CHAPTER I

INTRODUCTION

Background and Rationale of the Study

The general definition of being competitive is “having a strong desire to win or be

the best at something” (Merriam-Webster Dictionary). In business competitiveness is the

"capacity of a company to produce services or products that are acceptable to customers

in terms of price and quality and that occupy statistical significant share of the market for

that product..." (http://www.investorwords.com/16264/competitiveness.html November

28, 2015)

Business drivers are critically important factors that determines, or cause, an

increase in value or major improvement of a business. A business driver is a resource,

process or condition that is vital for the continued success and growth of a business.

(http://bizshifts-trends.com/ 2013/11/06/key-business-driver-major-impact-business-

performance-managing-value-innovation-growth-sustainability/ January 11, 2016)

Staying competitive in an enterprise that requires repeat business is important,

customers have needs and wants that must be met by the enterprise, failure to do so

would encourage customers to patronize the competitors, instead.

Food service enterprises are business that provides edible products to customers,

examples are fast food chains, fine-dining restaurants, karinderias, street food stands, so

on.
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The topic of this research is to measure the drivers of competitiveness of food

service enterprises inside the Central Philippine University.

The understudy in this research are the customers of the aforementioned

enterprises.

Currently there seems to be a lack of new ideas amongst the food service

enterprises inside the campus, most of the products available are either copies of famous

food chains’ value meals or traditional Filipino dishes. They are choosing those food

combinations that has proven their profitability over time.

Ideally, food enterprises must have a thoroughly clean working space because of

the nature of their products, it is very important that food should be prepared in a

hygienic area. It is also ideal for them to serve new and exciting meals to customers while

still making good profits at the same time.

The gaps of these two situations is that these enterprises must choose quality over

profit. They mostly make decisions that will maximize their profit and without

necessarily increasing the quality of their products. Most of the time, said changes

actually decrease the quality of the products.

This research is important to Centralian consumers and business owners alike. By

identifying how different drivers affect profitability of these business, we could shed light

to new and better strategies that may be beneficial to everyone involved.

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General Objectives and Specific Objectives

General objectives:

 To determine the drivers of competitiveness among the food service

enterprises at Central Philippine University campus.

Specific objectives:

 To determine whether there is significant relationship that exists between

the price of the product and the competitiveness of the enterprise.

 To determine whether there is significant relationship that exists between

the customers’ satisfaction and the competitiveness of the enterprise.

 To determine whether there is significant relationship that exists between

the profitability.

Conceptual and Theoretical Framework

Competition as Rivalry and Selection Mechanism

“Competition is the chief selective process in modern economic society, and

through it we have the survival of the fit.” (Ely, R.T. 1901, S.64Competition: its nature,

its permanency, and its beneficence, Publications of The American Economic

Association) Products and enterprises come and go and only the ones that knows the

public’s taste survive for another year. This could be the reason why the food service

category of SME’s inside CPU have nearly homogenous products. They choose old time
 4

favorites since these are safe and proven. To try something new must feel tantamount to

risking their competitiveness, hence, no new products.

But this strategizing in business with the mindset that tastes and styles don’t change, and

they do. Enterprises must conjure up new things, try new products and pricing

approaches and use the customers’ reaction as their guide in going forward, because the

customer’s will eventually get tires of the old favorites and those businesses that are

stagnant and uncreative will get wiped out. “To most of us layman, competition means

struggle, contest, rivalry, matching of with or strengths… To the non-economist,

competition in business is but one manifest of this spirit of conflict and rivalry of ideas.”

(Lilienthal, D. E. 1952, S. 54 Big Business: New Era, New York, Harper & Brothers

Publishers)

Independent Variables Dependent Variables

Price
Profitability
Customer Satisfaction
Level of
Competitiveness
Customer Profile:
- Age
- Sex
- Current Occupation
- Daily Budget

-
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Hypothesis

 There is a significant relationship that exists between the price of the

product and the competitiveness of the enterprise.

 There is a significant relationship that exists between the customers’

satisfaction and the competitiveness of the enterprise.

 There is a significant relationship that exists between the profitability and

the competitiveness of the enterprise.

