DECIPHERING YOUR DILEMMAS,

BUILDING YOUR WAY TO SUCESS:

A STRATEGIC PROPOSAL ON REFRIGERANT PARTS RETAIL COMPANY (RPRC)

Barajan, Erika A. Escobar, Aliyah Cassandra O.

Cantor, Carl Joseph C. Geli, Jay-r M.
Cardona, Mary Jane H. Janginon, Allissa Belle P.
Castañeda, Avegail M. Nebres, Alyssa Niña M.

Bachelor of Science in Accountancy

BSACC 4-YA

Dr. Elna Barrantes

 Table of Contents
I. Introduction ....................................................................................................... 1
II. Company’s Vision and Mission .......................................................................... 6
III. External Analysis .............................................................................................. 9
IV. Internal Analysis ............................................................................................ 40
V. Strategy Formulation ...................................................................................... 71
VI. Objectives, Strategy Recommendations, & Action Plans ................................. 82
VII. Strategy Implementation ............................................................................... 98
VIII. Strategy Evaluation, Monitoring, and Control .............................................. 121
IX. Conclusion .................................................................................................. 137
 List of Tables
Table 1. Buyer/Consumer Profile ......................................................................... 21
Table 2. Competitor Analysis .............................................................................. 31
Table 3. Competitive Profile Matrix ...................................................................... 33
Table 4. Opportunities and Threats Analysis ........................................................ 36
Table 5. External Factor Evaluation Matrix - Opprtunities ..................................... 37
Table 6. External Factor Evaluation Matrix - Threats ............................................ 38
Table 7. Breakdown of Sales of Three Branches for the Past 3 Years ................... 41
Table 8. Profitability Analysis ............................................................................... 44
Table 9. Financial Ratio Analysis ......................................................................... 46
Table 10. Strengths and Weaknesses Analysis .................................................... 53
Table 11. Internal Factor Evaluation Matrix .......................................................... 62
Table 12. Financial Problem & Internal Strategic Issues ....................................... 64
Table 13. Key Organizational Elements ............................................................... 66
Table 14. Competitive Profile Matrix .................................................................... 67
Table 15. SWOT Matrix ...................................................................................... 71
Table 16. STAS - Strengths ................................................................................ 76
Table 17. STAS - Weaknesses ............................................................................ 76
Table 18. STAS - Opportunities........................................................................... 77
Table 19. STAS - Threats.................................................................................... 77
Table 20. Infiltrate Online Market Platforms ......................................................... 92
Table 21. Creation of Organizational Structure .................................................... 97
Table 22. Action Plan for Online Marketing Platform .......................................... 102
Table 23. Action Plan for Promotions and Advertising ........................................ 103
Table 24. Action Plan for In-Store...................................................................... 104
Table 25. Projected Income Statement .............................................................. 106
Table 26. Projected Balance Sheet.................................................................... 108
Table 27. Projected Cash Flow .......................................................................... 111
Table 28. Projected Ratios ................................................................................ 114
Table 29. Financial Growth Perspective ............................................................. 123
Table 30. Customer Growth Perspective ........................................................... 126
Table 31. Internal Business Processes............................................................... 129
Table 32. Future Growth Perspective................................................................. 133
Table 33. Summary of Business/Operation Strategy........................................... 143
Table 34. Summary of Organizational Strategy .................................................. 145
Table 35. Competitive Edge Summary ............................................................... 147
 List of Figures
Figure 1. Estimated Sales ..................................................................................... 2
Figure 2. Estimated Profit ...................................................................................... 2
Figure 3. Marilao Branch Location......................................................................... 3
Figure 4. Apalit Branch Location ........................................................................... 3
Figure 5. SJDM Branch Location........................................................................... 3
Figure 6. Product Ranking .................................................................................... 5
Figure 7. Business Seasons .................................................................................. 5
Figure 8. Porter’s Five Forces of Competitive Analysis ......................................... 28
Figure 9. RPRC vs. Industry (2016 & 2017) ......................................................... 42
Figure 10. RPRC vs. Major Competitors (2016 & 2017) ....................................... 43
Figure 11. Supply Chain Analysis ........................................................................ 48
Figure 12. Internal-External Matrix....................................................................... 72
Figure 13. Grand Strategy Matrix ........................................................................ 73
Figure 14. Strategy Map ..................................................................................... 98
Figure 15. Balanced Scorecard Summary ......................................................... 121
 Acknowledgement

Deepest appreciation and gratitude for the guidance and belief goes to the

following individuals/business entity who have contributed to the completion of this

strategic proposal:

God the Almighty, for providing us with motivation, perseverance, wisdom,

mind endurance, and physical strength in completing this strategic proposal. You

helped us get through all sleepless nights, demotivated spirits, academic breakdowns,

and personal problems. Life would have been so cruel and difficult without Your love

and guidance.

Refrigerant Parts Retail Company, for allowing us to provide them with all-

inclusive and extensive strategic proposal. Without their trust to provide us with

company data and active participation, this strategic proposal would not even be

feasible. May your business continue to flourish and improve as COVID-19 pandemic

is gradually mitigating and business world is going back to normal.

Dr. Elna Barrantes, for continuous expert guidance, support, belief,

encouragement, and kindness throughout the making of this strategic proposal. Our

fourth-year life would have been so difficult to manage without your understanding

and patience to the gravity of review load we had this semester. We would forever

appreciate your love and passion for teaching and guiding students, like us.

Métier Decipher members, for the hard work, creativity, and dedication we all

exerted in making this strategic proposal concise and substantial. This may be the

last paper that we will be making for our college life, but this paper will not be the last

reason to bond in the future. May the friendship we had made throughout the making

of this paper last a lifetime. Good luck future CPAs.

 I. I N T R O D U C T I O N

Refrigerant Parts Retail Company was established in 2005. The company is

solely owned and managed by a woman. Marilao branch was the first branch

established in 2005. Four years later, San Jose Del Monte became the second branch.

It was initially used as a warehouse space for Marilao branch due to its spacious land

area, but the owner decided to turn the warehouse facility to a second branch. In

2011, the owner decided to open her third branch in Zabarte but only after four years,

the said branch filed for its bankruptcy. There was also a case of theft in this branch.

The thieves stole all cash and products inside the store. Zabarte branch also

experienced high costs due to strict business regulations fees imposed by Quezon

City Government which added to many reasons why the branch closed. As of now,

Apalit branch was the last addition to the branches. The owner opened Apalit branch

in 2015.

RPRC earns profit, in order to sustain the operations, through buying and

selling of refrigerant parts for home refrigerators, and air conditions either for house,

establishments and cars. The company retails various refrigerant parts such as but

not limited to, freon, numerous kinds of compressors for refrigerator and for cars,

evaporators for different type of cars, drier for refrigerator and air-conditions, and

many more.

After fifteen (15) years of operating in refrigerant parts retailing industry, the

company have acquired patrons and loyal customers as they have been selling

branded, high quality, and even imported refrigerant parts. They are also very

compliant to strict regulations of local government units and national government.

RPRC managed to stay in the market for fifteen (15) years because of the increasing

demand of cooling machineries which are due to fast-moving industrialization,

deteriorating climate, rising trade of perishable goods, and growing importance of

comfort in vehicles. (Grand View Research, 2018)

1
 ESTIMATED SALES
80,000

Figure 1. Estimated Sales

70,000
60,000
50,000
40,000
30,000
20,000
10,000
0

MONTH - YEAR

Marilao Apalit SJDM

Current estimated revenue size of RPRC for September 2020 – September

2021. For September to December 2020, both Marilao and Apalit branches obtained

60,000 sales while SJDM branch only obtained 50,000 sales. For January to

September 2021, Marilao and Apalit branches tied and obtained 75,000 sales while

SJDM branch only obtained 60,000 sales. Both Marilao and Apalit branches had a

25% increase in sales while SJDM branch lost 25% in sales for January 2021. Usual

peak and low seasons were also disturbed due to COVID-19 pandemic.
ESTIMATED PROFIT

16,000
Figure 2. Estimated Profit

14,000
12,000
10,000
8,000
6,000
4,000
2,000
0

MONTH - YEAR

Marilao Apalit SJDM

Based on the current profit estimation of RPRC as of September 2021. Net

profit for first quarter, both Marilao and Apalit branches obtained 8,000 while SJDM

branch gained 10,000. Net profit for the rest of the year, Marilao and Apalit branches

gained 15,000 while SJDM branch obtained 12,000. Both Marilao and Apalit

branches had a 87.5% increase in profit while SJDM branch earned 20% in profit

during January 2021. Before the pandemic, RPRC usually earns 50-60% of its gross

revenues but when the pandemic came the company only earns 20% of its gross

revenues.
2
 MARILAO BRANCH

Year Established 2005 (First branch)

Rank First
Market Companies, Walk-in Technicians, LGU

As this branch has the majority of the

RPRC’s loyal consumers, the largest

Figure 3.
Marilao portion of sales generates here.
Branch
Location

APALIT BRANCH

Year Established 2015

Rank Second
Market Walk-in Technicians or Refrigerant Service Shop Owners

This branch's competition is dormant.

Their nearest competitor is based in San
Fernando. It is also prominent there to
cater technician-owned refrigerant Figure 4.
servicing shops. As a result, this branch Apalit
Branch
is classified as the second biggest earner Location
branch of RPRC.

SAN JOSE DEL MONTE BRANCH

Year Established 2009

Rank Third
Market Bus Companies (Jackpherlyn, Miami, Mersan), Walk-in
Technicians, LGUs (entire LGU of CSJDM before. Only one
LGU department now), Resorts (Villa Antonio De Dave &
Grotto Vista Resort).

This branch earns the least of all the

RPRC’s branches as this branch seems to
Figure 5. have intense market competition. Most of
SJDM
Branch the competitors are located in Muzon,
Location Tungko, and Zabarte which is only few
kilometers away from RPRC.

3
25 total employees

which comprise of…

2 Accountants 3 Bookkeepers 4 Delivery Officers 2 Purchasing Officers

2 Branch 1 Manager 3 Drivers 4 On-call 4 Sales

Managers Technicians Representatives

4
 Among all products, Freon

ranked first. Most of bulk sales came

from customers who bought per kilo

of Freon. Refrigerator parts such as

Cooper Tube and Drier came second.

Last are the car refrigerant parts

specifically Compressor, Drier, and

Refrigerator Parts Freon Car Refrigerant Parts
(Cooper Tube &Drier) (Compressor, Drier, &
Evaporator.
Evaporator)

Figure 6. Product Ranking

Peak Season Low Season

Figure 7. Business Seasons

Refrigerant Parts Retail Company is inherently a seasonal business. Its two

business seasons are peak and low seasons. Peak season, or the summer season,

starts from April and ends in July. From August to March, or the rainy season,

refrigerant parts retail company experience low sales as it is their low season.

5
 II. C O M P A N Y ’ S V I S I O N & M I S S I O N

Development of vision and mission statements for a company is essential for

strategic direction. It assists employees in understanding the organization's purpose

and fundamental values. It is an important component of a company's strategy since

it assists in setting priorities, allocating resources, and ensuring that everyone is

working toward the same goals and objectives, thereby creating a roadmap for the

future. Vision and mission statements are vital in every business. They become the

very “foundations” upon which an owner will build a solid, sustainable, and growing

business (Business Vision, Mission, and Values - Why are they so important? -

Business Doctors, 2021). Well-designed vision and mission statements are necessary

for formulating, implementing, and evaluating strategy.

Refrigerant Parts Retail Company, unfortunately, does not have its own vision

and mission statements. Therefore, the following are the recommended vision and

mission statements for the company which was formed in accordance with David’s

framework and other criteria:

Recommended Mission Statement

We are committed in providing profound service and innovation to all

refrigerant parts models we market. By utilizing the latest technology advancements,

we are able to provide individuals and businesses dependable quality products and

services. We strive to grow profitably and to expand our brand in the refrigerant

industry across the Philippines. We adhere to the belief that good ethics is good

business thus, we make a concerted effort to balance the needs of our customers,

staff, and communities.

6
 A clear mission statement describes values and priorities of an organization.

Developing a mission statement compels strategists to think about the nature and

scope of present operations and assesses the potential attractiveness of future

markets and activities. It broadly charts future direction of an organization. A mission

statement is a constant reminder to its employees of why the organization exists and

what founders envisioned when they put their fame and fortune at risk to breathe life

into their dreams. (David & David, 2017)

Mission statement above represents how RPRC gives importance to

maintaining the value of their service and ensuring the quality of their products while

solely meeting their customer’s expectations as they gradually improve their roles to

fulfill their utmost needs. With that, they are confident enough to let their clients know

that their products and services can effectively compete with others in the same

industry especially with the latest advancement in technology they have applied to it.

Mission statements can and do vary in length, content, format, and specificity.

Most practitioners and academicians of strategic management feel that an effective

statement should include nine components. Since mission statement is often the most

visible and public part of the strategic-management process, it is important that it

includes the following nine components: customers, products and services, markets,

technology, concern for survival, growth, and profitability, philosophy, self-concept,

concern for public image, and concern for employees (David, 2011).

First line of the mission statement highlights the major product that the

company offers. It also indicates the competitive advantage, which is the

technological advancement of the company, in the second sentence along with the

company’s customers. Third line accentuates where the company competes and its

commitment to grow financially. In the last sentence, it specifies the philosophy that

the company believed in, together with the social, community, and environmental

concerns and the value of the employees as assets of the company.

7
Recommended Vision Statement

We envision being one of the leading providers and distributors of quality and

innovative products in the refrigerant industry across the Philippines while focusing

on innovation, customer satisfaction, integrity, and social responsibility.

Vision is an expression of the business’s aspirations. Whereas the mission

statement can change from time to time, the vision can last for generations (Hellriegel

et al., 2001). RPRC’s vision statement summarizes the stated objectives that the

company aims to achieve throughout the course of its existence. With all their hard

work, RPRC aims to be the best (refrigerant parts provider) in their industry across

the nation. Pursuing customer satisfaction by providing them quality products and

offering exceptional services is their way to maintain their status at the top of the game.

They visualize a progressive future for their company as they grow innovatively.

Mission and vision should be constantly communicated to the people since

having a lot of objectives and goals may be confusing, it is preferably executed more

often to the people to be reminded of RPRC’s reasons of existence and help them

make economic decisions. In order to communicate the company’s mission and vision

statement, it is advisable to conduct seminars and publications on company's website

and other platforms. By doing so employees, consumers, and stakeholders might find

it helpful and enlightening.

8
 III. E X T E R N A L A N A L Y S I S

General environment where RPRC operates would most definitely affect the

way their business is conducted. Weimer (1959) defined in his book, Introduction to

Business, A Management Approach, that business environment “encompasses the

climate or set of conditions, economic, social, political or institutional in which

business operations are conducted.” Additionally, Jauch and Glueck (1988).

explained in their book, Business Policy and Strategic Management, that the

environment contains “external factors that create opportunities and threats to the

business. This includes socio-economic conditions, technology, and political

conditions.” Vital in the formulation and implementation of strategic management

techniques is the scrutiny of company’s general environment as well as the

assessment of factors that could affect it since the environment is external and

beyond the company’s control.

For the purpose of external analysis, only San Jose Del Monte branch was

considered because it was determined to be the branch with the most issues and of

urgent need of strategic management implementation. As mentioned in previous

chapters, both Marilao and Apalit branches are exhibiting exemplary business

performance; with Marilao holding the most loyal customer base and garnering

majority of bulk sales; and Apalit being prominent in the area as well as having inactive

competition.

Following areas affect the RPRC’s external environment: a) Economic

developments; b) Socio-cultural, demographic trends, and lifestyle changes; c)

Technological developments; d) Political, legal, and governmental aspects; e)

Ecological aspects; and f) Other external factors that may be more directly relevant

to the business. For ease of understanding, assessment of the environment will be

presented with its effect and relative impacts on RPRC’s operations.

9
Economic Development

Economic development as defined by Shaffer, Deller, and Marcouiller (2004),

is the range of “activities that lead to greater resource productivity, a wider range of

real choice for consumers and producers, and broader clientele participation in policy

formulation (related to the economy).” As the economic condition of an environment

progresses, so does the standard of living and ways of doing business. In San Jose

Del Monte branch, economic development is expected to expand.

Last March 1, 2017, the 450th Negosyo Center of the Department of Trade

and Industry was established in Central Luzon at SM San Jose Del Monte with the

goal of promoting the formation of MSMEs (450th Negosyo Center at SM City San

Jose del Monte, 2017). Cultivation of MSMEs affect the economic development of the

city by encouraging the formation of new businesses, which could either be potential

customers, who could make use of refrigerant parts in the use of their air conditioners,

car air conditioners, or home refrigerators; or potential rivals, who will retail the same

products. Moreover, by virtue of Proclamation No. 1057, signed by the President last

December 4, 2020, the city has been declared as highly urbanized city (“San Jose

del Monte – Wikipedia, 2021).

10
 Major economic industries found at San Jose del Monte are agri-business

manufacturing and wholesale and retail trading. Trade and commerce are

concentrated in four (4) major nodes considered as the main district growth areas.

First is the Poblacion Node with private company foundations including eateries and

sari-sari stores. Next is the Muzon Node with important institutions in this area are two

fast-food chains, such as Jollibee and McDonalds; South Triangle Wet and Dry Market;

and financial institutions, such as Philippine Business Bank. Third is the Tungko

Mangga Node which appears to be the most advanced shopping center in San Jose

del Monte with the city’s largest shopping center (SM). Last is the Sapang Palay Node

with several agricultural, wholesale, and retail businesses located within the area.

These nodes serve as major marketplaces for retail shops, and it can be noted that

RPRC is not situated in any of these nodes. New customers who are not aware of

their company would not be able to locate them as the establishment is not easy to

find.

Consequently, the ongoing construction of Metro Rail transit 7 (MRT-7) is

going to boost the city’s economic development. “The line will traverse Quezon City

and Caloocan in Metro Manila and is envisioned to spur business and commerce at

its intermodal terminal station is San Jose del Monte, Bulacan. (MRT Line 7 – Metro

Manila, Wikipedia, 2021) . Following the establishment of MRT-7, the ease of

transport between Metro Manila and the city will be instituted making it easier for

people in NCR to seek business opportunities in the city. This could intensify the

competition in the marketplace as retail shops are easy to form. Additionally, more

people would be able to land jobs in NCR and earn higher wage since the provincial

rate is lower. With higher income, more potential customers could afford to buy new

refrigerant parts for their refrigerators and air conditioners.

11
Socio-Cultural, Demographic Trends and Lifestyle Changes

Socio-cultural is a term that refers to different aspects of social and cultural

data and events in a population group including demographic shared traditions, habits,

routines, and beliefs. (What is Sociocultural? -Definition | Meaning| Example, n.d.) For

RPRC to be successful in business, they must understand sociocultural aspects of

their market to make efficient decisions. Any company that wants to sell goods or

services needs to have a thorough understanding of its target market, at the very least,

and some fundamental facts. Total population declared for year 2020, in the City of

San Jose Del Monte, Bulacan, where the RPRC branch is located, was 651,813

people.

SJDM City is divided into fifty-nine (59) barangays having 6,200 inhabitants

per square kilometer or 16,000 inhabitants per square mile. This statistic makes it the

largest local government unit in Bulacan Province and the largest city in Central Luzon

Region III (Philippine Statistics Authority, 2021). Since this city is the 18th most

populated city in the Philippines, RPRC may have more potential customers. Also,

tremendous increase of the population in San Jose Del Monte Bulacan due to settlers

moving from rural areas to towns and to cities since the 1950s may affect the weather

of the city because of cutting trees in order to build houses. Demand for air

conditioning may rise and help RPRC’s operations in offering parts for air conditioners.

