Group 7 Final Strategy Paper - Maycar Foods Inc.

STRATEGY PAPER
Presented to the
Management and Organization Department
Ramon V. Del Rosario College of Business
De La Salle University - Manila
In partial fulfillment
Of the course requirements in
Strategic Management (K31)
SUBMITTED TO:
Mr. Denver Bingski Daradar
SUBMITTED BY:
Arrojo, Robert Carl Angelo B.
Chan, Wilton A.
Gan, Jenna Lynne N.
Portugal, Frenz Ralph Philip T.
Sablay, Angelo Miguel R.
December 7, 2016
December 7, 2016
BOARD OF DIRECTORS
Maycar Foods, Inc.
Greetings!
Started in the mid-1990s, Maycar Foods, Inc. pursued a desire to meet their neighbors demand for
processed meat products. As a family business, it started small and dreamt big - grounded by the principle
of providing the Filipino family a satisfactory meal on their tables. Today, profitable and growing,
Maycar Foods, Inc. continues this commitment by putting to heart the needs of its customers.
However, the continuously changing business landscape pushes Maycar to pursue its vision of becoming
the #1 processed meat manufacturer and distributor while keeping at heart its role for Filipino families.
This challenges Maycar to consider Puso ang Puhunan as a mantra for its ceaseless success in the
industry - to find a way to grow into new boundaries while remaining true to what it stands for - quality,
innovation and affordability. To do this, Maycar has to support strategies that would put its customers,
products and operations at the forefront.
Keeping these in mind, the Puso ang Puhunan strategic plan (page 29) focuses on four key components,
which will allow the company to continue with its profitable and efficient operations while pursuing its
growth vision.
1. Incorporating company history and quality certifications in the packaging

2. Training employees on three aspect to serve as their foundation: company culture, quality
practice, and continuous improvement
3. Introduce product packages that are specifically constructed to match the eating habits and
lifestyles of the local consumers
4. Promote Puso ang Puhunan through promotional materials and through a brand jingle
Included in this report are the exhaustive analyses of Maycars internal and external environment,
identification of issues, and a detailed discussion of our recommendations. Overall, we took into
consideration the strategic vision, operational structure and financial condition of your company in
coming up with strategies for you to put to life the Puso ang Puhunan mantra.
As your consultants, we are pleased to be of help to your company.
Warm regards,
Arrojo, Robert Carl Angelo B.

Chan, Wilton A.
Gan, Jenna Lynne N.
Portugal, Frenz Ralph Philip T.
Sablay, Angelo Miguel R.
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TABLE OF CONTENTS
I. Introduction about the Company 3
II. External Analysis
A. Macroeconomic and Industry Analysis 4
B. Competitors Analysis 6
C. Opportunities and Threats 7
III. Internal Analysis
A. Financial Analysis 10
B. Value Chain Analysis 15
C. Strengths and Weaknesses 15
IV. Strategy Analysis 17
V. Key Strategic Issues 19
VI. Alternative Courses of Action
A. Discussion of Alternative Courses of Action 20
B. Quantitative Strategic Planning Matrix 23
VII. Recommendation
A. Final Recommendation 29
B. Implementation Plan 31
C. Evaluation and Control Plan 32
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I. INTRODUCTION ABOUT THE COMPANY
OVERVIEW
Maycar Foods, Inc. (The Company) is a meat processing company in CALABARZON Region
IV. It has a prospect of becoming a production hub of high-quality processed meat products in the
Philippines. It offers some of the most popular processed meat products, which they produce in big
quantities for commercial consumption. This includes their best selling hamonado, tapa, tocino, skinless
longanisa, hams and sausages. Figure 1 summarizes the companys superordinate goals.
Figure 1. Maycars Superordinate Goals
The continuing success of the company can be attributed to its high regard to quality, hygiene and
reasonability of prices. Accredited in 2006 as Meat Establishment Category AA, the company was
awarded the distinction of being the Best Meat Establishment in Region IV-A for the years 2007 and
2008. In the same years, the company has been adjudged National Finalist in the NMIS-sponsored event,
Search for the Best Meat Establishment. As of now, the company is in the stage of further improving
and developing new products that will suit the Filipinos distinct like for processed foods.
CURRENT STRATEGY
Maycars array of processed meat products caters to the taste of Filipino households. It has been
doing well financially, with annually increasing net income, by employing a broad low-cost strategy. To
survive and to grow in the competitive meat processing industry, it is imperative that Maycar
continuously search for cost-reduction initiatives without compromising product quality. Bound by its
vision of becoming the number one manufacturer and distributor of high quality processed meat products,
Maycars current strategy revolves around continuous market analysis, increase in product lines and
variation, expansion of market share, and improvement of internal operations.
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II. EXTERNAL ANALYSIS
In this section, we examine Maycars external environment to identify opportunities to be

exploited and threats to be subjugated. We begin with an industry and macroeconomic analysis,
competitors analysis, identification of opportunities and threats, and finally, an EFE matrix.
MACROECONOMIC AND INDUSTRY ANALYSIS
A. MACROECONOMIC ANALYSIS: PESTLE ANALYSIS
Figure 2. PESTLE Analysis
The increasing complexity of the macroeconomic environment is challenging businesses to

