University of Santo Tomas
College of Commerce and Business Administration España, Manila
PRIMER GROUP OF COMPANIES A Strategic Management Paper
Presented to: Mr. Real C. So
In Partial Fulfillment
of the Requirements for the Course Strategic Management (Entre 7)
By:
Mary Ann L. Mendoza 4M9
ACKNOWLEDGEMENTS
This Strategic Management paper would not have been possible without the guidance and the help of several individuals who in one way or another contributed and extended their valuable assistance in the preparation and completion of this paper. After all of the hard work, and sacrifices that have made for this completion, it is just right to express my gratitude to the following people:
First and foremost, to the Primer Group of Companies, for their complete information and warm welcome that they have given me and also to the Marketing Department for the support, assistance and significant data that they have provided.
I would also like to extend my gratitude to my instructor of this Strategic Management subject, Mr. Real So, for guiding and being the inspiration of constructing this paper. He was abundantly helpful and offered invaluable assistance, support and guidance throughout the end.
Special thanks also to all my graduating friends, especially to my 4M9 block-mates for sharing the literature and invaluable assistance. Not forgetting my bestfriend who has always been there.
To my family, for their unending support, confidence and trust for showing me that no matter what happens they will be there for me.
And lastly, to my beloved Almighty God, for giving me the knowledge of discernment to know what perseverance was all about and determination to finish this paper, this would not all be possible without my faith and strength to you. Everything that I did and will do is all for your glory.
TABLE OF CONTENTS
Acknowledgements --- 1 Table of Contents --- 2
I. Introduction/Executive Summary
---II. External Environment
---Definition of Industry
---Analysis of Present Task Environment
--- Analysis of Potential Changes in the Macro-environment
---Threats and Opportunities
---Industry and Competitive Analysis
---III.Internal Environment Analysis ---Overview of the Company
---Financial Analysis
---Value Chain Analysis
--- Strengths and Weaknesses
---IV.Strategic Plan---Vision and Mission
---Objectives
--- Proposed Corporate Strategies
---Competitive Advantage --- V. Functional Area Strategies
---Marketing Operations ---Finance ---Human Resources ---Information Technology ---VI. Implementation
---Analysis of Company’s Capabilities to Implement
---Managing Internal Organization for Strategy Execution
---VII. Financial Projections Probable Scenario Best Case Scenario ---Worst Case Scenario
---INTRODUCTION/EXECUTIVE SUMMARY
Primer Group of Companies is a Philippine company engaged in the retail sale and distribution of consumer brands and products. The company carries international brands mostly lifestyle products. Primer also operates its own lifestyle boutique which includes ResToeRun, Travel Club, Ladybug, Bratpack and R.O.X. In addition to the retail and distribution, Primer recently opened its first retail and merchandising academy.
Primer Group was founded in the Philippines on 1985. It was formerly called Primer International Corporation (PIC) as a trading company, importing seasonal; merchandise. In 1992, the company Primer Group ventures into apparel licensing of Disney and Warner Bros. Later the same year, UniglobeTravelware Co., Inc. (UTCI) was established, opening the Primer Group’s first retail concept store specializing in luggage; The Travel Club. Five years later, the first Bratpack store was launched; a unique lifestyle concept store for young, hip and bold generation today.
The company continued to grow in the year 2000s. From a retail and distribution company in the Philippines, Primer Group expanded business to its neighboring regions in Asia. To date, the company distributes to HongKong, Indonesia, Japan, Malaysia, Philippines, Singapore, Thailang with 100 free-standing concept stores and 600 consignment deals in the Association of South-East Asian Nations (ASEAN). The
brands carried by Primer include DC, Gravis, Quicksilver, Volcom, Roxy, Bandals, Fitflop, Kickers, KruZin, Native, Olukai, Sanuk, Sledgers, Tretorn, Ace, Eagle Creek, Delsey, Design Go, Mendoza, Tumi, Victorinox, World Traveller, Boxfresh, Eastpack, Ellesse, Gaiam, Hedgren, High Sierra, JanSport, Kangol, Slendertone, Timbuk2, Tough Jeansmith, Outdoor Gear, Coghlans, Columbia, Mountain Hardware, Nalgene, Nathan, Salomon, Salvas, Sea to Summit and The North Face. Industrial products include Aircond, Network Philippines, Inc. (A.N.P.I.), Brushstroke Creatives, Primer Printing Services Inc. (P.P.S.I.), South AmerAsia Chemical Corporation (S.A.C.C.), Stellar Equipment and Machinery, Inc. (S.E.M.I) and Union Inks and Graphics Philippines, Inc. (U.I.G.P.I.).
EXTERNAL ENVIRONMENT ANALYSIS
1. DEFINITION OF INDUSTRY
RETAIL AND DISTRIBUTION INDUSTRY
The Primer Group of Companies is a retail and distribution powerhouse engaged in the distribution and licensing of the world’s top consumer and industrial products. The Primer Group has over 50 premium outdoor and lifestyle brands with over 100 free-standing concept stores, 600 doors in consignment all of which are in regional (ASEAN) operation across Asia.
Steadily, the Primer Group is rapidly flourishing in the retail and distribution business as it opened regional companies and concept stores in Japan, Malaysia, Thailand, Vietnam, Hong Kong, Indonesia and Singapore. Clearly, with its 25 years of unparalleled growth and solid business foundation, the Primer Group of Companies is set to reach greater heights in the retail and distribution industry as it brings closer to Asia the world’s best consumer brands in Premium luggage and travel bags, footwear and apparel, outdoor wear and equipment.
In the pursuit of continuous growth and excellence, the conglomerate diversified into several large scale businesses in industrial products and services, with regional operations in the Manufacturing operations of industrial ink, garment operations, printing
operations, distribution and maintenance of air conditioning and mechanical ventilation (ACMV) systems.
Truly enough, with its network of companies across the ASEAN region multiplying in a pace never achieved before, the Primer Group of Companies is realizing its vision to become the LEADER in the global distribution and innovation of premium goods and services and with achievements and international retail commendations, the Primer Group will continue its mission to bring the world closer to its customers as the company and its strong 1,200 employees adhere to its five core values entrepreneurial spirit, passion for excellence, integrity, teamwork and self-discipline.
