 5%
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CSF #5 Branding and Image A reputable brand will be a free marketing for the firm. Brands are not only part of the business it is the institution of the business. Big brands like Jollibee and McDonald’s have continually dominated the fast food industry because of their brand and image. A tarnished image will discourage consumers from buying. Importance Weight: 10%
CSF #6 Product Variety A limited product line is a disadvantage for the firm. Consumers get tired from buying the same food again and again. Product variety will be very important for expansion and longevity of the firm. Importance Weight: 5% CSF #7 Service Quality Consumers want to feel important. Service quality must be right on the middle for consumers do not like unnecessary employee interactions. Consumers also hate being neglected. Importance Weight: 5%
CSF #8 Accessibility Accessibility in the location of stores of the company is very important to attract and entice customers. It is very important factor in having a business because by having good and accessible location, the company will generate more income as more customers
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buy from them. Importance Weight: 15%
1.3 Mang Inasal CSF Ratings CSF#1 Mang Inasal’s Price Competitiveness (4) Mang Inasal’s products ranges from P49-P99. Most of their customers are students and people part of the labor force. Students and workers usually have a tight budget. Aside from being affordable, Mang Inasal’s unlimited rice promo have encouraged Filipinos (loves rice) to buy again and again even though their product line was limited (they recently expanded their product line). Source: http://www.manginasal.com/ourmenu.html
CSF#2 Mang Inasal’s Marketing and Advertising Initiatives (4) Aside from the Mark Bautista endorsement, Mang Inasal started a new advocacy program supporting OPM. Mang Inasal has continually invested time and money for marketing and advertising purposes. Source:
http://www.philstar.com/Article.aspx?
articleId=763242&publicationSubCategoryId=70 http://www.youtube.com/watch?v=aPuqUl-64zs
CSF#3 Mang Inasal’s Market Share (4) Through franchising, Mang Inasal’s branches have grown to 300. Mang Inasal is
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regarded as the fastest growing fast food chain in the country. In the Barbeque Fast Food Industry, Mang Inasal is the clear market leader. Source: http://business.globe.com.ph/news/mang-inasal-opens-300th-branch
CSF#4 Mang Inasal’s Product Quality (4) Overall employee performance and quality of products Mang Inasal have kept its standards high enough. However, according to an interview with Ms. Andrea Tan Lim, a franchisee of Mang Inasal, customers sometimes complain about not receiving free soup and the food is not cooked properly but these are just minor complaints that will not affect the overall standard of Mang Inasal.
CSF#5 Mang Inasal’s Branding and Image (3) A part of Mang Inasal enterprise was sold to Jollibee Food Corporation. Mang Inasal as a brand that caters to the masses. JFC’s involvement with Mang Inasal is a boost for the brand. Source: http://business.inquirer.net/money/topstories/view/20101019-298456/Jollibee-tobuy-70-stake-in-Mang-Inasal-for-P3B
CSF#6 Mang Inasal’s Product Variety (2) Mang Inasal’s menu is still not diverse as other fast food restaurants. The company only promotes its chicken inasal promos, which the customers have only a limited of products to choose from. Source: http://www.manginasal.com/ourmenu.html
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CSF#7 Mang Inasal’s Service Quality (4) Mang Inasal has fast service in serving food to their customers. The company has a training facility that has a mock-up branch of Mang Inasal to further improve serving the customers. Source: http://www.manginasal.com
CSF#8 Mang Inasal’s Accessibility (4) The company has an outstanding strategic location of their branches nationwide. In addition, Mang Inasal has the most number of branches compared to its competitors. Source: http://www.manginasal.com
1.4 Chic-Boy CSF Ratings CSF#1 Chic-Boy’s Price Competitiveness (3) Chic-Boy’s products costs around P49-P99 like Mang Inasal and Bacolod Chicken Inasal. They have been able to attract more and more consumers because of their affordable prices. However, some of its products like the drinks and desserts are more expensive than Mang Inasal. Source: http://chic-boy.com.ph/menu_cm.html
CSF#2 Chic-Boy’s Marketing and Advertising Initiatives (2) This is one weakness for Chic-Boy. Aside from billboards and print ads, Chic-Boy have failed to introduce their brand nationwide. Chic-Boy is the youngest fast food chain
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among the four restaurants.
CSF#3 Chic-Boy’s Market Share (3) Being the youngest fast food chain among the four restaurants, Chic-Boy was able to expand and open branches around the metro and Luzon. Chic-Boy is behind Mang Inasal for the most number of branches in the country. Since opening their first dine-in store last 2010, Chic-Boy was able to attract investors and franchisees that helped them expand.
CSF#4 Chic-Boy’s Product Quality (3)
“Some things to love about this place: its name (don’t you just love the pun on chickboy?), the pre-inflationary prices (a steaming bowl of sinigang at P49!) and the deadly, highly addicting combination of chicken inasal and roasted pork belly which are the house specialties.” Source: http://www.annalyn.net/2010/05/31/chic-boy-balamban-liempo-goes-to-manila/ CSF#5 Chic-Boy’s Branding and Image (4) Despite the Chic-Boy Caterpillar Scandal was first posted through social media, Chic-Boy continues to thrive and build their brand against all odds. Also, Chic-Boy is leading in terms of its branding and image as its target market are the young professionals. Sources: http://newsinfo.inquirer.net/109857/%E2%80%98look- there%E2%80%99scaterpillar-on-my-veggies%E2%80%99
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CSF#6 Chic-Boy’s Product Variety (4) Aside from their lechon products, Chic-Boy was able to take different dishes from Luzon, Visayas and Mindanao. They have one of the most diverse product line for a fastfood chain.
CSF#7 Chic-Boy’s Service Quality (3) “Their service was efficient; the crews are very attentive to their customers. They make sure that they will prioritize you and your entire request will be granted.” Source: http://rackell24lumberio.blogspot.com/2010/05/chic-boy.html
CSF#8 Chic-Boy’s Accessibility (3) The company is second in having the most number of barbecue fast food nationwide. However, the Chic-Boy still struggles because the company is still far behind from Mang Inasal.