change the way they perceive the competitive landscape. For one, governments are becoming more
involved in the research and development of technology, pushing for economic advancements that can
help benefit the society as a whole. The Philippine government, specifically, is also pushing for internal
growth by imposing various regulations that incentivises companies that patronize locally grown produce
and locally made products. On the other end, changing customer demands put pressure on companies
management teams to constantly assess and modify their operational and strategic objectives. Thus, it is
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imperative that companies know how to adapt, to have a learning mindset, and to take note of the
ever-changing technological landscape. More importantly, assessing environmental factors, such as the
geographical location of the company branches and the surrounding market, enable businesses to realize
unexplored opportunities and the challenges that come with them.
B. INDUSTRY ANALYSIS: PORTERS FIVE FORCES ANALYSIS
Figure 3. Porters Five Forces Matrix
The meat processing industry registered 6% current value growth and 4% volume growth to reach
retail sales of P 76.7 billion and 406,000 tonnes in 2015. The demand for processed meat remains
significant in the low-income sector. There are a handful of big players such as Purefoods-Hormel with a
value share of 30% and CDO Foodsphere with 14%, while other players accounted for less than 9% of
total value sales of processed meat in 2015. Common to these companies are their wide product lines.
Through significant operations, these companies benefit from economies of scale allowing them to create
brands targeted towards the low end of the market, which is an important source of demand for processed
meat in the Philippines (Euromonitor, 2015).
Processed meat is expected to post a value CAGR of 3% at constant 2015 prices over the forecast
period, which is marginally slower than its review period performance. In terms of retail volume sales, the
CAGR is projected at 3%, which is slightly slower than the 5% it recorded in the review period. The
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major contributors to this downturn is the health and wellness trend in the Philippines where fresh and
unprocessed foods are more favored (Euromonitor, 2015).
In summary, the entire industry is favoring a change toward greater cost-reduction strategies and
aggressive investments in product development research. These elements ensure competitiveness in
markets where customers have changing demands.
COMPETITORS ANALYSIS
Maycar is a small company in the vast meat processing industry. Thus, we analyzed Maycars
industry position both in the context of large, established meat processing companies, as well as of
similarly-sized companies that face the same circumstances as Maycar. In identifying its immediate
competitors, we check the companys strategic group map (see Figure 4), which shows the competitors
that are above and below the companys position in terms of quality and affordability.
Purefoods and CDO holds 80% of the market nationwide, boasting of large production capacity
and extremely wide market reach. Pampangas Best has homemade grassroots and origin as Maycar,
but has now expanded to a multi-million business. It is known for making the first tocino and holds a
fairly significant market share nationwide. Mekeni started as a backyard producer, but has expanded
nationwide as well. It is fairly larger in terms of market reach and production capacity compared to
Maycar. Finally, Batangas Prime occupies and captures the same region as Maycar and considered as a
head-to-head competitor with virtually the same pricing and product offerings.
Figure 4. Strategic group map: Maycar in the Meat Processing Industry

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Table 1. Competitive Profile Matrix
Key Success Factors Mekeni Maycar Foods, Inc. Batangas Prime
Rating Score Rating Score Rating Score
Quality1 30% 3 0.9 4 1.2 4 1.2
Affordability2 30% 3 0.9 2 0.6 2 0.6
Production 20% 3 0.6 1 0.2 1 0.2

Capacity3
Market Reach4 20% 3 0.6 2 0.4 1 0.2
Total 3.0 2.4 2.2
SUMMARY OF OPPORTUNITIES AND THREATS
After considering the external realities that Maycar faces, we have identified opportunities and
threats, as shown in Table 2, that the company can exploit or subjugate in order to realize its vision.
Table 2. Summary of Opportunities and Threats

Opportunities Threats
1. Low-income sectors increasing demand 1. Limited room for innovation and

for affordable processed meat products differentiation of products among market
2. Existence of markets nationwide which players
provides expansion and product variation 2. Low switching costs for consumers across
opportunities different processed meat providers and
3. Development of new variations of across other processed food substitutes
processed meat 3. Ease of entry due to lower market barriers
4. Abundance in both ends of the value chain that can increase market saturation
- raw meat suppliers and processed meat 4. Accessibility of physical and human capital
retailers. allows for forward integration of meat
5. Expanding small and medium enterprise suppliers
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Consumers highly prioritize quality when deciding on which food product to buy or, more specifically, which processed meat to buy.
Quality in the meat processing industry encompasses taste (most important), longevity in terms of storage, safety, and consistency of the said
factors. Quality, further, is measured through customer satisfaction surveys, industry studies, and compliance with food safety regulations.
Quality certifications from established institutions also serve as measurement tools for product quality as well.
2
With low-income consumers serving as the largest market for processed meat products, competitive pricing is a key success factor as
well. Product pricing which matches excellent food quality ensures market share and boosts a companys competitiveness. Additionally,
affordable products create a stable and consistent customer base.
3
Manufacturers generally sell products on a contract basis and in large quantities. Thus, a companys production capacity is able to dictate
how much sales the company can expect for a certain period. According to Maycars management, production capacity can be viewed as the most
significant enabler in manufacturing as they directly affect market share and market reach. This is in contrast to other components of the
manufacturing value chain wherein suppliers are very abundant (large number of piggeries and farmers) and retailers are constant. The impact of
back-end suppliers and front-end retailers, therefore, on sales and market reach compared to production capacity is unnoticed.
4
The competitiveness of any business can be measured in terms of how wide its market reach is. For food producers and manufacturers, the
demand for their products would always be there regardless of the place. To be able to tap into further regions such as Visayas and Mindanao, for
a company in Luzon for instance, propels a companys market position.
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retailers to help increase demand and need 5. Existence of stringent government
for a stable market for small and medium oversight over meat inspection and food
scale livestock raisers with Lipa City safety
6. Vocal support of local governments for 6. Upward trend of health-consciousness
self-sufficiency through job creation and among consumers
food security
7. Further processing of by-products from
processed meat production to produce other
marketable products (e.g. edible lards and
dried protein)
EXTERNAL FACTOR EVALUATION MATRIX
Taking into account the identified opportunities and threats existing in the external environment
of Maycar, we present in Table 3 an EFE matrix which assesses the companys current business
conditions with respect to external factors.
Table 3. EFE Matrix

