ROYAL PRINTING AND PACKAGING COMPANY

IN MAY 1989 ON THE MANAGEMENT OF THE ROYAL PRINTING AND PACKAGING COMPANY, MR.
RICARDO BALTAZAR WERE ABOUT TO TURNED OVER THE COMPANY TO HIS SON. IT’S PROBABLY TO HIS
OLD AGE 68 YEARS OLD. JOSE IS THE ONE WHO WILL BE HANDLING THE COMPANY SOONER OR LATER.
HE JUST GRADUATED FROM A BUSINESS SCHOOL IN METRO MANILA A MONTH AGO. MR. BALTAZAR,
HIS FATHER HAD MANAGED THE COMPANY FOR OVER 27 YEARS (1962-1989). DUE TO HARDWORK OF
MR. BALTAZAR HE ONLY STARTED THE BUSINESS WITH ONLY 2000 PESOS. DURING THE FIRST
ESTABLISHMENT OF THE BUSINESS, THE COMPANY ACCEPTED ALL TYPES OF PRINTING JOBS TO SMALL
ORDER TO BIG ORDER. ATER SOME TIME, MR BALTAZAR HAD ESTABLISHED ALREADY SOME
CONNECTIONS TO DIFFERENT COMPANIES. WITH THESE INSTUTITIONAL CLIENTS THE COMPANY ITSELF
DEVELOPED A PROGRESS ALONG ITS WAY.

HE WAS PROUDLY EXPLAINING TO HIS SON THE DIFFERENT COMPANY RESOURCES AND TELLING
HIM THAT THERE’S NO NEED TO WORRY ABOUT ITS SUBSTANCE LIABILITIES. MOREOVER, HE INCLUDED
THAT THE DIFFERENT TYPES OF PRINTING MACHINERIES WERE IN GOOD TERMS WHEN BOUGHT
DURING HIS TIME. THE EXCHANGE RATE OF PESO AND DOLLARS BACK THERE WAS ONLY 6PESOS-
1DOLLARS WHILE TODAY THE EXCHANGE RATE IS ROUGHLY 20PESOS-1DOLLARS. ONE OF THE GERMAN
BRANDS WAS HEIDELBERG OFFSET KORD AND ITS MARKET VALUE ALONE IS 1.2 MILLION PESOS BUT
MR. BALTAZAR ONLY BOUGHT IT WITH APPROXIMATELY 380,000 PESOS IN 1977.

ON THE FOLLOWING DAY JOSE REPORTED TO WORK AND REVIEW SOME FINANCIAL
STATEMENTS FOR THE PAST 25 YEARS. HE WAS GREATLY DISSAPPOINTED WHEN HE FOUND OUT THAT
THE COMPANY SALES DIDN’T EVEN REACH 1 MILLION PESOS AND ITS NET MARGIN WAS ONLY 10%. HE
CAME UP WITH THE IDEA TO SELL THE ASSETS AND INVEST TREASURY BILLS AND THEY WILL GET
ALMOST 16% INTEREST RATE UNLIKE TO THE NET MARGIN OF THE COMPANY SALES. HE DISCUSSED THIS
IDEA TO HIS FATHER AND CREATE AN ALTERNATIVE SOLUTION THAT EACH HEIDELBERG MACHINE MUST
PRODUCE A NET INCOME AT LEAST 192,000 PESOS BUT HIS FATHER DIDN’T APPROVED THAT SELLING
THE ASSETS IS AN OPTION AND DOESN’T CARE WITH WHATEVER TARGET JOSE WOULD SET. JOSE WENT
BACK TO WORK TO PLAN WHAT WOULD BE THE BEST OPTION TO THIS CURRENT YEAR AND TO
IMPROVE THE MANAGEMENT WHILE HE’S THE ONE HANDLING THE COMPANY.