1.5 Bacolod Chicken Inasal CSF Ratings CSF#1 Bacolod Chicken Inasal’s Price Competitiveness (2) Bacolod Chicken Inasal prices ranges from P49.50 to P99.50. Bacolod chicken inasal is much expensive than Chic-Boy and Mang Inasal. However, they still maintain their prices affordable for people with tight budgets. Sources: http://www.reyesbarbecue.net/menu/regular-menu/
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CSF#2 Bacolod Chicken Inasal’s Marketing and Advertising Initiatives (3) The brand was known in the telenovela in ABS-CBN’s Ysabella as it partnered with Bacolod Chicken Inasal. It also continuously promotes its name through radio advertisements. Sources: http://www.reyesbarbecue.net/uncategorized/ensogo-and-reyes-barbecue-tie-up/ http://www.reyesbarbecue.net/news/checkout-our-latest-billboards/
CSF#3 Bacolod Chicken Inasal’s Market Share (1) Bacolod Chicken Inasal garnered the lowest score for Market Share. Expansion has been stagnant for Bacolod Chicken Inasal and they have failed to reach 30 branches since their opening in 1993.
CSF#4 Bacolod Chicken Inasal’s Product Quality (2) Although Bacolod Chicken Inasal’s main specialty is the chicken inasal, it began to expand a more wide selection of Visayan as well as Filipino favorite dishes. Bacolod Chicken Inasal continually improves their products and develops new dishes to keep up with its customer’s needs and wants. It has 10 main product categories with over 100 dishes for the customers to enjoy. Sources: http://www.mymeryl.com/2009/04/reyes-barbecue-restaurant-review.html
CSF#5 Bacolod Chicken Inasal’s Branding and Image (2) Bacolod Chicken Inasal is the oldest brand among the four fast food chains. Their products have appeared in TV shows like Ysabella and Betty La fea. However, Bacolod
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Chicken Inasal’s consumer base is limited to the metro because they have not expanded to rural provinces especially northern Luzon.
CSF#6 Bacolod Chicken Inasal’s Product Variety (4) Bacolod Chicken Inasal continually improves their products and develops new dishes to keep up with its customer’s needs and wants. It has 10 main product categories with over 100 dishes for the customers to enjoy.
CSF#7 Bacolod Chicken Inasal’s Service Quality (2) Bacolod Chicken Inasal has poor service compared to Mang Inasal and Chic-Boy. It slow service affects the loyalty and entry of new customers to their stores.
CSF#8 Bacolod Chicken Inasal’s Accessibility (2) Bacolod Chicken Inasal has strategic locations of their stores that are found inside malls and other establishments. However, it is not enough because the company has only 20 branches nationwide.
1.6 Competitive Profile Matrix (CPM) Ratings
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Mang Inasal
ChicBoy
Bacolod Chicken Inasal
Critical Success Factors
Weight
Rate
Score
Rate
Score
Rate
Score
Price Competitiveness
0.30
4
1.2
3
0.9
2
0.6
Marketing and Advertising Initiatives
0.20
4
0.8
2
0.4
3
0.6
Market Share
0.10
4
0.4
3
0.3
2
0.2
Product Quality
0.05
4
0.2
3
0.15
2
0.1
Branding and Image
0.1
3
0.3
4
0.4
Product Variety
0.05
2
0.1
3
0.15
4
0.2
Service Quality
0.05
4
0.2
3
0.15
2
0.1
Accessibility
0.15
4
0.6
3
0.45
2
0.3
Total
1
3.8
2.90
2
0.2
2.30
c. Internal Factor Evaluation Matrix 1. Strengths and Mang Inasal’s responsiveness S1 Aggressive in promoting their products (Strategy) http://www.adobomagazine.com/global/module.php? LM=news.level1&id=1320818761405 http://www.businessweekmindanao.com/2011/11/04/what’s-cooking-with-mang-inasal’s11-11-11/
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Rating 4 - Mang Inasal makes itself known through all the promotional tools possible and it also makes sure that it makes the company present to masses. Mang Inasal’s endorser is Mark Bautista were you can see his face on billboards and print ads. Last year, the “11-11-11” advertisement of Mang Inasal became a mystery to the public; you can see it everywhere from billboards to commercials. This advertising strategy made Mang Inasal more popular as many are curious and excited for what is going happen on the said date. Mang Inasal wishes for the masses to retain the catchy jingles and commercials it presents, bringing more customers to the fast food chains thus increasing profit for the company.
S2 Market leader in the barbecue fast food chain (Product) http://www.ats-sea.agr.gc.ca/ase/5991-eng.htm
Rating 3 - Mang Inasal became the largest barbecue fast food chain in the Philippines by being accessible and putting up many outlets nationwide, through its affordability and products suited according to Pinoy taste.
S3 Accessibility: Strategic locations catering to the masses (Strategy) http://www.mb.com.ph/articles/263972/the-expansion-mang-inasal
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Rating 3 - Mang Inasal has widened its scope placing its stores strategically, letting its customers access their stores with convenience. Having hundreds of branches across the country, finding the nearest Mang Inasal store wouldn’t be such a burden. Having high visibility, it will always be an option for consumers to dine-in and enjoy the services of the firm has to offer. S4 Intensified employee competency through establishment of a new training facility and program (Employee) http://business.inquirer.net/money/topstories/view/20100814-286799/Union-of-batchoyand-inasal-creates-a-business-boom
Rating 3 – The owner of Mang Inasal, Edgar J. Sia, partnered with the owners of Deco’s Original batchoy. Chicken inasal products go together with batchoy and this will be a great product and additional brand to carry with the expansion of the firm. With the help of Sia’s Injap Investments Inc., Deco’s has six restaurants in Iloilo and plans to have more branches in Manila.
S5 Increased Operational Efficiency through the acquisition of an enterprise planning software (Strategy) http://www.manginasal.com/images/MI_NewsLetterDesign_2010a.pdf
Rating 4 - Mang Inasal partnered with Oracle, which is one the most compete and integrated business software and hardware systems that will help Mang Inasal with their internal operating systems. This will also help the firm, as more branches are being set up
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nationwide and by this system, it will be very easy to be monitored by the managers and owners of the firm the operations that have done by its employees.
2. Weaknesses and Mang Inasal’s responsiveness W1 Poor restaurant environment (Resources) http://passingparadigms.blog.com/tag/customer-service-2/ Rating 2 - Some Mang Inasal branches are not as good as others. There is no consistency of how the structure of Mang Inasal is made, although the interior of each stores are the same but some branches lacks space, no air conditioning units and have untidy surroundings.
W2 Limited products offered to consumers (Product) http://www.manginasal.com/ourmenu.html
Rating 2 – Mang Inasal has a limited variety of products to choose from. Customers’ satisfaction will diminish; the company should add more products to their menu so that customers will buy more from them.