12
Technological Developments

Philippine Public Utility Vehicle Modernization Program (PUVM) aims to

transform the public transportation road sector by introducing safer and more climate-

friendly vehicles, better regulation, and industry consolidation. The program seeks to

improve the quality of life in cities, reduce economic losses due to lost time during

travel, mitigate health costs and premature deaths, and lessen greenhouse gases.

This upgrade to modernized jeepneys and buses can greatly affect the market that is

related to air conditioning. All modernized jeeps and buses are now air-conditioned

and are in need of regular maintenance. This results to additional potential customers

in the market because refrigerant parts are to be maintained within such PUVs, such

as the Compressor and the Evaporator, and Freon must be refilled. RPRC is engaged

in the retail of these products and so technological developments will result in a new

pool of customer segments.

Political, Legal and Government Aspects

The political, legal, and governmental aspect of a business is the factor that

dictates how a company should operate in accordance with regulations set by law. It

directs decrees for compliance to ensure that everything is in order. Kubasek et al.

(2011) stated that legal environment is “the study of selected areas of public and

private law, such as securities regulation, antitrust, labor, product liability, contracts,

and consumer and environmental law. In each of these areas, we emphasize the

processes by which business managers relate to individuals and government

regulators.”

13
 RPRC engages in the practice of buying and selling refrigerant parts, with

Freon being the best seller. Freons “are colorless, odorless, nonflammable,

noncorrosive gases or liquids of low toxicity that were introduced as refrigerants in

the 1930s” (Carey, 2015). Furthermore, Freon is a type of chlorofluorocarbons

(CFCs), hydrochlorofluorocarbons (HCFCs), and related compounds. These

chemicals destroy earth's protective ozone layer which shields the planet from harmful

ultraviolet (UV-B) rays generated from the sun. Due to this, sale, distribution, use, and

disposal of Freon is subject to regulation.

Department of Environment and Natural Resources released DENR

Administrative Order 2013-25 with the subject of Revised Regulations on the

Chemical Control Order for Ozone Depleting Substance (ODS) to regulate, restrict or

prohibit importation, manufacture, processing, sale, distribution, use, and disposal of

chemical substances and mixtures that present unreasonable risk and/or injury to

health or environment including the export and destruction of ozone-depleting

substances to abate or minimize risks and hazards to the stratospheric ozone, public

health, and the environment (Department of Environment and Natural Resources,

2013).

Republic Act 6969, or the Toxic Substances and Hazardous and Nuclear

Wastes Control Act of 1990, and Republic Act 8749, otherwise known as the

Philippine Clean Air Act of 1999 also regulates transactions involving Freons. These

legal aspects set forth by the government are essential in analyzing the company’s

external environment as changes in these laws and regulations could either make or

break a business. Increasing prohibition of Freons would make RPRC lose its

bestseller. On the other hand, lowering restrictions could enable RPRC to have a

smoother trade. Nevertheless, compliance with the following laws must always be

practiced ensuring that RPRC can continuously operate without incurring any

violation. As of 2021, RPRC remains compliant with such laws.

14
Ecological Aspect

City’s ecology is also a matter of concern as the company’s products are

dependent on the city’s climate since warmer seasons will raise the demand for

refrigerant parts while colder seasons will lower it. City of San Jose Del Monte is under

the Type I climate classification which means that the city generally experiences dry

season from December to April, while wet season is from May to November. During

the dry season, there is little to no rainfall. Accordingly, the wet season is associated

with tropical storms and afternoon thunderstorms. However, the dry season does not

necessarily mean warm weather, since the cold breeze of the so-called ber-months

lasts from late August until March, coinciding with the low season of RPRC’s sales.

Due to colder climate, most air conditioners are turned off prolonging their life

and delaying the need to replace their parts. On the other hand, wet season entails

the presence of rain which could pour down even in the warm weather. Sales peak

from April to July where it is summertime in the Philippines and most people are

keeping their air conditioners and refrigerators turned on. Nevertheless, this can also

be held true with respect to customers who use air conditioners at home, who can

control when they turn it on. Air conditioners in cars and inside office buildings,

establishments such as malls, food chains, and other commercial places would most

likely turn their air conditioner on regularly.

Generally, Philippines has a tropical climate where a significant amount of

rainfall would be felt throughout the year and having a dry season shorter than the

wet season. Average annual temperature of the city is 27.6°C, monthly figures range

from 25.6°C in January and 29.6°C in May. However, due to climate change, it was

determined that a change in temperature would be felt within 2020 to 2050 on

average from 0.9 to 2.1°C.

15
 Also at the same period, a projected percentage change in rainfall shall be

from -23% to 23.6%, making dry months even drier and wet months longer with

heavier rains. Occurrence of extreme weather events, such as typhoons, will also be

more frequent ("Geophysical Sector | City of San Jose Del Monte, Bulacan,

Philippines", 2021). Rise in temperature could signify an opportunity to get more

clients due to the rising heat which increases the demand for refrigerant products.

However, more rains could also mean frequent colder seasons that will further

mitigate the low season sales.

Other External Factors

COVID-19 pandemic outbreak disrupted RPRC’s operations. Following

Proclamation No. 922 s. 2020, Philippines was declared to be in a state of public

health emergency all throughout the country. Restrictions as to public contact are

imposed to curtail local transmission of the virus. Accordingly, non-essential

businesses are shut down, and going out in public has been limited. Following events

snowballed and caused a grave downturn to RPRC’s sales for late 2020 up until the

third quarter of 2021. This can be attributed to the temporary stops in business

operations to comply with quarantine guidelines.

Closure of non-essential businesses, work from home setup, and employee

layoffs may also have caused a decrease in demand. With other businesses not

operating and employees working from home, air conditioners at office sites are not

being used. Employee layoffs resulted in loss of income, and non-essential activities,

such as the purchase of refrigerant parts, may have been removed from company

budgets. Suspension in travel also caused disruptions in bus operations of bus

companies, which purchase refrigerant parts from RPRC.

16
 Before the pandemic, suppliers were also able to deliver products ordered by

RPRC without requiring immediate payments. This makes RPRC capable of

controlling its cashflow and take advantage of the credit period. However, since the

pandemic has pushed businesses to financial difficulties, suppliers now require

checks to be issued outright upon delivery.

Market Size and/or Growth Rate and Stage in the Growth Cycle

For purposes of determining the market growth and size in the industry, data

from the most recent publications of the Philippine Statistics Authority (PSA) was used

to ensure that data used is official and valid. The most recent data gathered from PSA

reflects accumulated amounts from the year 2017 and was used as a basis for the

external analysis. Amounts presented are not representative of the year 2017 alone

and may consist of cumulative amounts of prior years. RPRC belongs to the heating,

ventilation, and air conditioning industry (HVAC) since they are engaged in the retail

of refrigerant parts in refrigerators and air conditioners.

Based on the 2019 publication from the PSA from the 2017 annual survey of

Philippine Business and Industry (ASPBI) - Electricity, Gas, Steam and Air

Conditioning Supply Sector, it shows that a total of 299 establishments in the formal

sector of the economy were engaged in Electricity, Gas, Steam and Air Conditioning

Supply. This represents a 12.8% growth rate increase in terms of air conditioning and

refrigerant supply in households and other establishments that utilize air conditioners

from the 265 total establishments reported in 2016 (Philippine Statistics Authority,

2019). Growth can be attributed to changes in the tropical weather in the country

intensified by the rising heat and humidity, driving customers to demand air

conditioning and is evidenced by the 28% increase in the average temperature in the

Philippines from April to July. Accordingly, from 2018 data, only 23%-27% of the total

residential household in the Philippines were not using any air conditioner.

17
 Market size of the industry is expected to grow even more in the following years

due to the increasing heatwave and rising heat index in the country. On the other

hand, refrigerant parts are also being retailed by the motor vehicle repair sector.

Growth rate in motor vehicles repair and retail of refrigerant parts had a 1.71% decline

from 6,380 in 2016 to 6,271 in 2017 (Philippine Statistics Authority, 2019). Decline

can be considered as immaterial since the usage and utilization of car air conditioning

is continuous and not dependent on the weather and temperature as fully

airconditioned buses will still operate with air conditioners even in the cold weather.

In terms of revenues and value of output, growth of income in the household

and other establishments that utilize air conditioners sector had an increase of 12.6%

from 762 Million in 2016 to 859 Million in 2017 while those from motor vehicle repairs

only had a 2.42% increase from 223 Million in 2016 to 315 Million in 2017 (Philippine

Statistics Authority, 2019). In terms of market segments, commercial markets are

dominating the industry with 47.84% market share which indicates that commercial

establishments are the most common customers of the HVAC industry, evidenced by

having their office buildings, malls, restaurants, and other commercial places fully air-

conditioned.

Additionally, based on the same market analysis, about 90% of all commercial

establishments are already utilizing air conditioning, and thus the segment will

experience slower growth in the years to come. On the contrary, about a quarter of

the whole population is still not using air conditioning products, aggregating a total of

23 million residential households. Therefore, residential segment is the most potential

segment to penetrate and to expand on.

18
Number of Players and their Relative Sizes; Market share analysis

In connection with market share analysis, PSA data are once again used.

Analysis was based on the 2019 publications regarding 2016 and 2017 data which

may include cumulative amounts from prior years. Due to the rising heat and humidity

in the Philippines, demand for HVAC systems has been experiencing rapid growth in

the industry, with approximately a total of 6,569 establishments according to PSA.

299 establishments in the economy’s formal sector are engaged in Electricity, Gas,

Steam, and Air Conditioning Supply. 6,270 establishments represent 6.2% that are

involved in sales, repair, and maintenance of motorcycles and related parts and

accessories (Philippine Statistics Authority, 2019). Accordingly, air conditioning

industry is considered highly competitive.

Top five (5) players in the industry are Uniform Refrigeration and Air-

conditioning Supply, HMJ Trading Refrigeration, Aircon, Car Aircon Parts and

Supplies Wholesale and Retail, GEMC Enterprises Company, MRV Airconditioning

Parts and Supplies, Renz Refrigeration & Airconditioning Supply (aircon repair,

cleaning, home service), and in aggregate, the combined market share of the players

only amount to around 42% of the industry while the remaining share is distributed

into different businesses. In the Philippines, in-house manufacturing accounts for 60%

of air conditioning usage while imports account for 40% ("Philippines Air Conditioning

Market - Forecast(2021 - 2026)", 2021).

19
Market Aspects (Product or Service, Price, Promotion, and Channel of Distribution)

HVAC industry involves a variety of market aspects, products, and services

offered. To retain relevance in strategic management, only the air conditioning

component of the industry would be analyzed. Heating and ventilation would be

ignored since RPRC operates in air conditioning. Only refrigerant parts retail side of

the industry will be touched for purposes of analyzing. In the industry, businesses offer

their products and services based on customer demand.

Customers will request product orders and accordingly, companies will try to

match the demand by locating local or international suppliers who can cater to

customers’ needs. Since retail is plainly buying and selling, high-demand products will

be included in the list of products offered by the company. This is also true with

respect to services since air conditioning and technician services will be offered once

customers need them.

Pricing in the industry is dependent upon business entities. Different

companies can offer varied price ranges on the products they offer and will still get

customers. In terms of promotions, promotional activities for refrigerant parts are

infrequent. Commercial ads are more common for appliance units and not for

refrigerant parts. In channels of distribution, retailers buy refrigerant parts from

suppliers and outright trades them as it is to customers. With respect to services,

shops offer direct cleaning, maintenance, repair, and other services directly to their

customers.

20
Buyer/Customer Profile

Customers - Industry Specifics Particulars

Bus ▪ Jackpherlyn There are lots of Bus

▪ Miami Companies in the City of
Companies
▪ Mersan SJDM, Bulacan

Walk-Ins ▪ Technicians Most of the Technicians

own service shops and
acquire parts from RPRC

LGUs ▪ LGUs of CSJDM When Rey San Pedro was

Bulacan the mayor, the entire LGUs
of CSJDM Bulacan were
their regular clients.
Currently, now that Arthur
Robes is the mayor of
CSJDM, they only have
one (1) LGU regular
customer.

Resorts ▪ Villa Antonio De These are the resorts near

Dave the RPRC SJDM Branch.
▪ Grotto Vista Resort

Table 1. Buyer/Customer Profile

Factors Affecting the Cost of Doing Business

Establishing businesses in the HVAC retail industry is easier now due to the

presence of online platforms. Since online retail shops can be established with just

the right amount of capital without the need of building a physical shop, cost of doing

business will be minimized for new entrants. New retailers of refrigerant parts can just

operate purely online and use their own homes as storage warehouses. Family

members can help with the management of the business and delivery of products to

customers. Families with cars and other vehicles can make use of their automobiles

to deliver their products and minimize freight costs. Some online businesses are also

less scrutinized by the government, having fewer regulations and permits required to

operate. This factor also reduces the cost of doing a retail business.

21
Operations/Production Aspects

Retailing, or the sale of goods, usually entails a firm set up for that purpose

marketing single components or small lots to a large number of clients. Retailing is

very competitive and retail enterprises die at a pretty high rate. Primary kind of

competition is focused on pricing. Retail shops allow customers to see what they are

buying up close and, unlike internet businesses, they give instant gratification

because customers can pull away with their purchases right away. A healthy and

helpful workforce also contributes to client loyalty, ensuring that consumers return

from time to time.

Technology Developments

In HVAC industry, particularly in air conditioning, new product development

and innovation in models of refrigerators, home air conditioners, and manufacture of

new car models introduce new products to be offered in the market. When new AC

units are produced with new specifications and requirements, new refrigerant parts

are also developed to match the system of new unit and prevent system damages.

This increases variations of refrigerant parts in the market. Development of new cars

would also require air conditioning systems that are tailored to car’s interior. Newer

versions of Freon are also being developed to be less toxic and less harmful to

environment.

22
Industry Financial Analysis (Growth, Profitability, Liquidity, Leverage, and Efficiency)

With regards to industry financial analysis, data are still based on the PSA 2019

publication reflecting 2017 and 2016 findings as those were the only recent data

available. Such numbers presented may include cumulative amounts from prior years

and from 2016 and 2017. As previously mentioned, establishments that utilize air-

condition, grow at an annual growth rate of 12.8% for years 2016 to 2017 based on

the PSA. Regarding its value-added or the income growth rate, there is a 12.6%.

Establishment growth rate for motor vehicle refrigerant parts has a declining rate of

1.71%, and 2.42% for the income growth rate of motor vehicle refrigerant parts

(Philippine Statistics Authority, 2019).

In terms of profitability of the industry, air conditioning industry relies on

seasonal peaks since although the Philippines is a tropical country, it is not always

warm. Numerous cyclones and typhoons enter the country and during such times,

profitability in the industry dwindles. This is because typhoons bring in colder climates

which decrease the demand for air conditioning products. During the years where

most typhoons enter the country, such as during the last five years, growth rate of the

industry had a decline as compared to prior years.

23
Problems in the Industry

Even before the pandemic, problems that RPRC and businesses in the industry

of Heating, Ventilation, and Air Conditioning Industry (HVAC) mostly encounter is

seasonal sales. Philippines is known as a tropical weather country, but not all the time

as we can experience extremely hot and humid weather throughout the year.

PAGASA stated that climate in the Philippines may be split into two primary seasons

based on temperature and rainfall: (1) the rainy season, which lasts from June to

November, and (2) the dry season, which lasts from December to May. The dry

season is further divided into two parts: (a) the mild dry season, which lasts from

December to February, and (b) the hot dry season, which lasts from March to May.

Weather affects the operations of RPRC due to the demand for air conditioning

that fluctuates every season. Since there is a growing demand for energy-efficient

solutions, and an expanding trend of smart homes, it is driving market expansion for

this industry. Now that there are lots of people starting a business in this industry, it

may affect the operation of RPRC by having a lot of competitors who have cheaper

products than them. In terms of the location of RPRC’s physical stores, retailers

should consider opening in places where an active market exists. When COVID19

pandemic happened, physical stores were required to close, and people were afraid

to go out because of the increasing number of covid cases. Most businesses were

affected including the RPRC.

24
 Another major problem in the industry is the vulnerability of Freon to price hikes.

Price hikes and fluctuations in the cost of refrigerants can be attributed to increases

in steel prices, which directly contributes to the cost of steel cylinders that hold the

refrigerant. COVID-19 pandemic has also hindered the production of many major

refrigerant manufacturers such as Honeywell, Chemours, and Arkema causing

disruptions in supply chain.

Another factor of inflation can be attributed to increases in fuel & labor costs,

which directly contributes to the costs of manufacturing & transportation, ultimately

causing a price increase” ("R-22 & R-410A Refrigerant Costs Higher in 2021, Outlook

Much the Same for 2022", 2021). Freon commonly experiences price hikes annually

increasing its cost to purchase, which makes it even harder for retailers to sell them

at a desirable selling price.

25
Critical Success Factors in the Industry

Understanding all factors that might impact a company's operations is critical

to its success. It is essential, not only for the individual, but of course for the business

to understand the situation before making a decision. Templeton in 2013 defined

critical success factors as critical areas of activity that must be well-executed if a

project's objectives or goals ought to be met.

RPRC may develop a single point of reference to assist them in guiding and

assessing the performance to identify and to communicate critical success factors

and make decisions ensuring that the operation is well-focused and prevents wasting

time and resources on less essential areas. By making CSFs precise and by

communicating them with everyone involved, it can be a great help to keep the project

on track toward similar purposes and goals. RPRC has a lot of competitors, and in

order to step up and have an edge, they need to stay on track and be updated with

current trends and innovations. Compared with other competitors, RPRC does not

have their own social media platform.

26
 Marketing is a very essential key point for RPRC in enabling them to establish

long-term ever-present relationships with its target customers. It is a continuous

approach that will assist RPRC in development. RPRC also needs to focus on its

Brand Reputation as it attracts potential loyal customers and creates more value for

its products in the long run. RPRC branch located in San Jose Del Monte Bulacan

City has a dramatic increase in population. RPRC must consider the location if there

is an advantage of having an active market.

Since there are a lot of competitors, RPRC needs to be known to obtain the

best Product Quality and Customer Service in order to have an advantage over other

competitors. Lastly, seeing that one of RPRC’s problems is seasonal sales, acquiring

customer loyalty may help the business run continuously. RPRC also needs to assess

their Product Range and understand factors affecting the increase or decrease by

having products including freon, the compressor for refrigerator, the compressor for

car, evaporator, drier for refrigerator, and welded drier for air conditioner.

27
 Porter’s Five Forces of Competitive Analysis

Five forces model by Michael Porter is a framework used to assess the

environment where a business operates. This model is anchored on the “insight that

a corporate strategy should meet opportunities and threats in the organization's

external environment. Especially, competitive strategy should be based on an

understanding of industry structures and the way they change” (Morrison, 2010).

These five forces are supplier power, buyer power, competitive rivalry, the threat of

substitution, and the threat of new entry.

Threat of New Entry

Threat of New Entry in the
industry is actually high.

Rivalry among
Supplier Power Competitors Buyer Power
For RPRC, Supplier RPRC experiences intense For RPRC, Buyer Power
Power is high. rivalry in its SJDM Branch is considered to be low.
since it has the most active
competition.

Threat of
Substitution
RPRC products are not
subject to substitution,
meaning threat of
substitution is low.

Figure 8. Porter’s Five Forces of Competitive Analysis.

28
 As shown in Figure 1, supplier power is high. There are currently only six

suppliers of refrigerant parts and Freon, and these suppliers are demanding check

issuances for payment before delivery of goods. Refusal of suppliers to deliver goods

ordered will be costly for the business as they will not be able to have any safety stock

to cover for any fluctuations in demand. It would also be costly to switch suppliers.

