CASE 2.

LILI MARLENE AVIATION SCHOOL: Lucy in the Sky with Diamonds

For more than 15 years, Miss Marlene Cagatao worked in various capacities with Airwave

Aviation School, an educational institution engaged in educating and training pilots and airplane

technicians.

Marlene was aware of the ever-increasing demand for pilots and technicians around the world.

This information lingered in the mind of Marlene and she thought that maybe there was an opportunity

to open an aviation school outside Metro Manila. As vice president of Airwave Aviation School for five

years, she felt that she was ready to operate a school for pilots as president. She knew exactly the

requirements needed for operating this kind of school.

In due time, Marlene was able to convince three prominent persons to finance the project.

Marlene already had a name for the school: LILI MARLENE AVIATION SCHOOL. Her next concern

was to find a suitable location outside Metro Manila. She found a 20-hectare land in Cabanatuan City,

which she thought, would be just right for her proposed project.

When Marlene was called to a meeting with the financiers, she was asked about the advantages

of Cabanatuan as the site for the school. Among her reasons were the low acquisition cost of land and

the importance of the area in the development projects of the national government. The construction of

the SCTEX highway to Baguio was in progress, while the proposed seaports in Dingalan and Baler,

Aurora was already on the drawing board. In addition, various infrastructure and facilities were already

present in the area.

The financiers were satisfied with her statements regarding the proposed site, but they wanted

more information. Marlene was told that like any other business, operating an aviation school must be

able to meet the criteria of profitability and stability for a long period of time. They asked her to produce

information about how the current situation would allow the proposed aviation school to prosper. In

response, Marlene agreed to produce the answer in their next meeting.

Learning Assessment

1. Using the various environment that affect business, conduct and present an environmental

scanning that could serve as basis whether to pursue or not the proposal.

2. Based on the data given, provide a list of pros and cons for the proposed location/site.

3. Create acceptable assumptions to present possible level of profitability and stability of the

proposal.
CASE 3. MUTUAL LENDING: Help Yourself

The job of Ms. Juliana Sarangaya was to solicit borrowers for the branch office of Mutual

Lending, a financing firm. The branch had just opened seven months earlier and was still struggling to

justify its existence. So far, Ms. Sarangaya was able to develop a profitable group of clients. She was

still not satisfied, however. She knew that for the branch to survive, it must have a bigger portfolio of

clients.

Ms. Sarangaya’s opportunity came when a long-time friend mentioned a possible prospect. She

was assured that with the help of the prospect, she could get a sufficient number of qualified borrowers.

The prospect held a high position in a large university and he could arrange an exclusive loan

agreement between the university’s employees and mutual Lending. A meeting between Ms.

Sarangaya and the prospect was scheduled.

During their meeting, the prospect told Ms. Sarangaya that a facilitator’s fee was required for the

deal to push through. From Ms. Sarangaya’s point of view, the fee was only possible if the interest

charge was jacked-up. Ms. Sarangaya thinks that this would cause inconvenience to the borrowers

who were mostly low-income earners. She relayed the information at once to her superior who prodded

her to go ahead. Ms. Sarangaya was adamant. “I consided the facilitator’s fee as a bribe and don’t think

it is morally right for me to agree to such a condition,” Ms. Sarangaya thought.

Torn between clinching the agreement and her moral duty, Ms. Sarangaya’s mind wandered

from one option to the other.

Learning Assessment

1. Explain your opinion/perspective on the merits or demerits of the facilitator’s fee.

2. Aside from the proposed “facilitator’s fee,” propose other possible “ethical” ways or strategies to

improve profile of client’s portfolio as well as its sustainability.

CASE 4. RISTORANTE FILIPINO: More

 After finishing a course in Hotel and Restaurant Management at St. Paul’s College, Ms.

Remedies Espiritu immediately starts to assist her mother in operating “Ristorante Filipino” a big

restaurant in San Fernando, Pampanga. The firm’s total personnel complement of 30, which includes

her mother as proprietor and manager, consists of waiters, cooks, cashier, a security guard, utility boy,

technician, and a supervisor. A five-piece band plays middle-of-the road music every morning. By all

indications, the business appears to be succeeding.

As a consequence of favorable results, Remedios is requested by her mother to prepare a plan

for expanding the business. The first move will be to open a branch within San Fernando. The ten-year

target will be to established branches in Tarlac, Bulacan, Nueva Ecija, Bataan, and Zambales.

Remedios has a sister who is an accountant, another is an industrial engineer, a brother is a

chemist, and another is the traing director of a company. All of them, except Remedios, are employed

outside of the family business, with an average job experience of five years. All of them have indicated

that they prefer working with their mother, if given the opportunity.

All the parts of the expansion plan appear to be manageable tasks for Remedios, except that

part which identifies the source of funding for the expansion. Even if the family owns the restaurant,

their mother does not want to rely on bank loans as source of capital.

Remedios knows that the family’s assests are not sufficient to finance even a branch. However,

her mother insists on opening new branches within two years. According to her mother, “Timing is very

important in business.” The next two years is very crucial to our continued success. To Finance the

proposed Expansion, Remedios is considering a change in ownership form as an option. However, she

must think hard on the type of ownership that will suit their family’s business.

Learning Assessment
 1. Evaluate possible proposed re-organization to suit for the planned expansion. Present various

pros and cons for each of the proposed form of ownership that may serve as basis for decision

making.

2. Prepare a cost-benefit analysis for each of the possible form of ownership other than its current

business structure.

CASE 5. JONA CAR RENTAL: Before the Next Teardrop Falls

For fourteen months, Mr. Jose Naguimbing Acted as general manager of Jona Car Rental. The

company had branches in Angeles City, Olongapo City, and Baguio City. The main office was located

in Makati City.

Jose succeeded his brother Pedro who founded the company and was well-liked by his subordinates.

The car rental company was very lucrative when Pedro left it to establish another business. Jose was

very enthusiastic during the first few months of his stewardship. At the fifth month, his staff member

began losing confidence in his abilities to run the firm. One time, when a purchase order for three units

of Toyota car was presented to him by the office manager for his signature, he signed it immediately.

The manager filed the order with the dealer on the same day. The next morning, however, Jose

instructed the office manager to cancel the order. He also instructed the manager to buy three units of

Mitsubishi cars from a dealer.

When the position of branch manager for Angeles City became vacant, he appointed someone whom

his immediate staff thought to be the least deserving of the three candidates. After three months, his

staff members were proven right: the revenues of the branch were drastically reduced. Compared with

a competitor in the area, the performance of the branch was dismal.

When Jose decided to establish another branch, he asked his staff to identify three potential sites for

him to choose from. He picked Laoag City. It turned out that Laoag had the weakest potential. After a

few months of operation, the branch had not shown any sign of promise. In contrast, the competitor

who put up a branch in Santiago City in the same year was registering substantial revenues. Santiago

City was one of the potential sites forwarded to Jose for consideration.

Learning Assessment
1. Examine and discuss which of the steps in decision making was not done properly by Jose that

caused the kind of output his decision has brought.

2. Propose a decision tool or model that Jose can use to improve his performance. Use either

qualitative or quantitative approach.