W3 Inconsistency in distribution of products (Resources) http://www.manginasal.com/ourmenu.html
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Rating 2 – Mang Inasal commissary in the country works at the top of its game but as it expands to other provinces, constraints will surely be faced. The firm has no capacity to maintain this kind of system in every branch in the Philippines in order to suplly ingredients 24/7.
W4 Inconsistency of the quality of products (Product) http://a1pinoy.blogspot.com/2011_07_01_archive.html
Rating 2 – There are feedbacks from customers that the quality of products served in the branches of Mang Inasal are different from one anothr. Some branches offers good quality of their product line, while others doesn’t have the ample quality that consumers should enjoy. Mang Inasal has a problem with its inconsistent uniformity with the taste of their foods that is a problem because the firm has a hard time in monitoring because it has too many branches to control.
W5 Unable to maximize 24-hour services (Product) http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Food-andbeverage/Pages/Food-and-beverage-market-in-the-Philippines.aspx
Rating 3 – Mang Inasal has stores that open 24/7. This is very costly for the company because there are only few customers who buy from them at the middle of the night, thus generating a low amount of income.
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3. IFE Matrix Key External Factors STRENGTHS S1 Aggressive in promoting their products S2 Market leader in the barbecue fast food chain S3 Accessibility: Strategic locations catering to the masses S4 Intensified employee competency through establishment of a new training facility and program S5 Increased operational efficiency through acquisition of an enterprise resources planning software WEAKNESSES W1 Poor restaurant environment W2 Limited products offered to consumers W3 Inconsistency in distribution of products W4 Deficiency in assessing and evaluating branch and employee performances W5 Unable to maximize 24hour services Total
Internal Factor Evaluation Source Weight Rating
Weighted Score
Strategy
0.15
4
0.6
Product
0.05
3
0.15
Strategy
0.15
3
0.45
Employee
0.10
4
0.4
Strategy
0.10
4
0.4
Resources Product
0.10 0.05
2 2
0.2 0.1
Resources
0.10
2
0.2
Operations
0.15
2
0.3
Product
0.05
3
0.15
1
2.95
d. SWOT The SWOT matrix helps develop four types of strategies, which are the StrengthsOpportunities
(SO),
Weaknesses-Opportunities
(WO),
Strengths-Threats
(ST)
and
Weaknesses-Threats (WT).
Market Development Strategies:
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1. S3-T1: Branch out stores in Mindanao specifically in urbanized cities
Market Penetration Strategies: 1. S1-O1: Hire new product endorsers i.e. John Lloyd Cruz and Anne Curtis 2. S1-S4-S5-O4: Organize a Mang Inasal Franchise Summit to attract potential franchisees 3. S1-T1-T5: Intensify social media marketing
Product Development Strategy: 1. W3-O3: Build a smooth communication channel for faster distribution of products from the supplier to the branches 2. W4-O4: Form a department for auditing and evaluating the company’s financial statements and books of records. 3. W1-W2-O3: Conduct research through mobile and online surveys
Related Diversification Strategy: 1. W2-T3-T4: Adding more and healthier products their menu i.e. pinakbet, chopseuy and laing
SWOT Matrix:
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STRENGTHS (S) S1 Aggressive in promoting their products
WEAKNESSES (W) W1 Poor restaurant environment
S2 Market leader in the barbecue fast food chain S3 Accessibility: Strategic locations catering to the masses S4 Intensified employee competency through establishment of a new training facility and program
W2 Limited products offered to consumers W3 Inconsistency in distribution of products W4 Deficiency in assessing and evaluating branch and employee performances
S5 Increased operational efficiency through acquisition of an enterprise resources planning software
W5 Unable to maximize 24-hour services
OPPORTUNITIES (O) O1 Trending barbecue fast food industry
SO STRATEGIES S1-O1 (Market Penetration) Hire new product endorsers i.e. John Lloyd Cruz and Anne Curtis
O2 Technological advancements in the field of poultry production
S1-S4-S5-O4 (Market Penetration) Organize a Mang Inasal Franchise Summit to attract potential franchisees
WO STRATEGIES W3-O3 (Product Development) Build a smooth communication channel for faster distribution of products from the supplier to the branches W4-O4 (Product Development) Form a department for auditing and evaluating the company’s financial statements and books of records. W1-W2-O3 (Product Development) Conduct research through mobile and online surveys
SWOT MATRIX
O3 Growing number of people who uses Internet and Mobile Phones O4 Increasing number of potential owners through franchising O5 Increase in demand for packaged food products due to more people moving to urban areas THREATS (T) T1 Market becomes saturated due to booming fast food industry
ST STRATEGIES S1-T1-T5 (Market Penetration) Intensify social media marketing
T2 Decline of Palay Production that may lead to inflated rice prices
S3-T1 (Market Development) Branch out stores in Mindanao specifically in urbanized cities
WT STRATEGIES W2-T3-T4 (Related Diversification) Adding more and healthier products their menu i.e. pinakbet, chopseuy and laing
T3 Filipinos are looking for a healthier lifestyle T4 Health related risks of poultry T5 High number of foreign companies entering the fast food market vs. local brands
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e. SPACE MATRIX The Strategic Position and Action Evaluation (SPACE) Matrix, is a fourquandrant framework that indicates whether the firm needs an aggressive, conservative, defensive or competitive strategy for the organization. There are four factors that are very important to determine the firm’s strategic position, which are the financial position, competitive position, stability position and industry position.
a. Financial Strength (FS) Ratings: For FS use +1 (worst) to +6 (best) Mang Inasal is very efficient in using its assets in generating sales, as its asset turn over rating is +3. The firm’s liquidity rating is +6 because of marketability and made it stronger with associating with Jollibee Food Corporation. Mang Inasal is now the leading barbeque fast food industry so it enables to gain more revenues each year with a rating of +5.
b. Industry Strength (IS) Ratings: For IS use +1 (worst) to +6 (best) A +5 rating for growth potential is given to the firm because it has a huge chance of making it more successful as it known nationwide. The profit potential rating is +5 because it has many branches in the Philippines that the firm can generate more income as they continue to put up more branches. A rating of +3 in resource utilization as the company is using their raw materials efficiently.
c. Environmental Stability (ES) Ratings: For ES use -1 (best) to -6 (worst)
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It is very easy to put up a business in the Philippines, especially in the fast food industry. A rating of -5 is given to the barriers to entry into market because there are a lot of competitors in the food industry. The price range of competing products is -3 as more business sells affordable meals to Filipinos. A -2 rating for the inflation rate as prices of products continues to increase. The technological change rating is -1 since more new products are being invented and sold worldwide and technology is growing faster over the years.