However, this only holds during the pandemic since most businesses are in financial

distress. Prior to the pandemic, supplier ower was low. To have a timely and current

analysis, the current situation was used.

For RPRC, buyer power is considered to be low. RPRC buyers are still

patronizing their products even though it is priced relatively higher compared to

competitors. This could be attributed to the trustworthy reputation of RPRC, their

branded and high-quality products, which are tested by TESDA before retailing to the

public. There are numerous buyers, including big bus companies, walk-in technicians,

resorts, and the LGU. It would be costly for the customers to switch to other retailers.

29
 RPRC experiences intense rivalry in its SJDM Branch since it has the most

active competition. There are numerous competitors within the commercial districts

of SJDM, mainly Muzon and Tungko, while competitors outside the city also exist in

Quezon City, which is close to SJDM. Online businesses that cater to a wider range

of markets all over the Philippines are also numerous.

Threat of new entry in the industry is actually high due to retail of refrigerant

parts does not require intense capital requirements and governmental regulations

with respect to the retail of such is minimal and easy to comply with. With the

economic developments in SJDM, there is a large possibility of the entry of new

competitors.

RPRC products are not subject to substitution, meaning the threat of

substitution is low. Types of refrigerant parts (copper tube and drier), car refrigerant

parts (compressor, drier, and evaporator), and Freon vary according to the

requirements of the air conditioner/ home refrigerator. Using the wrong type will

damage the system. Therefore, there is no alternative to substitute products for

refrigerant parts.

30
Competitor Analysis

Following competitors, namely Kwikkool, FMD, and PA have been assessed

and the assessment is presented in the table below. Most recent data are found on

the 2019 publication of the PSA based on 2017 findings. Amounts shown in the

revenue size are cumulative based on prior years and therefore do not represent

revenue per annum. However, since it is the only reliable data available, such data

have been considered for purposes of analysis.

FMD Ref-Aire Pili-Aire Aircon &

Kwikkool Enterprises Refrigeration Parts
Refrigeration & Trading
Airconditioning Parts

▪ Located in ▪ Located in ▪ The warehouse

Company Overview Quezon City, Commonweal is located at
City Metro th Avenue, San Pedro
Manila Quezon City Laguna
Metro Manila
▪ Retailer of ▪ Retailer of
refrigerant parts ▪ Car repair compressors
such as freon services for cars,
Evaporator,
▪ reseller of and Copper
refrigerant wire
parts such as
freon ▪ Car repair
services

Revenue Size ▪ Approx. ▪ Approx. ▪ Approx.

₱28,711,166 ₱28,711,166 ₱36,496,401
annually annually annually

▪ Point of ▪ Cause ▪ Conversational

Marketing Strategy purchase Marketing Marketing
marketing (links the (Real-time
(Packages) services and interaction via
products) chat box)
▪ Direct Selling
▪ Direct Selling ▪ Social Media
Marketing

▪ Slightly Good ▪ Fair (Issue on ▪ Slightly Good

Brand Reputation (Affordable and right pricing (Generic and
low-cost of repair) Low-Cost
products) product)

31
 FMD Ref-Aire Pili-Aire Aircon &
Kwikkool Enterprises Refrigeration Parts
Refrigeration & Trading
Airconditioning Parts

▪ Quezon City, ▪ Commonwealth ▪ The

Location City Metro Avenue, warehouse is
Manila Quezon City located at
Metro Manila San Pedro
Laguna

Product Quality ▪ All products are ▪ All products are ▪ All products
generic products generic with are generic
are Freons are average quality. and more on
not tested by replacement
TESDA. Product products.
quality is Quality is
average. average to
slightly above
average.

Customer Service ▪ Customer ▪ Customer ▪ Customer

service is slightly service is service is
above average slightly above good
(technicians are average (nationwide
available) (technicians are delivery)
available)

Customer Loyalty ▪ Customers are ▪ Customers are ▪ There is no

slightly not loyal slightly not loyal fixed loyal
because some because of the customer
of their products issue with the base since
are not tested by association of they operate
TESDA. technicians. online.

Product Range ▪ Average ▪ Wide ( Offers a ▪ Slightly Wide

( Refrigerant different variety (Offers other
Parts ) of products ) parts of cars)

Table 2. Competitor Analysis

*Amounts reflected in the revenue size of the competitor analysis represent

cumulative averages based on the PSA 2019 publication on 2017 data. Amounts may

or may not represent those of the current year but were used since it is the only

available basis.

32
 Competitive Profile Matrix

Competitive Profile Matrix

Pili-Aire Aircon &

KWIKKOOL FMD
Refrigeration Parts Trading

Critical
Success Weight Score Weighted Score Score Weighted Score Score Weighted Score
Factor

Marketing 0.3 2 0.6 2 0.6 4 1.2

Brand
0.2 3 0.6 2 0.4 3 0.6
Reputation

Location 0.05 2 0.1 3 0.15 2 0.1

Product
0.1 2 0.2 2 0.2 2 0.2
Quality

Customer
0.1 2 0.2 2 0.2 3 0.3
Service

Customer
0.05 2 0.1 2 0.1 1 0.05
Loyalty

Product
0.2 2 0.4 4 0.8 3 0.6
Range

Total Score 1 2.2 2.45 3.05

Table 3. Competitor Profile Matrix

In the competitive profile matrix, the rating values are as follows: 1 = major

weakness, 2 = minor weakness, 3 = minor strength, and 4 = major strength.

Critical success factors explained previously have been weighted based on

impacts they have in the industry. Marketing is 30% or 0.30, owing to its capacity to

bring in and induce sales, including any after sales-care or service offered. Marketing

is rated as 30% since the pandemic forced operations to be done online and

marketing presence online is essential to keep the business surviving. Brand

reputation is 20% or 0.20 since customers want to patronize brands that have a good

standing in the eyes of the public. Location is 5% or 0.05 since location dictates where

the business’s physical store is located. However, since retail shops are establishing

a solid presence online and due to the online setup brought by the pandemic, location

is only 5% as only few customers can go outside to physical stores.

33
 Product Quality and Customer Service are both 10% or 0.10 since customers

are particular with the quality of product and service that they receive from retail shops

but at the same time considering its price and affordability since most retailers offer

homogeneous products. Customer loyalty is given a weight of 5% or 0.05 due to its

ability to retain existing customers. Although vital for success, other factors are

considered to be more important since the business cannot retain customers if they

do not exist in the first place. Product Range is 20% or 0.20 because most industry

products are flexible and can be used not only in houses, establishments but also in

different transportation vehicles. This may affect the success of the operations and

business because of its demand.

In the first critical success factor, which is Marketing, KwikKool, and FMD got

a score of 2 being a minor weakness since they both do not have any social media

site to inquire with unlike PA & Refrigeration Parts Trading, which has an active

Facebook page. It was considered to be a minor weakness only because their

marketing does not cover wide range in refrigerant parts retail industry. However, it is

PA’s major strength since they operate online nationwide.

Second is brand reputation. In this success factor, Kwikkool and PA are tied

with a score of 3 as their minor strength since both of them offer affordable products

with a slightly good reputation. FMD got a 2 as a minor weakness because brand

reputation is just fair due to issues with association of technicians because of its faulty

pricing. Location of Kwikkool and Pili-Aire Aircon & Refrigeration Parts Trading both

got the score of 2 which represents that there is a minor weakness in the area of

Quezon City, and San Pedro Laguna where they are located, while FMD got the

highest score of 3 for the location, indicating that there is minor strength in

Commonwealth Avenue, Quezon City Metro Manila where FMD is located.

34
 Next success factor is product quality. All three competitors got a score of 2

represented as minor weakness. Due to the quality of products that they are offering,

all three of them offers generic and has an average quality. In terms of Customer

Service, Kwikkool and FMD both got a score of 2 as a minor weakness because,

although they have available technicians to cater customers whenever they buy

refrigerant parts, it is only slightly above average. Whereas PA got a score of 3 as a

minor strength in customer service since nationwide shipping can cater deliveries to

a wider scope of customers.

When it comes to customer loyalty, Kwikkool and FMD both got a score of 2

which means that their customers have minor frailty with these entities’ products and

services. Customers of Kwikkool are slightly not loyal due to some of their products

are not tested by TESDA, and FMD Customers are also slightly not loyal due to the

issue with the association of technicians. Compared with these companies, Pili-Aire

Aircon & Refrigeration Parts Trading got the lowest score of 1 which shows that one

of their major weaknesses is customer’s loyalty because they do not have a fixed

loyal customer base since they operate online.

Last success factor was product range. First, Kwikkool got a score of 2

because it has limited products to offer to the market. Next, is FMD, which got a score

of 4, among the competitors it has the widest product range, it is because it has a

different variety of products or services to offer, like computers parts and cellphone

repair. Lastly, Pili-Aire Aircon & Refrigeration Parts Trading has a score of 3 or minor

strength because it offers other kind of products such as vehicle parts.

35
 Overall, PA has the strongest competitive position with a 3.05 total score

owing to its social media presence, the wide array of products, and nationwide

deliveries. FMD is the second strongest with a 2.45 total score due to its generic

product quality and wide range of products. Kwikkool is the weakest in terms of

competition with a 2.20 total score which can be attributed to their lack of marketing

strategies and generic products not tested by TESDA.

Opportunities and Threats Analysis

OPPORTUNITIES THREATS

▪ 450th Negosyo Center of DTI in ▪ Competitors: Kwikkool and

SM SJDM.
▪ Construction of MRT-7
▪ 17% increase in SJDM
population
▪ Enactment of the Philippine
Public Utility Vehicle
Modernization Program
(PUVM)
FMD offer more affordable and
generic refrigerant parts
▪ Phil-Aire has engaged in online
selling platform
▪ Similar marketing style
▪ Supplier power is high and
switching suppliers will be
costly.

▪ Tropical climate of 27.6°C ▪ Prolonged public contact

average monthly figures restrictions due to COVID-19
ranging from 25.6°C in January
and 29.6°C in May ▪ Freon experiences price hikes
every year
▪ 23%-27% of the total
residential households in the
Philippines were not yet using
any air conditioner.

▪ Industry grows at a compound

annual growth rate of 4.55%.

▪ Only 42% of the market share

is held by top industry players.

▪ RPRC does not have an online

presence and social media
marketing yet.

▪ Technological Developments

Table 4. Opportunities and Threats Analysis

36
External Factor Evaluation Matrix

Opportunities Weight Rating Weighted Score

450th Negosyo Center of DTI in SM SJDM

1 encourages the establishment of new MSMEs who 0.06 2 0.12
potential customers could be.

Construction of MRT-7 will boost the commercial

2 districts of San Jose Del Monte, Bulacan, and 0.06 2 0.12
attract businessmen.

17% increase in SJDM population in 2015 and its

3 continued growth will increase the market for 0.04 2 0.08
potential customers (residential segment).

Enactment of the Philippine Public Utility Vehicle

4 Modernization Program (PUVM) will require 0.16 4 0.64
jeepneys to modernize into fully air-conditioned
vehicles, which are potential customers.

Tropical climate of 27.6°C average monthly figures

ranging from 25.6°C in January and 29.6°C in May
5 and the increasing heat index in the city will raise 0.03 4 0.12
the demand for air conditioning products and
refrigerants.

6 23%-27% of the total residential households in the 0.12 3 0.36

Philippines were not yet using any air conditioner.

7 Industry grows at a compound annual growth rate 0.03 2 0.06

of 4.55%.

8 Only 42% of the market share is held by top 0.04 1 0.04

industry players.

9 RPRC does not have an online presence and 0.08 1 0.08

social media marketing yet.

Technological developments leading to new

10 product development will lead to new products 0.04 3 0.12
being offered in the market.

Table 5. External Factor Evaluation Matrix – Opportunities

37
 Threats Weight Rating Weighted Score

Competitors Kwikkool and FMD offer more

1 0.06 4 0.24
affordable refrigerant parts.

Pil-Aire has established an online presence and

2 0.08 2 0.16
offers a nationwide delivery.

3 Rivals are starting to copy RPRC’s styles. 0.04 2 0.08

Supplier power is high and switching suppliers

4 0.04 2 0.08
will be costly.

Prolonged public contact restrictions due to

5 0.05 1 0.05
COVID-19 will drive sales to go lower.

6 Freon experiences price hikes every year 0.07 1 0.07

Total 1.00 2.42

Table 6. External Factor Evaluation Matrix – Threats

Based on the EFE Matrix, RPRC obtained a total weighted score of 2.42, which

is lower than the average of 2.50. This signifies that strategic management policies of

the company are not that effective in response to external opportunities and threats.

There are a lot of opportunities present but RPRC is not optimizing these opportunities

for their benefit. In terms of threats, although minimal, RPRC is not responding

effectively to these threats and is in need of new strategic management policies.

Weighting system was based on relative impacts of the following opportunities and

threats to RPRC’s operations and was rated based on their existing responses to such.

Overall, HVAC retail industry is a highly proactive and competitive industry

where fewer barriers to entry exist. Industry is also expected to grow more in the

following years, and with many opportunities present, it could be considered the best

time to seize and to take advantage of such. However, since the pandemic had led to

many business closures and shutdowns, the economy has been disrupted and normal

operations in the HVAC may not continue at full capacity yet.

38
 In conclusion, assessment shows that Refrigerant Parts Retail Company has a

middle-ground strength in its competitive position, leaning towards the weaker side.

Nonetheless, when strategic management policies have been formulated to answer

and to take advantage of opportunities in the external environment, as well as respond

to threats, RPRC will definitely gain the upper hand in the competition. Identified key

strategic issues related to the external environment have also been assessed in this

external analysis, and as soon as RPRC addresses such, it can reposition itself into a

better competitive standing

39
 IV. I N T E R N A L A N A L Y S I S

Determining general environment is as important as identifying the

organization itself. Internal business environment incorporates factors that a company

can control and manage. Shatilo O. (2020) stated in his research, “the internal

environment of a company enables its development and operation. It can be a source

of either business expansion or problems that disrupt its existence.” It is important

and necessary that after assessing the opportunities and threats, a company will also

conduct an assessment on its strengths and weaknesses. Both external and internal

environment are interconnected as both can affect decision making and operations

of the business. Hunger, J. (2020) defined internal environment as, “variables within

the organization itself and are not usually within short-run control of top management.”

These variables include the structure, culture, processes, and resources of the

business.

For the purpose of internal analysis, estimated amounts were based on the

data posted on the website of Philippine Statistical Authority. Industry covered in the

internal assessment were for sale, maintenance, and repair of motorcycle parts and

accessories sector and for electricity, gas, steam, and air conditioning supply sector

for household. Years used in comparing the company to the covered industry were

2016 and 2017 only as it was the latest years published on the PSA website. Unlike

in the external analysis, all branches were considered.

Following areas affect RPRC’s internal environment: a) review of company’s

performance; b) identify major strengths and weaknesses; c) major financial and

internal strategic issues; and d) key organizational elements that may hinder or

promote growth and productivity.

40
Review on the Company’s Performance

BREAKDOWN OF SALES OF THREE BRANCHES FOR THE PAST 3 YEARS

Change Change
2021 2020 2019 (%) (%)
(2020-2021) (2019-2020)
Branches
Apalit 600,000 570,000 1,920,000 5.00 (236.84)

Marilao 600,000 570,000 1,920,000 5.00 (236.84)

SJDM 320,000 700,000 1,160,000 (118.75) (65.71)

Table 7. Breakdown of Sales of Three Branches for the past 3 years

Sales of SJDM branch had a 65.71% decrease in year 2020 and also

decreased by 118.75% on its 2021 sales. Its 2021 sales declined drastically due to

COVID 19. Only essential businesses are open, and RPRC by nature selling a

seasonal product, is not an essential business. Most of its regular consumers shut

their business temporarily and some limited their operations such as bus companies

and resorts. Purchasing power of individuals also became weak ever since the

pandemic started.

Most of RPRC’s products are only affordable by middle class consumers. Peak

and low season did not matter in this year. Sales of Marilao and Apalit branch

experienced a decrease of 236.84% in year 2020 but its sales recovered by 5% in

year 2021. Both sales of Marilao and Apalit branches decreased dramatically in 2020

due to COVID-19 as the owner shut down these branches during the peak season

which resulted to zero sales for 3 months but continuously paying fixed expenses.

41
 RPRC VS. INDUSTRY
(GROWTH COMPARISON FOR YEARS 2016 AND 2017 )
Indusry RCPC

112,123,049,476 123,915,309,061

16,323,384 20,640,933

2016 2017

Figure 9. RPRC vs. Industry (2016 & 2017)

From 2016 to 2021, the industry of Electricity, Gas, Steam, and Air

Conditioning Supply grows an accumulated increase of 11.23% for the whole country.

Estimated values were based on data posted by Philippine Statistics Authority for sale,

maintenance, and repair of motorcycle parts and accessories sector and for

electricity, gas, steam, and air conditioning supply sector for household. Only years

2017 and 2016 were the latest years posted but both years were posted for 2018 and

2019 on the website. All of RPRC branches are located in Central Luzon.

Out of the total estimated sales of 859,397,826,061 in 2017, only

123,915,309,061 belongs to Central Luzon. Out of the total estimated sales of

762,923,393,476 in 2016, only 112,123,049,476 belongs to Central Luzon.

Accumulated growth based on the current financial estimation of RPRC from 2016 to

2021, RPRC grows an accumulated increase of 20.92%. Estimated sales for 2017

was 20,640,933 and 16,323,384 for 2016. RPRC’s accumulated contribution to the

industry for 2017 was 0.24% and 0.21% for 2016.

42
 RPRC VS. MA JOR COMPETITORS
(GROWTH COMPARISON)
2016 2017

28,711,166 36,374,339
20,640,933 28,711,166
24,431,077 24,431,077 26,396,076
16,323,384

RPRC KW I KOOL FMD REF-AIRE PI L I-AIRE

Figure 10. RPRC vs. Major Competitors (2016 & 2017)

Accumulated growth based on the current financial estimation of RPRC from

2016 to 2021, RPRC grows an accumulated increase of 20.92%. Estimated sales for

2017 was 20,640,933 and 16,323,384 for 2016. Kwikkool and FMD Ref-Aire

Enterprises Refrigeration & Airconditioning Parts grows an increase of 14.91%.

Estimated sales for 2017 was 28,711,166 and 24,431,077 for 2016. Pili-Aire Aircon

& Refrigeration Parts Trading grows an increase of 27.43%. Estimated sales for 2017

was 36,374,339 and 26,396,076 for 2016.

Amounts used in estimated sales of competitors were based on the data

posted by Philippine Statistics Authority and only years 2017 and 2016 were the latest

years posted on the website. Kwikkool and FMD Ref-Aire Enterprises Refrigeration &

Airconditioning Parts are both located in NCR while PA & Refrigeration Parts Trading

is located in CALABARZON.

CALABARZON was the highest productive region for both 2016 and 2017 as

their labor productivity for household reaches at 5,300,000 and 4,800,000 per worker.

CALABARZON also contributed the biggest share in in value added and received the

highest subsidy from the government amounting to 1,500,000,000 in 2017. Even if

NCR’s employment declined by 23%, NCR still obtained the highest total employment

in 2016, having a total of 7,967 workers, and in 2017, having a total of 6,142 workers.

43
 Accumulating amounts used for computing profitability analysis and financial

ratio analysis are from the available data of 2016 to 2017. These years are the

greatest basis of comparison for RPRC as this is the peak years of the business. RPRC

run on a normal business operation since 2016-2017 minding that these years were

pre-COVID-19 years. RPRC has been established since 2005 and it has been in the

market for 15 years. Its normal operating years is greater than the years it operated

during COVID-19 which is the reason COVID-19 years were not used.