QUESTIONS:

1. WHAT KEY VARIABLES SHOULD JOSE INCLUDE IN THE PLAN?

2. WHAT ARE THE AREAS HE SHOULD CONSIDER IN EACH KEY VARIABLE?
3. DOES THE COMPANY WILL IMPROVE IF HE SELLS THE ASSETS AND INVEST IN THE TREASURY
BILLS?
 METROPOLITAN HOUSING PROJECT COMPANY

ON NOVERMBER 30,1988 THE PROJECT MANAGER OF METROPOLITAN HOUSING PROJECT

COMPANY DECIDED TO MAKE A THREE-YEAR PLAN FOR THE PERIOD (1989-1991) AND TO BE PRESENTED
TO BOARD ON DECEMBER 31,1988. THE METROPOLITAN HOUSING PROJECT COMPANY ALSO
DEVELOPED A REAL STATE PROPERTIES TO BE SOLD IN THE PUBLIC. THE FIRST PROJECT OF THE
METROPOLITAN HOUSING PROJECT COMPANY WAS THE DEVELOPMENT OF REAL STATE IN LAGUNA
CALLED LAGUNAVILLE. IT WAS NEAR IN UNIVERSITY OF THE PHILIPPINES CAMPUS AT LAGUNA.

MR. ROY ROXAS, THE PROJECT MANAGER PRESENTED A DRAFT OF LAGUNAVILLE PROJECT IN
MARCH 1987. HE STATED THAT THE CASH BALANCE OF THE COMPANY WAS MERELY ABOUT 110,755
AND THE LIABILITIES ITSELF WAS ABOUT 13.75 MILLION PESOS. HIS OBJECTIVES FOR THE NEXT 3 YEARS
ARE TO SETTLE ALL OF THE LIABILITIES TO THE PROJECT, TO INCREASE THE CASH BALANCE STARTING TO
110,755 TO 2.348M PESOS, TO SELL ALL OF THE RESIDENTIAL LOTS AND TO COMPLETE THE SITE
DEVELOPMENT IN LAGUNAVILLE. HE ALSO SAID THAT IT CAN BE ACCOMPLISHED WITH THE HELP OF
THESE FOLLOWING CRITERIAS; THE PURCHASING POWER MUST BE BALANCED WITHIN THE
GOVERNMENT EMPLOYEES, THE HOME DEVELOPMENT MUTUAL FUND (HDMF) MUST TAKE OUT SOME
CREDIT SALES, THE HIGHWAY ROAD MUST BE COMPLETED ALONG TO THE SITE OF LAGUNAVILLE AND
THE AVAILABILITY OF INTERIM FINANCING FACILITY.

THE SUCCESS OF THE PROJECT PLANNING WILL DEPEND ON THE TOTAL CASH FLOWS OF 20.7
MILLION PESOS IN THE SOURCE OF THE COLLECTIO N OF INSTALLMENT SALES AND FROM THE SALES OF
NEW SLOTS IN THE NEXT 3 YEARS. THE NET CASH FLOWS OF 2.348 MILLION PESOS THAT IS STATED
EARLIER EXCLUDE THE TWO SALES OF THE PARCELS OF COMMERCIAL LOTS WITH A TOTAL AREA OF
12.232.00 SQM. WITH THE VALUE OF 5,504,400,00 BILLION PESOS. IT CAN BE SOLD WITH A VALUE OF
450 PESOS/SQM.

QUESTIONS:

1. AS A MEMBER OF THE BOARD, EVALUATE THE 3-YEAR PLAN PREPARED BY MR. ROY ROXAS.
2. WHAT ADDITIONAL REPORTS WILL YOU REQUEST MR. ROXAS TO PREPARE IN ORDER TO ENABLE
YOU TO EVALUATE THE FEASIBILITY OF THE 3 YEAR PLAN?
3. IF SITE DEVELOPMENT COSTS INCREASE BY 30% STARTING 1989 (AND ASSUMING NO CHANGES
IN THE SELLING PRICES OF LOTS), WILL THE COMPANY ENCOUNTER CASH FLOW PROBLEMS?