d. Competitive Advantage (CA) Ratings: For CA use -1 (best) to -6 (worst) The market and advertising initiatives and market share rating are both -1. Mang Inasal is the number in the barbeque fast food industry and it continues to grow as more branches are built. People can see everywhere advertisements and endorsements of Mang Inasal. The branding and image rating is -2 since the part owner of the firm is Jollibee Food
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Financial Strength High Assets Turn-over Liquidity Net Revenue Average Industry Strength Growth Potential Profit Potential Resource Utilization Average Economic Stability Price range of competing products Inflation Rates
Rating +3 +6 +5 +4.67
Barriers to entry into market Technological Changes Average Competitive Advantage Market and Advertising Initiatives Market Share Branding and Image Product and Service Quality Average
-5 -1 -2.75
+5 +5 +3 +4.33 -3 -2
-1 -1 -2 -2 -1.5
Corporation that is a prestige and a well-known brand. The product and service quality rating is -2 as it product line is appropriate to its prices that are low cost budget meals for the people to enjoy.
Space Matrix: Based from SPACE matrix, Mang Inasal belongs in the Aggressive quadrant. The firms should pursue backward, forward and horizontal integration, market penetration, market development, product development and related or unrelated diversification.
Space Matrix Calculation •
ES (-2.75) + FS (+4.67)= 1.92
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•
CA (-1.5) + IS (+4.33)= +2.83
f. Internal-External Matrix Based on the I-E matrix, Mang Inasal falls in cell V. The recommended strategies are hold and maintain for the firm. Market penetration and product development strategies can be used. Total Weighted Score for IFE= 2.95 Total Weighted Score for EFE= 2.75 4.0
3.0
2.0
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I
II
IV
V
III VI Mang Inasal
VII
VIII
IX
3.0-4.0 2.0-2.99 1.0-1.99 Result: Hold and maintain Strategies: Market Penetration and Product Development g. Grand Strategy Matrix Using the Grand Matrix Strategy, firms are positioned in in one of the four quadrant depending on the firms’ competitive position and industry growth.
Market Growth Rate- Rapid Demand for food service industry will always be high because of its genre. Restaurants and fast food chains are the main contributors for the food service industry to which Mang Inasal belongs. In the year 2009, there are 13,348 restaurants, bars, fast food chains and other drinking and eating-places present in our country and it continues to grow until this time. In Mang Inasal case, with the help of the increasing chicken barbecue industry and an increase in the number of people who are interested in franchising then its market continuous to grow.
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Competitive Position- Strong Mang Inasal has a strong competitive position for the reason that it is the market leader in the barbecue fast food industry. Because of its being proactive in promoting and advertising its products and having accessible locations of store for the people, it was able to attract customers and top the barbecue fast food industry.
Competitive Position- Strong Mang Inasal has a strong competitive position for the reason that it is the market leader in the barbecue fast food industry. Because of its being proactive in promoting and advertising its products and having accessible locations of store for the people, it was able to attract customers and top the barbecue fast food industry. Rapid Market Growth II Market Development Market Penetration Product Development Horizontal Integration Divestiture Liquidation
I Market Development Market Penetration Product Development Forward Integration Backward Integration Horizontal Integration Related Diversification
III Retrenchment Related Diversification Unrelated Diversification Divestiture Liquidation
IV Related Diversification Unrelated Diversification Joint Venture
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Weak Competition Position
Strong Competition Position
Slow Market Growth Mang Inasal falls under the quadrant one of the grand strategy matrix. Under this quadrant, market development, market penetration, product development and related diversification are available for business. However, Mang Inasal cannot adapt horizontal integration for they are bought by its competitor Jollibee Food Corporation. Forward Integration is not also available since Mang Inasal don’t offer merchandise that can be directly sold. Lastly, Backward Integration will not be appropriate since Mang Inasal has different suppliers.
h. Summary of Strategies After doing the TOWS, SPACE, Internal-External, and Grand Strategy Matrices, different recommended strategies where tallied to determine the most common option for the firm. Market Penetration Market Development Product Development
TOWS X X X
SPACE X X X
I-E X X
GRAND X X X
TOTAL 4 3 4
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Forward Integration Backward Integration Related Diversification Horizontal Integration Concentric Diversification Alliance/Merger Divestment Liquidation
X
X X X X
X X X X
2 2 3 2 0 0 0 0
The most common options are Market Penetration and Product Development. For the third strategy, Market Development and Related Diversification got the same total. However, market development strategy will suit the company better.
i. Quantitative Strategic Planning Matrix (QSPM) The Quantitative Strategic Planning Matrix (QSPM) is an instrument that is used in order to evaluate the strategies and alternative strategies, based on the different external and internal factors that are listed.
On Opportunities: Market Penetration is effective when usage rate of customers could be increased significantly. A rating of 4 is given to more Filipinos are moving to urban area since this will help in order to increase the market share of Mang Inasal since new customers will be tapped by the firm through its advertisements.
Market development is most suitable when there are new channels of distribution will be available. Increase in number of potential owners through franchising receives a rate 4 for the reason that the new franchisee will be able to provide new location of Mang Inasal store
78
which are not yet tapped. A rate of 3 is given to Market Penetration for the same opportunity since new store of Mang Inasal will be able to attract new customers.
A rating of 4 is given to product development for trending barbecue fast food industry for it is most acceptable since Mang Inasal competes in a high-growth industry. Technological advancements in the field of poultry production and growing number people who uses Internet and mobile phones also receives a rating 4 for this can help in order for Mang Inasal to improve their products and customer services.
On Threats Product Development is highly applicable to compliance to sanitary standards. Mang Inasal should always check the sanitation of their different branches and enhance its service for sanitation; therefore it receives a rating of 4. Market Penetration got a rating of 2 since it is not that much applicable to this factor.
Market Penetration is used in order to increase sales through marketing efforts. High number of foreign companies entering the fast food market vs. local brands would mean more competitors. Thus, further marketing efforts is needed by Mang Inasal in order to penetrate and attract customers from its different competitors.
A rating of 4 is given to the Product Development for Saturation of the market due to booming fast food industry. Mang Inasal should improve its products and menu in order to compete with its direct and indirect competitors and those established and new fast food
79
chains. Market Penetration receives rating of 3 to attract more customers in order to increase further the market share of Mang Inasal.