Profitability Analysis Percentage

Gross Margin 20%

Profit Margin 1%

Return on Total Assets 2%

Return on Equity 3%

Table 8. Profitability Analysis

Gross margin ratio measures the percentage of gross sales left after the

company pay its direct costs. The higher the gross margin ratio, the better. Upon

analyzing, RPRC has a 20% gross margin which interprets as high or good

considering that RPRC is a SME. For every peso that RPRC generated, 0.20 centavo

can be kept as profit or payment for selling and administrative expenses and operating

expenses while 0.80 centavo is used to pay direct costs.

44
 Profit margin ratio measures the percentage of profit left after the company

pay its indirect costs. It also measures the capacity of a company to turn sales to net

income which can give creditors insights and assurance on how a company can earn

sufficient money to pay back its creditors. A good profit margin ration ranges from

10% as average, 20% as high, and 5% as low. However, RPRC only has a 1% profit

margin which interprets that RPRC does not have the capacity to pay its creditors and

RPRC did not do well in managing its expenses, specially the fixed ones.

Return on total assets ratio measure show efficient a company utilizes its

financial resources to generate profit and create value for the company. It compares

assets with the revenue these assets generated over a period of time. A better return

on asset is 5% and a greater return on asset is 20%. However, RPRC only generated

2% which is lower than the considered better return on assets, Low return on assets

suggests that RPRC cannot use its financial resources efficiently and effectively in

generating profit.

Return on equity ratio measures how a company can obtain its initial

investments. It is commonly used in tracking the performance of the company and in

comparison, with other businesses of the same industry. A good return on equity ratio

is 15-20%. However, RPRC only obtained a 3% return on equity which is way below

than the considered good return on equity. Low return on equity ratio interprets that

the company may have used debt in acquiring its financial resources. It also means

that the business earns profit lower than its equity,

45
 Financial Ratio Analysis
Short Term Solvency Ratio
Current Ratio 2.28:1
Inventory Turnover 1.21 times
Long Term Solvency Ratio
Debt Ratio (Debt to Asset Ratio) 0.41 times
Debt to Equity Ratio 0.71 times
Evaluation of Operation Efficiency Ratio
Asset Turnover 1.17:1

Table 9. Financial Ratio Analysis

Current ratio is short term solvency ratio that measures the capacity of a

business to pay its short-term liabilities and obligations. An acceptable current ratio

range between 1.5 to 3. RPRC obtained a 2.28 ratio which interprets as included in

the acceptable range. Even though it has low profit margin ratio, RPRC has the

capacity and ability to pay its short-term liabilities.

Inventory turnover measures the times that the product of a business is being

sold and replaced during a given accounting period. A good inventory turnover, that

can balance enough inventory on hand and limited reordering process, ranges from

5 to 10 times. Ideally, a business should restock its inventory every one to two months

which indicates that the business is earning well and enough. However, RPRC only

obtained 1.21 times of inventory turnover which interprets that they seldom restock

their inventories. RPRC only restock their inventory thrice a year during normal

operating business and only twice during COVID-19 because the life cycle of RPRC

products have longer life cycle than the other products sold in the market.

46
 Debt to asset ratio measures the portion of assets being funded by debt. If the

debt to asset ratio is more than one (1) it means that the business has greater debt

than assets but if it is vice versa where debt to asset ratio is less than one (1), then it

means that the business has greater assets than debts. Favorably, the debt to asset

ratio of RPRC is only 0.41 times or lower than 1 which interprets that RPRC has more

assets than debts.

Debt to equity ratio measures the portion of equity being funded by debt. It has

similar interpretation with debt to asset ratio where above one (1) means that it has

greater debt than equity while below one (1) means that equity is greater than its debt.

Favorably, debt to equity ratio of RPRC is only 0.71 times which interprets that RPRC

has more equity than debt. However, the business is only 0.29 times away from being

considered as risky.

Asset turnover ratio measures the capability of assets of the business to

generate income efficiently and effectively. In retail, asset turnover or 2.5 and above

is considered good enough. RPRC only obtained a 1.71 turnover which is considered

low.

COVID-19 has resulted in a decrease in sales across all branches from 2020

to 2021. This is a significant issue for the company, particularly in terms of its financial

ability to continue operating during these difficult times. RPRC has been in the industry

for 15 years and is still standing today, indicating that they will overcome these

challenges in due time.

47
Supply Chain Analysis

Supply chain is a vital part of the success of a company as it tries to hit two

birds in one stone by obtaining excellent customer satisfaction while maintaining low

expenses. It helps businesses in making better informed and calculated economic

decisions about business operations and assist company in identifying potential risks

that can be addressed immediately before it can largely disturb the operations. Supply

chain guide business in overseeing all components of their business processes and

ensuring that all processes, such as supplier, procurement, stock, store, selling,

transport, and customer, are operating efficiently and effectively.

Figure 11. Supply Chain Analysis

48
 Supplier

Choosing the right and trustworthy suppliers is critical in order for the business

to obtain an effective and efficient supply chain. Suppliers are one of the many

reasons why a business can continuously operate for years and satisfy its consumers

for a long period of time. Competitive advantage comes in when a business finds the

right supplier. RPRC has a total of six trusted suppliers that provides them with

branded and high-quality products. RPRC also maintains a good relationship with all

of their suppliers.

Connell Brothers Co. Pilipinas, Inc. and T.A. Fresco Corporation are two of the

six trusted suppliers of RPRC. Connell Brothers Co. Pilipinas, Inc. is a registered

importer of Ozone Depleting Substances (ODS) and its Alternative Chemicals. RPRC

chose this supplier as it adheres to DENR regulation regarding restrictions on trading

ozone-depleting chemical substances and mixtures, which was explained in detail in

external analysis. The business is located at Pasig City and sells products such as but

not limited to Refrigerant 22, R141B, KLEA 410A, KLEA 404A, KLEA 407C, KLEA

134A, and R-32A. T.A. Fresco Corporation is one of the leading wholesalers and

retailers of air conditioning and refrigeration part since 1998. The business is located

at Quezon City and offers wide range of products such as but not limited to

compressors, expansion valves, pressure switches, hoses, fittings, coolant control

valves, refrigeration tubes, and pipes.

49
 Procure

Procurement process guarantees that all products are properly sourced,

requisitioned, ordered, inspected, and reconciled so that orders can be delivered to

customers on time and all products are always available. Effective procurement can

become a competitive advantage for the business as it maximizes the time and

resources spent in acquiring inventories. RPRC does not have any definite or specific

date on purchasing inventory from their suppliers. RPRC will just order once their

inventory reach their reorder point.

Before pandemic, the company usually order bulk inventories three times a

year, when prices decrease, and when there was a hint of prices increase. However,

after COVID-19 happened, the company reduced their order to two times per year

and even if their stocks already reach their reorder point, they will not order

immediately due to fluctuating prices of some products such as but not limited to

Freon. Usually, RPRC retail Freon at ₱3,800 but how can they maintain retailing Freon

if the acquisition price of Freon from suppliers increased to ₱4,400.

Stock

Properly storing inventories inside a secured and organized warehouse can

improve delivery, labor productivity, and customer satisfaction. It lessens the risks of

damaged goods, especially RPRC has some flammable products such as Freon. It

also monitors the inventory count which can lessen the risks of employees stealing

the products and tracks when the reorder point is already reached. RPRC usually

receives their orders at SJDM branch. This company’s branch has a secured and safe

storage where they can store all of their refrigerant parts supplies and even flammable

products such as Freon. After checking and counting inventories received, RPRC

either put products inside the storage room or put products in the store to be

displayed in the respective branches.

50
Store

Retail stores are great opportunity for both the business and its customers to

interact and to develop a good customer-seller relationship. Physical stores are

important as it allows the consumers to personally check the products before buying

which can increase their trust to the business. Sample products are being displayed

on the store display racks. Some goods that are reserved, by customers whom pre-

ordered through RPRC, are being delivered immediately at the consumer’s doorstep.

Sell

Selling the product is the means of the business to earn profit. As of now, the

business uses personal selling technique wherein sales representatives sell products

onsite and personally demonstrate how the product works to customers. Personal

selling is what made RPRC operate for 15 years without investing on digital marketing.

It was an effective way of obtaining sales and earning the trust of customers. RPRC

usually sells their products at retail. Consumers have two options in buying Freon,

they ca buy product per tank or per kilo. In per kilo, products are being sold at retail

or outside the tank by pouring certain amount of product to consumer’s refillable tanks.

RPRC can also sell through pre-orders where previous consumers will call RPRC to

order products they need and have it directly delivered to them.

51
 Transport

Meeting the demands and satisfaction of customers is the top priority of every

business and it can only be obtained if the business has an effective logistics system.

Delivering products is also an alternative way of customers to acquire the goods.

RPRC can transport their products in three ways: on hand, same day delivery, and

pre-orders. Most of the consumers personally buy products at the physical stores of

RPRC. Some consumers even if they buy products on site, they will have those

delivered by RPRC employees for reasons such as but not limited to insufficient car

space or bulk orders without means of bringing products home. Some consumers

prefer to call RPRC, usually for convenience, and have those products delivered

directly to them once available.

Customer

Customers are the end point of the supply chain and the end users of all

products. Ensuring that they are always satisfied with services provided by companies

is the top concern of all businesses. Consumers usually receive products in two ways: on

hand and through delivery. Some consumers prefer to personally buy products in the physical

store but some, especially when they are too busy to personally buy products, have those

products delivered at their doorstep.

52
Strengths and Weaknesses Analysis

STRENGTHS WEAKNESSES

• Branded and High-Quality ▪ Some Products are Warranty-

Products Free.

▪ Product Quality Control and ▪ Caters Small Market of Customers

Awareness
▪ No Sales/Marketing Scheme
▪ Customers Loyalty
▪ Products are More Expensive
▪ Good Reputation Compared to Competitors.

▪ Business Stability Despite COVID- ▪ Only Operate/Sells in their

19 Physical Stores

▪ Stable Relationship with Suppliers ▪ Inaccessibility of SJDM Branch

Location
▪ Responsive to Market Needs
▪ Increasing Risk of Inability to Pay
▪ Investing in Complete Delivery Suppliers
Equipment and Equipped Store
▪ Difficulty in Acquiring Inventory
▪ Sufficient Employees
▪ Consistent Low Sales from 2020-
▪ Effective Sales Representatives 2021

▪ Absence of Organizational
Structure

Table 10. Strengths and Weaknesses Analysis

53
Strengths

▪ Branded and High-Quality Products

Branded and High-Quality Products in the business world serves as the

standard of the consumers when choosing a product. Consumers believe that

branded and high-quality products satisfy the longevity that they need in a

product, they believed that it maximizes its full potential. Consumers presumed

that efficiency will only be possible if they branded and high-quality product.

RPRC is not bothered with the lower prices being offered by their competitors

on similar products that they sell due to their products being branded and high

quality. The company opted to provide and to sell branded products in order

to leave a remarkable impression. This is also the reason why they have

several loyal customers such as Villa Antonio de Dave and Grotto Vista Resort.

▪ Products Quality Control and Awareness

To maintain and encourage trust from consumers, it is important to sell

products that passed an excellent quality control assessment. In this way,

business is assured that their products will be used by consumers in its full

capacity without being worried on how it will turn out in both short and long run

of use. RPRC ensures that all their products undergo a trusted product testing,

which is performed by TESDA, before retailing to the public. This is RPRC’s

way of securing products being sold are of top quality and safe to use since

some of their products are flammable, such as Freon. The company is

knowledgeable and compliant with the RA 9514 or the Fire Code of the

Philippines 2008. RPRC is also smart in choosing its suppliers as Connell

Brothers Co. Pilipinas, their supplier since 2005, complies with DENR

Administrative Order 2013-25 which talks about the regulations and

restrictions on trading ozone-depleting chemical substances and mixtures.

54
▪ Customer Loyalty

Aside from profit, one of the hardest things to earn in doing business in

customers loyalty to the products and services that you sold. Keeping up with

their standards are the hardest to maintain in the whole course of doing

business with the, minding that every now and then consumers tend to easily

replace products if their standards are not met. Consumers are still patronizing

RPRC even if their respected branch area/place is not easy to find, particularly

the SJDM branch. Customers really made effort and time to physically buy the

product from the store itself.

▪ Good Reputation

Good reputation always seen as an essential edge of a business

because it can help to improve the trust in their brand, gain and improve

customers loyalty, build a brand recognition, and continue to improve the value

of the business. RPRC has a good reputation since 2005. They are now serving

various known businesses such as bus companies like Jackpherlyn, Miami,

Mersan, and resorts like Villa Antonio De Dave and Grotto Vista Resort. The

resorts mentioned are RPRC’s customers since 2005.

Part of gaining customers loyalty is trusting the branch itself of the

business, regardless of how many competitors in the area is present or how

small the trusted branch is if the consumers build the trust none of that will

matters. SJDM branch of RPRC is one of the most trusted branches by

technicians, as a result of the good reputation, regardless of how active the

competition and how many players are present in the SJDM area.

55
▪ Business Stability Despite COVID-19

COVID-19 is one of the most unexpected threats that every business

had been facing and battling. Some business already closed selected

branches in order to keep the profiting ones running. However, RPRC made

sure that all their branches are operating continuously.

▪ Stable Relationship with Suppliers

Relationship with the suppliers is one of the most important relationship

that needs to be established during the course of the business. In a business,

it is essential to find a good supplier that can cater all the needs in operating

the business. It is beneficial and efficient if the business will only transact to

trusted suppliers and vice versa. RPRC was able to provide quality products

to its customers for 15 years due to their great and stable relationship with

their trusted suppliers. Before the pandemic happened, RPRC can order any

time of the year without worrying about the methods of payment.

▪ Responsive to Market Needs

One of the goals in operating a business is catering all the needs of your

possible consumers, by consistently providing them what they need the

business can gain their loyalty that will eventually help the business to succeed.

RPRC is very responsive to the needs of its customers. Whenever a customer

asks an unknown product to the store, the company will find the product for

the customer and if that product becomes in demand, they will add it to their

product lists. The owner is also willing to listen to the suggestions of her

employees.

56
▪ Investing in Complete Delivery Equipment and Equipped Store

As a business that offers delivery for the convenience of customers,

having a complete delivery equipment is an advantage that the company holds

against its competitors. RPRC can also deliver the products safely and

promptly to the customers. All of RPRC’s branches have complete equipment,

furniture, and fixtures. Their stores are always neat and dirt-free. Studies have

shown that cleaner stores encourage customers to spend more money than

they pre-planned. Properly equipped stores promote a positive workplace

environment where the displayed products are organized.

▪ Sufficient Employees

RPRC has sufficient number of employees needed per position as

manpower is parallel to effectiveness and efficiency of the company’s

operations. The more employees available, the more products can be sold and

delivered to customers.

▪ Effective Sales Representatives

RPRC does not have an established marketing team, schemes, and

plan. However, this does not stop the company from earning enormous sales

as their sales representative, since the day RPRC was established, are all

effective and efficient.

57
Weaknesses

▪ Some Products are Warranty-Free

Some of the products that RPRC sell do not have warranty such as but

not limited to Timer Switch of the refrigerator. Warranties are as important as

the product because it provide guaranty to customers that they are entitled to

have replacement if the product is proven to be defective. It became a

weakness since most customers in the Philippines seek out stores that provide

warranty to its products. Also, having a warranty can earn the business a loyal

customer if that customer was impressed with the customer service that the

company provided.

▪ Caters Small Market of Customers

RPRC low customer count per branch may be translated as catering a

small market. It may become a weakness in the future when this small market

becomes even smaller due to some regular customers suddenly close their

business or those regular customers finding new refrigerant parts store.

▪ No Sales/Marketing Scheme

RPRC does not have any marketing schemes to entice current and

potential customers to buy products from their store. The business does not

even have any websites or social media pages to promote their available

products. Even though the business has effective and efficient sales

representatives, having no marketing scheme may become a problem in the

future as businesses in today’s generation are little-by-little transferring to e-

commerce. Also, employees come and go. These sales representative may

leave the business anytime they want, leaving the business with no effective

sales representatives and no marketing schemes.

58
▪ Products are More Expensive Compared to Competitors

As stated above, RPRC selling branded and high-quality products is the

main reason that the business sells its products a little higher than its

competitors. More expensive selling prices are not a bad thing or a forbidden

scheme in the business field. However, RPRC might be losing potential buyers

as this potential market may be going to their competitors due to lower price.

▪ Only Operate/Sells in their Physical Stores

RPRC only invests in physical stores. The business does not have any

websites or social media pages to cater their customers. Again, there is no law

that prohibits a business in investing only in one method of selling. However,

there would be disadvantages in doing so. As of 2021, the business already

experienced the disadvantage of only investing in physical stores. Last 2020,

the business shut down two branches for three months resulting to zero sales

but continuously paying the fixed costs. Imagine if the business also invests in

e-commerce, RPRC can continuously sell its products while paying the fixed

costs in the branches that were shut down.

▪ Inaccessibility of SJDM Branch Location

RPRC location for SJDM branch is not easily accessible to customers.

Many studies have shown that location is one of the key factors that makes a

business succeed. RPRC may lose potential customers or even their regular

customers if these consumers find another store that offers the same quality

and same price range but is more accessible to them.

59
▪ Increasing Risk of Inability to Pay Suppliers

Ever since COVID-19 happened, RPRC had been facing an increasing

risk of not paying their suppliers. Some of their suppliers are requiring the

business to provide post-dated checks before providing the goods. The capital

price for Freon also increases. The business has also been consistently

generating low sales due to COVID-19.

▪ Difficulty in Acquiring Inventory

Ever since COVID-19 happened, some of their suppliers implemented

strict policies regarding payment methods. Although it was a reasonable move

for suppliers, RPRC consistently generating low sales due to COVID-19 makes

it more difficult for them to acquire inventories as usual. Finding new suppliers

may also impose new risks. RPRC’s relationship with their suppliers are already

great, stable, and proven by time. COVID-19 was the only reason that existing

suppliers implemented strict policies. Also, there are only few suppliers that

provide refrigerant parts here in the Philippines and these other suppliers may

even have same policies with the existing ones.

60
▪ Consistent Low Sales from 2020-2021

RPRC’s consistently generating low sales since the pandemic

happened. If these low sales continued for another three to five years, the

business may suffer too much loss and may even close branches in order to

cut down their fixed expenses. The revenue that RPRC is generating since

2020 is insufficient to cover the usual costs and expenses that the business

spends to operate.

▪ Absence of Organizational Structure

RPRC does not have organizational structure implemented in the

business. Establishing organizational structure is as important as having a

vision mission statements since this structure serves as the hierarchal guide

of employees in their reporting duties. Absence of this structure may lead to

non-segregation of duties and confusion to employees.