PHILIPPINE RETAIL AND DISTRIBUTION INDUSTRY OVERVIEW
The Philippine retail market is a growing market. Despite the global economic downswing that depleted gross domestic product (GDP) of many Asian economies last year, the Philippine economy expanded by 3.4 percentYoY, thanks to 3.5 percent growth in consumer spending. The government estimated that consumer spending, as measured by personal consumption expenditure (PCE), accounted for 79 percent of GDP in 2001.l the 3.5 percent growth in consumer spending last year was equivalent to about P89.6 billion or approximately US$1.75 billion. The fact that growth took place at a time the government limited its expenditure indicates the domestic market’s potential for higher growth. Over 90 percent of establishments in the Philippine employ less than ten persons each. Most large establishments are concentrated in Metro Manila, which covers only 636 square kilometres out of the country’s total land area of 300,000 square kilometres.
In the censuses and annual surveys, the National Statistics Office (NSO) defines wholesale trade as the “resale or sale without transformation of new and used goods to retailers, to industrial, commercial, institution or professional users, to other wholesalers, and to government, wholesale merchant, industrial distributors, exporters and importers.” Likewise, retail trade is defined by NSO as the “resale or sale without transformation of new and used goods for personal or household consumption” (NSO)
There is a preponderance of retailers and wholesalers in the food, beverages and tobacco classification, followed by retailers and wholesalers in dry goods, textile and wearing apparel. The third most numerous retail and wholesale establishments are in
the wholesaling and retailing of construction materials and supplies. The preponderance of retailers and wholesalers in food, clothing and housing is not surprising because they constitute the bulk of expenditures of a Filipino consumer. In 1991, 48.5 percent of total family expenditures was spent on food, 13.5 percent on housing, 3.7 percent on clothing, footwear and other wear, and 2.7 percent on beverages and tobacco. In 1997, 43.9 percent of total family expenditures were on food, clothing housing, beverages and tobacco as a share of total family expenditures was 68.4 percent in 1991 and 64.7 percent in 1997, respectively (NSCB).
Not surprisingly, Metro Manila houses the majority of large wholesale firms, and even to some extent, retail firms. In 1991, Metro Manila accounted for 60 percent of the country’s large wholesale firms and 47 percent of all the large retail establishments. In 1995, Metro Manila accounted for 56.7 percent of the 15 country’s large wholesale establishments and 45.3 percent of the large retailers. The dominance of Metro Manila in large wholesale and retail establishments is even more evident in terms of gross sales and gross value added. Metro Manila’s large wholesale and retail establishments accounted for 69 percent of gross sales and 75 percent of gross value added of all large wholesale and retail establishments in 1991, although the share declines to 64 percent and 67 percent, respectively, in 1995. For the whole distribution sector, Metro Manila accounted for 63 percent of total sales and 68 percent of gross value added in 1995 declined significantly to 50 percent for both gross sales and gross value added.
The share of Metro Manila to gross sales, gross value added and employment by industry in 1995. It shows that Metro Manila virtually monopolizes the large establishment segment in a number of industries, particularly wholesaling of office and household furniture, furnishings and appliances (615), wholesale trade not elsewhere classified; i.e., merchandise brokering, import and export (619), dealing of machinery and equipment (616), retailing of books, office and school supplies (621) and retailing of dry goods, textiles and wearing apparel (623).
The share of Metro Manila in gross value added is generally higher than its share in gross for large wholesale enterprises, suggesting that much of the returns of wholesaling in the country accrue to the Metro Manila large wholesalers. Metro Manila is not as dominant in retailing as in wholesaling, especially for small retail establishments. Nevertheless, the region is still an important presence especially in the retailing of office and household furniture, furnishings and appliances (625), retailing of books and office and school supplies (621), retailing of transport machinery and
equipment, accessories and supplies (626), and retailing of construction materials and supplies (624). The large presence of Metro Manila even in retailing systems from the fact that the region is the premier retail market in the country gicen its large population and higher capita income.
2. ANALYISIS OF PRESENT TASK ENVIRONMENT
Task Environment includes forces from suppliers, distributors, customers, and competitors, which the organization interacts directly and that have a direct impact on the organization’s ability to achieve its goals.
Porter’s five forces is a framework for the industry analysis and business strategy development. The five forces determine the competitive intensity and therefore attractiveness of a market. It is a simple tool for understanding where power lies in a business situation. This is useful because it helps us understand both the strength of the current competitive position and the strength of a position you’re looking to move into.
THREAT OF ENTRY IS LOW
Companies diversifying through acquisition into the industry from other markets often use their resources to cause a shake-up. Thus acquisition into an industry with intent to build market position should probably be viewed as entry even though no entirely new entity is created. Within the industry of Primer Group of Companies, acquisitions of brands of the other companies, either multinational or local can be a potential entrant.
The threat of entry to an industry depends on the barriers to entry that are present, coupled with the reaction from existing competitors that the entrant can expect. Porter identified six major sources of barriers to entry:
Economies of Scale
Economies of Scale arise when the cost per unit falls as output increases. The retail industry has economies of scale in producing their products due to its mass production. So for the retail industry, an economy of scale is also present in its market because of the volume of products produced in the market. This means companies in the retail industry can produce more at a lower price and possibly sell more and eventually would help improve the profitability of the company. As a matter of fact, the existing players have already achieved a cheaper, high quality and trendy design products with a low-cost manufacturing process to increase operating profit. Economies of scale in production, purchasing, research and development, marketing, sales force utilization and distribution can be the key barriers to entry for a potential entrant in this industry.
The retail industry is composed of very large manufacturers and retailers. This manufacturers and retailers are able to build brand loyalty and image for the existing players, thereby adding value to their company. Potential entrants may find it moderate to penetrate the industry since the power of the internet has created also a venue for the manufacturer to double as a retailer. Though, smaller entrants will have a tougher time entering the retail industry because the large players have the authority and have the cost advantage against new entrants to bid down costs from its suppliers. Potential entrants should establish manufacturing plants in countries that have low-labor cost such as China in order to achieve economies of scale.
Product Differentiation
Product Differentiation is a marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products.The stronger the attachment of buyers to established brands, the harder it is for a newcomer to break into the marketplace.
Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior. There are numerous players in the retail industry that offers similar products and service that most companies can produce. In the retail industry particularly in shoes, slippers, bags and clothes, product differentiation is high because everybody buys different products and each brand has different value to different people. This threat would be brand loyalty. Being first in the industry, poses a threat to new entrants because of their customers brand loyalty. So, high product differentiation is needed because consumers have strong brand identification and loyalty to brands. Potential entrants will face a difficult undertaking because investing in building a brand name are particularly risky and they will have no salvage value if they fail.