Health related risks of poultry products and Filipinos are looking for healthier lifestyles are not rated for the reason the three strategies are not applicable to these factors.
On Strengths As a market leader in the barbecue fast food chain and being aggressivein promoting their products, market penetration is the best strategy to use. Mang Inasal can continue to do more advertising and do promos in order to drag bigger market. A rating of 3 is given to Market Development in order for Mang Inasal to expand more their areas to the different parts of the Philippines and go International. Being a leader not only in market share but also in marketing and advertising its products, they can also focus on improving their product or add more to their menus through product development in order to keep its customers more satisfied.
Market Development is most suitable to the accessibility of the locations of the restaurant to masses. Mang Inasal could expand to the different provinces of the Philippines especially to those areas where there are lesser Mang Inasal restaurants.
The three strategies are not suitable intensified employee competency though establishment of new training facility program and increased operational efficiency through acquisition of an enterprise resource.
80
On Weaknesses The weakness of inconsistency in distribution of products can be solved through adding more commissaries in order for the different restaurants to have a better distribution of products. A rating of 3 is give to product development since inconsistency of distribution would also mean inconsistency of the products. Mang Inasal can further improve their services.
The weaknesses that there are only limited products offered to consumers can be solved through product development. Mang Inasal can create new products and specialties that they will cater to its customers. A rating of 2 is given to market penetration and 1 for market development since they are not suitable to these factors.
Market Penetration is most applicable in addressing the weakness of unable to maximize its 24-hour services. Market Development receives a rating of 3 because Mang Inasal can create new market in order to satisfy its 24-hour services. Poor restaurant environment and deficiency in assessing and evaluating branch and employee performances are not rated since none of the three strategies is applicable.
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KEY FACTORS Weight Opportunities 1. Trending barbecue fast food industry 2. Technological advancements in the field of poultry production
Market Penetration TS AS
Market Development TS AS
Product Development TS AS
0.20
1
0.20
3
0.60
4
0.80
0.10
2
0.20
3
0.30
4
0.40
3. Growing number of people who uses Internet and Mobile Phones
0.10
3
0.30
2
0.20
4
0.40
4. Increasing number of potential owners through franchising 5. More Filipinos are moving to urban area Threats 1. Market becomes saturated due to booming fast food industry
0.10
3
0.30
4
0.40
1
0.10
0.05
4
0.20
3
0.15
1
0.05
0.15
3
0.45
2
0.30
4
0.60
2. Compliance to sanitary standards
0.05
2
0.10
3
0.15
4
0.20
3. Filipinos are looking for a healthier lifestyle 4. Health related risks of poultry 5. High number of foreign companies entering the fast food market vs. local brands Total Weight Strengths 1. Aggressive in promoting their products 2. Market leader in the barbecue fast food chain 3. Accessibility: Strategic locations catering to the masses 4. Intensified employee competency through establishment of a new training facility and program 5. Increased operational efficiency through acquisition of an enterprise resources Weaknesses 1. Poor restaurant environment 2. Limited products offered to consumers 3. Inconsistency in distribution of products 4. Deficiency in assessing and evaluating branch and employee performances 5. Unable to maximize 24-hour services Total Weight TOTAL
0.05
-
-
-
-
-
-
0.10 0.10
4
0.40
3
-
0.30
2
0.20
0.15
4
0.60
3
0.45
2
0.30
0.05
4
0.20
3
0.15
2
0.10
0.15
3
0.45
4
0.60
1
0.15
0.10
-
-
-
-
-
-
0.10
-
-
-
-
-
-
0.10 0.05
1
0.05
2
0.10
4
0.20
0.10
2
0.20
4
0.40
3
0.30
0.15
-
-
-
-
-
-
0.05
4
0.20
3
0.15
2
1.0
0.1082
1 3.85
4.25
3.8
VIII. Recommendations a. Strategic Objective The strategic objective of to maintain its dominance of the barbecue fast food industry here in the Philippines by adding more and healthier products, branching out thirty more branches in Mindanao, increasing its advertising efforts through hiring new product endorsers, taking advantage of advertising on public mass transportation systems and fixing administrative deficiencies. Mang Inasal is currently on top of the barbecue fastfood industry. In 2011, Mang Inasal generated a gross profit of P432, 200,000.00 and total expenses of P383, 100,000.00. Mang Inasal was able to achieve a net income of P49, 100,000.00 and Mang Inasal’s liabilities amount to P374, 943,939.00. However, Edgar "Injap" Sia, founder and CEO Mang Inasal, knows that there would come a time when Mang Inasal will stop expanding. The question will be how will Mang Inasal handle an inevitable drop in sales and expansion. An assessment of their strength and weaknesses, along with the external opportunities and threats, has concluded that Mang Inasal should focus more on product development. Mang Inasal has been dominating the middle class. Most of their consumers are students and people from the labor force. It would be very important for them to continue dominating this class because here in the Philippines about 35% of the population is part of the labor force and are students.
b. Recommended Strategies 1. Market Development Strategies a. S3-T1 Branch out stores in Mindanao specifically in urbanized cities
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Opening 30 more branches in Mindanao will be a very important business move for Mang Inasal. Mang Inasal have successfully opened branches in different key citites and provinces in Luzon and Visayas. However, Mang Inasal must realize that branching out in Mindanao will be very beneficial to them especially if they will be able to open up branches in the key cities and provinces in Mindanao.
2. Market Penetration Strategies a. S1-O1 Hire new product endorsers b. S1-O5 Increase brand visibility by taking advantage of advertising on mass transportation systems c. S1-T1-T5 Intensify social media marketing Mang Inasal’s initiative to promote and advertise their products is one of the best ways to increase their sales. Aside from this, because of the trending barbecue fastfood industry Mang Inasal’s promotions will yield much better and positive results. Instead of relying on Mark Bautista alone Mang Inasal must hire more endorsers for their ptoduct. Visayan celebrities will be very effective to be their product endorsers. Mang Inasal also has a number of gigantic billboards around the metro. However, Mang Inasal must also invest in advertising on mass transportation systems like MRT, LRT 1 and 2, and PNR. People on the go will be able to see this as they ride these transportation systems. Social media channels like Twitter and Facebook will provide free advertising.
d. S1-S4-S5-O4 Organize a Mang Inasal Franchise Summit to attract potential franchisees
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Through this franchise summit, Mang Inasal will be able to discuss and explain the nature and procedures of a branch and acquring a franchise. This will help Mang Inasal attract potential franchisees.