Definition of Terms

 Price – the amount of money that you pay to obtain something. In this study, the

price measures the availability of the enterprises products.

 Product – a tangible good, an intangible service, or a combination of this. In this

study, the product will be used to determine their satisfaction.

 Competitiveness – the ability of a food stores to earn profit in the same level as its

direct competitors. In this study, competitiveness is the dependent variable if it

affects the independent variable.

 Food Enterprise – an enterprise that sells edible goods for profit. In this study,

food enterprise is one of the understudies.

 Daily budget – the amount of money that an individual assign for his day-to-day

expenditures. In this study, daily budget is the independent variable for which

level of competitiveness can affect the results thereof.

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Scope and Limitations of the Study

This research study will be conducted inside the premises of Central Philippine

University, all the enterprises that will be studied will have to be inside the gates of the

same university and only SME’s serving food and beverage will be studied, those selling

other goods and services will not be included. Customer respondents can be students or

non-students that purchase food from the said SME’s.

Significance of the Study

Findings in our study can be a used as a guide to entrepreneurs that would want to

try and start a food business inside CPU. This study could also help those who are

already managing their business here by possibly showing them how their consumers

think about their products.

Making our food source competent will not only help those enterprises

mentioned but also the customers, as their money will be better spent quality food.

Students create thesis about other establishments all the time. But those establishments

rarely affect their day-to-day life the way food enterprises inside our own university does.

This study will prioritize that which is near to use important to us.
 CHAPTER II

REVIEW OF RELATED LITERATURE& STUDIES

Related Literature

Competitiveness is the ability of people to compete with themselves and others by

pushing themselves to their limits.

It is said that“ competitiveness in business it is the ability of a

firm to offer products and services that meet the quality standards of the local and

world markets at prices that are competitive and provide adequate returns on

the resources employed or consumed in producing them.”(businessdictionary.com).

It is important to take notice of the consumers’ preferences when it comes to

operating a restaurant because customer satisfaction is closely related to the customer

expectations if the services able to full fill the expectations that means they have done

their job. (Farhana N. and Islam, S., 2011)

Price is a critical factor to a food service enterprises’ success because customers

usually have limited daily food budgets. It is important that these enterprises price their

products strategically to attract the three (3) types of buyers: (1) the Spendthrifts – people

that are able to spend more before they hit their maximum “buying pain”, (2) the

Tightwads – people that spend less [on average] before they hit their maximum “buying

pain”, (3) the Unconflicted – average spenders (Tightwads and Spendthrifts). “Buying

pain” is the pain that consumers experience when they have reached their maximum

spending amount.
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Entrepreneurs interested in opening a restaurant may think that an experienced

cook and a good location will undoubtedly bring in huge profits for their business. In

reality, the restaurant industry is characterized by small profit margins — around 2 to 6

percent on average according to the Restaurant Resource Group (Peter Baskerville,

2014). In the case of an enterprise, profit is earned in a daily day-to-day basis by

computing their gross and net profit. Gross profit is the difference between the selling

price and the cost of goods sold (COGS) or, if you like, the cost of the ingredients and

raw materials that made up the meal and drinks. While, net profit is the amount left over

from the gross profit after deducting the overheads (wages, rent, utilities) and financial

charges (interest on loans, equipment leasing costs). Wages costs in the restaurant

business are high, sometimes as much as 35% of sales. So half the gross profit is used up

in just paying for the staffs. (https://www.nav.com/blog/96-profit-in-the-restaurant-

business-5342/)
 9

Related Studies

Enterprises inside campuses must price their products in a way that students can

afford them. College students typically get P150 to P250 daily excluding transport

allowance. The allowance covers P50 to P100 for lunch and P30 to P50 for snacks.

(PhilippineStar.com)

It is not only the actual price of the food being sold that’s important, how they

create value for their customers also matters, it is found out by researchers that even

small changes in wording has an effect on how the consumer perceives the expensiveness

of an item. (Carnage Mellon University)

Menu directs the customers to choose what they want to eat, since it is the core of

food and beverage operations. Specifically, menu is an instructor that clearly dictates (i)

what will be produced, (ii) what type of equipment and ingredients are needed, and (iii)

which qualifications employees should have. Menu also functions as a communicating

and selling tool (Kincaid and Corsun, 2003). More specifically, it communicates not only

the food and beverage offerings, but also the image of the firm. Furthermore, menu is a

base on which the customers make their food choices and a well-designed menu can

direct customers' attention to the items the firm wants to sell more (Antun and Gustafson,

2005).