Another thing is that if it is difficult or costly for a customer to switch to a new brand, a new entrant must persuade buyers that the brand is worth the switching costs. To overcome switching cost barriers, new entrants may have to offer consumers discounted price or an extra margin of quality or service. These barriers discouraged new entrants since they act to boost financial requirements and lower expected profit margins.
Capital Requirements
Capital requirements are the standardized requirements for banks and other depository institutions, which determine how much liquidity is required to be held for a certain level of assets. Nowadays, there is an increasing technological advance in the internet and production process which means that there is a small amount of capital needed to enter in the retail industry.
Access to Distribution Channels
Most of the company’s distribution channels in the retail industry access their products through retailing and distribution, where in the company usually place their products in malls or in retail boutiques. Retail industries recognized the importance of the internet and adapted to the internet to have their own websites. Wherein nowadays, there are catalogues in their websites, place it in carts, then some internet users use this service where they can purchase the clothes or accessories they want without leaving their home.
The major players in the retail industry have already established their distribution channel through the wholesalers and retailers. The major players are struggling in their shelves space to make their product more accessible and visible to the consumers. If
the major players are already struggling for shelve space, it will be more difficult for new entrants for the fact that retailers and wholesalers may be reluctant to take on a product that lacks buyers recognition.
Cost Disadvantages Independent of Scales
Cost Disadvantages Independent of Scale, is whereby established companies already have product technology, access to raw materials, favorable sites, advantages, in the form of government subsidies and experiences. In the retail industry, managerial know-how is an advantage for existing firms and most existing firms have already benefited from the learning curve. This advantage can also be associated with any business function, from marketing, purchasing raw materials to distribution and service that can lower costs. New entrants will take time to achieve these advantages. Having no experience of new entrants will definitely inherent higher costs than established firms and they must bear heavy start-up losses from below or near cost pricing in order to gain such experience and having more experience with the new and late entrants, employees from existing company can already forecast trends that can add great significance to the company and benefit from key relationships with suppliers and people within the retail industry.
Government Policy
Government policies and organized bodies such as World Trade Organization (WTO), International Labor Organization (ILO), industry and trade associations, and others create a barrier of entry in the retail industry, since majority of labor production is performed overseas. Also, these organized bodies set regulations, standards, testing and certification procedures such as ISO. This applies to companies, where their products are manufactured overseas. Like the Bureau of Customs which check the proper and qualified items to sell in the country.
THREAT OFSUBSTITUTE PRODUCTS OR SERVICES IS LOW
Substitute products are the natural result of industry competition, but they place a limit on profitability within the industry. A substitute product involves the search for a product that do the same function as the product the industry already produces.
Porter’s Five Forces Analysis of the Retail Industry
There can be many substitute products within the retail industry. Example of a substitute within the industry is Havaianas slippers for Sanuk sandals and Crocs for our brand Native. There can be also low switching costs for the consumers. It should be noted,
however, that these substitutes are within the industry only. In order for a product to be considered as a substitute, it must perform the same function outside the industry.
Potential substitute for these sandals are slippers. Nonetheless, the sales of these substitutes are not growing faster than the sales of the retail industry. Neither the profits of the producers of substitutes are on the rise nor are the producers of these substitutes moving to add a new capacity.
However, consumer preference may be considered as a threat because not every customer is the same. Some might prefer wearing slippers in summer over sandals or wearing tank tops over shirts during rainy season. Customers also might substitute brand other than those elements where they might substitute brand for preferences such as fit, color, comfort, design and even price point.
INTENSITY OF RIVALRY AMONG EXISTING COMPETITORS HIGH
Rivalries naturally develop between companies competing in the same market. Competitors use means such as advertising, introducing new products, more attractive customer service and warranties, and price competition to enhance their standing and market share in a specific industry. To Porter, the intensity of this rivalry is the result of factors like equally balanced companies, slow growth within an industry, high fixed costs, lack of product differentiation, over capacity, price-cutting, diverse competitors, high-stakes investment, and the high industry exit. In the retail industry, rivalry is high and intense due to the similarities of the product being offered. Threat of rivalry includes all stores that sell bags, shoes, sandals, clothes and many more. Stores and brands are those such as Havaianas, Crocs, Toms, and many more. The retail industry is comprised of several main rivals of equal size and each brand has their customer base. When consumers establish brand loyalty, it shows striking signs of rivalry. And when rival firms threaten existing firms, it reduces their economic profits. Since there are so many stores that sell different brands in the retail industry, this presents very competitive pricing for the product. That is why; often times in the retail industry, celebrities and models are used to influence customers to purchase products. Another is that, competitive moves by one firm have noticeable effects on its competitors and thus may incite retaliation or efforts to counter the move; that is, firms are mutually dependent. One indicator of this is that there is a lively price competition. The prices of the products of the firms within this industry are almost the same because they counter the price of each other.
Other indicator that there is an active rivalry among industry members is that members are racing to differentiate their products from rivals by offering higher-quality products but in a cheap price and a wider product selection. The industry members are also
pursuing their best efforts to build stronger dealer networks expanding their distribution capabilities and making more presence in the market.
BARGAINING POWER OF BUYERS HIGH
Buyers compete with the industry by forcing down the prices, bargaining for higher quality or more services, and playing competitors against each other all at the expense of industry profitability. The buyer’s power is significant in that buyers can force prices down, demand higher quality products or services, and in essence, play competitors against one another, all resulting in potential loss of industry profits. The bargaining position of buyer changes with time and a company’s competitive strategy.
The threat of buyers depends on the marketing efforts for the product. If a company has good marketing strategy then customers are most likely to purchase their products. Also, the retail industry buyer’s are as big as the population. Every consumer is a buyer in the retail industry, since our products are necessity for humans. Primarily, the buyer dictates the type of products sold because the firms are the one catering to their needs and wants. And often times, even fashion trends in the said industry are dictated by the buyers. Also, due to similarities of product being offered in the retail industry, the threat of buyers can be greater.
BARGAINING POWER OF SUPPLIERS IS LOW
The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services. Suppliers in the food processing industry can exert bargaining power over participants by threatening to raise prices or reduce the quality of purchased goods. Supplier bargaining power is likely to be high when, the market is dominated by a few large suppliers rather than a fragmented source of supply. There are no substitutes for the particular input. The suppliers’ customers are fragmented so their bargaining power is low. The switching costs from one supplier to another are high. There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. The buying industry hinders the supplying industry in their development and the buying industry has low barriers to entry.