3. Product Development a. W4-O4 Form a department for regulating and evaluating branches and employee performances to enhance employee competency and branch longevity for potential franchisees b. W1-W4-T2 Set up a sanitation compliance team to ensure that sanitary standards are met for each branch Mang Inasal must establish an Evaluation and Regulatory Department as well as a Sanitation Compliance Team. These two newly instituted departments will help maintain above average employee performances and a relatively healthy franchise fiscal year performance.
c. W1-W2-O3 Conduct research through mobile and online surveys Customer loyalty is very difficult to quantify or qualify because a lot of factors must be taken into account. However, conducting mobile and online survey will enable Mang Inasal learn how consumers perceive they brand and products.
d. W3-O3 Build a smooth communication channel for faster distribution of products from the supplier to the branches Shortage of stocks in Mang Inasal branches will be prevented if a smooth and clear
85
communication channel between the distributor (commissary) and the branch so that delivery and emergency replenishment of stocks will be set and will be on time.
c. Financial Projection Financial Objective The financial objectives of Mang Inasal are to increase its net income by 25% and increase in return of equity by 50% consecutively through 2012, 2013, and 2014. Financial Assumptions This year, as Mang Inasal faces its competitors (i.e. Chic-boy and Bacolod Chicken Inasal), Mang Inasal may experience a slower growth than before (also considering inflation and exchange rates).
Expected Success Rate of Marketing Programs Mang Inasal has been doing quite well in terms of how they sell their goods. As Mang Inasal hires more potential workers/employees (but not too much, as it will lead to "diseconomies of scale"), they are becoming more efficient in terms of the efficiency and accuracy of its services.
Market Condition The fast food industry has been growing and (expectedly) will still continue to grow in the future. With this assumption, there will/might come a time when Mang Inasal will be "outmatched" by another fast food company.
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Equipment Performance/Durability As technology advances and as Mang Inasal continues (hopefully) to grow, Mang Inasal would be able to purchase more advanced equipments that will improve the efficiency in selling/producing their products.
Ease of Credit Collection Mang Inasal assumes that none of its receivables are impaired (as of 2011), which means that over the past years, the business had no problem dealing with credit sales. But as the number of Mang Inasal's customers is increasing, they will find it more difficult to collect its receivables. Ratio against competitors
MANG INASAL
CHIC -BOY
BCI
Rating
1. CURRENT RATIO
1.19
0.79
0.29
+
2. QUICK RATIO 3. INVENTORY TURNOVER
0.93
0.61
n/a
+
23.29
13.96
n/a
+
4. DEBT RATIO 5. TIMES INTEREST EARNED 6. OPERATING INCOME RETURN ON INVESTMENT 7. OPERATING PROFIT MARGIN 8. TOTAL ASSET TURNOVER 9. FIXED ASSET TURNOVER 10. RETURN ON EQUITY 11. RETURN ON ASSET
0.28
0.41
2.05
+
41.83
5.14
n/a
+
0.47
0.14
-1.19
+
0.13
0.12
-0.26
+
3.77
0.37
+
11.93
0.74
4.57 13.2 8
0.79
0.13
-0.7
+
0.33
0.08
-1.19
+
+
87
From a financial perspective, Mang Inasal is doing better than its competitors. Ultimately, Mang Inasal has the greatest return on equity with a ratio of 0.79 during the year 2010, compared to that of Chic-boy and Barbecue Chicken Inasal (BCI) with ratios 0.13 and 0.7 (deficiency), respectively. (The “n/a” indicated on BCI Inasal is because BCI has no report on its inventory and interest expense.) MANG INASAL (CURRENT AND PREVIOUS)
2010
2009
Rating
1. CURRENT RATIO
1.19
1.24
-
2. QUICK RATIO
0.93
1.10
-
3. INVENTORY TURNOVER
23.2 9
17.3 8
+
4. DEBT RATIO
0.28
0.62
+
5. TIMES INTEREST EARNED 6. OPERATING INCOME RETURN ON INVESTMENT 7. OPERATING PROFIT MARGIN 8. TOTAL ASSET TURNOVER
41.8 3
33.5 4
+
0.47
0.38
+
0.13
0.22
-
3.77
1.70
+
9. FIXED ASSET TURNOVER 10. RETURN ON EQUITY 11. RETURN ON ASSET
11.9 3
7.43
+
0.79
0.69
+
0.33
0.26
+
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Projected Financial Statements Cash As the firm operates, Mang Inasal is expected to receive cash inflows from its operations. It may be in the form of collection of its Accounts Receivables, Sale of Property or Equipment, Sale of Inventories, or Income itself.
Receivables (Net) During 2012, Mang Inasal is expected to have a significant decrease in Accounts Receivables. This phenomena is evident because there has been a decrease in most of the Financial Ratios for the year 2011, yet Operating Income Return on Investment remains positive, which means that the firm is still making profit. But in 2014, Mang Inasal is expected to lend firms/people more plus interest, resulting to further increases in Accounts Receivable.
Inventories In 2012, Mang Inasal is expected to not sell as much as 2011 (by looking at the financial ratio); therefore, inventories increase. But in 2013, suppose there will be foreigners who will be residing in the country, given the current positive growth in the Philippine economy (around 3% aggregately). But, in 2014, Mang Inasal is expected to experience a tight competition between rising number of competitors, old and new (given a limited population). Other Current Assets
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Mang Inasal is expected to have an increasing number of other assets (e.g. prepaid expenses, scrap value of equipment) during its operations.
Property and Equipment Mang Inasal is expected to buy more property in the succeeding years because it aims to dominate the market. Given more property, more equipments are needed.
Deferred Tax Asset We assume that Mang Inasal does not pay its taxes in advance in the succeeding years.
Other Non-Curretn Asset Other non-current assets include organization cost, goodwill, franchise, trademarks, trade names, patents, copyrights, etc. Because of the increasing number of branches, it is expected to have an increase in other non-current asset.
Accounts Payable and Accrued Expenses In the succeeding years, Mang Inasal is assumed to be liquid and is able to pay its debts. Therefore, accounts payable and accrued expenses are expected to decrease.
Current Portion on Borrowings due to a Related Party So far, there is a great decrease (more than half) in this account in 2009 and 2010. During the year 2011, this account is assumed to have zero balance, and it continues to remain at zero in the succeeding years.