OPPORTUNITIES Weight Rating Weighted
Score
Low-income sectors increasing demand for affordable 16.0% 2 0.32

processed meat products
Existence of markets nationwide which provides expansion and 8.0% 2 0.16

product variation opportunities (e.g. tap Visayas market)
Introduction of new variations of processed meat in the market 10.0% 3 0.30
Abundance in both ends of the value chain - raw meat suppliers 6.0% 3 0.18
and processed meat retailers
Vocal support of local governments for self-sufficiency through 8.0% 4 0.32

job creation and food security
Further processing of by-products from processed meat 5.5% 2 0.11

production to produce other marketable products (e.g. edible
lards and dried protein)
THREATS Weight Rating Weighted

Score
Limited room for innovation and differentiation of products 12.0% 2 0.24

among market players
Low switching costs for consumers across different processed 8.0% 2 0.16
meat providers and across other processed food substitutes
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Ease of entry due to lower market barriers that can increase 9.0% 2 0.18
market saturation
Accessibility of physical and human capital allows for forward 6.0% 3 0.18
integration of meat suppliers
Existence of stringent government oversight over meat 5.5% 4 0.22

inspection and food safety
Upward trend of health-consciousness among consumers 6.0% 2 0.12
TOTAL WEIGHTED SCORE 100% 2.49
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III. INTERNAL ANALYSIS
In this section, we examine Maycars internal environment to identify the strengths that can be
utilized and weaknesses that must be surpassed for the company to move forward. We begin with an
financial and value chain analysis, and then we summarize the companys strengths and weaknesses
through and IFE matrix.
FINANCIAL ANALYSIS
We take into consideration the trends and composition of Maycars key financial accounts, which
may present valuable representations of the companys strengths and weaknesses. We present in this
section the horizontal and vertical financial analysis of the Maycar Inc.s financial position and the
financial performance for the years ended 2012-2015.
HORIZONTAL ANALYSIS
Financial performance has

experienced a steady increase
overtime
Sharp increase in the
companys net financing costs
in 2015, which can be
attributed to increased
investments in non-current
assets
Majority of Maycars assets

fall under property, plant and
equipment
In 2015, the company decided
to increase investments in
state-of-the-art technologies
Increasing value in
inventories, which can be
attributed to the companys
initiatives of preparing for a
bigger customer base in
neighboring provinces.
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For the first three years,
operating cash flows were
increasing, which can be
attributed to the increase in
purchases of inventory, and
the related sales of the same.
In 2015, the change in
operating and investing cash
flow activities is attributed to
Maycar expanding its
operations through the
increase in long term assets
and inventory financed by its
long term debt, respectively
VERTICAL ANALYSIS
Table 4. Common-size Income Statement

Financial Performance 2015 2014 2013 2012 Findings
Sales 100.00% 100.00% 100.00% 100.00% Overtime, there was a

constant decrease in
Cost of Sales 93.42% 94.37% 95.25% 97.00%
the companys cost of
Gross Income 6.58% 5.63% 4.75% 3.00% sales.
Gross profit margin
Operating Expenses 2.90% 5.14% 4.72% 3.86% has consistently been
improving throughout
Other Operating Income 0.00% 0.14% 0.40% 1.14%
the past years and this
Net Operating Expenses 2.90% 5.00% 4.33% 2.72% is attributable to
managements efforts
Operating Income 3.68% 0.63% 0.43% 0.28% to decrease its
production costs.
Finance Income 0.00% 0.16% 0.41% 0.44%
Finance Cost 2.82% 0.25% 0.27% 0.39%
Net Finance Cost 2.82% 0.09% -0.14% -0.05%
Income before Income Tax 0.87% 0.54% 0.57% 0.32%
Provision for Income Tax 0.26% 0.19% 0.13% 0.08%
Net Income 0.61% 0.35% 0.44% 0.24%
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Table 5. Common-size Balance Sheet
Financial Position 2015 2014 2013 2012 Findings
ASSETS For 2012-2014, the

