III.

Executive Summary

The objectives of the case is to be the principal food provider in

Asia in the next 30 years, to be able to penetrate new market

place. To be able to stand firm even if there are new competitors

in the food industry. This study included detailed looked of

internal and external strategic factors (SWOT analysis)of FPI. It

was found out that FPI needs to consider the following:

A. Focus on the expansion for Seafood products in Asia and

set aside the acquisition of Betarich Piggery.

B. How FPI catch up with the competition and how would be able

to finance the acquisition of Betarich Piggery and other

business expansion.

However, there are identified alternative courses of actions

FPI to deliberate: one is to focus first on the expansion for

Seafood products in Asia and set aside the acquisition of Betarich

Piggery. Second, apply for a Bank loan to acquire Betarich Piggery

and lastly to use mass media in promoting activities and

advertisement activities to broaden the exposure to another target

market place. Yet among the three it was to apply for a bank loan

to acquire Betarich Piggery. In this way the additional fund is

intended to be used for future expansions and other investments

such as Acquisition of the Betarich Piggery.

1
IV. Strategic Management Analysis

A. Current Performance or Situation

 Chairman Esmero appoints Nayve as the president of FPI because

of his experience in needs and wants of the market.

 Nayve found opportunities that are attractive to FPI.

 FPI has company that provide sea foods in different restaurant

and to other country Searich Fishing Corporation (SFC).

 Tita Maris Seafood is one of the competitors of SFC that hold

the top 10 spot in sea food industry.

 Despite of its good performance, 2006 is the year that their

forecasted sales have a marked variance to their actual sales.

 Chairman Esmero contemplated in acquiring the Betarich

Piggery Farm because he thinks that the return of pig

production will come very quick.

Ring the cash flow that will lead to inefficient cash flow.

 Nayve also assigned to reshape the culture of FPI. There are

factors that need to be considered to establish good

environment to their organization.

 FPI needs to gather P10 billion to finance the acquisition

of Betarich Piggery Farm and expansion for sea foods in Asia.

2
B. Analysis of Competitive Factors

Strengths

-In the year 2003 and 2006, Food is the Filipino family’s

main expense comprising of 50.45% and 54.65% of the total

family expenditures.

-FPI’s consolidated net sales hit PHP2.5 billion with a

growth of almost 48%.

-Orders from Japan, Thailand and South Korea rise.

-0.3% increase on net profit margin from the year 2005 with

5.2% and the year 2006 with 5.5%

-FPI owned Searich Fishing Corp. (SFC)

-By 2007, net profit increase to PHP500 million from the

year ago deficit of PHP100 million.

Weaknesses

-Measures initiated in the last quarter of 2000 to mitigate

the effects of the glut on higher ingredients cost were

taken by the company, which included cutbacks in

production, downsizing the personnel, and sale of non-

performing assets.

-TMS’s 2006 performance reports show a marked variance

between the forecasted sales and the actual sales of the

3
month. Poor sales forecasting can lead to lost sales due

to being out of stock, overly large inventories and costly

price markdowns. Stock outs of the most saleable items

result in permanent loss of sales.

-Despite 10 years of food business operations, the

company’s main product line has remained the same and chose

to limit its advertisement in radios and through flyers.

-FPI is not properly monitoring the cash flow, which may

lead to inefficient cash flow management, and eventually

bankruptcy. The cash of TMS is at times being used in the

purchase of seafood products to supply in other seafood

restaurants in Metro Manila and Cebu.

Opportunities

-Economy improves; Filipinos have more money to buy the

food they want.

-New market segments with higher number of sickly people.

-Acquirement of Betarich piggery farm of Cecille Castillo

by Esmero.

-Population growth rate of 14% from 2000 to 2007.

4
-Searching for new markets in Asia, Europe and Middle East

help them expand their marketing reach and eventually

higher sales.

-Extended loan facilities by Angat and Lumpia Shanghai

Banks.

Threats

-Reeling off from the seafood glut in 2001, it seemed like

the company and the rest of the industry was on its way

out of the doldrums.

-Production decreased due to foot and mouth disease, high

production cost and calamities.

-Entry of existing and new competitors.

-Rising prices of goods would increase the cost of

production and logistics affecting the company’s profits

and tighten cash flows.

-2010 will be difficult for business due to political and

economic instability. It is anticipated that high raw

material prices and tight financial and supplier’s credit

will continue to pressure on supply.

-Reports said that by 2030 if unable to seriously address

the siltation and sedimentation of the water ecosystems

due to deforestation, mining and other human activities,

the country’s fishery resource will be depleted.

5
 -It is also reported that by 2070 the world shall face food

and water crisis due to global warming.

V. Problems found in Situation Analysis

A. The company wants to stay alive in business world and

prevent bankruptcy but they are running out of strategy.

1. Evidence of the problem - TMS’s 2006 performance

reports show a marked variance between the forecasted sales

and the actual sales of the month.