61
Internal Factor Evaluation Matrix

Strengths Weight Rating Weighted Score

1 Branded and High-Quality Products 0.08 4 0.32

2 Product Quality Control and Awareness 0.05 4 0.20

3 Customers Loyalty 0.05 4 0.20

4 Good Reputation 0.07 4 0.28

5 Business Stability Despite COVID-19 0.05 4 0.20

6 Stable Relationships with Suppliers 0.04 4 0.16

7 Responsive to Market Needs 0.05 4 0.20

Investing in Complete Delivery Equipment and

8 Equipped Store 0.05 4 0.20

9 Sufficient Employees 0.04 3 0.12

10 Effective Sales Representatives 0.04 3 0.12

Weakness Weight Rating Weighted Score

1 Some Products are Warranty-Free 0.03 2 0.06

2 Caters Small Market of Customers 0.04 1 0.04

3 No Sales/Marketing Scheme 0.06 1 0.06

Products are More Expensive Compared to 0.04 2 0.08

4 Competitors

5 Only Operates/Sells in their Physical Stores 0.06 1 0.06

6 Inaccessibility of SJDM Branch Location 0.04 2 0.08

7 Increasing Risk of Inability to Pay Suppliers 0.06 1 0.06

8 Difficulty in Acquiring Inventory 0.06 1 0.06

9 Consistent Low Sales from 2020-2021 0.06 1 0.06

10 Absence of Organizational Structure 0.03 1 0.03

TOTAL 1 2.59

Table 11. Internal Factor Evaluation Matrix

62
 Based on the IFE matrix, RPRC obtained a total weighted score of 2.59 which

is above the average score of 2.50. This signifies that the internal position of the

company is firm enough to counter the negative effects of previous ineffective

management and COVID-19. RPRC has been providing branded and high-quality

products from trusted and government compliant suppliers for 15 years. RPRC has

also been stringent when it comes to product quality control, being one of the SMEs

that sells flammable products, they are required to comply with RA 9514 or the Fire

Code of the Philippines 2008. RPRC has earned the trust of their market which is why

customers have been patronizing their products for a long period of time. Even if it is

inconvenient for them, they are willing to go extra miles just to personally buy the

products. RPRC has acquired sufficient employees to counter the absence of digital

marketing which, surprisingly, was effective for the past 15 years.

63
Summary and Conclusion

Financial Problems Internal Strategic Issues

▪ Consistent Low Sales from 2020- ▪ No Sales/Marketing Scheme

2021
▪ Only Operate/Sells in their Physical
▪ Increasing Risk of Inability to Pay Stores
Suppliers
▪ Absence of Organizational Structure
▪ Difficulty in Acquiring Inventory

Table 12. Financial Problem & Internal Strategic Issues

Financial problems that RPRC must address are consistent low sales from

2020-2021, increasing risk of inability to pay suppliers, and difficulty in acquiring

inventory. On the other hand, the internal strategic issues that the business must

address are no sales/marketing scheme, only operate/sells in their physical stores,

and absence of organizational structure.

RPRC, for the first time, experienced low sales even during peak seasons due

to COVID-19 hindering its regular clients to purchase their usual number of orders.

COVID-19 also made RPRC shut down its business operations for a maximum of three

months but still made them pay the fixed expenses. RPRC had been experiencing an

increasing risk to their liabilities due to low sales generated since the pandemic.

64
 RPRC’s trusted suppliers suddenly change their payment policies due to

COVID-19, which is reasonable enough, but became a problem to the company

because they cannot immediately restock their inventories whenever they want

without providing post-dated checks to their suppliers. RPRC has also been

experiencing difficulty in acquiring inventories due to the price increase of Freon.

Non-investment to marketing strategy and digital stores may have impact in

the approaching years. Since 2020, many businesses are promptly shifting to e-

commerce in order to sustain business operations. Adapting digital marketing, such

as social media advertisements and website, in the time of technological

advancements will boost not only the company’s sales but also its reputation,

branding, and market reach. Leaving the business without clear structure of authority

and reporting may continuously confuse existing and future employees and RPRC

may lose the chance to avoid or mitigate theft and fraud.

One of the reasons why multinational corporations are successful is their

commitment in creating and establishing clear organizational structure. Therefore,

non-establishment of organizational structure may create confusion and conflict to

existing and future employees as to whom they will report, lack of coordination

between existing employees about the products and processes, delayed decision-

making of managers and the owner, and lose the chance to mitigate fraud, theft, and

error.

65
 Key Organizational Elements

• No Segregation of Duties

▪ Business Entity Principle Issue

Table 13. Key Organizational Elements

Key organizational elements that may hinder or promote growth and

productivity are RPRC’s non-compliance to segregation of duties, personal expenses

being mixed up with business expense, and business difficulty in keeping up with

competitors. Compliance to segregation of duties is one of the most important internal

controls that a business may use in order to prevent crimes such as theft and fraud.

Segregation of duties oversees immaterial errors before it can become

material errors in the accounting books. Accounting professionals must follow the

business entity principle where transactions associated to business must be strictly

separated to personal transactions of the owner. However, RPRC’s owner do not

follow this concept which deteriorates the essence of a business having its own

juridical identity.

66
 Competitive Profile Matrix

Pili-Aire Aircon &

Indicators RPRC KWIKKOOL FMD Refrigeration Parts
Trading

Critical
Weighted Weighted Weighted Weighted
Success Weight Score Score Score Score
Score Score Score Score
Factor

Marketing 0.30 1 0.30 2 0.60 2 0.60 4 1.20

Brand
0.20 4 0.80 3 0.60 2 0.40 3 0.60
Reputation

Location 0.05 2 0.10 2 0.10 3 0.15 2 0.10

Product
0.10 4 0.40 2 0.20 2 0.20 2 0.20
Quality

Customer
0.10 3 0.30 2 0.20 2 0.20 3 0.30
Service

Customer
0.05 3 0.15 2 0.10 2 0.10 1 0.05
Loyalty

Product Range 0.20 4 0.80 2 0.40 4 0.80 3 0.60

Total Score 1 2.85 2.20 2.45 3.05

In the competitive profile matrix, the rating values are as follows: 1 = major
weakness, 2 = minor weakness, 3 = minor strength, and 4 = major strength.

Table 14. Competitive Profile Matrix

To complete the competitive edge of the company with the same weight for

the critical success factors, competitive matrix of competitors presented on the

previous chapter is represented again together with the competitive assessment of

RPRC compared to its competitors. Selected set of critical success factors function

as a navigation for RPRC as it provides the business with closer description of strong

areas and weak points of their competitors. For efficiency and limit redundancy,

interpretation for competitors will not be reiterated and further discussed as this

portion will only focus on the competitive interpretation of RPRC.

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 In the first critical success factor which is marketing. Kwikkool and FMD both

got a score of 2, PA Refrigeration Parts got a score of 4 while RPRC only got 1.

Marketing is considered as one of the major weaknesses of RPRC due to the lack of

social media and advertising presence. RPRC is only known to areas where its

branches are located. Additionally, RPRC only caters small market which could have

reach wider market if it only invests in digital marketing and not solely rely on personal

or direct selling. Its competitor, PA Refrigeration Parts, scored high due to its effort to

invest in digital marketing.

Second success factor is brand reputation. Kwikkool and PA Refrigeration

Parts both received a score of 3, FMD received a score of 2 while RPRC received a

score of 4. One of the major strengths of RPRC is their brand reputation. One of

RPRC’s branch, SJDM branch, is considered as one of the most trusted branches by

technicians when it comes to retailing of refrigerant parts.

Third success factor is location. Only FMD got a score of 3 as this competitor

is located in Commonwealth Avenue, Quezon City while RPRC, Kwikkool and PA

Refrigeration Parts all got a score of 2. It is considered as a minor weakness for RPRC

as one of its branches, SJDM, is really difficult to locate. Only its loyal customers and

patrons will make the effort to buy personally at the store.

Fourth success factor is product quality. All three competitors received a score

of 2 while RPRC received a score of 4. Product quality is what segregates RPRC from

its competitors. Due to the high-quality products it sold in the market for the past 15

years, RPRC survived staying relevant in the market without social media presence.

RPRC’s products undergo product testing which is made through TESDA. Its

suppliers are also legitimate as one of the suppliers is a registered importer of Ozone

Depleting Substances (ODS) and its Alternative Chemicals. Most technicians also

considered SJDM branch as their trusted branch for retailing refrigerant parts.

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 Fifth success factor is customer service. Kwikkool and FMD both got a score

of 2 while PA Refrigeration Parts and RPRC both got a score of 3. Customer service

is considered as one of the minor strengths of RPRC due to the various services to its

consumers that resulted to great customer satisfaction. RPRC provide pre-orders to

customers who wanted to avail a product that is currently out of stock. The business

also administers deliveries to customers whom orders did not fit on its car or who just

wanted the products to be delivered at their doorstep.

Sixth success factor is customer loyalty. Kwikkool and FMD both received a

score of 2, PA Refrigeration Parts received a score of 1, while RPRC received a score

of 3. Customer Loyalty is considered as minor strength of RPRC as some of its regular

clients, such as Villa Antonio de Dave and Grotto Vista Resort, have been their

customer since they opened in 2005. Customers are also making effort to physical

buy products from the store itself even if some branches, such as SJDM branch, is

difficult to locate.

Seventh success factor is product range. Kwikkool got a score of 2, PA

Refrigeration Parts got a score of 3, while both FMD and RPRC got a score of 4.

Product range is considered as one of the major strengths of RPRC as the business

literally offers various variation of a single product, e.g., Freon. RPRC offers nine (9)

types of Freon, namely Daikin 134A, Klea 134A, Eufron 134A, Performance 134A,

Maxx 134A, DY R22, 410A, 404, and R600. RPRC also offer three types with different

sizes of compressors for refrigerators and eighteen (18) types of car compressor.

RPRC also sells laminated evaporators for different type of cars, different types of

drier for refrigerator, and several types of welded drier for home air conditions. Freon

can be bought per kilo and per tank. Compressors can be sold depending on the

sizes. Other products price ranges from 300 to 18,000.

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 V. S T R A T E G Y F O R M U L A T I O N

Strategy is a company’s set course of action to accomplish its goals and

objectives, as well as, to resolve existing issues. Michael Porter explained that having

a competitive strategy is establishing "a combination of ends (goals) for which the firm

is striving and means (policies) by which it is seeking to get there" (1996). All in all,

strategy is what makes a business different from the perspective of customers. After

the performance of external and internal analyses respectively in previous chapters,

a strategy must be formulated to address key external and internal issues identified

and reach a better competitive position.

To aid in formulation strategies, the following strategy formulation tools are

used: Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, IE (Internal-

External) Matrix, Grand Strategy Matrix, and Quantitative Strategic Planning Matrix

(QSPM).

Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

SWOT Matrix is the strategic management strategy formulation tool that

permits firms to create alternative strategies by matching internal factors with external

ones and coming up with a strategy that involves the two. Under SWOT Matrix,

organizations can relate internal factors that they can control to external ones that

they cannot control and formulate a strategy that addresses both. For purposes of

SWOT Matrix, only the most intense issues with the highest assigned weights from

EFE and IFE matrices, respectively, are used. This ensures that the ones with the

most impacts are addressed in the creation of alternative strategies. SWOT Matrix is

presented below.

70
 S.W.O.T STRENGTHS WEAKNESSES

1. Branded and High-Quality 1. Only Operates/Sells in

Products their Physical Stores

2. Good Reputation 2. Caters Small Market of

Customers
3. Products Quality Control and 3. No Sales/Marketing
Awareness
Scheme

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

1. Enactment of the 1. Offer a 1-to-2-year warranty 1. Enter into contracts or

Philippine Public to customers or contracted agreements with
Utility Vehicle partners. Jeepney Operators or
Modernization (S1,S3,O1) the JODA (Jeepney
Program (PUVM) Operators and Drivers
will require Association) itself to
jeepneys to 2. Sponsor events around supply them with
residential areas to introduce
modernize into fully refrigerant parts for their
air-conditioned their high-quality products to modernized jeep.
vehicles, which are potential customers. (W2, O1)
potential (S1, S2, O2)
customers. 2. Make an advertisement
using tarpaulins and
2. 23%-27% of the offer a 1-month contract
total residential to tricycles and jeepneys
households in the in SJDM, Bulacan to put
Philippines were tarpaulins on their
not yet using any vehicle for 200php in a
air conditioner. month. (W3, O1, O2)

THREATS ST STRATEGIES WT STRATEGIES

1. Pil-Aire has 1. Introduce or advertise the 1. Create an online market

established an Branded and high-quality platform to set up a
online presence products with the help of presence on the online
and offers a online market platforms/store market to have a wider
nationwide delivery. page (T1, S1) customer reach and to
operate well amidst the
2. Freon experiences pandemic.
price hikes every 2. Increase selling price to offset (W1, W2, T1, T3)
year the price hike in Freon,
ensuring that products are 2. Hire two persons to
3. Prolonged public still of best quality through market high-quality
contact restrictions quality control and will not products on online
due to COVID-19 tarnish reputation. (S1, S2, market platforms and its
will drive sales to S3, T2) safety transaction.
go lower. (W3, T1, T3)

Table 15. SWOT Matrix

Abovementioned strategies will then be related to the IE and Grand Strategy

Matrices in formulating the ultimate alternative strategies, incorporated from all the

matrices used.

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Internal-External (IE) Matrix

Figure 12. Internal-External Matrix

Internal-External Matrix is a form of an administration tool wherein the total

weighted EFE and IFE scores obtained from previous EFE and IFE matrices in prior

chapters are plotted in a nine-cell grid to position the organization’s current position

and suggest alternative strategies now and for the future. Grid is divided into three

regions, with cells I, II, and IV representing “Grow and Build region”; III, V, VII

representing “Hold and Maintain” region; and VI, VIII, and IX for “Harvest or Divest”

region. Total EFE score of RPRC from Chapter 3 was 2.42, representing a medium

score while IFE score from Chapter 4 was 2.59, representing an average competitive

position.

When plotted together in x- and y- axes, RPRC’s position landed at the fifth

cell, belonging to “Hold and Maintain” region. This suggests that based on RPRC’s

current position, the suggested course of action and strategy to implement would

most likely be market penetration to maintain its current competitive standing. RPRC

can continue boosting its sales to an existing customer base in an existing market to

obtain more market share and to gain competitors’ customers, maximizing their

current position. This is true with respect to refrigerant parts retail industry as there

are variety of retailers almost everywhere and the market is generally wide.

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Grand Strategy Matrix

Figure 13. Grand Strategy Matrix

Grand Strategy Matrix is another feasible strategy formulating tool that plots

the standing of the company in a graph to determine different alternative strategies

for the organization depending on which quadrant it lands in. GSM is based on two

dimensions, which are competitive position and market growth.

On the x-axis, the competitive position is rated from 1-9, with 1 representing

an extremely weak competitive position to 9 which is an extremely strong competitive

position. RPRC was assigned to a competitive position of 7, which translates as strong.

This is due to the existing loyal customer base and excellent brand reputation, and

even though their prices are higher compared to others, RPRC’s products are of

superior quality which lead to customers patronizing the business.

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 On the y-axis, the market growth is rated from 1-9, with 1 representing

extremely slow market growth while 9 represents extremely rapid market growth.

RPRC’s industry, which is the Heating, Ventilation, and Air Conditioning Industry, in

the Electricity, Gas, Steam, and Air Conditioning Supply Sector and the Retail industry

are all rapidly growing industries given the increasing heat index in the Philippines as

well as the ease of establishing retail businesses in the Philippines. Industry growth as

mentioned in Chapter 3 is 4.55% which is considered rapidly growing and so a rate

of 8 was assigned. Therefore, as plotted in the graph, RPRC fell under Quadrant I,

which is the strongest quadrant in the Grand Strategy Matrix.

Quadrant I entities have a strong strategic position and suggest that firms

engage in the following strategies: 1. Market Development, 2. Market Penetration, 3.

Product Development, 4. Forward Integration, 5. Backward Integration, 6. Horizontal

Integration, and 7. Related Diversification. Such strategies will fortify the current

strong competitive base of the company with its already available resources and

strong standing. In connection with the previously done IE Matrix, Market Penetration

also seems like a plausible strategic alternative to handle the company’s issues and

to increase its competitive position.

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Quantitative Strategic Planning Matrix (QSPM)

Quantitative Strategic Planning Matrix (QSPM) is the strategic decision-

making tool that is used to evaluate and assess the relative attractiveness of

alternative strategies derived and formulated through the use of the other matrices

above. Through QSPM, strategies are evaluated based on their feasibleness and

assigned weighted scores that corresponds to their attractiveness to identified key

factors.

This enables companies to prioritize which strategies are actually beneficial to

the company and ensure its smooth establishment. Formulated from matrices above,

two final strategies being evaluated in the QSPM are (1) Infiltrate Online Market

Platforms and (2) Promotions and Advertising. QSPM table is shown below. A more

detailed description of the two strategies is presented after QSPM.

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 Infiltrate Online
Promotions and
Market Platforms Advertising

Strengths Weight AS TAS AS TAS

1 Branded and High-Quality Products 0.08 4 0.32 4 0.32

2 Product Quality Control and Awareness 0.05 3 0.15 3 0.15

3 Customers Loyalty 0.05 3 0.15 2 0.10

4 Good Reputation 0.07 4 0.28 4 0.28

5 Business Stability Despite COVID-19 0.05 3 0.15 0 0.00

6 Stable Relationships with Suppliers 0.04 0 0.00 0 0.00

7 Responsive to Market Needs 0.05 3 0.15 2 0.10

Investing in Complete Delivery Equipment

0.05 0 0.00 0 0.00
8 and Equipped Store

9 Sufficient Employees 0.04 3 0.12 2 0.08

10 Effective Sales Representatives 0.04 3 0.12 3 0.12

Table 16. STAS – Strengths Table 17. STAS - Weaknesses

Infiltrate Online
Promotions and
Market Platforms Advertising

Weaknesses Weight AS TAS AS TAS

1 Some Products are Warranty-Free 0.03 3 0.09 4 0.12

2 Caters Small Market of Customers 0.04 4 0.16 4 0.16

3 No Sales/Marketing Scheme 0.06 4 0.24 4 0.24

Products are More Expensive Compared

4 0.04 1 0.04 1 0.04
to Competitors

Only Operates/Sells in their Physical

5 0.06 4 0.24 1 0.06
Stores

6 Inaccessibility of SJDM Branch Location 0.04 3 0.12 0 0.00

Increasing Risk of Inability to Pay

7 0.06 0 0.00 0 0.00
Suppliers

8 Difficulty in Acquiring Inventory 0.06 0 0.00 0 0.00

9 Consistent Low Sales from 2020-2021 0.06 3 0.18 3 0.18

10 Absence of Organizational Structure 0.03 0 0.00 0 0.00

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 Infiltrate Online Promotions and
Market Platforms Advertising

Opportunities Weight AS TAS AS TAS

1 450th Negosyo Center of DTI in SM SJDM 0.06 0 0.00 2 0.12

2 Construction of MRT-7 0.06 0 0.00 0 0.00

3 17% increase in SJDM population 0.04 3 0.12 3 0.12

Enactment of the Philippine Public Utility

4 0.16 1 0.16 4 0.64
Vehicle Modernization Program (PUVM)

Tropical climate of 27.6°C average monthly

5 figures ranging from 25.6°C in January and 0.03 3 0.09 2 0.06
29.6°C in May

23%-27% of the total residential households

6 in the Philippines were not yet using any air 0.12 4 0.48 3 0.36
conditioner.

Industry grows at a compound annual growth

7 0.03 3 0.09 2 0.06
rate of 4.55%.

Only 42% of the market share is held by top

8 0.04 2 0.08 1 0.04
industry players.

RPRC does not have an online presence and

9 0.08 4 0.32 3 0.24
social media marketing yet.

10 Technological Developments 0.04 4 0.16 1 0.04

Table 18. STAS – Opportunities Table 19. STAS - Threats

Infiltrate Online Promotions and

Market Platforms Advertising

Threats Weight AS TAS AS TAS

Competitors Kwikkool and FMD offer more
1 0.06 2 0.12 2 0.12
affordable refrigerant parts.

Pil-Aire has established an online presence

2 and 0.08 4 0.32 3 0.24
offers a nationwide delivery.

3 Rivals are starting to copy RPRC’s styles. 0.04 2 0.08 1 0.04

Supplier power is high and switching

4 suppliers 0.04 0 0.00 0 0.00
will be costly.

Prolonged public contact restrictions due to

5 0.05 3 0.15 2 0.10
COVID-19 will drive sales to go lower.