percentage of current
Current Assets
assets increased
Cash and cash equivalents 7.74% 9.82% 9.55% 9.50% overtime primarily
because of the increase
Trade & other receivables 10.42% 11.35% 12.24% 12.18% in prepayments and
inventory while the
Inventories 28.64% 28.57% 22.79% 20.99%
percentage of
Prepayments 2.65% 2.03% 1.68% 0.11% noncurrent assets
decreased because of
Total current assets 49.45% 51.77% 46.26% 42.79% the absence of
significant acquisitions
Non current Assets
in fixed assets.
Trade & other receivables 0.00% 0.00% 1.63% 1.63% In 2014, there was an
increased investment in
Property, plant and 50.55% 48.23% 52.11% 55.59% technology and
equipment manufacturing
equipment. The
Total non current assets 50.55% 48.23% 53.74% 57.21%
financing of equipment
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% came from the issuance
of long term debt,
reflected in the change
of the capital structure
LIABILITIES & EQUITY
in 2015. The financial
Current Liabilities leverage of the
company decreased
Loans and Borrowings from the first year to
the third year until it
Trade and other payables 0.21% 1.21% 0.85% 0.93%
rose again in 2015.
Due to Stockholders 0.35% 0.48% 0.37% 0.27%
Income & Taxes Payable 0.08% 0.12% 0.06% 0.05%
Total Current Liabilities 0.65% 1.81% 1.61% 1.63%
Non-current Liabilities
Loans and Borrowings 26.57% 4.15% 6.53% 9.11%
Other Non-current Liabilities 3.32% 0.00% 0.00% 0.00%
Total Non-Current Liabilities 29.89% 4.15% 6.53% 9.11%
TOTAL LIABILITIES 30.53% 5.95% 8.14% 10.74%
Shareholders' Equity
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Share capital 6.99% 9.51% 9.33% 9.11%
Retained earnings 62.48% 84.53% 82.53% 80.16%
TOTAL EQUITY 69.47% 94.05% 91.86% 89.26%
TOTAL LIABILITIES & 100.00% 100.00% 100.00% 100.00%

EQUITY
RATIO ANALYSIS
For 2012-2015, the

company is liquid
enough to pay its
short term bills and
increasing working
capital.
The increase in
current ratio was
not solely because
of the added
inventory, but also
due to more liquid
accounts, like
accounts receivable
and cash.
There was a
liquidation of a
portion of the short
term debt through
relying more on the
long term debt.
The decrease in
fixed asset turnover
ratio and inventory
ratio was not
because of inability
to make revenue
but because of the
rise in investments
in inventory and
fixed assets for
2015.
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There was
2015 2014 2013 2012
increased leverage
because of the shift
Long term debt to Equity 98% 70% 80% 85% from short term to
long term debt
Total debt to Equity 44% 6% 9% 12% The company has
improved its
Debt Ratio 31% 6% 8% 11%
capability to pay its
Interest Coverage Ratio 1.31 3.17 3.08 1.83 debt, as evidenced
further by the
interest coverage
ratio
From 2012 to 2014,

the company had a
fluctuating profit
margin, which can
be attributed to an
increase in operating
costs.
The company
decided to invest
significantly in new
technology for 2015
which explains the
increase in Financial
Leverage and partly
that of Total Asset
Turnover.
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VALUE CHAIN ANALYSIS
Figure 5. Value Chain of Maycar
Central to Maycars expansion vision is its provision of quality products. The companys value
chain revolves around this goal by ensuring that procured materials and finished goods are properly
managed through good quality controls. In addition, its research and development initiatives focus on
continuously improving its products to make it more distinct and competitive in the market. Although
local, Maycars marketing initiatives are considered to be poor. Maycars branding is important,
especially because competitors have strong brand identity. By improving on these aspects, Maycar can
expose itself to a broader market and stimulate more demand.
In addition, through a VRIN analysis previously conducted, we found that Maycars customer
services, marketing team, supplier relationships, brand reputation, and R&D and innovation are key
sources of sustainable competitive advantage. Moving forward, Maycar must put these capabilities at the
forefront in order to strengthen its internal operations, and, ultimately, achieve its target outcomes.
SUMMARY OF STRENGTHS AND WEAKNESSES
After considering the internal capabilities of Maycar in terms of its financial and operational
performance, we have identified strengths and weaknesses, as shown in Table 6, that the company has to
consider in coming up with a strategy that can optimize opportunities and subjugate threats.
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Table 6. Summary of Strengths and Weaknesses
Strengths Weaknesses
1. Sound financial performance 1. Poor marketing initiatives and brand

2. Constant product innovations and identity building
development 2. High carrying costs of inventories
3. Improving operational efficiency 3. Poor credit and collection system
4. Strong cash flows 4. High leverage
5. Superior product quality 5. High cost structure
6. Diversified product lines
INTERNAL FACTOR EVALUATION MATRIX
Taking into account the identified strengths and weaknesses of Maycar, we present in Table 7 an
IFE matrix which assesses the companys current business conditions with respect to internal factors.
Table 7. IFE Matrix

STRENGTHS Weight Rating Weighted
Score
Sound financial performance 8% 3 0.24
Constant product innovations and development 10% 4 0.40
Improving operational efficiency 9% 4 0.36
Strong cash flows 8% 3 0.24
Superior product quality 15% 4 0.60
Diversified product lines 5% 3 0.15
WEAKNESSES Weight Rating Weighted