Suppliers have a great deal of influence over an industry as they affect price increase and product quality. A supplier group exerts even more power over an industry if it is dominated by a few companies, there are no substitute products, the industry is not an important consumer for the suppliers, their product is essential to the industry, the supplier differ costs, a forward integration potential of the supplier group exists. Labor supply can also influence the position of the suppliers. Threat of Suppliers all depends on the amount of raw materials. In some cases, companies in the retail industry; produces their own product, then there isn’t a threat of suppliers other than the materials it takes to produce their products. Distributing own product of a company in
the retail industry is an advantage of the company because they don’t have to rely on other businesses to do it. Price increase of raw materials can be considered as a threat because if that is the case, the threat of wages going up can be considered.
Five Competitive Forces Intensity
1. Threat of Entry Low
2. Threat of Substitute Products Low
3. Intensity of Rivalry among Competitors High
4. Bargaining Power of Buyers High
5. Bargaining Power of Suppliers Low
3. ANALYSIS OF POTENTIAL CHANGES IN THE MACRO- ENVIRONMENT
The Macro Environment Analysis is tradionally the first step of a strategic analysis. It is sometimes referred to as an external analysis. The purpose of the Macro Environment Analysis is to identify possible opportunities and threats to the industry as a whole that are outside the control of the industry.
There are many factors in the Macro-environment that will affect the decisions of the managers of any organization. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change.
• Political factors. These refer to government policy such as the degree of intervention in the economy. What goods and services does a government want to provide? To what extent does it believe in subsidizing firms? What are its priorities in terms of business support? Political decisions can impact on many
vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system.
• Economic factors. These include interest rates, taxation changes, economic growth, inflation and exchange rates. For example, higher interest rates may deter investment because it costs more to borrow, a strong currency may make exporting more difficult because it may raise the price in terms of foreign currency, inflation may provoke higher wage demands from employees and raise costs and higher national income growth may boost demand for a firm's products.
• Social factors. Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. In the Philippines, for example, the population has been aging. This has increased the costs for firms who are committed to pension payments for their employees because their staffs are living longer. The ageing population also has impact on demand. For example, demand for sheltered accommodation and medicines have increased whereas demand for toys is falling.
• Technological factors. New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organizations providing the products.
• Environmental factors. Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.
• Legal factors. These are related to the legal environment in which firms operate. In recent years in the Philippines there have been many significant legal changes that have affected firms' behavior. Legal changes can affect a firm's costs and demand.
LOCAL NATIONAL GLOBAL
POLITICAL Provision of services by local council Philippines’ government policy on subsidies World trade agreements e.g. further expansion of the EU
ECONOMIC Local income Philippines’ interest
rates Overseas economic growth
SOCIAL Local population
growth change (e.g. ageing Demographic population) Migration flows TECHNOLOGICAL Improvements in local technologies e.g. availability of Digital TV Philippines’ wide technology e.g. Philippines’ online services International technological breakthroughs e.g. internet
ECONOMIC MACRO-ENVIRONMENT
POTENTIAL CHANGE
IMPLICATION EFFECT ON
COMPANY
The inflation rate in Philippines was last
reported at 4.5 percent in May of
2011
There is a possibility that the consumer
demands will decrease
Decrease sales revenue for the company, due to the purchasing power of
the peso is not anymore the same as before that would
decrease sales for the company
No new high tax measures
A possible increase in consumer demands, cause of the no movement of
taxes and prices.
The company won’t be able to increase
its prices if the possible cause is tax. Philippines raises 2011 GDP growth goal to 7-8 percent An increase on the investments, inside and outside of the
country
There might be an increase in trust and
confidence of the investors. National Income Account on agriculture is down by 0.5%
Reflection that there is no improvement on agriculture on the
said country and they weren’t able to
further invest on technology, studies
etc.
This would cause the company to calm, unable to be
distracted by local market, especially new ones to be able
to replicate its products.
Inflation rate in Philippines was last reported at 4.5 percent in May of 2011
The inflation rate is one of the most important economic forces consistently weighing on the value of a nation's currency.In the Philippines the inflation rate has increase to 3.80% from the 3.20 from the last year’s computation, an 18.75% increase; this would be gradually felt by the public. For those who are buyers, they might experience a little disappointment to the ability of their peso, but compared to the percentage given to the 2009 computation which was 9.20% inflation rate, this was a big change.
No new high tax measures
One of the promises of the president was not to increase taxes on his term as what he have promised during the 2010 election to the Makati business club, with the statement “"We will refrain from imposing new taxes or increasing tax rates," as what President Aquino have said” "I strongly believe that we can collect more taxes at the BIR (Bureau of Internal Revenue) and higher duties at customs if we become more serious in curbing and punishing tax evasion and smuggling." With this promise he was able to impress different sector of the business community which means bigger profit for them. Other investors will also be allure on such offer to invest to the country.
Philippines raises 2011 GDP growth goal to 7-8 percent
GDP is one of the indicators if one economy is growing or falling, this computation of investment, consumption and government spending minus to the import and export of the country. And having an increase of one percent in our GDP means,that the government action towards the economy are moving in a good flow, even though that it is not felt that much we could tell that the economy is blooming and if the investors trust and confidence will be lift.
National Income Account is down by 0.5%
A National Income Account provides a quantitative basis for choosing and assessing economic policies as well as making possible quantitative macroeconomic modeling and analysis. This is not used to make decision, but only they do provide a basis for the objective statement and assessment of economic policies. These would be their guide, as to where are the sectors of governance need focus.
Based on the latest NIA, the government didn’t focus much on its Agricultural and Aquatic resources. This would take as an opportunity for foreign investor. Example rice we somehow import rice, due to our focus on Industrial development, rather than agricultural or balance.
POLITICAL-LEGAL MACRO-ENVIRONMENT
LEGAL CHANGE IMPLICATION EFFECT TO THE
COMPANY
Philippines Product Registration, Importation and
Exportation
Obtaining the proper licensing and ensure legal compliance for
importation, exportation and distribution of the
product in the Philippines.
This would cost liability in the part of
the company for importation of the products/ingredients
that will be used for the said production.
