Republic of the Philippines

DEPARTMENT OF EDUCATION
Region VII, Central Visayas
DIVISION OF CEBU PROVINCE
TAYUD NATIONAL HIGH SCHOOL
Tayud, Consolacion, Cebu
S.Y. 2018-2019

Case Study No. 1:

A Case Study of
Abakada Company

Submitted by:

Kent Anthony L. Gestopa

XII-RUBY

Submitted to:

Ms. Marites Melendres

Teacher
Case Problem Analysis:
Abakada Company began a small enterprise buying and selling various
food products. After a few years of successful operations, it added apparel and
footwear to its wares. During this initial stage, Abakada managed to work on the
basis of its proprietor’s capital, borrowing from its bank from time to time when
needed.

After more years of operation, Abakada found that it needed to draw larger
amounts of funds through bank borrowing, as well as to hire more personnel for
the growing marketing needs and services, apart from administrative functions
like accounting, among others. The proprietor carefully weighed his options:

 Shall I incorporate my business so that I can have greater and

easier access to funds, especially larger loans from banks?
 If I hire more people as my company goes bigger, will I be able to
manage and control well the personnel working for me?
 If I begin offering ownership shares to other people outside my
family, will serious disagreements arise among us in terms of
products and services to offer in the future as well as managerial
style?

Guide Instruction: Based on the situation above, give the owner of Abakada
Company appropriate advice regarding whether or not to incorporate his
business. You might wish to categorize the pros and cons into the following
issues:

• BUSINESS SIZE

• MISSION AND OBJECTIVES

• PROCEDURES FOR INCORPORATION

• PERSONNEL

• CONTROL

• FUNDING SOURCES

• LEGAL AND TAXATION

I. INTRODUCTION

The Abakada Company started to grow from a little business where

the owner’s capability and capacity in financial sustainability on his
business are only enough for day-to-day transactions. As time goes by,
his small business started to grow and eventually, the financial aspects
of his company doesn’t coincide with the needed funds for his business
that’s why he thought for another solution through borrowing some
cash in banks. However, he realized that it needed to draw larger
amounts of funds through bank borrowing, as well as to hire more
personnel for the growing marketing needs and services, apart from
administrative functions like accounting, among others.

II. BACKGROUND

The owner of the company doesn’t have enough financial and

business management literacy for he is hesitant in taking the risk in
borrowing money from banks. He also tends to be confused in making
decisions in making his company bigger by hiring more competent
workers and by letting other personalities to take shares from his
business. He thinks as a pessimistic one in engaging in his own
business and not the full of spirit businessman.

III. PROPOSED SOLUTIONS AND ALTERNATIVES

Under this section are the solutions for the problems of Abakada
Company and some alternatives in dwelling to the business worls in
order to make the business fully-equipped and ready to survive and it
will be categorized in terms of:

 Business Size

If the company will choose to make the size of the business

larger then it will increase the output efficiency for the
business will established a bigger business where the
markets will increase their demand and eventually will result
to a higher business performance. It will also create greater
impact towards the locality and improved brand exposure.
 On the other hand, the business itself will also needs
larger capital in financing the needed transactions and
because it will capture larger markets, then it will also
increase in logistical complexities.

 Mission and Objectives

If the business will expand, then it will also make its

mission and objectives to view on a holistic scale or in a
greater view for it will tackle around the larger business
aspect.

However, it will not have a complete assurance that

these missions and objectives will be fulfilled for the
organizational structural itself will distribute the power and it
will be hard to please others to follow a certain goal due to
their personal view for the company.

 Procedures for Corporation

If the business will expand to a corporation, then it will have

greater benefits, not only for the people but also for the
business itself.

However, before a business will turn into a

corporation, it will first undergo some processes which can
make the business operations slow for a span of time before
it can operate fully and legally.

 Personnel

If the business will expand, it will require high number of

personnel where it can make the business’ performance
more productive and competent in the market.

However, it will not be long that these personnel can

achieve harmonic work for it is inevitable to avoid the
quarrels in each workplace or departments which could
result to some internal or even external issues.

 Control
 If the business will expand, then it will have a greater
span of workers to be controlled. Where the owner itself, can
hire for other specialist to make his workload lighter and
makes the business more efficient.

However, it will also result to some internal issues

where other personnel tend to have greed dreams that can
destroy the company.

 Funding Sources

If the business will expand, the funding sources

should have a larger amount of capacity where banks will
open offers where you can borrow and transact with them.

However, if you can’t pay it on the said negotiations, it

will not result to a better effect for it can also cause
bankruptcy in the business itself.

 Legal and Taxation

If the business will expand and we look in the legal

terms, it will make the business more credible enough and
can make other investors to invest in the company.

However, the tax collection will also partake its role

where any violations in the law can ruin your business
wholely.

IV. CONCLUSION

Thus, in growing a business you should have the good-decision

skill and risk-taker for the business itself can be more successful and
more productive in the market and as well as in the business world.