To enhance consumers’ satisfaction, it is important to create a sense of loyalty

because it was found out in a study called “Social Categorization and Intergroup

Behaviour” by social psychologist Henri Tajifel that when people feel that they belong in

a group they would be more passionate in doing things that will benefit the group. So,
 10

when consumers feel like they belong in a certain class because of a product, they would

buy that product even more than compared to those consumers who don’t feel any

additional prestige when buying.

Summary

Based on the above literature and studies, the competitiveness is attained if one is

profitable with steady or increasing market share over time that can provide customers

with only having limited amount of money to spend with unlimited wants and specific

preferences, it is imperative that an enterprise remains competitive in relation to its

competitors since there is only a fixed amount profit available to be earned, and each

enterprise strives to gain as much profit as they possibly can.

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CHAPTER III

METHODOLOGY

Research Design

The descriptive method of research is use in this study. Thus one shot survey or

post-test design is an appropriate research design to employ. According to David (2005),

this type of research design is used when the study objective is to describe the level of

competitiveness that exists, or to determine/describe the choices of respondents.

Data relating customers’ preference and profile will be obtained using a

questionnaire. There will be a large number of respondents and this method will save

time in gathering and processing data, and a questionnaire will provide an easier

perspective into the customer’s profile.

Population and Sample Respondents

The respondents of this study are the customers, owners and crews of the SME’s

inside the Central Philippine University. Based on initial observation, the population of

customers is skewered towards teenagers and young adult students in collegiate level,

although there are possible respondents from grade school; high school; graduate school;

university faculty and staff; and parents.

 12

Sampling and Sampling Procedures

The entire population of food enterprises inside the campus will be used.

The formula that will be used to derive the sample size for customer respondents is:

𝒁𝟐 𝒑𝒒
𝒏=
𝒅𝟐
Where:

n = sample size

N = total population

Z = 1.95, the Z-value at the 95 percent confidence level adopted

D = 0.05, the tolerable sampling error for the confidence level adopted

P = 0.50, the largest possible proportion

Sample elements will be drawn using simple random sampling through lottery

technique with replacement.

Data Gathering Instruments

Two questionnaires will be used to gather the necessary data in this study. Both

questionnaires are researcher-generated. The first questionnaire will be for the food

enterprises and the second for the customer respondents. The questionnaire for the food

enterprises will contain questions regarding their approximate profits in a weekly basis on

weeks which university has no special events; the average percentage of their mark-up

from the COGS; the average cost of the drinks, breakfast, lunch, and snacks that they

offer; and they will be asked, based on their perspective, which is the most preferred
 13

category of food that they offer; and lastly, to rank the drivers of competitiveness in

descending order; from the one which they believe to have the most positive effect in

their income to the one which they believe to have the least positive effect on their

income. The questionnaire for the customer respondents will be divided into three:

Personal Profile – they will have to identify themselves based on sex, occupation, age

and daily budget.

Preference – this will contain open ended questions regarding their preference on

specific categories of foods (drinks, lunch, breakfast, and snacks).

Willingness to Spend – we will ask our customers how much they are willing to spend

on specific categories of food (drinks, lunch, breakfast, and snacks).

Data Gathering Procedures

The questionnaires will be distributed to the food enterprises by one of the group

members and will be collected the next day, giving each enterprises twenty-four hours to

answer. Questionnaires for the consumers will be sent out randomly, the respondents will

be requested to answer the short questionnaire in a few minutes after which the researcher

will gather the same to be filed. Ten percent of the approximate population of consumers

will be given numbered questionnaires. Corresponding numbers for the consumers’

questionnaires will then be used in a lottery where the sample size will be draw with

replacement. Data processing will then commence when the sample size for consumers

and the questionnaires from the food enterprises are available

 BIBLIOGRAPHY

A. Books

Applegate, et al. 2007. Corporate Information Strategy and Management. Seventh

Edition. McGraw-Hill Companies, Inc. 1221 Avenue of the Americas. New York

Ryan, et al. 1996. Small Business, An Entrepreneur’s Plan. 4th Edition. Harcourt Brace &