6 Freon experiences price hikes every year 0.07 4 0.28 2 0.14

STAS 4.96 2.75

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 Results of the Sum Total Attractiveness Scores (STAS) revealed that the more

attractive of the two final alternative strategies evaluated is to Infiltrate the Online

Market Platforms with a STAS of 4.96 as opposed to the 2.75 of promotions and

advertising. This can be implied to arise from the fact that the COVID-19 pandemic

forced businesses to operate online, and therefore businesses should be where the

customers at. The big difference between its STAS with promotions and advertising

also implies that infiltrating the online market platforms considers several key factors

more and thus resulting to be more desirable of two alternatives.

In summary, through series of evaluations and assessments from matrices

above, alternative strategies have gone revisions and finalizations to incorporate

various strategies formulated initially. Strategies have first been formulated through

SWOT Matrix, considering issues with the highest weights and impacts to RPRC.

From eight initial strategies from SWOT, strategies that can be combined and

synergized have been merged into one. IE Matrix, as well as Grand Strategy, revealed

company’s position in their respective grid and graph to determine what type of

alternative strategies would be the best courses of action to take.

Strategies suggested from these two matrices are narrowed down and

incorporated into the strategies gathered from the SWOT Matrix. From eight SWOT

strategies and narrowed-down suggestions from IE and Grand strategy, the two final

strategies have been formulated namely to (1) infiltrate the online market platforms

and (2) promotions and advertising. Lastly, to determine their relative attractiveness,

the QSPM was used to assess which is more desirable.

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 Infiltrate Online Market Platforms

Considering RPRC's weaknesses that it only operates and sells in its physical

stores, caters small market of customers, and has no sales/marketing scheme, it is a

good strategy to infiltrate online market platforms to help RPRC grow and have a wider

customer reach. One of the threats to consider in setting up an online market platform

presence is that the competitor has already established an online presence and offers

nationwide delivery; it is an edge over RPRC.

Since an online market platform is the best place for Marketing, it can also

promote and build relationships with its customers and can be a good strategy for the

RPRC to operate well amidst the pandemic. Online transactions are also much safer

because it limits physical contact between customers and sellers. To set up presence

in the online market platforms, RPRC needs to hire two (2) people to create and to

manage their accounts, including their posts, advertisements, and even possible

promo and discounts. They can create a Facebook page and earn a lot of followers;

they can also create virtual shops on a market platform such as but not limited to

Lazada and Shopee.

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Promotions and Advertising

One of RPRC’s weaknesses is it has no marketing scheme and caters to a

small market of customers. Therefore, promotions and advertising can boost the

customer's knowledge about the company and what products and offers they can

grab. It is also a great way to introduce RPRC to large number of potential partners.

RCPC can identify and choose potential partners and create proposals to targeted

business partners and make profitable and advantageous offer to customers, create

an informative tarpaulin for promotions about company’s quality products, offers, and

incentives, and give reasonable incentives to owners of vehicles that will carry and

spread the information of the company to establish a good relationship.

As derived and innovated from multitude of strategies from SWOT Matrix, the

proposed strategy is to have RPRC enter into supply agreements with customers,

especially bus and modernized jeep operators, to exclusively supply refrigerant parts,

with bundle promos and other perks of the said agreement. As part of this agreement,

RPRC will have its posters, stickers, and other promotional materials displayed inside

the PUV so that commuters, who are potential customers, both in the commercial,

residential, and transportation sectors will all see the promotional materials. As part

of the promotional strategy, RPRC could also offer warranties on selected products

to offer more sense of security to customers.

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 Two final alternative strategies are also in conjunction with IE Matrix conducted

above. Results showed a medium external score and an average competitive position,

suggesting that RPRC must hold and maintain its operations through market

penetration. The same is true with the grand strategy matrix wherein RCPC landed in

the first quadrant where market penetration is also one of the recommended

alternative strategies. Market penetration can be done by establishing marketing

activities both through online market platforms and promotions and ads. This will allow

RPRC to reach more customers in existing target market and grab a share of

competitors’ market share. When implemented well, it can further strengthen RPRC’s

current competitive position and increase operating performance in the long run.

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 VI. O B J E C T I V E S, S T R A T E G Y

R E C O M M E N D A T I O N S, & A C T I O N P L A N S

A. Financial and Strategic Objectives

Notwithstanding their conceptual distinction, financial objectives and strategic

objectives flow symbiotically in the way a company runs its business. Both concepts

are mutually inclusive — meaning, a major strategic move the organization makes

has financial repercussions, and vice versa (Codjia, 2017). Setting goals is crucial for

RPRC, as a company, since it is necessary to impose series of objectives that will

support the achievement of these goals. Financial objectives, for example, offer the

foundation for a strong plan to drive the firm towards the path to success, while

strategic objectives, on the other hand, are non-financial goals that the company

aspires to reach with a specific indication which can be monitored over time. Such

are the suggested financial and strategic objectives for RPRC's operation for the next

five years:

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1. Financial Objectives

Financial objectives are goals of a company that may be measured in money.

It corresponds to objectives that have a direct impact on a company's financial

statements. These are generally measurable targets that companies can measure

and achieve, and these goals are usually geared toward long-term achievement. Here

are some potential financial objectives to guide the company in determining where it

should focus its efforts over the next five years:

1.1 Increase annual revenues with a margin of 25% for the next five years.

Increasing annual revenues is what makes businesses successful and allows

them to continue growing while not compromising the company’s financial health

which can be jeopardized if revenue growth is not achieved. A company can establish

a goal of increasing revenue by 15% in a year. If this is a success and the company

experiences significant growth, it may set a larger objective for the next year, such as

a 20% rise in revenue.

For RPRC, both Marilao and Apalit branches had a 25% increase in sales while

with the current impact of Covid-19, its peak and low season, RPRC’s SJDM branch

has experienced its downfall on sales as it incurred a 25% loss last January 2021. In

aspiration, RPRC expects to have a 25% increase in their revenue sales for the next

five years, revenue growth will open up more opportunities for RPRC like expanding

their market since they are just operating in Central Luzon, it is important to secure

profit margin to meet the organization's needs while also allowing it to invest in the

business for expansion and profit distribution.

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1.2 Obtain at least a 5%-10% profit margin ratio in order to have the capacity to pay the

creditors.

Reasonable profit margin ratio ranges from 10% on average, 20% on high, and

5% on low. However, RPRC only has a 1% profit margin, implying that it lacks the

financial ability to pay its creditors and that it probably will not be able to handle its

expenses efficiently. In order to meet the business's needs, we suggest that RPRC

must be able to achieve profit margins of at least 10% to 20% during the next five

years. Profit Margin Ratio indicates a firm's ability to convert sales to net income,

which can provide creditors with knowledge and assurance on how a company will

be able to earn enough money to repay its creditors or suppliers.

Improving the profitability of RPRC can help them decrease expenses,

increase turnover and productivity, and plan for change and growth. The way they

can boost their company's profitability will be determined by a variety of criteria,

including the industry they’re in, the size of the company, and its operating costs.

84
1.3 Acquire at least 2.5 times inventory turnover ratio.

Inventory turnover is a financial ratio showing how many times a company has

sold and replaced inventory during a given period. It is important because a

company's inventory often holds a significant amount of money. Having difficulties in

acquiring inventory can result in RPRC's inventory falling out of favor, and becoming

obsolete, or even deteriorating. If this happens, some of company's funds will be lost.

Slow-moving items take up valuable warehouse space and reduce warehouse

efficiency.

RPRC will have a well-balanced inventory for sales and restocking of items if it

achieves at least a 2.5 times turnover ratio within the next 5 years of operation.

Inventory will rotate 2.5 times per year, implying that the company will sell products

quickly and that there will be high demand for their products, potentially leading to

increased sales. This is a healthy ratio for a company whose inventory has no

expiration date. Not only will there be an increase in sales and a better flow of

operations, but the company will also have a better understanding of how to make

better pricing, marketing, and purchasing new inventory decisions. This way, the

company can avoid idle investment in inventory.

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2. Strategic objectives

Strategic objectives are important to an organization's success because it gives

a sense of direction and establish measurable goals. Strategic planning is a technique

that may be used to guide day-to-day decisions as well as to evaluate progress and

change strategies as you move forward. Here are some suggested strategic

objectives to help the company define where the organization's efforts should be

directed for the next 5 years:

2.1 Create effective promotions and advertising.

One of the most important aspects of a business is the creation of effective

promotions and advertising. It is the most direct and crucial link to the consumer.

Consumers are more willing to contact a business if they feel personally connected to

the advertisement. New customers imply a new target audience for advertisements.

Promotion and advertising show newcomers to the market that RPRC is the top of the

line and the one they want to trust with the product.

In order to thrive and remain relevant in the digital world, RPRC must have

detailed, extensive marketing plans. It is unable to reach out to potential customers

and promote any communication that tries to persuade people to buy products. In the

next 5 years, RPRC should spend 2% to 5% of its annual sales revenue on promotion

and advertising, with a net profit margin of 10% to 12% after all expenses. By

developing effective promotions and advertising, RPRC will raise customer awareness

of the company's product by informing them of new offerings, establish a strong

market position, and, most importantly, increase business sales.

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2.2. Infiltrate online marketing platforms.

Since online marketing platforms are considered the best place for marketing

today, RPRC can promote and build relationships with company’s customers and can

also be a good strategy for it to operate well amidst the pandemic. In using online

marketing platforms, RPRC can reach an enormous audience in a way that is both

cost-effective and measurable. RPRC may improve its reach and conversions in a

couple of months with the proper implementation and use of online marketing

platforms.

Unlike traditional marketing, online marketing has a higher return on

investment and a higher conversion rate, which means it has a higher revenue.

Spending on online marketing platforms is projected to increase sales of RPRC by

anywhere from 12-15% in 5 years. In the first year, they may start to endorse their

product through online marketing platforms like Shopee and Lazada. For succeeding

years, they may now start to establish their own website to sell their products. If the

business can implement this successfully, RPRC can penetrate the online market and

obtain a market share of the online customer base.

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2.3 Establish an organizational structure that serves as the hierarchal guide of employees

in their reporting duties.

The structure of the organization gives businesses leverage and can help

improve their operational performance. However, RPRC does not have an

organizational structure implemented in the business. Because this structure acts as

the hierarchical guide for employees in their reporting obligations, it is just as vital as

having a vision and mission statement. In the absence of this structure, personnel

may experience non-segregation of duties and confusion.

RPRC needs an organizational structure to provide guidance and clarity on

tasks and reporting connections. It can be used as a guide for employing staff and

expanding in the future. By not establishing their own organizational structure, existing

and future employees may be confused and conflicted as to whom they will report,

there may be a lack of coordination between existing employees about products and

processes, managers and supervisors may take longer to make decisions, and the

opportunity to mitigate fraud, theft, and error may be lost.

In 5 years, this structure may be able to help the business to create a

management chain to ensure that all business locations operate according to the

company's standard procedures. For instance, in the first year, they may establish

positions for managers and supervisors per branch. In the succeeding years, they

may gradually add additional positions in order to complete their structure. From this,

management can now rely on the organizational structure that has been set and can

now avoid the instances that the owner may not be able to visit each location in a

timely manner.

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B. Recommended Business Strategies

1. Infiltrate Online Market Platforms

Strategy Infiltrate Online Market Platforms

Overview of the RPRC does not have any online market platforms during
objective of the
the last fifteen (15) years. Ever since COVID-19 happened
strategy
many businesses started to shift from physical store to online
business. Absence of online market presence became a
weakness to the company. The amount of missed opportunities
and revenues lost, added with the ongoing pandemic that
restricts customer-seller interaction provokes the company to
penetrate online market.

Area of concern External Factors

affected by
A. RPRC does not have an online presence and social media
implementing
this strategy marketing yet.
B. Technological Advancements
C. Prolonged public contact restrictions due to COVID-19

Internal Factors
A. RPRC only operates and sell products in its
physical stores
B. Caters small market of customers
C. Has no sales or marketing scheme
D. Inaccessibility of SJDM branch location

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Strategy Infiltrate Online Market Platforms
Outcome of External Factors
implementation
A. RPRC will penetrate online market. Different kinds of
opportunities may come as online market is a far-reaching
area for marketing. RPRC will also have the chance to
position itself in the online marketplace.
B. RPRC will have the edge to keep up with technologically
advanced businesses. Communication with customers will
also improve as RPRC can now answer queries anytime and
anywhere.
C. Instead of temporarily closing stores or branches due to
COVID-19 restrictions, RPRC can continue business
operations thru online transactions. Losses during COVID-
19 may be avoided since there are other revenue streams
beside the physical stores.

Internal Factors
A. Obtain double distribution channel as RPRC can now operate
physically and digitally. Operating online is cost and time
efficient. Loyal consumers may order at RPRC, especially
during emergency situations.
B. Market reach and market share will increase since RPRC is
now accessible to everyone on the internet. RPRC may also
attract new prospects and develop new customer base.
C. RPRC brand will increase and may even provide long-term
visibility to its target market. It may also improve business
trust and credibility as many potential customers may see
the positive reviews left by the previous consumers. It may
increase company’s digital footprint.
D. Customers may order refrigerant parts to RPRC anytime and
anywhere. They do not have to obliged themselves to
physically go to the store as RPRC can deliver the goods at
their doorstep.

Possible Investing in online market platforms can introduce new risks for
problems that RPRC such as but not limited to:
may encounter
during ▪ Costly transition due to the investment to technologies
implementation such as laptop and stable internet connection
▪ Data security since RPRC’s data are exposed to the
internet.
▪ Other refrigerant parts businesses may copy RPRC’s
online marketing style.
▪ Competitors may easily spy on RPRC.

90
Strategy Infiltrate Online Market Platforms
Guidelines in Since functional level strategy is impossible for RPRC to
implementing implement, a per job position strategy will be used.
the strategies
▪ Sales Representative (Marketing and Sales)
1. Only selected sales representatives will be
repositioned to online marketing as physical selling is
still operating.
2. Attend seminars, webinars, or class regarding online
marketing.
3. Selected sales representative must take seminars,
webinars, or class seriously as the result of the e-
commerce penetration depends on how well they
perform.
4. Owner must invest in equipment such as laptops and
cellphones that will be helpful when online marketing
starts. She may also invest in a business software
where it automatically aggregates the sales from e-
commerce, separately from the physical store sales.
5. Sales representative may use different online
marketing platform simultaneously.

▪ Purchasing Officers, Delivery Officers and Drivers

(Distribution)
1. Only selected purchasing officers, delivery officers,
and drivers will be repositioned to online marketing
as physical selling is still operating.
2. Attend seminars, webinars, or class regarding
purchasing and logistics for e-commerce.
3. Selected purchasing officers, delivery officers, and
drivers must take seminars, webinars, or class
seriously as the customer satisfaction depends on
how efficient purchasing officers stock inventory for
online marketing and how fast delivery officers and
drivers transport the goods to the consumers.
4. Owner must invest in additional delivery vehicle for
the drivers and laptops or cellphones for purchasing
officers and delivery officers. The owner must also
provide separate stock room for e-commerce
inventories to separate physical store inventories
from e-commerce.
5. Owner may also opt to outsource the services of
couriers in case she does not want to hire additional
drivers or if the drivers have designated tasks in the
company.

91
Strategy Infiltrate Online Market Platforms
Guidelines in
implementing ▪ Branch Managers, Manager, and Owner (Operations)
the strategies 1. Owner may choose to reposition one branch
manager to handle the operations for e-commerce.
2. Attend seminars, webinars, or class regarding the
efficient and effective operations of online marketing.
3. Selected branch manager must take seminars,
webinars, or class seriously as the overall flow of
operation depends on the understanding and
command of the branch manager.
4. The owner may invest on laptops and cellphones
which is helpful for the overall monitoring of e-
commerce operations.
5. The owner may choose to supervise the e-commerce
operations herself or hire new manager that
specializes in online marketing.

▪ Accountants and Bookkeepers (Finance)

1. Owner may choose to reposition one bookkeeper

and accountant to supervise the financing,
budgeting, and accounting of e-commerce sales and
expenses.
2. Attend seminars, webinars, or class about
accounting for e-commerce business.
3. Selected bookkeeper and accountant must take
seminars, webinars, or class seriously as the
financing and accounting responsibility rests upon
their knowledge and expertise.
4. The owner may invest on laptops and accounting
software to efficiently record e-commerce sales and
physical store.

▪ Manager and Owner (Human Resource)

1. Owner and manager may choose to hire additional

employees for sales representative, purchasing
officer, delivery officer, drivers, branch manager,
manager, bookkeepers, and accountants that will
supervise the operations in online market.
2. Newly hired employees may be an expert already on
e-commerce or they may attend trainings and
seminars, but it is more efficient for the company to
hire employees that already have expertise on online
marketing.
3. Newly hired employees must perform well since this
is the first time that RPRC will enter online market.
4. The owner must provide all the equipment needed by
the newly hired employees to operate properly.
Table 20. Infiltrate Online Market Platforms

92
2. Promotions and Advertising

Strategy Promotions and Advertising

Overview of the RPRC survived fifteen (15) years without any marketing
objective of the
schemes. Through the implementation of promotions or
strategy
advertisements, there will be a high chance of mitigating
continuous losses RPRC incurred during the pandemic and
raising its market reach and market presence.

Area of concern External Factors

affected by
A. 450th Negosyo Center of DTI in SM SJDM
implementing
this strategy B. Enactment of the Philippine Public Utility Vehicle Program
C. Tropical climate of 27.6°C average monthly figures ranging
from 25.6°C in January and 29.6°C in May.
D. 23%-27% of the total residential households in the
Philippines were not yet using any air conditioner.

Internal Factors
A. Customer loyalty
B. Some products are warranty-free
C. Caters small market of customers
D. No sales/marketing scheme
E. Consistent low sales from 2020-2021

93
Strategy Promotions and Advertising
Outcome of External Factors
implementation
A. Exposures to these kind of events or facilities may boost
brand awareness, brand reputation, and business
connections. RPRC may use this opportunity to promote the
business and even attract new customers or potential
business partners. Aside from the instant business
promotion, RPRC may also find potential skilled workers who
are eager to learn how retailing business works. RPRC may
conduct seminars to encourage aspiring entrepreneurs to
join the team or also start retailing business. It is a great
opportunity to provide knowledge and likewise a great
chance for RPRC to learn new things.
B. Supply refrigerant parts to modernized public vehicle
operators. Public utility vehicles modernization is a great
opportunity for RPRC. Aside from supplying refrigerant
parts, they can also provide promotional devices such as
informative tarpaulins to help the business widen its market
reach.
C. Increased sales in air conditioning and refrigerant parts. The
rising heat is another opportunity for RPRC to take
advantage. By using promotional videos spread throughout
the internet and promotional devices legally hanged on
public establishments and vehicles, it may attract new
customers and encourage individuals who already owned air
condition units to buy parts from RPRC.
D. Another increased sales in air conditioning and refrigerant
parts and possibly increased customer base. If this 23% to
27% were encouraged to buy air conditioning unit for their
houses, RPRC may grab the chance to sell and provide
refrigerant and air conditioning parts to these people.

94
Strategy Promotions and Advertising
Outcome of Internal Factors
implementation A. Advertising in exchange of incentives. As RPRC infiltrates
online market, they may start using digital marketing to
promote products. RPRC can get free promotion from its
loyal customers as they are free to share on their social
media pages the promotional videos or posts of RPRC in
exchange of incentives such as discounts or promo points.
B. Product promotion in return for warranty of goods. RPRC can
collaborate with their business clients in order to display
promotional materials and in return, RPRC can provide
warranty on the goods sold to those business clients who
agreed.
C. Increased user base. RPRC may use tangible promotional
devices and legally display it on establishments. However, in
the generation that uses too much internet, promotional
videos reach new market faster.
D. Effective marketing strategy. As RPRC is starting to sell and
advertise products online, it is not surprising that not all
marketing strategy are effective, that is why RPRC can using
different marketing strategies in order to determine what
marketing strategy works best for them. RPRC may even
collaborate with different artists and brands for product
placement.
E. Consistent increase of sales. RPRC survived fifteen (15)
years without any marketing schemes. COVID-19
lockdowns were the only reason it reaches its lowest sales,
for the first time. By implementing promotion or
advertisements, there is a probable chance that it will help
alleviate the continuous loss RPRC incurred during the
pandemic.
Possible Investing in advertisements can introduce new risks for RPRC
problems that such as but not limited to:
may encounter
during ▪ RPRC may receive negative feedback from netizens.
implementation ▪ RPRC may target the wrong market using the wrong tool
in advertising.
▪ Actual promotional costs may go beyond the budget.
▪ It is costly to produce quality and unique advertisements.