Score
Poor marketing initiatives and brand identity building 12% 1 0.12
High carrying costs of inventories 10% 2 0.20
Poor credit and collection system 8% 2 0.16
High leverage 5% 2 0.10
High cost structure 10% 1 0.10
TOTAL WEIGHTED SCORE 100% 2.67
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IV. STRATEGY ANALYSIS
After a detailed assessment of the external realities and internal capabilities of Maycar, Inc., we
analyze the strategic position of the company using an I/E matrix, as shown in Figure 6.
Figure 6. I/E Matrix
With the current promising performance of Maycar, the I/E matrix indicated that it is best for
Maycar to hold and maintain its current position. However, in order to remain relevant, it is important for
the company to pursue courses of actions that will maintain its competitive advantage and allow the
company to achieve its vision of becoming the number one manufacturer & distributor of high quality
processed meat products.
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Table 8. SWOT-TOWS Matrix OPPORTUNITIES THREATS
1. Low-income sectors 1. Limited room for innovation

increasing demand for and differentiation of products
affordable products 2. Low switching costs for
2. Expansion and product consumers
variation opportunities 3. Increased market saturation due
3. Development of new to ease of entry
variations of processed meat 4. Accessibility of physical and
4. Abundance in raw meat human capital allows for
suppliers and processed meat forward integration of meat
retailers. suppliers
5. Expanding SME retailers to 5. Existence of stringent
help increase demand and government oversight over
provide a stable market meat inspection and food safety
6. Vocal support of local 6. Upward trend of
governments for health-consciousness among
self-sufficiency through job consumers
creation and food security
7. Further processing of
by-products to produce other
marketable products
STRENGTHS S-O STRATEGIES S-T STRATEGIES
1. Sound financial performance Use operational efficiency in Conduct further R&D to identify
2. Constant product innovations creating more variations of prospects for product
and development affordable products differentiation
3. Improving operational Partner with local governments Capitalize on product quality to
efficiency and SMEs to further strengthen become indifferent to stringent
4. Strong cash flows cash flows government oversight and to
5. Superior product quality Tap into company ingenuity in overcome low switching costs
6. Diversified product lines coming up with marketable
products using processing
by-products
WEAKNESSES W-O STRATEGIES W-T STRATEGIES
1. Poor marketing initiatives and Utilize SME retailers to Implement a differentiation

brand identity building increase brand awareness and strategy to create a unique brand
2. High carrying costs of simultaneously reduce reputation that is immune to
inventories inventory carrying costs market saturation
3. Poor credit and collection Capitalize on increasing
system demand to shield against
4. High leverage negative effects of high
5. High cost structure leverage
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V. KEY STRATEGIC ISSUES
In identifying the key strategic issues for Maycar, we go back to the companys vision and assess
any barriers that hinder the company from achieving such. We quote their vision The number one
manufacturer & distributor of high quality processed meat products in Region IV.
Although its direct clients are its retailers, we believe that the company has built good
relationships with these distributors. On the other hand, we find that appealing to end consumers is one of
the major problems that Maycar has to overcome. Hence, we develop an understanding of these
consumers, as shown in Table 9.
Table 9. Consumer Insight

Basic Truth I will purchase a quality and affordable processed meat product.
Motivation I want to maximize my utility from these products. I need a product that is:
(1) Honest with its quality and health promise
(2) Balanced between quality and pricing
(3) Unique and satisfying in terms of its taste
Tension There are various brands I could choose from. All of them are competing in terms
of quality and affordability. How do I choose the best among them?
After empathizing with the companys vision and the needs of its customers, we synthesized our
findings and defined various issues that Maycar has to resolve moving forward:
(1) How do we differentiate our products?

(2) How d o we improve our operations?
(3) How d o we attract more patrons?
As shown in the I/E matrix (See Figure 6), Maycar has to hold and maintain its promising
performance. Maycar has been seeing continuous, albeit minimal, growth in the market. Only by
answering these questions, however, can Maycar pursue its vision of growing to become the number one
in its industry.
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VI. ALTERNATIVE COURSES OF ACTION
DISCUSSION OF ALTERNATIVE COURSES OF ACTION
A. ISSUE 1: HOW DO WE DIFFERENTIATE OUR PRODUCTS?
With big players and saturated competition ahead of Maycar, differentiation is key to sustain a
competitive stance in the industry. Table 10 presents possible courses of action that Maycar can consider
implementing in order to differentiate itself from the rest of the players in the meat processing industry.
Table 10. Alternative Courses of Action to Differentiate Maycars Products

Possible Solution Strategic Impact Operational Impact
PS1: Offer per unit/packaged + Creates opportunities for Increases inventory

products (ex. 1 strand of add-on sales on multiple turnover and sales
longganisa, 1 ham, and 10 products - Requires sales team to
hotdogs packaged for a single + May allow Maycar to monitor and create saleable
breakfast for a family of 5) introduce less popular packages
products to customers when - Requires new per unit
bundled with hot selling production and packaging
items equipment (current
equipment produces
products in sets which are
packaged thereafter)
PS2: Display information + Consumers are able to + Increase in patrons,

regarding Maycars history and connect with Maycar resulting to stable product
quality achievements on its beyond consumption sales and demand
packaging through knowing their - Requires additional
history and their dedication packaging costs and
to quality coordination with
packaging partner
PS3: Add product flavor Opens opportunities for Increase in sales due to the
varieties (ex. Spicy hotdog, untapped market through the new product line
sweet and sour longganisa) new product line - Investments in research &
Highlights Maycars development and consumer
objective to satisfy analysis to determine best
customers flavors and respective
Displays Maycars processes
innovation - Increase in costs for new
materials and possible new
equipment for new product
line
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B. ISSUE 2: HOW DO WE IMPROVE OUR OPERATIONS?
In achieving its vision to become the top manufacturer and distributer of high quality processed
food, internal operations need to be refined and developed. This will allow for lower costs, and,
ultimately, lower prices. We can recall that affordability is one of the key success factors in Maycars
industry; Table 11 presents possible courses of action Maycar can consider to improve its operations.
Table 11. Alternative Courses of Action to Improve Maycars Operations