Company. 6277 Sea Harbor Drive, Orlando, Florida

Megginson, 2000. Small Business Management, An Entrepreneur’s Guidebook. 3rd

Edition. McGraw-Hill Companies, Inc. 1221 Avenue of the Americas. New York

Stokes, et al. 2006. Small Business Management & Entrepreneurship. 5th Edition.

Thomson Learning High Holborn House 50-51 Bed ford Row, London

Hatten, 2003. Small Business Management Entrepre3neurship and Beyond. 2nd Edition.

Houghton Mifflin Company. 222 Berkeley Street, Boston

Zeithaml. 2006. Service Marketing (integrating customer focus across the firm). 4th

Edition. McGraw-Hill Companies, Inc. 1221 Avenue of the Americas. New York

B. Thesis/Dissertations

Denuevo, 2005. Factors Associated with Business Tax Compliance among micro-

enterprise owners in Nueva Valencia, Guimaras. Central Philippine University,

Iloilo City.

Razon, 2014. Customer Satisfaction as a Determinant of Customer Retention among

selected Fitness Clubs in Iloilo City. Central Philippine University, Iloilo City.

Padama, 2014. Customer Relationship Management practices among Computer Retail

Businesses in Iloilo City. Central Philippine University.

 15

C. Internet Sources

https://www.investorwords.com

https://bizshifts-trends.com

www.businessdictionary.com

https://www.nav.com

www.helpusout.net/consumer-behaviour/
 16

APPENDIXES
 17

Appendix A Letter to the Management

January 20, 2016

TEODORO C. ROBLES
President
Central Philippines University
Jaro, Iloilo City

Sir,

Greetings!

We, the students of Central Philippines University, are conducting a study entitled “Drivers of
Competitiveness of Food Service Enterprises inside the Central Philippine University” In
connection with this, we would like to ask permission to conduct our survey on the Food
Services inside your campus including, but not limited to, the ones that the administration
manages; the Dining Hall, the Canteen in Elementary and High School and others that were not
mentioned.

We are also asking your permission to conduct a survey to the Students, Faculty, Staff and the
Parents inside the premises of the Central Philippine University campus on dates of February 10-
20, 2016.Your support regarding this matter is highly appreciated.

Thank you very much.

Very respectfully yours,

Nolita O. Catilo

Venice S. Colorge

Nathalie M. Malapitan

Maria Teresa I. Malicdem

Beverly Rose D. Rafio

Noted:

Mary O’ Penetrante
Research Professor
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Appendix B Letter to the Respondents

College of Business and Accountancy

Central Philippine University
Jaro, Iloilo City

January 20, 2016

Dear Respondents,

Greetings!

We, the students of Central Philippines University, are conducting a study entitled “Drivers of
Competitiveness of Food Service Enterprises inside the Central Philippine University”.

In connection with this, we are requesting you to answer the attached questionnaire with honesty
and sincerity. Your responses will be held in confidence and will not be used against you. Your
cooperation will be greatly help the completion of this study.

Thank you very much.

Very respectfully yours,

Nolita O. Catilo

Venice S. Colorge

Nathalie M. Malapitan

Maria Teresa I. Malicdem

Beverly Rose D. Rafio

Noted:

Mary O’ Penetrante
Research Professor
 19

Appendix C Enterprises Owners’ Questionnaire

Central Philippine University

College of Business and Accountancy
Jaro, Iloilo City

This questionnaire is intended to gather data for a research paper. Your establishment is
requested to supply data that is honest and accurate as far as your knowledge is concerned. All
the information that will be gathered by this questionnaire will be held in confidence.