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Income Tax Payable Suppose that in 2012, Mang Inasal will be able to pay a portion of its income tax payable. However, in the succeeding years, Mang Inasal focuses on its expansion, given the rise of new competitors; therefore, the firm’s income tax liability increases.
Borrowings- Net of Current Portion Mang Inasal, given its relatively high income, pays its borrowings before paying its Income Tax, as the borrowings entail Mang Inasal’s trust to the “lenders.” As a result, Mang Inasal would rather pay for its borrowings before paying for its income tax liability.
Capital Stock The capital stock is assumed to be constant throughout 2012, 2013 and 2014.
CURRENT RATIO QUICK RATIO INVENTORY TURNOVER DEBT RATIO TIMES INTEREST
2008 3.57 2.75
2009 1.24 1.1
2010 1.19 0.93
2011 1.09 0.85
2012 1.42 1.14
2013 1.84 1.51
2014 2.39 2.00
71.21 0.98 n/a
17.38 0.62 33.54
23.29 0.28 41.83
4.23 0.61 21.89
2.42 0.48 34.41
2.34 0.38 36.67
2.10 0.30 40.11
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EARNED OPERATING INCOME RETURN ON INVESTMENT OPERATING PROFIT MARGIN TOTAL ASSET TURNOVER FIXED ASSET TURNOVER RETURN ON EQUITY RETURN ON ASSET
0.021 0.008 1
0.38
0.47
0.71
0.74
0.77
0.83
0.22
0.13
0.83
0.59
0.55
0.53
2.62
1.7
3.77
0.08
0.81
0.66
0.52
8.50 1.29 0.014
7.43 0.69 0.26
11.93 0.79 0.33
0.28 0.21 0.08
2.61 0.24 0.09
2.24 0.27 0.10
1.88 0.33 0.12
Projected 2012 to 2014 Financial Ratios Interpretation:
Overall, Mang Inasal should be doing well financing its available assets due to increases in Operating Income Return on Investments. But, Mang Inasal made financial sacrifices such as borrowing money (also subjected to more interest expenses) and buying more financial assets (expansion). The buying 70% of Mang Inasal by Jollibee had the greatest impact on Mang Inasal’s Financial Ratios (leading to decreases in all ratios except Operating Income Return on Investments). But according to how Mang Inasal is doing in the first quarter of 2012, Mang Inasal should be able to regain its financial growth in assets in the next 5 years, unless affected by externalities. In the projected financial statements, Mang Inasal is expected to have a slower growth or a decreasing growth as it faces new competitors. But, by comparing the financial ratios of Mang Inasal with Chic-boy and Reyes Barbecue, Mang Inasal is still leading in the barbecue fast food industry.
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Financial Objective Mang Inasal should have an increase in Return on Equity by 50% consecutively throughout the years 2012, 2013, 2014 to maintain competitiveness and profitability while maintaining a low cost level (around just a 15% increase) relative to its gross income.
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d. Departmental Programs Each and every department of Mang Inasal has an important role for the implementation and effectiveness of market and product development strategies.
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Strategy Map
Development of Extended Share Holder Value Expanded Growth of Capitalization
Increase in Net Income
Revenue from new Franchisees
“Pang-masa ang lasa, affordable pa!” “To consistently provide our customers a great pinoy dining experience.”
Intensified Social Media and Public Mass Transportation System Marketing Increasing brand awareness through marketing channels like television ads, print ads and public mass transportation advertising will be an investment for the company.
Human Capital Establishment of an evaluation and regulatory body and a sanitation compliance team Consistent employee performance will not only be an asset to the company but it will be a bridge for a better customer-business relationship.
Branch out stores in Mindanao Reinforced Franchising Reinforced Franchising specifically in urbanized cities Paradigm and Mang Inasal Paradigm and Mang Inasal Mang Inasal must realize that Franchise Summit Franchise Summit Mang Inasal's BDD must Mang Inasal's BDD must branching out in Mindanao will be very beneficial to them especially if they realize thethe importance ofof realize importance will be able to open up branches in the quality stores. Potential quality stores. Potential key cities and provinces Capital in Mindanao.. franchisees areare very price Organizational franchisees very price Information Capital sensitive. Every franchise is is anan sensitive. Every franchise Utilization of Computerized asset forfor thethe company. asset company. Customercentric and teamAccounting Systems,
based paradigm.
Communication Solutions and a Customer Management System.
Marketing Mang Inasal's marketing development has been developing strategies and brand direction which will contribute to Mang Inasal's desire to become a leader in innovation, creativity,
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and customers relations in the years to come. The marketing department must focus more on brand awareness and they must realize that mouth to mouth marketing is still the best and cost-efficient way to market your brand and product. Aside from the conventional marketing schemes, Mang Inasal must understand the value of of their asset and working with their strengths.
Intensified Social Media and Public Mass Transportation System Marketing Increasing brand awareness through marketing channels like television ads and print ads will be an investment for the company. However, Mang Inasal must take full advantage of the popularity of social media and start promoting and advertising through the internet. Internet marketing is much cheaper compared to television ads and print ads. Intensified brand marketing will be needed for an effective market penetration and development strategies. Aside from this, LRT 1 and 2, MRT, PNR and other public transporations are potential advertising hotspots fot Mang Inasal and must take fully advantage of these hotspots. Marketing is needed to sell the product right now and where ever.
Operations Mang Inasal's Newsletter reports that the Operations department started the year with the release of the revised Operations manual for the five basic stations namely kitchen, counter, quality control, dining and grill. Recently, OD released the revised Cash Control Policies, brought about by the opportunities encountered by the stores in handling of sales and funds. OD is in the continuing process of reinforcing the knowledge and skills of the management team members and crew on the “Basics of our Operations” focusing not only
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on the systems and procedures embodied in the revised Operations Manual, but on other aspects of running the business as well. Skills of managers in the achievement of sales objectives and management of controllable expenses are now being honed –with store management teams coming up with daily targets for sales and expenses. How sales targets are achieved, (good Cycle of Service, GRC concept, etc.) as well as ways to manage expenses, are the orders of the day. Recently, OD has also started teaching the managers how to compute for the food cost, the biggest expense in the PnL. Upcoming Operations activities are focused on how to manage food cost and food cost variance troubleshooting.
Establishment of an evaluation and regulatory body and a sanitation compliance team Mang Inasal must establish an Evaluation and Regulatory Department as well as a Sanitation Compliance Team. These two newly instituted departments will help maintain above average employee performances and a relatively healthy franchise fiscal year performance.