REPUBLIC ACT NO. 8976 (An Act Establishing the Philippine Food Fortification Program
and for Other Purposes)
The addition of nutrients to processed foods or
food products at levels above the
natural state.
There will be an increase in sales especially when the
health conscious people are aware of the nutrients that are
Execution of Value Added Tax
An increase in consumer product
taxes by 12%.
This would cause increase the Taxes that are given to all consumer products that are being paid by the customers. Implementation of
the Anti-Smoking Law including inside the hotels, shopping malls, and buildings except for smoking
areas that are approved by the city
government
Customers who are smokers will only dine at restaurants
and delis with smoking areas
Decrease in number of customers who
are smokers
Philippines Product Registration, Importation and Exportation
There are certain laws that are being followed. One is which called Tariff law, that stated law sections that contains the things that should be imported and not to be imported. According Sec 602 of the Custom Law site the certain role of the Bureau of Custom on imported products/materials, which they are the one responsible on assessment of the revenue that would came out of such importation. These would cause liability to the company, but would give assurance to the customers that the ingredients that are used are Starbucks certified ingredients, and are legal well paid on the taxes.
REPUBLIC ACT NO. 8976 (An Act Establishing the Philippine Food Fortification Program and for Other Purposes)
Nowadays, people who are health conscious are being a trend to the society. Through such republic act, the government could increase the necessary nutrients by the body. The government should ensure that the process foods and food products be inspected for the safety of its users. According to Sec. 7 of this republic act “The agencies charged with the implementation of this Act shall establish a quality assurance system. Likewise, the manufacturers and importers of processed foods or food products shall also establish their own quality assurance system in accordance with the quality assurance system of the implementing agencies.” Meaning insurance that we eat and drink should be safe and clean for the consumer’s health benefits.
This was enacted through the effort of Republic Act No. 9337 provides that the President, upon the recommendation of the Secretary of Finance, shall, effective January 1, 2006, raise the rate of value-added tax to twelve percent (12%), after any of the following conditions has been satisfied:
• Value-added tax collection as a percentage of Gross Domestic Product (GDP) of the previous year exceeds two and four-fifth percent (2 4/5%); or
• National government deficit as a percentage of GDP of the previous year exceeds one and one-half percent (1 1/2%).
In which products, from food to clothes, are given 12% taxes additional to its products, that are carried by its consumers, this would cause suffering to the market especially on these period that labor unemployment is increasing.
SOCIO-CULTURAL MACRO-ENVIRONMENT
Cultural Issue of the Philippines
Many of those living near or below the poverty line in the Philippines experience constant hardship, suffering, and oppression. Most of them remain homeless and without jobs. Even those who receive small paychecks or wages cannot sustain their families with such meager incomes.One of the factors that greatly influence such low standards of living and sustenance is very poor self-esteem. Because of their state of life, they tend to harbor derogatory feelings of inferiority. They see themselves at the whim of wealthier people and at the mercy of those who drive society. Thus, what results is poor motivation to try to work harder. They have resigned themselves to their lifestyles and intend to just live their lives like slaves.This factor cycles into limited freedom because of poverty.
Their state of life prevents them from escaping societal evils such as oppression and abuse, especially from the upper classes. They remain powerless without any voice in matters that run their lives. They are their own slaves to their lack of confidence and motivation. They are imprisoned in economic and material hardship.Aside from being born into poverty, there are other elements that keep a person under that dreaded poverty line. One of the most important of these is poor education. The lack of sufficient academic foundations and work experience brings about the inability to perform higher-paying jobs. This relegates the poor to the level of unskilled laborers who finds themselves in the simplest and lowest-paying jobs around.
Another major contributor to a low standard of living is the poor state of health that many of the poor experience. Ailing workers lack motivation, they have little discipline in them to enable them to tackle more complicated areas of work or longer shifts. This not only turns out progressively unskilled laborers, but also hampers quality production.The poor also lack knowledge in family planning. They believe that the more children they have, the more they can send them to be victims of child labor and earn income for the family. They abuse their kids to earn more and turn a blind eye to the rights of the child. It is very common sight in the Philippines. Parents with notions that the child will study hard, and one day lift his or her parents from poverty. All of this backfires because the labor supply continues to shoots up. This brings down the price of labor and allows huge capitalist organizations to take advantage of cheap labor. In most cases, it leads to abuse and neglect.Another one of the major causes of poverty are low savings. These, in turn, equate to low investments. The poor seldom have enough finances to bring into existence even a little business of their own. They are often placed under the iron fists of unfair employers who fail to take into account the welfare of their workers.
Languages in the Philippines
Filipino is based on Tagalog and is the official language of the Philippines. In spite of being the national language, only about 55 percent of Filipinos speak the language. In addition to Filipino are about 111 distinct indigenous languages and dialects, of which only about 10 are important regionally.English is generally used for educational, governmental and commercial purposes and is widely understood since it is the medium of instruction in schools. The Philippines are the third largest group of English speaking people in the world, after the United States and the United Kingdom.Since English is widely spoken in the Philippines, it is common to hear Filipinos use a mixture English and Filipino words or phrases, known as "Taglish" (a mixture of English and Tagalog), in their everyday conversations. A steadily dwindling minority still speak Spanish, which had at one time been an official language.
Demographics
Demographics are records of human population in the country, including its population density, population growth, education level, health, and other aspects of the population. The main demographic force that is essential in this paper is the population because people make up markets. According to the 2007 Census, the population of the Philippines was 88,574,614. The national Statistics Office is the office in-charge of taking note these data. From 2000-2007, the population growth is 2.04%. As of 2010, the estimated population is 94,013,000 people. This estimates the population growth for 1.957%.
With the chart above, we can see that there is an increasing growth of our population. With the population growth rate, NSO predicted that by 2025 our population will be 163,072,000 or almost double of the population this year.
The age distribution is at most in the working age which is 59.2 in 2007. This means that almost half of the population is in the middle stage of their life. There is also rapid urbanization since urban areas comprise of 65% of the total population in 2008.
The rapid growth of the population and the urbanization are the major population issues of our country. Although there is a high rate of urbanization in the country, this indicates that there can also be an increase in the people’s income. When there is an increase of income, the consumption and demand for high quality goods will also increase.
Source: National Statistics Office, Philippines
Culture Lifestyle
To further understand the factors that can affect the food processing industry, it is better to discuss the Filipino lifestyle in foods.