PS1: Train employees and focus + Complements recent + Improves productivity and
on labor efficiency improvements in technology increases output
+ Directly achieves quality + Reduces spoilage and scrap
improvement while ensuring + Lessens non-value adding
efficiency activities and improves takt
- Training without sufficient time
employee benefits might - Reduces output due to the
work to Maycars required training sessions
disadvantage
PS2: Manage the current and + Reduces carrying costs of + Lowers inventory turnover
expected increase in inventory idle inventory and speeds up the cash
+ Ensures that product conversion cycle
demand is met - Requires coordination with
+ Investment in inventory will the sales and purchasing
be mitigated and frees up department
cash for new profitable
investment or projects
- Embedded cost in inventory
management
PS3: Invest more in equipment + Allows for bigger amount of Increases output and paves
output way to a more mechanized
+ Paves to more varieties of manufacturing
products - Needs maintenance and
- Recent purchases of regular-check up in the
technology sufficient to machineries used
support current demand - Relies more on operating
- Requires more long-term leverage and cost of goods
financing and will increase sold will mostly be fixed
Maycars leverage costs
- Prevents the need to offer
job opportunities
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C. ISSUE 3: HOW DO WE ATTRACT MORE PATRONS?
With the ever changing consumer behavior and preferences, businesses like Maycar is challenged
to find ways in order to attract more patrons. To do so, a best-fit marketing initiative must be put in place
that attracts customers in the best way and in the best channel. Table 12 presents possible courses of
action that Maycar can consider in attracting more customers.
Table 12. Alternative Courses of Action to Attract More Patrons

PS1: Emphasize its brand + Attracts consumers who Increase in sales from the
differentiator - being homemade prefer homemade over new marketing plan
commercial products - Entails marketing costs
- A new set of controls will - Requires packaging
potentially be applied if overhaul
Maycar will stay true to a
production that mimics
backyard production yet is
capable of producing a large
output
PS2: Relate strongly with its Heightens demand and Increase in sales from the
target market likeability due to matching new marketing plan
product branding with what - Entails marketing costs
the target market really - Requires hard promotion
wants that displays the lifestyle of
Requires market research to consumers
determine consumers taste
and lifestyle
Aligns with innovation and
introduction of new varieties
PS3: Market its taste and Emphasizes its vision of Increase in sales from the
affordability affordable high quality new marketing plan
products and aligns to the - Entails marketing costs
needs of its customers
- Brand perception is hard to
market due to its vagueness
whether it is a quality-first
product or a low price-first
product
QUANTITATIVE STRATEGIC PLANNING MATRIX
22
A. ISSUE 1: HOW DO WE DIFFERENTIATE OUR PRODUCTS?
Table 13. Quantitative Strategic Planning Matrix

Key Factors Weight Status Quo PS1 PS2 PS3
AS TAS AS TAS AS TAS AS TAS
Internal
Sound financial performance 8% 3 0.24 3 0.24 3 0.24 3 0.24
Constant product innovations and 10% 4 0.40 4 0.40 4 0.40 4 0.20

development
Improving operational efficiency 9 % 4 0.36 4 0.36 4 0.36 4 0.36
Strong cash flows 8% 3 0.24 3 0.24 3 0.24 3 0.24
Superior product quality 15% 4 0.60 3 0.45 4 0.60 4 0.60
Diversified product lines 5% 3 0.15 4 0.20 3 0.15 4 0.20
Poor marketing initiatives and 12% 1 0.12 3 0.36 4 0.48 3 0.36

brand identity building
High carrying costs of inventories 10% 2 0.20 3 0.30 3 0.30 3 0.30
Poor credit and collection system 8% 2 0.16 2 0.16 2 0.16 2 0.16
High leverage 5% 2 0.10 2 0.10 2 0.10 2 0.10
High Cost Structure 10% 1 0.10 1 0.10 1 0.10 1 0.10
External
Low-income sectors increasing 16 % 2 0.32 3 0.48 3 0.48 2 0.16

demand for affordable processed
meat products
Existence of markets nationwide 8% 2 0.16 3 0.24 3 0.24 3 0.24

which provides expansion and
product variation opportunities
(e.g. tap Visayas market)
Introduction of new variations of 10% 3 0.30 3 0.30 3 0.30 4 0.40

processed meat in the market
Abundance in both ends of the 6% 3 0.18 3 0.18 4 0.24 3 0.18
23
value chain - raw meat suppliers
Vocal support of local 8% 4 0.32 4 0.32 4 0.32 4 0.32

governments for self-sufficiency
through job creation and food
security
Further processing of by-products 5.5% 2 0.11 4 0.22 2 0.11 2 0.11