2. Effects of problem- Poor sales forecasting can lead to

lost sales due to being out of stock, overly large

inventories and costly price markdowns. Stock outs of the

most saleable items result in permanent loss of sales.

B. How FPI catch up with the competition and how would be

able to finance the acquisition of Betarich Piggery and other

business expansion.

1. Evidence of the problem

Type of Asset Appraised Value 60% loan Value

(in Millions) (in millions)
Land 3,500.00 2,100.00

Buildings 900.00 540.00

Other Land 600.00 360.00

Improvements
Machinery & 2,000.00 1,200.00
Equipment
Total 7,000.00 4,200.00

6
 2. Effects of the problem of - However 60% valuation of

the personal properties by San Jose Appraisers on June 30,

2007 of 4.2B it is still not enough for the acquisition and

expansions.

VI. Strategic Alternatives for Solving Problem

A. Focus on the expansion for Seafood products in Asia and

set aside the acquisition of Betarich Piggery. (

alternative 1)

1. Benefits/Advantage of Alternative 1

-No increase in operational expenses since there is no need

to purchase additional equipments and construction materials

for new facilities.

-The company will be able to enhance its current products

and to focus on a good marketing strategy.

2. Disadvantage of Alternative 1

- Its main product line remains the same.

- Venture opportunities will be disregarded

- Competition in the same industry is threatening since

market leaders in Seafood industry is now selling to

more than 5 countries worldwide, almost 5 times bigger

than FPI

7
B. Apply for a Bank loan to acquire Betarich Piggery

(alternative 2)

1. Benefits/Advantage of Alternative 2

-Increase in cash/ asset

-Additional fund to be used for future expansions and

other investments.

-May be easier than securing start-up financing

2. Disadvantage of Alternative 2

-May increase company’s liabilities due to interest

payable.

-High borrowings can lead to limited future cash flow

and stifle growth.

-Must prove viability of the target business

C. Use mass media in promoting activities and advertisement

activities to broaden the exposure to another target

market place. (alternative 3)

1. Benefits/Advantage of Alternative 3

-It gives opportunities to connect to local and

international market that can have a big impact in

promoting the business.

2. Disadvantage of Alternative 3

-High cost and maintenance.

8
VII. Selection and Implementation of Strategic Alternatives

Apply for loan in Acquisition of Betarich Piggery Farm

The best alternative course of action among the three is that

FPI should make a loan to acquire the Betarich Piggery Farm

that will help them expand their product line and give them

a new market opportunity. Low chance of losing out in

competition with TMS because of different variety they offer

in market. In addition, if they will pursue the bank loan FPI

can find prospective foreign and local investors.

Expanding business abroad can be extremely beneficial for the

organization. It increases the bargaining power, it can

provide bigger funds that can be use for the development of

existing industry and we can help the economy by alleviating

the unemployment rate in the Philippines.

VIII. Action Plan and implementation

Apply for loan in Acquisition of Betarich Piggery Farm

Activities Covered Concerned

Period Dept.
Assign a research team that will 1- Month Research
examine the terms and conditions Department and
of chosen bank/s. the team needs finance and
to come up with a long term plan the president
considering the changes and
future challenges that the
company might encounter.
Application for a loan and 1 month Finance and
compliance with the loan legal
requirements

9
 Once the loan is granted, department,
communication and negotiation president
plan with Betarich Piggery will
start
Closing deals and signing of 2 weeks President, BOD
contract pertaining to Finance and
acquisition of Betarich piggery operation
Rehabilitation and development of 1 month Finance
the facilities at the same time Department,
processing of permits and other president
necessary documents.
Opening of betarich Piggery under 1 day Entire company
new management and start of the
operation
Evaluation and presentation of 1 month President,BOD,
the effectiveness of the project Finance
after its 1st quarter Department and
Department
heads

IX. Evaluation and Control

Upon acquisition of the Betarich re-evaluating a company’s

overall strategic plans must be visited every now and then. The

management needs to justify acquisition recommendations to the

board of directors in an economically sound, convincing manner.

The acquisition planning process begins with a review of

corporate objectives and product-market strategies for various

strategic business units. The FPI should define its potential

directions for corporate growth and diversification in terms of

corporate strengths and weaknesses and an assessment of the

company’s social, economic, political, and technological

10
environment. Specified criteria that should be taken into focus

often include statements about industry parameters, such as

projected market growth rate, degree of regulation, ease of entry,

and capital versus labor intensity. Company criteria for quality

of management, share of market, profitability, size, and capital

structure also commonly appear in acquisition criteria lists.

X. References

Marcus, A. A. (2011). Achieving Sustained Competitive Advantage.

In Management Strategy. USA: McGraw Hill Irwin.

Ybanez, A. E. (2014). Applied Strategic Management and Business

Policy. Makati City: KATHA Publishing, Inc.,.

11