Filipinos love to eat, and since they’re naturally hospitable and gregarious, food is the basis of their social life. Because the feeling of fulfillment after eating rice, their staple ingredient, is relatively short-lived, they eat three meals a day and two snacks in between. Filipinos, especially country folk, rise early. Some will eat a segundo almuerzo (second breakfast) around 10:30, plus a merienda, or mid-afternoon snack. Rural folk eat their main meal at midday, while city dwellers emphasize the evening meal. The diet of poor families is usually rice, fish, and vegetables, interspersed with starchy snacks. At fiesta time, all families try to eat meat.
Filipino eating lifestyle is also shifting towards healthy foods because they are now conscious of their looks and figures. With the increasing awareness by consumers on healthy eating and a healthy lifestyle, food-processing companies continue to develop or add new products that cater to the demand of this growing segment. Beverages continue to be the trendsetter with new brands and/or variety of flavored waters, soy beverages, and yogurt drinks, energy drinks, and health drinks such as green teas. The marketing campaigns for the beverages emphasize “no sugar”, “natural”, “vitamin and fiber enriched”, “no fat”, “no cholesterol”. A highly competitive market place has led companies to seek out prime shelf space in supermarkets and convenience stores.
In relation to the food processing industry, this Filipino eating lifestyle can be a basis for creatively innovate their products and marketing their products. For example, if Filipinos eat snacks in between of the main meals, companies in the industry, which produce snacks, can have a marketing activity via commercial airing at the afternoon where snacks are usually eaten.
Education
Filipinos have a deep regard for education, which they view as a primary avenue for upward social and economic mobility. However, according to the NSO data, there is a decreasing rate of Filipinos who can finish college. From the elementary stage to college level, the number of enrolees also decreased. It indicates that there is an issue with regards to the education of our country. One example is that middle-class parents make tremendous sacrifices in order to provide secondary and higher education for their children.
Some universities were excellent; others were considered "diploma mills" with low standards. Public elementary schools often promoted students regardless of achievement, and students, especially those in poor rural areas, had relatively low test scores. (Please refer to the table below)
Source: National Statistics Office, Philippines
DEMOGRAPHICS MACRO-ENVIRONMENT
POTENTIAL CHANGE
IMPLICATION EFFECTS ON THE COMPANY
The current population of the Philippines as of 2009 is 92,226,600, and projected population on 2010 is 94.01million. There is a competition on scares resources that are available in
the market. There are possibilities of increase of consumers of the product based on the increase on population. The Philippine is made up of different
ethnic groups that composed of
120-170 different dialects.
A differ on dialects could bring a barrier for one to exchange
goods/products
This would be a challenge for the company to serve different groups with
different dialects.
80% of the Filipinos are Catholic 5% are
Muslims and the 10% are Protestant
and other religious group.
Being a colony of Spain for 300 years, this was one of their
influences.
There would be less stress for Starbucks of discussing certain Ethical issues on
their products.
Issues regarding overpopulation in the country
There are many factors affecting this problem on overpopulation such as poverty, hunger, lack of job openings, lack of proper education, etc. many of which result from another. Regardless of what the true cause of the problem is, it all boils down to the creation and sustenance of life. Some studies claim that a baby is born every eight seconds and somebody dies every thirteen. Others might contest that a baby is born every three seconds. Although these studies may vary, the fact of the matter remains that the birth rate far outnumbers the fatality rate. This implies that there are an excessive number of people living in the world today. While there are many proposed solutions to this crisis that may have a high rate of effectiveness, such as the use of contraceptives and certain policies limiting the progeny of a couple, they are not highly encouraged or implemented here in the country. Due to the influence of the Catholic
Church, the Government cannot easily impose certain regulations that might affect the country and the economy. In fact overpopulation is one of the reason why there is a large number of unemployed people, not only education is the cause, but with the computation on few slots that are available people are trying to attain what is the only option for survival. For those who cannot compete leaves the country. Other nations are one who benefits the ability of these individuals.
TECHNOLOGICAL MACRO-ENVIRONMENT
POTENTIAL CHANGE
IMPLICATION EFFECT ON
COMPANY
ITW Food Equipment
Group Receives
Highest Honor with
2011 ENERGY STAR Sustained Excellence Award ITW FEG is committed to supporting customers in their drive to cut costs, consume less water and electricity, and decrease waste.
ITW FEG companies that support the sustainable initiatives of customers and end-users with new
products and
technologies that directly address their
concerns about
operations and the environment.
Using or upgrading of current POS (point of sales) software
Custom made to the company’s
specification or need. A software or equipment where the sale is made official
Less time consuming work for the management to keep
track of the
company’s sales
Availability of Commercial/Domesti c used coffee makers
in the market.
Easier and more convenient coffee
makers, that are using by hotels and
restaurants are available strait from
Competition on coffee making are
intense, the availability of cheaper coffee
your office and at home
different shop cater to the demands of its
customers.
Employing or upgrading of current POS (point of sales) software
Majority of commercial food service companies nowadays make use of the POS (point of sale) technologyis the location where a transaction occurs. A "checkout" refers to a POS terminal or more generally to the hardware and software used for checkouts, the equivalent of an electronic cash register.
The POS makes everything easier for a store/company to audit and track the records of its inventory, with this stores won’t need any more to worry regarding lost inventories and changes in prices, because everything is updated and would be able to change as long as a database is available.
LABOR MACRO-ENVIRONMENT
POTENTIAL CHANGE IMPLICATION EFFECT ON THE COMPANY
Low wages are given to the Filipino Labor
force that is not enough to their daily
living.
Laborers would rather find another
job to increase their monthly salary
or would seek opportunities
abroad
Employees would ask for increase or
would lessen their performance if the demands are not
The issue regarding job mismatch is prominent to some
companies today
Many Filipinos are unsatisfied on their
jobs due to this mismatch that would result on less performance and lack of ability
for the said employee
Companies would put these people on
a low wage bracket especially it’s not
their forte, that would result to underdevelopment Underemployment rate is 7.30% as of 2011 a 2.26 increase as of last year underemployment rate A great indication that there is no growth in the economy and that
poverty is increasing Companies should be able to find quality employees because of lack of employment in the country
Issue of Low Wages in the Philippines
The Philippine is one of the countries that has the lowest labor which is P389.00-P426.00 ( $ 9.83) which is not enough to the daily cost of living of a typical Filipino family is around P800. That bothers many Filipinos especially if that person has a child, which they need to send to a decent school, a decent life they need to save a couple of money to be able to do that. With this kind of salary given to every Filipino Laborer it’s not enough for one’s family.