95
Strategy Promotions and Advertising
Guidelines in Since functional level strategy is impossible for RPRC to
implementing implement, a per job position strategy will be used.
the strategies
▪ Sales Representative (Marketing and Sales)
1. Only selected sales representatives will be
repositioned to focus on the advertisement or
marketing of the products.
2. Attend seminars, webinars, or class regarding
advertisements or marketing.
3. Selected sales representative must take seminars,
webinars, or class seriously since the increase of
sales or improvement of brand awareness depends
on how well they perform.
4. The owner must invest in equipment such as laptops
and cellphones that will be helpful in promoting
products. She may also want to invest in software,
graphing pad, and laptop that graphic designers may
use in creating contents which sales representatives
may use in promoting the product.
5. The owner can hire graphic designers to help sales
representatives in promoting and advertising
products aesthetically.

▪ Purchasing Officers, Delivery Officers and Drivers

(Distribution)
1. Only selected purchasing officers, delivery officers,
and drivers will be repositioned to help sales
representatives in promoting and advertising
products.
2. Selected purchasing officers, delivery officers, and
drivers must take their jobs seriously as the effective
advertisement depends on how efficient purchasing
officers buy raw materials for tangible promotional
devices and how efficient delivery officers and drivers
transport promotional materials to business and
brand partners.
3. The owner must also provide space in the stock room
for promotional materials.
4. The owner may also opt to become eco-friendly and
not use any tangible advertisement tools and just
post every advertisement online.

▪ Accountants and Bookkeepers (Finance)

1. Owner may choose to reposition one bookkeeper
and accountant to supervise the financing,
budgeting, and accounting of advertising expenses.
2. Attend seminars, webinars, or class about efficient
budgeting of advertisement costs.
3. Selected bookkeeper and accountant must take
seminars, webinars, or class seriously as the
financing and budgeting of advertisement costs
depends on their estimates.

96
C. Recommended Organizational Strategies

Organizational Creation of Organizational Structure

Strategy
Overview of the RPRC survived fifteen years (15) without clear
objective of the organizational structure. However, absence of this important
strategy structure created confusion, conflict, lack of coordination, and
non-segregation of duties among employees.
Area of concern
affected by A. Absence of organizational structure
implementing B. No segregation of duties
this strategy
Outcome of A. Employees perform efficiently and effectively. There is also
implementation an improvement on the communication among employees.
Confusion regarding the chain of command will be
lessened. Conflicts between employees are also reduced.
Strategies are also being successfully implemented.
Redundancy of work is avoided.
B. Fraud and error are mitigated. Potential damage by one
person is also avoided.
Possible Creating organizational structure can introduce possible risks
problems that for RPRC such as but not limited to:
may encounter
during ▪ Employees may possibly disobey the command of higher
implementation officer.
▪ Conflict may start due to loyalty to higher level of
authority.
▪ Employees may also resist to the sudden changes in line
of authority.
Guidelines in 1. Owner can create the organizational structure herself or hold
implementing a meeting with the manager and branch managers to develop
the strategies the organizational structure.
2. After drafting the organizational structure, the owner must
hold a company meeting where all employees must attend.
3. Owner must present to all employees the new organizational
structure.
4. Owner may ask for the opinion of employees and consider if
helpful.

5. If all employees agreed, owner may now impose the new

organizational structure.

6. All employees must adhere to the new organizational

structure.

7. After three (3) months, the owner must conduct another

company meeting to hear the feedback of her employees.
She can evaluate if the organizational structure if effective or
net. She may change the organizational if deemed ineffective.

Table 21. Creation of Organizational Structure

97
 VII. S T R A T E G Y I M P L E M E N T A T I O N

A. Strategy Map

Figure 14. Strategy Map

98
Financial Growth

Financial growth is categorized into two strategies: (1) Asset Utilization

Strategy and (2) Revenue Growth Strategy that were designed to escort RPRC in

determining where it should anchor its labor over the next five (5) years.

Under Asset Utilization Strategy, acquiring of at least 2.5 times inventory

turnover ratio was listed. It is considered as healthy ratio to obtain a well-balanced

inventory for sales and restocking, and increased understanding of pricing, marketing,

and purchasing new inventory decisions.

Under Revenue Growth Strategy, obtaining at least 5% to 10% profit margin

ratio to have the capacity to pay creditors and increasing annual revenues with a

margin of 25% for the next 5 years. Profit margin ratio of at least 5% to 10% is

reasonable enough to improve the profitability of RPRC which can result to reduced

expenses, increased turnover and productivity, and planned change and growth.

Raising annual revenues to 25% for the next 5 years to expand market and meet

organizational needs while simultaneously investing in business expansion and profit

distribution.

99
Strategic Growth

Strategic growth contains (1) New Strategies and (2) Maintained Strategies to

provide guidance and institute quantifiable objectives in helping RPRC meet its

financial objectives for the next five (5) years.

Under New Strategies which are the results from Chapter 5 and 6 that aims to

aid the weaknesses and possible threats of the company, effective promotions and

advertising and infiltrate online marketing platforms were formulated. Creating

effective promotions and advertising will entice additional market base as it raises

customer awareness, establishes strong market position, and increases business

sales. Infiltrating online marketing platforms will assist in reaching enormous audience

through a cost-effective way. Higher return of investment is also expected after

administering this strategy.

Under Maintained Strategies, existing strategies were listed. Company

strengths enumerated are some of the reasons why RPRC lasted for 15 years and

even survived the peak economic recession during COVID-19 pandemic. Results of

Internal-External Matrix, showed in detail in Chapter 5, that RPRC must hold and

maintain its operations while implementing the two suggested strategies.

100
Internal Growth

Aside from sorting out external factors that will aid RPRC in meeting its financial

objectives, internal factors must also be organized to supply holistic guidance in

implementing the ultimate strategies for the next five (5) years. Organizing internally

must be conducted by department. However, RPRC is only a small retail business

containing a total of twenty-six (26) employees with no departments establish which

is why marshalling the internal management was done using job positions. Only

necessary job positions for new strategies were included. Under the job positions,

aggregated recommended actions for previous strategies and new strategies were

provided. Previous strategies were still included since the Internal-External Matrix

suggested hold and maintain previous strategies.

Future Growth

After taking financial objectives, strategic objectives, and organizational

objectives in consideration, connecting point one to point three is administered

through financial growth, market penetration, and organizational growth. In a long

term basis, the following are strategies must be maintained: Financial growth will be

achieved through financial strategies; Market Penetration will be accomplished

through strategic objectives; and lastly, Organizational Growth will be realized through

organizational objectives such as creation of organizational structure, standardizing

policies, effective leadership, regular employee trainings, additional office equipment,

healthy corporate culture, and harmonious teamwork of employees.

101
 B. Recommended Action Plan

1. Action Plan for Infiltrate Online Marketing Platform

Online
Actions Person Time Results Resources Bottleneck
1. Hold meeting
regarding execution of All Marketing plan & Physical & Miscommunication &
1 day
market penetration employees Budget allocation Financial different opinions

2. Find appropriate online Chosen online

marketing platform or if they choose to marketing Costly, complex
Physical,
build their own online market platform, Owner & platform or systems, or
3 days Human, &
find, or outsource third party export Manager chosen third party incompetent service
Financial
that will help them build one. service website provider.
provider.
Contract signing
or partnership.
3. Hold meeting with representative of Physical,
(Obtain Miscommunication,
the chosen platforms or third party- Owner & 1-3 Human,
guidelines about misinterpretation, &
expert they outsource regarding the Manager days Intellectual,
the chosen online different opinions.
guidelines & Financial
marketing
platform.)
4. Find institutions that provide
Costly or may
trainings and seminars about operating Booked trainings Human &
Manager 5 days choose incompetent
in e-commerce, most especially in their & appointment. Financial
institution.
chosen online market platform.

5. Decide if she will reposition existing Repositioned or

Human & Employee refuses or
employees or hide additional Owner 5 days newly hired
Financial no applicants.
employees. employees
Employees
6. Repositioned or newly hired Repositioned acquired
Human & Costly or ineffective
employees will attend trainings, or new 30 days technical
Financial training.
seminars, or webinars. employees knowledge about
e-commerce.
Written report on
7. Test employees for 1 week by Failure to spot other
Repositioned employees’ Human,
conducting a dry run using all weak areas &
or new 7 days readiness on Physical, &
necessary resources and chosen unresolved error in
employees e-commerce Financial
online market platform. processes
operations.
8. If all employees passed proceed to Unforeseen event
Repositioned Sales and Human,
soft opening. If some employees failed, 3-5 planning,
or new evaluation report Physical, &
retrain employees, and repeat dry run days unexpected surge, or
employees for soft opening. Financial
after. expenses.
Repositioned Unforeseen event
9. If soft opening is successful,
or new Sales and Human, planning,
proceed to grand opening. Continuous
employees. 1 day evaluation report Physical, & unexpected surge, or
evaluation about the performance of
Manager, & for soft opening. Financial expenses, &
employees and outcome of strategies.
Owner uncertainties.
Repositioned Written report on
10. If soft opening is not successful, or new problems Human,
Miscommunication,
hold a meeting to reevaluate or identify employees. 1 day encountered Physical, &
& different opinions.
oversight loopholes. Manager, & during soft Financial
Owner opening.
Delivery options Human,
11. Held meeting about delivery All Miscommunication,
1 day such as same day Physical, &
options. employees & different opinions.
or next day. Financial
Repositioned Evaluation report
12. If problem was identified, find the or new during soft Human, Miscommunication,
3-5
appropriate solution, and repeat the employees. opening. Retrain Physical, & different opinions, &
days
previous accurate process needed. Manager, & employees if Financial costly.
Owner needed.
Table 22. Action Plan for Online Marketing Platform

102
 2. Action Plan for Promotions and Advertising
Online
Actions Person Time Results Resources Bottleneck
1. Hold meeting about execution of All Advertising plan & Physical & Miscommunication
1 day
promotions and advertisements. employees Budget allocation Financial & different opinions
May choose
2. Choose appropriate platform for Owner & Chosen platform for Human &
3 days platforms with
advertisements for online platforms. Manager advertisements. Financial
complex systems.
3. If they choose to advertise using online platforms, hold a
Contract signing or
meeting with representative of the chosen platforms regarding Physical, Miscommunication
partnership. (Obtain
the guidelines of advertising on that platform. If meeting is not Owner & 1-3 Human, , misinterpretation,
guidelines about the
applicable, manager and owner should be knowledgeable Manager days Intellectual, & & different
chosen online
about the guidelines or contracts (pricing, duration, etc.) in Financial opinions.
marketing platform.)
promoting.

4. If they choose to advertise physically, (e.g., PUV) hold a

Contract signing or Physical, Miscommunication
meeting with the appropriate person or officer that handles that
Owner & 3-5 partnership (Obtain Human, , misinterpretation
particular advertisements in chosen PUV. Manager and owner
Manager days guidelines about the Intellectual, & & different
should be knowledgeable about the guidelines or contracts
chosen platform.) Financial opinions.
(pricing, duration, etc.) in promoting.

Costly or may
5. Find institutions that provide trainings and seminars about
Booked trainings & Human & choose
promotions and advertisement, most especially in their chosen Manager 5 days
appointment. Financial incompetent
platform (either physical or online).
institution.
Repositioned or
6. Decide if she will reposition existing employees or hire Human & Employee refuses
Owner 5 days newly hired
additional employees (e.g., graphic designers). Financial or no applicants.
employees.
Repositione Employees acquired
7. Reposition & newly hired employees will attend trainings, 30 Human & Costly or
d or new technical knowledge
seminars, or webinars. days Financial ineffective training.
employees about advertising.

8. Creation of promotional tools/materials for physical

Repositione Human, Delays or promo
advertisements which can be done simultaneously in the midst 10 Tarpaulins and
d or new Physical, & tools are prone to
of the employee’s training or after training but with strict days product posters.
employees Financial physical damage.
deadline.

Repositione
9. Establishing social media accounts, website, and online Social media Human, Delays or software
d or new
publication materials for e-commerce operations which can be 7-15 accounts, website, Physical, used to edit photo
employees.
done simultaneously in the midst of the employee’s training or day photo or video Technological or video is
Manager, &
after training but with strict deadline. advertisement. & Financial crashing.
Owner
Employees lack
creativity or
Human, software used to
Repositione Promotional materials
10. Employees apply their technical knowledge in 3-5 Physical, edit photo or video
d or new created by
advertisement in using the platforms they choose. days Technological is crashing or
employees. employees.
& Financial physical promo
tools are prone to
damage.
Promotional materials Slow internet,
Human,
Repositione digitally posted on negative feedback,
11. If the employees are ready, they can start posting all Physical,
d or new 3 days online platform and & street kids may
promotional materials physically or on their online platforms. Technological
employees. physically hanged on vandal physical
& Financial
PUV. promo tools.
Promotional materials
Delays due to slow
Repositione digitally posted on Human,
12. Before the start of the online market soft opening, all 3-5 internet connection
d or new online platform and Physical, &
advertisements shall be posted. days or PUV drivers are
employees. physically hanged on Financial
not cooperative.
PUV.
13. If initial promotional advertisement is successful, continue Repositione Slow internet,
working with those or think of another ideas or ways to make it d or new Every Evaluation report for Human, negative feedback,
better. Continuous evaluation about the performance of employees. 90 initial promotional Physical, & & street kids may
employees and outcome of the advertisement should be strictly Manager, & days advertisement. Financial vandal physical
followed. Owner promo tools.
Repositione Written report on
d or new problems Human, Miscommunication
14. If initial promotional advertisement is not successful, hold a
employees. 1 day encountered during Physical, & & different
meeting to reevaluate or identify oversight loopholes.
Manager, & initial promotional Financial opinions.
Owner advertisement.
Evaluation report
Repositione
during initial
d or new Human, Miscommunication
15. If problem was identified, find the appropriate solution and 3-5 promotional
employees. Physical, & , different opinions,
repeat the previous accurate process needed. days advertisement.
Manager, & Financial & costly.
Retrain employees if
Owner
needed.
Table 23. Action Plan for Promotions and Advertising

103
 3. Action Plan for In-Store

In-Store
Actions Person Time Results Resources Bottleneck
1. Conduct meeting to Owner, Organizational
Physical,
create organizational and Manager, & structure and Vision Miscommunication
1 day Human, &
vision and mission Branch and Mission & different opinions.
Financial
Managers Statements.
2. Conduct another meeting to explain Awareness of new
Physical,
the constructed organizational All organizational Oppositions & Non-
1 day Human, &
structure and vision and mission. employees structure and vision compliance.
Financial
and mission.
3. Impose newly established
Strict compliance of Oppositions & Non-
organizational structure and vision and Owner 1 day Human
all employees. compliance.
mission.
Revised
Different opinions,
4. Conduct meeting to check organizational Physical,
All no feedback, or
compliance, progress, benefits, and 1 day structure and vision Human, &
employees resistance to
feedback. Change if necessary. and mission, if Financial
change.
necessary.
5. Conduct another meeting to tell all
Continuity and Physical, Uncertainties,
employees to continue doing the same All
1 day improvement of Human, & rejections, or lack of
operations as there is nothing to employees
previous strategies. Financial cooperation.
change in physical selling.
6. Post monitoring shall be done Quarterly report on Physical, Non-compliance,
All Every
quarterly to track strict compliance, the performance for Human, & rejections, or lack of
employees 30 days
progress, benefits, and feedback. in-store employees. Financial cooperation.

Table 24. Action Plan for In-Store

Action plan for physical store was added to implement the newly established

organizational structure and vision and mission. It is also a way to announce to in-

store employees that their actions will now be strictly monitored and evaluated.

Implementing new strategies, such as online market penetration, does not equate to

abandoning previous strategies that made the business lasts for fifteen (15) years. It

will be beneficial and profitable to balance the management for both online market

and physical store.

104
C. Financial Projections and Overall Evaluation of the Strategies

Financial Projections

For purposes of financial projections, the accumulated amounts used for the

are from the available data of 2016 to 2017. These years are the greatest basis of

comparison for RPRC as these are the peak years of the business. RPRC ran on a

normal business operation since 2016-2017, minding that these years were pre-

COVID-19 years. RPRC has been established in 2005 and it has been in the market

for 15 years. Its normal operating years were greater than the years it operated during

COVID-19, which was the reason COVID-19 years were not used. However, due to

privacy and confidentiality reasons and in accordance with the non-disclosure

agreement, the historical performance of the RPRC, i.e. their Financial Statements,

will not be shown in this paper.

Under each projected financial statement, assumptions and impacts of each

strategy would be explained to properly incorporate financial implications of

implementing strategies into financial projections.

105
 Projected Income Statement

Years 2022 2023 2024 2025 2026

Revenue from
6,217,888.00 7,461,465.00 9,326,832.00 11,658,540.00 14,573,175.00
Sale of Goods
Cost of Goods Sold 4,974,310.00 5,969,172.00 7,461,465.00 9,326,832.00 11,658,540.00

Gross Income 1,243,578.00 1,492,293.00 1,865,366.00 2,331,708.00 2,914,635.00

Operating and
1,181,399.00 1,119,220.00 1,212,488.00 1,515,610.20 1,457,317.50
Administrative Expenses
Finance Cost 30,169.00 30,169.00 30,169.00 30,169.00 30,169.00

Profit before Tax 32,010.00 342,904.00 622,709.00 785,928.80 1,427,148.50

Tax 2,561.00 27,432.00 49,817.00 62,874.30 114,171.88

Net Income 29,449.00 315,472.00 572,892.00 723,054.50 1,312,976.62

Table 25. Projected Income Statement

Based on the recommendations, RPRC Projected Income Statements are

given in the table above. Note the 15% increase of revenue from the sale of goods for

the year 2022 to set a larger objective for the next year and due to infiltrating online

market platforms, promotions and advertising, and the new action plan for in-store.

Expecting its success from the first year of 15% increase, 2022 to 2023 is expecting

to have a 20% increase of its revenue and 25% increase for the next years.

Projections reveal that RPRC expects to achieve a 10% average profit margin ratio,

which will be a positive effect to show a firm’s potential to transform sales into net

income. This will provide creditors insights and assurance on how a company can

generate enough money to pay back its creditors.

106
 Projections show that since RPRC is adapting to the new nature of marketing

or the online market platforms, they will need to spend an estimated value of

P1,181,399 for 2022’s Operating and Administrative Expenses. This will cover the 70%

allocated amount for the salaries of the newly hired employees who’re responsible for

the company’s online presence or the Sales Representatives, Purchasing officers,

Delivery officers, Drivers for the product distribution, Branch Managers, Accountants,

bookkeepers, and of course the owner. It will also cover the monthly internet

connection bills that will cost P24,000 annually, and of course the training and

seminars of the newly hired employees for their efficiency.

Training and seminars are considered also as an investment of the company

to help their employees do their job effectively. For the next year, Operating and

Administrative expenses will continue and are projected to spend an estimated

amount of P1,119,220 because it is expected to also continue the training and

seminars of the employees to be more competitive among other companies. The

Operating and administrative costs for the next years were estimated to stay at the

range from 1,212,488.00 to 1,515,610.20 until the year 2026.