from processed meat production
to produce other marketable
products (e.g. edible lards and
dried protein)
Limited room for innovation and 12% 2 0.24 2 0.24 3 0.36 3 0.36
differentiation of products among
market players
Low switching costs for 8% 2 0.16 3 0.24 3 0.24 2 0.16

consumers across different
processed meat providers and
across other processed food
substitutes
Ease of entry due to lower market 9% 2 0.18 3 0.27 3 0.27 2 0.18

barriers that can increase market
saturation
Accessibility of physical and 6% 3 0.18 3 0.18 3 0.18 3 0.18

human capital allows for forward
Existence of stringent government 5.5% 4 0.22 4 0.22 4 0.22 3 0.165

oversight over meat inspection
and food safety
Upward trend of 6% 2 0.12 2 0.12 2 0.12 2 0.12

health-consciousness among
consumers
Sum Weights 5.16 5.92 6.21 5.435
Sum Total Attractiveness Score
B. ISSUE 2: HOW DO WE IMPROVE OUR OPERATIONS?
24
Internal

development

High leverage 5% 2 0.10 2 0.10 2 0.10 1 0.05
External

meat products



25
security

dried protein)
market players

substitutes

saturation


and food safety
Upward trend of 6% 2 0.12 2 0.12 2 0.12 2 0.12

consumers
Sum Weights 5.16 6.06 4.95 5.12
C. ISSUE 3: HOW DO WE ATTRACT MORE PATRONS?
26
Internal

development

High leverage 5% 2 0.10 2 0.10 2 0.10 2 0.10
External

meat products



27
security

dried protein)
market players

substitutes

saturation


and food safety
Upward trend of 6% 2 0.12 3 0.18 3 0.18 2 0.12

consumers
Sum Weights 5.16 6.45 5.96 6.02
VII. RECOMMENDATION
28
PUSO ANG PUHUNAN
Sample promotions for Puso ang puhunan

(Picture taken from Eight O-clocks commercial)
Besides becoming Maycars new marketing tagline, Puso ang puhunan is a business mantra.
We believe that everything should start from the heart. Interestingly enough, Maycar started out just as a
small backyard operation whose existence stemmed from the owners vision to provide quality meat
products. Simply stated, Maycars existence started from the heart, and we want to emulate that in
Maycars strategy. Puso ang puhunan extends towards how employees are treated and, in turn, how
they will treat customers and business partners, how the creation of products are performed (value chain) -
with a goal of providing only the best quality products stemming from the heart, and most especially how
customers are treated. With Puso ang puhunan, Maycars products will be consumed by our patrons,
especially the families, with the heart that was put into creating such products in mind. Additionally, the
Puso ang puhunan strategy, which focuses on Maycars homemade and purely local and underdog
history, is in line with the current consumer trend of Filipinos wherein they want to support local and
growing enterprises rather than long-established and too big to fail corporations.
1. External Package Overhaul

Because we want to emphasize Maycars homemade history and devotion to quality, the new
product packaging will include a brief history of Maycar starting from its start as a backyard
business and a list of Maycars quality certifications. Consumers will be able to connect with
Maycar and its journey.
2. Employee Training
To ensure that our employees embody Puso ang puhunan, we will focus on their training and
development. The training will focus on three major points: culture (attendance, how to address
co-workers, etc.), devotion to quality (SOPs for each process in the value chain, minimum job
quality requirements, etc.) and continuous improvement (how to address new issues, how to
suggest company improvements, etc.). Employee training aims to achieve process efficiency,
product quality, and the devotion of customers to their job.
29
3. Product Packages
In the long run, with sufficient cash flows or financing capabilities to invest in new equipment
and market research, Maycar could offer minimal product customization through product
packages. For instance, if based on market research, an average family of 5 in Lipa City,
Batangas eats 20 longganisas, 10 hot dogs, and 1 ham for a day or a meal, then Maycar could
sell such into a packaged product. Consumers get exactly what they want and Maycar is able to
attract cost-minded consumers who only purchase what they exactly-need. This is customization
in a sense that the packages are constructed based on what the consumers want. This would also
require an investment on equipment and packaging to separate production for per unit items to
be grouped into packages.
4. Promotions
The goal of Puso ang puhunan is to market Maycar and its products as something that is made
truly from the heart. To establish Maycars brand image as a genuine product out of love,
promotions emphasizing Puso ang puhunan will be advertised. These include posters in
partner supermarkets and retailers, photos on the packaging of products, and any form of
advertising which the marketing and management team decides on. To serve as a kicker, we also
recommend a brand jingle that will be played on radio in the Batangas area. Local radio
advertisements are quoted and priced very low and serve as the best promotion platform for
Puso ang puhunan. In totality, the promotions of Puso ang puhunan should view the Filipino
family as the target market, specifically the moms who purchase Maycar products for the family.
These families and moms are more likely to support products they can trust and connect with -
the tagline being in Filipino is an additional empathy factor.
IMPLEMENTATION PLAN
30
Year 2017 2018 2019
Quarter 1 2 3 4 1 2 3 4 1 2 3 4
Create, revise, and finalize

employee training
curriculum and schedules
Conduct regular training for

current and new employees
Assess process improvement

and other measures
Create the new design for

package printing
Create a marketing jingle for

Puso ang puhunan
Create promotional designs
Incorporate the new

packaging into production
Contract with partner

retailers and supermarkets to
put up posters and with local
radio broadcasters to play
the brand jingle
Assess sales and other

measures
Conduct a market study on

consumer lifestyles and
eating habits
Construct product packages
Determine and invest in

necessary equipment and
materials to create the
product packages
Launch the new product

packages
Assess sales and other

measures
EVALUATION AND CONTROL PLAN
31
A. BALANCED SCORECARD
Strategy BSC Proposed Business Target Outcome Source of Persons
Perspective Actions Measurement funds Responsible
Customer (1) External Customer 99% Customer External Packaging