Name of Establishment: ______________________________________________

Location inside CPU: ________________________________________________

Approximate Sales in a regular week (week with no special event): P_______________

Check the box of your Average Price mark-up per food item (based on percentage of the item’s
cost):

5% of the cost 20% of the cost

10% of the cost above 20% of the cost but below 50%

15% of the cost above 50% of the cost

Rank the following factors in descending order based on your perspective, from the most
effective in increasing sales to the least effective in increasing sales

________ Price of your food

________ Preference of your customers
________Personal profile of your customers (age, sex, occupation and daily budget)

Fill the blanks with the amount that in your opinionis the average amount that your customers are
willing to spend on the following food categories

________Drinks ________Lunch
________Breakfast ________Snacks

Rank the following in descending order, from the most profitable to the least profitable food
category for your establishment

________Drinks ________Lunch
________Snacks ________Breakfast

Thank you very much for your participation….

 20

Appendix D Respondents Questionnaire

Central Philippine University

College of Business and Accountancy
Jaro, Iloilo City

This questionnaire is intended to gather data for a research paper. You’re requested to
supply data that is honest and accurate as far as your own understanding is concerned. All the
information that will be gathered from this questionnaire will be held in confidential.

Respondents Profile:

Age:
Sex: Male Female
Role in CPU: Student Parent Faculty/Staff Visitor

Daily Food Budget: P_________

Personal Preference:

How much do you USUALLY spend on the following food categories inside Central Philippine
University Campus?

P_______ Drinks P________ Lunch

P_______ Snacks P________ Breakfast

How much is the MAXIMUM amount that you are willing to spend on the following food
categories?

P_______ Drinks P________ Lunch

P_______ Snacks P________ Breakfast

Rank the food category based on your preferences, 1 being most preferred and 4 being least
preferred.
________Drinks ________Lunch
________ Breakfast ________ Snacks

Thank you for your participation….

 21
Schedule of Activities

It will be logical to distribute the questionnaires for the food enterprises first as the

number of the enterprises are much smaller than the ten percent of the approximate population.

After this, the questionnaire for the consumers will be divided into five so that each member will

have an equal responsibility in distributing questionnaires.

Distribution must not exceed five days. The lottery of questionnaires will be done as soon

as all the questionnaires are answered. After the lottery, the data processing will commence

immediately.

Projected Budget

Photocopy/Printing of Questionnaires and letters — P700.00

Others — 200.00

Hardbound — 500.00

Total — P1, 400.00

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Gantt Chart of Activities

TIME FRAME
2015 2016
ACTIVITIES EXPECTED MEMBER
OCT NOV DEC JAN FEB OUTPUT RESPONSIBLE
Choosing the topic and the title for Group leader and
Title and topic for study
the study members
Reviewing related literature Background of the study All group members
Maria Teresa I.
Typing of introductions Softcopy of introduction of the study
Malicdem (Leader)
Proofreading, Formatting, Editing Beverly Rose D.
Hardcopy of Introductions
and Printing of introductions Rafio
Maria Teresa I.
Revising of Introductions and
Softcopy of first chapter Malicdem, Nolita O.
Typing of first chapter
Catilo
Proofreading, Editing and printing Beverly Rose D.
Edited Hardcopy of first chapter
of first chapter Rafio
Venice S. Colorge
Researching and Noting of Related Information for revision of the first
Nathalie M.
Literature chapter and writing of
Malapitan
Typing of second chapter Softcopy of second chapter All group members
Proofreading, Editing and printing Beverly Rose D.
Edited Hardcopy of second chapter
of second chapter Rafio
Researching for Materials for Third
Information for third Chapter All Group Members
Chapter
 23
Typing of third chapter,
Proofreading, Editing and printing Edited Hardcopy of third chapter All Group Members
of third chapter
Letters of permission to the Maria Teresa I.
Supplying the Appendixes President and Consumers, Malicdem, Nolita O.
Questionnaires Catilo
Typing of Bibliography Bibliography and Appendixes All group members
Printing, Editing and proofreading Beverly Rose D.
Hardcopy of Study
of entire study Rafio
Creating PowerPoint presentation
PowerPoint presentation All group members
for the panelists
Preparation for presentation Materials and props Venice S. Colorge
Presenting the document to Comments and suggestions from
All group members
panelists panelists
Provision of electronic hardware Beverly Rose D.
Soft and hard copies of study
for encoding and printing Rafio,