Issue regarding Job Mismatch
There are many Filipino workers who are underemployed, meaning that their skills didn’t match the need of a company 19.4% of the total labor force, some of these people are part of the mismatch labor force. Their skills, talent and education during college, was not the same profession that they were able to work on. These people are the one who are unsatisfied on their jobs and the one who cannot resign due to the crisis in our country.
Employment and Unemployment Rate
The quality of the Philippines labor market is already weak to start with. For the past seven years through 2008, the economy grew at 5.4 percent on average per year. Yet, during these prosperous times, the labor market was characterized by (i) a high unemployment rate (7.4% in 2008 and 7.5% in 2009); (ii) even higher underemployment rate (19.3% in 2008 and 19.1% in 2009) with a high incidence among the youth, and even skilled (graduates) youth; (iii) high informal sector (mostly in agriculture and services); (iv) a rigid labor market environment (including an outdated and complex labor code); (v) and a falling trend in real wages since 2001.
Notwithstanding the resiliency of the economy, the quality of the labor market is slowly weakening. The quantity of jobs lost is already large but difficult to fully capture. The unemployment rate continued its steady rise in 2009 (from 7.4% in October 2008 to 7.5% this January12). Along with the slump in exports (annual contraction of about 40% in both January and February), the manufacturing sector continued to shed jobs, posting more than 100,000 job losses in January. Starting 2008, data point to a particular worsening of the job market for unskilled workers. Overseas employment an important safety valve given the rapid growth of the Filipino labor force also weakened in November, and contracted by 5.8%, in December. It again registered strong growth earlier this year but downside risk still lies on the scenario of deeper global downturn. Nevertheless, the services sector continued to create jobs even as the economy slowed down. The underemployment rate remains below 20%. Surprisingly, measured employment quality remained broadly stable at this stage.
Half of the estimated 35 million employed persons in 2009 were engaged in services, distributed mostly in the wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods. About 35 percent of the employed were engaged in agriculture while the rest (14.5%) worked in the industry sector.
Occupation-wise, the laborers and unskilled workers comprised the largest group (32.5%), followed by farmers, forestry workers and fishermen (16.7%), next by officials of government and special interest organizations, corporate executives, managers, managing proprietors and supervisors (13.5%). The service workers and shop and market sales workers accounted for 10.5 percent of the total employed persons in 2009. In addition to the market sales workers, the rapid expansion of the call centers or the BPO Industry constitutes a large percentage on this labor force.
More than half of the total number of employed persons worked as wage and salary workers. One-third were own account workers while the rest (12%) were unpaid family workers. There is also an increase in the number of household with both parents working.
Net Job creation started deteriorating in July 2008
Consumer Spending
Filipino families earned a total of P3.01 trillion in 2006 according to the final results of the 2006 Family Income and Expenditure Survey (FIES). Distributing this total annual income among the estimated 17.4 million Filipino families in 2006 resulted in an average annual family income of approximately P173 thousand. The total annual family expenditure was approximately P2.56 trillion, or P147 thousand per family on the average.
Considering the inflation between 2003 and 2006, the total family income in 2006 would be valued at P2.18 trillion at 2000 prices. Likewise, the total family expenditure in 2006 would be valued at P1.86 trillion at 2000 prices. In real terms, the total income of families increased by 8.5 percent while the total expenditure increased by 10.5 percent between 2003 and 2006.
Total Number of Families, Family Income and Family Expenditure and Gini Coefficient: 2006 and 2009
Percent Distribution of Family Expenditure by Expenditure Item for Bottom 30 Percent and Upper 70 Percent Income Group: 2006 and 2009
There was a shift in the spending pattern of Filipino families particularly those in the bottom 30 percent income group because it slides towards more spending on food. In 2009, 59.9 percent of all expenditures by this group were on food, increased by 0.8 percentage points from 59.1 percent in 2006. In totality of the income group, there was an increase in food spending of 1.2 percent from 41.4 in 2006 to 42.6 in 2009.
Consequently there was a decrease in tobacco, fuel, light and water expenditures. All other expenditures were increased or at par both in 2006 and 2009.
OFW Remittance
There was a total increase of OFW remittance in all of the continents. Basically, it can be attributed to the deployment of the OFW because there was a 15.1 percent change from 2008-2009.
There is also an increasing demand for the Filipino workers abroad since the government is intensifying their human resource development to improve the competitive advantage of the Filipino workers abroad.
Remittances of Overseas Filipinos : 2003 - 2009 (In Thousand US Dollars)
Inflation Rates
The annual headline inflation rate at the national level went up to 3.0 percent in November from 2.8 percent in October primarily due to the jump in the annual growth in fuel, light and water (FLW) index to 12.0 percent from 8.3 percent in October. Higher annual rates of price increments in housing and repairs (H&R) and services index also contributed to the uptrend. Inflation a year ago was 2.8 percent.
Excluding selected food and energy items, core inflation advanced to 3.5 percent in November from 3.3 percent in October. Similarly, the annual inflation rate in the National Capital Region (NCR) increased to 3.6 percent in November from 2.2 percent in October. It resulted from higher annual price adjustments in food, beverages and tobacco (FBT), H&R and FLW index.
Annual inflation rate in Areas outside the National Capital Region (AONCR) continued to move at a slower pace of 2.8 percent in November from 2.9 percent in October brought about by the deceleration in the annual price gains in FBT and H&R index.
Import and Export
Total external trade in goods for January to October 2010 reached $87.911 billion, a 31.4 percent increment from $66.897 billion registered during the same period in 2009. Total imports posted a 26.3 percent annual increase to $44.826 billion from $35.501 billion. Similarly, an increase of 37.2 percent for merchandise exports was noted to $43.084 billion in January to October of 2010 from $31.397 billion during the same period in 2009. Thus, the balance of trade in goods (BOT-G) for the Philippines registered a deficit of $1.742 billion during the 10-month period in 2010, a value lower than the $4.104 billion deficit in the same 10-month period last year.
Businesses involved in international commodity trading (i.e., importers, exporters and those engaged in dual activities) have a positive but less favorable outlook relative to the previous quarter’s survey results due to expectations of low export demand on account of the slow economic recovery of international markets from the global financial crisis. This is as quoted from Business Expectations Survey of BSP, Quarter 4, 2010.