Package Demand, Satisfaction and Department,
Overhaul Satisfaction, Internal Promotions/
and Loyalty, High Switching Financing Marketing
(2) Product Inventory costs Department
Packages Turnover
Inventory
(3) Promotions Turnover of 6
8 % Annual
Sales Growth
Learning (1) Employee Customer 99% Customer Internal HR and

and training Satisfaction, Satisfaction financing Production
Growth Takt time Department
Minimum Takt
Puso time possible
Ang
Puhunan
Business (1) External Spoilage and Six Sigma Internal Production

Process Package Scrap Ratio financing Department
Overhaul Zero or
minimum
(2) Employee spoilage and
training scrap
Financial (1) Operating Operating 2% Operating No Funds Finance

Costs Expense Expense Required Department,
Reduction Ratio,Cash Inventory,
Conversion 120 days Cash Purchasing and
(2) Shorten Cycle, Conversion Sales
Cash Cycle department
Conversion
Cycle
B. RISKS & MITIGATION PLAN
32
Figure 7. Risks and Mitigation Matrix
33

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Group 7 Final Strategy Paper - Maycar Foods Inc.

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STRATEGY PAPER

1. Incorporating company history and quality certifications in the packaging

As your consultants, we are pleased to be of help to your company.

Arrojo, Robert Carl Angelo B.

I. Introduction about the Company 3

II. External Analysis

A. Macroeconomic and Industry Analysis 4

C. Opportunities and Threats 7

III. Internal Analysis

B. Value Chain Analysis 15

C. Strengths and Weaknesses 15

IV. Strategy Analysis 17

V. Key Strategic Issues 19

VI. Alternative Courses of Action

A. Discussion of Alternative Courses of Action 20

B. Quantitative Strategic Planning Matrix 23

C. Evaluation and Control Plan 32

Figure 1. Maycars Superordinate Goals

In this section, we examine Maycars external environment to identify opportunities to be

MACROECONOMIC AND INDUSTRY ANALYSIS

A. MACROECONOMIC ANALYSIS: PESTLE ANALYSIS

Figure 2. PESTLE Analysis

The increasing complexity of the macroeconomic environment is challenging businesses to

B. INDUSTRY ANALYSIS: PORTERS FIVE FORCES ANALYSIS

Figure 3. Porters Five Forces Matrix

Figure 4. Strategic group map: Maycar in the Meat Processing Industry

Rating Score Rating Score Rating Score

Quality1 30% 3 0.9 4 1.2 4 1.2

Affordability2 30% 3 0.9 2 0.6 2 0.6

Production 20% 3 0.6 1 0.2 1 0.2

Market Reach4 20% 3 0.6 2 0.4 1 0.2

Total 3.0 2.4 2.2

SUMMARY OF OPPORTUNITIES AND THREATS

Table 2. Summary of Opportunities and Threats

1. Low-income sectors increasing demand 1. Limited room for innovation and

EXTERNAL FACTOR EVALUATION MATRIX

Table 3. EFE Matrix

Low-income sectors increasing demand for affordable 16.0% 2 0.32

Existence of markets nationwide which provides expansion and 8.0% 2 0.16

Introduction of new variations of processed meat in the market 10.0% 3 0.30

Vocal support of local governments for self-sufficiency through 8.0% 4 0.32

Further processing of by-products from processed meat 5.5% 2 0.11

THREATS Weight Rating Weighted

Limited room for innovation and differentiation of products 12.0% 2 0.24

Existence of stringent government oversight over meat 5.5% 4 0.22

Upward trend of health-consciousness among consumers 6.0% 2 0.12

TOTAL WEIGHTED SCORE 100% 2.49

Financial performance has

Majority of Maycars assets

Table 4. Common-size Income Statement

Sales 100.00% 100.00% 100.00% 100.00% Overtime, there was a

Finance Cost 2.82% 0.25% 0.27% 0.39%

Net Finance Cost 2.82% 0.09% -0.14% -0.05%

Income before Income Tax 0.87% 0.54% 0.57% 0.32%

Provision for Income Tax 0.26% 0.19% 0.13% 0.08%

Net Income 0.61% 0.35% 0.44% 0.24%

ASSETS For 2012-2014, the

Income & Taxes Payable 0.08% 0.12% 0.06% 0.05%

Total Current Liabilities 0.65% 1.81% 1.61% 1.63%

Loans and Borrowings 26.57% 4.15% 6.53% 9.11%

Other Non-current Liabilities 3.32% 0.00% 0.00% 0.00%

Total Non-Current Liabilities 29.89% 4.15% 6.53% 9.11%

TOTAL LIABILITIES 30.53% 5.95% 8.14% 10.74%

Retained earnings 62.48% 84.53% 82.53% 80.16%