Conduct research through mobile and online surveys Customer loyalty is very difficult to quantify or qualify because a lot of factors must be taken into account. However, conducting mobile and online survey will enable Mang Inasal learn how consumers perceive they brand and products.
Business Development According to Mang Inasal NewsLetter, BDD or Business Development Department’s
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creation on January 2009 made a big impact on Mang Inasal’s growing status (number of stores built, alignment to quality and improvement and creation of new store designs). From its 100 total stores opened in five years (2003-2008), a phenomenal achievement was recorded when it opened 100 stores in just a year (2009) - a mark on history not only in Mang Inasal but in the whole fast-food industry as well. As BDD is gearing up towards its 300th store in October of this year (with more than 50 stores already on process and lined up to open first quarter of next year), growth and success will be inevitable for Mang Inasal.
Reinforced Franchising Paradigm and Organize Mang Inasal Franchise Summit Mang Inasal's BDD must realize the importance of quality stores. Potential franchisees are very price sensitive. BDD must be able to explain tranparently every expense franchisees are paying for their store. BDD must also prove that every peso spent for owning a Mang Inasal franchise is worth it. In a franchising business, every franchise is an asset for the company. Through this franchise summit, Mang Inasal will be able to discuss and explain the nature and procedures of a branch and acquring a franchise. This will help Mang Inasal attract potential franchisees.
Branch out stores in Mindanao specifically in urbanized cities Opening 30 more branches in Mindanao will be a very important business move for Mang Inasal. Mang Inasal have successfully opened branches in different key citites and provinces in Luzon and Visayas. However, Mang Inasal must realize that branching out in Mindanao will be very beneficial to them especially if they will be able to open up branches in the key cities and provinces in Mindanao.
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Finance and Controllership The Finance and Controllership Department is responsible for gathering financial related reports from various segments of the Company and prepares consolidated Financial Statements in accordance with applicable Philippine Financial Reporting Standards. This is in compliancewith the disclosure requirements of the Securities and Exchange Commission. The head of the department sees to it that well-developed accounting systems and internal controls are operational and in place. This is because periodic and timely accounting reports to the board are a major tool for decision making.
Utilization of Computerized Accounting Systems, Communication Solutions and a Customer Management System. Mang Inasal has already invested money for the acquisition of an Enterprise Resource Planning software (ERP) of Oracle thru its Philippine affiliate, Active Business Solutions, Mang Inasal is poised for business dominance in the fastfood industry. Computerized Accounting System (CAS) refers to the integration of different component systems to produce computerized books of accounts and computer-generated accounting records and documents. CAS will be very useful for Mang Inasal because it is an asset for the company and its franchises. CMS and CS are very important for a smooth and hassle-free operations
Training According to Mang Inasal's Newsletter, improvements in Mang Inasal’s services are
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expected as staff and crew get trained and certified in the new training center that is now operational at the former commissary in Tramo, Metro Manila. The reconstruction of the commissary into a training center started in March 2010 and includes a mock-up of a typical Mang Inasal store. President Ferdinand Sia said the training center is part of the company’s thrust in improving operations, services and food quality. “Existing stores will be required to have their store employees, cashiers, dealers and dining crew trained and certified. This is a certification program for all who work with Mang Inasal,” said the President. The certification program for employees will soon become a requirement prior to the opening of any new Mang Inasal store.
Customercentric Training Series Mang Inasal must make it a point to train their employees in such a way that customers will appreciate the service being given to them. Consistency must be instilled to each and every employee. Consistent employee performance willl not only be an asset to the company but it will be a bridge for a better customer-business relationship.
IX.
Evaluation and Success Indicators a. Balance Scorecard GOALS-DASHBOARD
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MEETS EXPECTATION
ALERT
BELOW EXPECTATION
15%-39%
14%≥
20%-49%
19%≥
30%≤
5%-29%
19%≥
25%≤
10%-24%
9%≥
OPERATIONS
REDUCE UTILITY COSTS (VARIABLE COST) 15%≤
10%-14%
9%≥
LEARNING AND GROWTH
SEARCH FOR EFFICIENT EMPLOYEES TO BOOST PERFORMANCE
5%-3%
2%≥
FINANCE
CUSTOMER
GROWTH IN NET INCOME 40%≤ IMPROVE CAPITALIZATION 50%≤ ATTRACT UPPER-CLASS BUSINEESSMEN ATTRACT FOREIGNERS
6%≤
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b. Contingency Planning Downside Potential Events Key Concerns Mass Production of chicken and other meats by injecting numerous antibiotics and stimulants
Action Plan Enhance the Research and Development team. Hire a part-time health inspector (To be aware and updated of current health issues)
Enhance the Research and Introduce new menu items Development team. Hire a parttime health inspector (to be aware and updated of current health issues) Rise of Production and Other Compensate by moderately increase the Costs mark-up of goods sold. Upside Potential Events Key Concerns Increasing Prices of Land
Growth in the Philippine Economy
Action Plan Offer Leases
Invite potential investors
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X. 1. 2.
References Fred, David. Strategic Management. 7th edition. 2009. Securities and Exchang Commission Audited Financial Statements for Mang Inasal, Chic-Boy and Bacolod Chicken Inasal
3.
Tan. Andrea. Mang Inasal Franchisee. Personal Communication. January 2012.
4.
http://www.manginasal.com
5.
http://www.scribd.com/doc/64568286/MANG-INASAL
6.
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7.
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8.
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9.
http://business.globe.com.ph/sme/news/mang-inasal-opens-300th-branch
10.
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11.
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12.
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13.
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14.
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16.
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17.
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18.
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19.
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20.
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21.
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22.
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23.
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24.
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26.
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27.
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28.
http://business.inquirer.net/money/topstories/view/20100814-286799/Union-ofbatchoy-and-inasal-creates-a-business-boom
29.
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30.
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31.
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32.
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33.
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industry/Food-and-beverage/Pages/Food-and-beverage-market-in-thePhilippines.aspx 34.
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35.
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36.
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37.
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38.
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40.
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41.
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42.
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45.
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XI.
Appendix a. Financial Statements Appendix 1:Mang Inasal Income Statement Appendix 2 Mang Inasal Balance Sheets Appendix 3: Competitors Income Statements Appendix 4: Competitors Balance Sheets Appendix 5: Mang Inasal Financial Ratios Appendix 6: Competitors Financial Ratios Appendix 1
Appendix 2
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Appendix 3
Appendix
4
107
108
Appendix 5
Appendix 6
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