Philippine Import Annual Growth Rates: October 2009 – October 2010
Combined import and export merchandise trade for October 2010 was up by 27.9 percent to $9.664 billion from $7.556 billion in October 2009. Total merchandise imports increased at 28.4 percent to $4.888 billion from $3.808 billion in October 2009. Total exports, on the other hand, rose by 27.4 percent to $4.776 billion from $3.748 billion in October 2009. The balance of trade in goods (BOT-G) in October 2010 posted a deficit of $112.00 million compared to last year recorded deficit of $60.00 million. On a month-on-month basis, total imports for October 2010 grew by 6.9 percent from $4.573 billion recorded in September 2010.
(F.O.B. Value in Million US Dollars)
Philippine Trade Performance in October: 2010-2009 (F.O.B. Value in Million US Dollars)
Exchange Rate of Philippine Peso vs. US Dollar
The Philippine Peso is continuing to appreciate though the rate is fluctuating. As of September 2010, the exchange rate accounts to 44.31 compared to 48.139 of September 2009. Despite of the financial crisis, the Philippine Peso proved supple because of the OFW remittances, export earnings and foreign investments.
The increase in exchange rate of Peso and Dollar can definitely affect the import and export of the country. The strengthening of the peso contributed to the lower confidence of respondents in the exports business, but the same factor provided support to the
more sanguine outlook of importers given that a stronger peso reduces the cost of imports in peso terms. Some say that the increase in the rate of Philippine Peso is good for the country’s economy especially to the importers. However, it will have a great impact for the families of the OFW because they will have to undergo a decrease in their family income.
ECOLOGICAL MACRO-ENVIRONMENT
The ecological environment involves the stock of the physical and natural resources within a region. It can be broadly segmented into: (1) Physical – Land, air, water, and sea, and (2) Nature – Flora and fauna.
The Philippines was one of the first countries to adopt the Agenda 21 process, initiated at the Rio Earth Summit in 1992, by formulating its own National Agenda 21, through a highly participatory process, in 1996. However, despite its government’s good intentions, rapid population growth, urbanization and industrialization have far outstripped urban environment services and weak natural resource management systems have led to rapid degradation of those environments, too.
Rapid conversion of forestlands and grasslands to urban use is depleting these natural systems. Agricultural yields in lowland areas are stagnating, and population pressures are stimulating cultivation of fragile upland areas, causing serious soil erosion. While estimates of deforestation differ, forest cover in the Philippines has certainly been significantly reduced over the last forty years, due to increasing urbanization, illegal logging, and forest fires. Reforestation efforts by the government have been erratic, with low tree survival rates. Marine resources are heavily stressed by over-exploitation and pollution.
The loss of forests and other critical habitats is also threatening the Philippines’ rich biodiversity. Although the number of protected areas has grown on paper, so have the rates of destruction and habitat conversion within them. Management is hampered by inconsistent laws, inadequate regulations, over-lapping institutional mandates, weak enforcement and funding shortages.
Over the past decade, the Government of Philippines has tried to reverse environmental degradation by introducing innovative institutional and legal reforms. In addition, in recent years, many donors, including the World Bank, have supported efforts to improve overall environmental governance in the country by building the capacity of the Department of Environment and Natural Resources (DENR), the Laguna Lake Development Authority, the National Economic Development Authority, the Department of Public Works and Highways, the Land Bank of the Philippines, local governments, NGOs, and local communities, and by supporting innovative partnerships among them. In spite of all these efforts, capacity in environmental and natural resources governance still requires significant improvement, particularly in local government units.
INSTITUTIONAL MACRO-ENVIRONMENT
Transportation Road System
The Philippines has 199,950 kilometers (124,249 miles) of roads, of which 39,590 kilometers (24,601 miles) are paved. As of 2004, the total length of the non-toll road network was reported to be 202,860 km, with the following breakdown according to type: National roads - 15%, Provincial roads - 13%, City and municipal roads - 12%, Barangay (barrio) roads - 60%.
Road classification is based primarily on administrative responsibilities (with the exception of barangays), i.e., which level of government built and funded the roads. Most of the barangay roads are unpaved village-access roads built in the past by the Department of Public Works and Highways (DPWH), but responsibility for maintaining these roads have now been devolved to the Local Government Units (LGUs). Farm-to-market roads fall under this category, and a few are financed by the Department of Agrarian Reform and the Department of Agriculture. However, despite having a large road network built over the country, large parts of the road network continue to be in poor condition (only 20 percent of the total road network is paved). Parts of the road system are the jeepneys, buses, railways.
Water Transportation
he main gateway to the Philippines through the sea is through the Manila International Cargo Terminal and the Eva Macapagal Port Terminal, both in the pier area of Manila. Other cities with bustling ports and piers include Bacolod, Batangas City, Cagayan de Oro, Cebu, Davao, Butuan, Iligan, Iloilo, Jolo, Legazpi, Lucena, Puerto Princesa, San Fernando, Subic, Zamboanga, Cotabato, Allen, Ormoc, Ozamiz and Tagbilaran. Most of these terminals comprise the Strong Republic Nautical Highway, a nautical system conceptualized under the term of President Gloria Macapagal Arroyo where land vehicles can use the roll-on/roll-off (Ro-Ro) ship service to traverse the different islands of the country at minimal costs.
Air Transportation
There are 76 total paved runways and 190 unpaved runways. There are also 13 airports on which there are domestic and international flights. This can also be a mode of transportation of goods and other cargoes.
4. THREATS AND OPPORTUNITIES
Potential Change in the Macro Environment Segment Opportunity or Threat
1. No new high tax measures Economic Opportunity
2. Philippines raises 2011 GDP growth goal to 7-8 percent
Economic Opportunity
3. National Income Account on agriculture is down by 0.5%
Economic Threat
4. An Act Establishing the Philippine Food Fortification Program and for Other Purposes
Political-Legal Opportunity
5. Execution of Value Added Tax Political-Legal Threat
6. ITW Food Equipment Group Receives Highest Honor with 2011 ENERGY STAR Sustained Excellence Award
Technological Opportunity
7. Using or upgrading of current POS (point of sales) software
Technological Opportunity
8. The issue regarding job mismatch is prominent to some companies today
Labor Threat
9. Underemployment rate is 7.30% as of 2011 a 2.26 increase as of last year underemployment rate
Labor Threat
10. Issue of Low Wages in the Philippines
Labor Threat