107
 Projected Balance Sheet

December 31, December 31, December 31, December 31, December 31,
As of
2022 2023 2024 2025 2026
ASSETS
Current Assets
Cash and Cash
538,347.00 1,699,996.00 3,407,701.00 5,190,852.99 7,784,648.60
Equivalents
Trade and Other
266,465.00 399,697.00 499,621.00 577,953.00 716,519.00
Receivables
Inventories 4,120,137.00 4,472,762.00 4,793,396.00 5,257,277.00 5,586,621.00
Other Current Assets 61,616.00 65,077.00 68,732.00 72,593.00 76,671.00

Total Current Assets 4,986,565.00 6,637,532.00 8,769,450.00 11,098,675.99 14,164,459.60

Property and
1,373,973.00 1,455,973.00 1,455,973.00 1,455,973.00 1,455,973.00
Equipment

Total Assets 6,360,538.00 8,093,505.00 10,225,423.00 12,554,648.99 15,620,432.60

Liabilities and Owner’s

Capital
Trade and Other
2,940,756.00 3,960,779.00 4,946,912.00 5,830,029.00 6,672,079.00
Payables
Other Current Liabilities 186,667.00 236,667.00 286,667.00 336,667.00 386,667.00

Total Current Liabilities 3,127,423.00 4,197,446.00 5,233,579.00 6,166,696.00 7,058,746.00

Noncurrent Liability 405,556.00 355,556.00 305,556.00 255,556.00 205,556.00

Total Liabilities 3,532,979.00 4,553,002.00 5,539,135.00 6,422,252.00 7,264,302.00

Owner’s Capital
Capital 2,827,559.00 3,540,503.00 4,686,288.00 6,132,396.99 8,356,130.60

Total Capital 2,827,559.00 3,540,503.00 4,686,288.00 6,132,396.99 8,356,130.60

Total Liabilities and

6,360,538.00 8,093,505.00 10,225,423.00 12,554,648.99 15,620,432.60
Owner’s Capital

Table 26. Projected Balance Sheet

108
 Table above illustrates RPRC’s Projected Balance Sheet. Projected inventory

of RPRC in 2022 was 6.18% larger than in 2021; and in 2023, it is also larger than

the previous year with 8.58%; for 2024 it is higher than the previous year with 7.16%;

in 2025 and 2026 projected inventory were also higher than their respective previous

years of 9.67% and 6.26%. Projected inventory was getting bigger over the years due

to RPRC need to increase its inventory for the national market and for a bigger

customer base that covers online markets.

This table also shows that the projected property and equipment of RPRC

increased by 116% in the first year of implementation. It is for the investment of the

vehicle and equipment that is related to infiltration of online markets. Also in the next

year 2023, the property and equipment were increased by 5.97%, due to the

investment on this year for new gadgets and additional upgrades to go deeper into

the infiltration of the online market.

109
 For the trade and other payables, it amounted to 2,940,756.00 in the first year

and subsequently increased by 34.6% on the second year, for the third, fourth and

fifth year it is also increased by 24%, 17%, and 14% respectively. Trade and other

payables increase over the years due to the purchases of inventory that the RPRC

need, which is also increasing due to the increased demand from effective marketing

both in social media and through promotions and advertising.

For the projected capital of RPRC, amounted to 2,827,559 in the first year and

thereafter increased by 25% by 2023. These increases were related to the additional

investment to purchase the inventory, investment in equipment and vehicles, as well

as the purchase of marketing supplies needed for the infiltration of the online market

and effective promotions and advertising. By 2024, it also increased by 32%. For the

years 2025 and 2026, the projected capital also increased by 30% and 36%. The

increases of capital over the years can be traced to the increase in net income coming

from the larger scale of a market, which is the national market, with the help of social

media platforms and also due to the additional investments to RPRC.

110
 Projected Cash Flow

Years 2022 2023 2024 2025 2026

Income (loss) for the year 29,449.00 315,472.00 572,892.00 723,054.50 1,312,976.62
Adjustments for non-cash
income and expenses:
Depreciation 158,196.00 158,196.00 158,196.00 158,196.00 158,196.00
Operating income before
187,645.00 473,668.00 731,088.00 881,250.50 1,471,172.62
working capital changes
Decrease (increase) in:
Trade and other receivables (88,822.00) (133,232.00) (99,924.00) (78,332.00) (138,566.00)

Other current assets (3,277.00) (3,461.00) 3,655.00 (3,861.00) (4,078.00)

Inventories (240,000.00) (352,625.00) 320,634.00 (463,881.00) (329,344.00)

Increase (decrease) in:
Trade and other payables 1,240,866.00 1,020,023.00 986,133.00 883,117.00 842,050.00
Cash generated from
1,096,412.00 1,004,373.00 1,941,586.00 1,218,293.50 1,841,234.62
operations
Income taxes paid (12,562.00) (17,432.00) (49,817.00) (62,874.00) (114,172.00)
Net cash provided by (used
1,083,850.00 1,021,805.00 1,991,403.00 1,281,167.50 1,955,406.62
in) operating activities

Cash flows from investing

activities
Purchase of laptop and
(100,000.00) (82,000.00) 0.00 0.00 0.00
cellphones
Purchase of delivery vehicle (640,000.00) 0.00 0.00 0.00 0.00
Net cash provided by (used
(740,000.00) (82,000.00) 0.00 0.00 0.00
in) investing activities

Cash flows from financing

activities
Payment of loan for the
0.00 (50,000.00) (50,000.00) (50,000.00) (50,000.00)
purchase of a delivery vehicle
Additional investment 0.00 296,844.00 156,302.00 651,984.50 763,388.98

Withdrawal 0.00 (25,000.00) (390,000.00) (100,000.00) (75,000.00)

Net cash provided by (used
0.00 221,844.00 (283,698.00) 501,984.50 638,388.98
in) financing activities

Net increase (decrease) in

343,850.00 1,161,649.00 1,707,705.00 1,783,152.00 2,593,795.60
cash and cash equivalents

Cash at the beginning

194,497.00 538,347.00 1,699,996.00 3,407,701.00 5,190,853.00
of the year

Cash at the end of the year 538,347.00 1,699,996.00 3,407,701.00 5,190,853.00 7,784,648.60

Table 27. Projected Cash Flow

111
 Presented above is the projected cash flow for RPRC. Cash flow is created

using indirect method of computing for net cash provided or used in operating

activities in accordance with accounting policies used by RPRC. Amounts are solely

based on estimates, based on historical financial performance, and forecasted

impacts of implementing the suggested strategies. By implementing the provided

strategies, RPRC can increase total cash balance to 343,850 by the end of 2022 from

its beginning balance of 194,497 by 2021. This is a notable increase of 177% only in

the first year of implementation.

However, implementing strategies of infiltrating online platforms, engaging in

effective promotions and advertising, and creation of an organizational structure will

also require an outflow of cash since necessary investments must be made for the

execution of aforementioned strategies. Additional investments must be made by

purchasing laptops and cellphone equipment, which would approximately amount to

100,000, based on current year fair market values, delivery equipment, that would

amount to 640,000 based on current year prices, as well as the allocation of funds for

the advertising plans.

112
 Since the indirect method was used, cash flow for all expenses is not shown

such as marketing expenses, additional salaries of newly hired personnel,

accumulated annual amounts paid for internet connection, seminars, and training of

employees, as well as the maintenance of storage facility. Such expenses were

explained in the projected income statement presented before.

By the end of the second year, total cash would have had a 216% increase

from the first year, followed by a 100% increase in the third year, a 52% increase in

the fourth year, and a 49% increase by year five. Downward trend is caused by the

allocation of cash funds for other investments that RPRC can undertake and ensure

that all cash is working and that there are no idle investments.

Additional investments are also required to continue the sustenance of the

business, especially with respect to its online market positioning. Increase in total

cash balances at the end of each year can then be utilized for market penetration

strategies to further increase the customer base.

113
Projected Ratios

Years 2022 2023 2024 2025 2026

Profitability Ratios

Gross Margin 20% 20% 20% 20% 20%

Profit Margin 1% 5% 7% 7% 10%

Return on Total Assets 0% 4% 6% 6% 8%

Return on Equity 1% 9% 12% 12% 16%

Short Term Solvency Ratios

Current Ratio 1.59 1.58 1.68 1.80 2.01

Inventory Turnover 1.51 1.67 1.95 2.22 2.61

Long Term Solvency Ratios

Debt Ratio (Debt to Asset Ratio) 0.56 0.56 0.54 0.51 0.47

Debt to Equity Ratio 1.25 1.29 1.18 1.05 0.87

Evaluation of Operation Efficiency

Asset Turnover 0.98 0.92 0.91 0.93 0.93

Table 28. Projected Ratios.

After implementing the suggested revenue growth strategies, RPRC can attain

its target of reaching a 10% profit margin in 5 years, compliant with the target

objectives established in the previous chapter. However, since strategies would only

be implemented and tried out during the first year, big investments and costly

expenses would be incurred during the first year of implementation, offsetting the

increase in sales, which would result in a 1% profit margin. Nevertheless, profit margin

will continue to rise in the succeeding years, owing to the decline in expenses as the

big outflow would only be incurred during the first year and would lessen later on since

online market presence, promotional ads, and the organizational structure would

already be established by then.

114
 Increase in the profit margin brought by implementing the strategies will enable

RPRC to have excess cash that can be used to pay creditors and avoid defaulting.

Return on Assets and return on equity would also both experience a decline during

the first year but would also boost in the following years reaching 8% and 16% by

year 5, which are 400% and 533% larger compared to their current performance of

2% and 3% respectively. Initial decline is likewise attributed to the increase in

expenses to establish the strategies.

In accordance with asset utilization, from the initial 1.21 times inventory

turnover of the current year, turnover can gradually increase to 1.51 times in the first

year of implementation. 1.67 times in the second year, 1.95 times in the third year,

2.22 times for the fourth year, and finally reaching 2.61 times in the fifth year. This is

due to the penetration of the online marketplace, as well as the effective placement

of promotional ads, boosting company’s sales and thereby increasing the utilization

of inventories. This signifies that the company would be able to sell more frequently in

a given period.

It can also be noted that company’s debt ratio and debt to equity ratio will have

an initial increase in year one, from its current 0.41 and 0.71 to 0.56 and 1.25,

respectively due to obtaining a loan to finance the strategies. Nonetheless, both ratios

will decline in the succeeding years, from 0.56 and 1.25 in the first year of

implementation, to 0.47 and 0.87 in the fifth year, since during these years, they would

finance most of their investments and strategies through the capital by having

additional investments.

115
Overall Evaluation

Taking the strategy map, the action plan, and the financial projections into

consideration, formulated strategies for RPRC are overall evaluated to be reasonable

and favorable for the company and are just what RPRC needs to address in strategic

management issues that they currently face, as well as for the achievement of the

company goals and objectives.

First and foremost, RPRC is currently experiencing a massive downturn in

sales for the first time in fifteen years due to the COVID-19 pandemic which limited

operations of businesses and even derailed customers’ incomes. Restrictions on

public contact also limited number of customers who can go out and purchase from

their physical stores, and thus resulted in fewer sales. Since the pandemic greatly

hindered physical store operations, after a thorough evaluation and planning, it is

assessed that infiltrating online market platforms will answer threats of COVID-19 to

the business. It will enable the business to continue operating online while at the same

time gaining access to a wider range of customer bases.

This results in two revenue sources, from the physical store and online sales

respectively and so any losses incurred by physical stores can be offset by online

platform sales. This also allows them to access new customers that may not have

heard of the company before since they do not have any marketing scheme. It

effectively converts its weakness of having no marketing into a strength. Customers

can also leave positive reviews and feedback for others to see, and given RPRC’s

excellent brand reputation, more potential customers would be informed about their

products.

116
 Additionally, one of their weaknesses is also the inaccessibility of their physical

store’s location, which makes it harder for new customers to discover them. Online

presence makes it so that anyone from anywhere can know of their existence, and as

such, it answers the weakness of catering only to a small number of customers. It also

takes advantage of the opportunity to engage in social media marketing to establish

an online presence and engage in an effective advertising scheme.

Opportunities of technological advancements such as the presence of the

internet and telecom also make retailing a lot smoother and easier since customer

inquiries can be answered in real-time through the internet. Frequently Answered

Question (FAQs) can also be posted to serve as guidelines. The strategy also

suggests that purchase of delivery equipment will cater to a wider area, especially

since customers can now order from anywhere.

Accessing the online marketplace would effectively boost sales and help reach

target increase in sales of 25% in 5 years, starting from 15% in the first year of

implementation, 20% in year two, until target is reached. This will also aid in the

objective of having an increase in the profit margin of 10%, while effectively

maintaining reasonable levels of expenses. Participating on online marketplace would

be very beneficial for the entity, as it not only addresses the company’s strategic

management issues, but also aids in reaching company’s target objectives.

117
 Even though the company is facing troubles, they were able to sustain financial

stability amid the pandemic due to their high-quality products, good reputation, and

loyal customer base. RPRC was able to establish an excellent brand image even

without any marketing scheme, and therefore upon thorough analyses from prior

chapters, it is highly recommended to engage in promotions and advertising. This

action plan can benefit RPRC to create customer relations by providing assurance of

their quality products and services.

Focusing on promotion and advertisements is a good strategy to increase

brand recognition. This will create healthy business interactions with their potential

customers. Educating consumers using different creative outputs can also caught

customers’ attention and will definitely be of great help to fight competition in the

market. RPRC can put tarpaulins in different public areas where most potential

customers can see them. It is also a good strategy to enter into a contract or

agreement since Philippine Public Utility Vehicle Modernization Program (PUVM) will

require jeepneys to modernize into fully air-conditioned vehicles.

Every business aims for the satisfaction of its consumers, and consumers

always aim for quality products. To benefit both customers and the owners, they need

to set expectations for their products. This is the reason why warranty of goods is a

good strategy to have and beneficial as product promotion. When customer

satisfaction is reached, RPRC can get free promotions from its loyal consumers by

receiving good feedbacks from their social media. There is a good likelihood that

introducing marketing or advertising can assist reduce ongoing loss suffered by RPRC

throughout the pandemic.

118
 Lastly, although RPRC was able to operate and perform well with the lack of

an organizational structure and without an established mission and vision, it still poses

a strategic management issue in the company since an organizational structure will

ensure that functions are in order and a mission and vision statement will aid in the

establishment of goals. Continuous lack of these components can, later on, cause

chaos within the organization and improper planning and execution of organizational

strategies due to unclear reporting lines. Having no clear structure also poses a threat

since there is no segregation of duties and therefore there is a higher risk of fraud or

misappropriation of assets and fraudulent financial reporting. Hence, it is a must to

implement a strategy that enhances the quality of management in the physical store.

In-Store action plan is necessary for the proper management of the business.

This involves the establishment of a clear and direct organizational structure, clearly

defined mission and vision statements, and of course, the thorough communication

of these changes to their employees. The need to implement this strategy arises in

order to address the company’s weaknesses and prevent occurrence of fraud, as well

as smoothen out communication channels. Change is necessary, especially since

RPRC is gearing to operate online by infiltrating online market platforms and

establishing promotional ads and such strategies may not be executed well when

there is an internal chaos.

119
 Additionally, an organizational structure would aid in boosting sales by

providing a good strategy. This can be done by placing a person in charge that

focuses on strategy, which would lead to higher sales. It can also help to minimize the

fraud, a threat which could lower the income or misstate the assets of RPRC. Another

one is segregation of duties which would increase the speed of getting the work done

by properly assigning each personnel to a different function from each other in order

to increase productivity. It also prevents one person from altering records and stealing

from the company.

Overall, abovementioned strategies are assessed to be the most suited,

necessary, reasonable, feasible, and accessible strategies that are needed to be

implemented in order to address company’s strategic management issues and

achieve a better competitive position.

120
 VIII. S T R A T E G Y E V A L U A T I O N,

M O N I T O R I N G, A N D C O N T R O L

Balanced Scorecard

Balanced Scorecard (BSC) is a framework for implementing and managing

strategy. It aligns strategic objectives, measures, targets, and initiatives to a vision. It

strikes a balance between financial indicators, performance indicators, and objectives

relating to all other aspects of the business. BSC itself can be used as a tool of RPRC

for managing business performance.

Figure 15. Balanced Scorecard Summary

121
 Balanced scorecard enables management to determine the business from four

different perspectives and also serves as a way to "connect the dots" between

different aspects of strategic planning and components. Since it is well understood

that a company’s main objective is to maximize profits, financial perspective is

positioned at the very top of the diagram, encompassing the business’ need for

financial growth to maintain its stability.

Next is the customer’s perspective, where market penetration is a significant

matter, they convert their basic customer stated mission into specific measures that

represent things that matter the most to clients. Right next to the customer is the

internal business process which are parameters that a company considers most

important for competitive performance and are identified by metrics on the balanced

scorecard.

In addition, some firms use particular improvement goals for their existing

processes to measure product and process innovation. Finally, the future growth

perspective, where the scorecard should be based on business operations that have

the most impact on customer satisfaction, their firm's core competencies, as well as

the development required to maintain market leadership. A company's success is

determined by its financial performance, which is closely tied to its internal operations.

122
 FINANCIAL

Objectives Measures Targets Initiatives

Capacity of ▪ Use an appropriate online marketing

business to Obtain at least 5% to platform for advertising and promotions.
convert sales into 10% profit margin
Gain higher profit ▪ Encourage employees to do more by
net income in ratio in order to have
margin providing them seminars and trainings.
order to pay its the capacity to pay
creditors. ▪ Streamline business operations.
creditors

▪ Create an advertising plan and budget

allocation for execution of promotions.
Percentage of Increase annual
Increase annual ▪ Create effective virtual marketing
sales increase revenues with a
revenue and tool/materials for advertisement.
through online margin of 25% for the
profitability ▪ Evaluate the performance of the
marketing next 5 years.
advertisement if it is successful or add
more to make it better.

▪ Offer promotional sales discounts.

Acquire at least 2.5 ▪ Optimize inventory management
Higher inventory Ratio of replaced
times inventory process.
turnover inventory
turnover ratio. ▪ Formulate better sales and purchase
forecast.

Table 29. Financial Growth Perspective

Table above represents objectives, measures, targets, and initiatives of

financial growth perspective. Shareholders may determine company's overall

wellbeing by looking at its financial performance. For the next 5 years, RPRC is geared

towards achieving its long-term growth by measuring and implementing financial

objectives necessary for its goal.

123
 To accomplish this, RPRC can monitor their performance through the

balanced scorecard, first column is where the financial objective is placed. RPRC can

understand where to create and make initiatives by connecting objectives from lower

levels in the model. Each objective must connect to its measures, targets, and

initiatives. In the first one where RPRC needs a higher profit margin, in order to meet

business's needs, RPRC must be able to achieve profit margins of at least 10% during

the next five years which is measured by their capacity to convert sales into net

income to pay their creditors.

To make this possible, it is important for RPRC to use an appropriate online

marketing platform for advertising and promotions so that their sales will increase.

They also need to encourage their employees to exert more effort by providing them

with seminars and trainings about e-commerce, in order for them to be familiar with

their chosen online platform. Another initiative to gain a higher profit margin is to

streamline business operations where they can improve the efficiency of processes in

businesses or organizations by simplifying or eliminating extraneous work-related

duties.

124
 Next objective is to increase annual revenue and profitability with a margin of

25% for the next 5 years. By the help of a new strategy, RPRC expects to gain an

increase in sales through the online marketing platform. This will be measured by the

percentage of sales increase through online marketing. It will only be possible if the

budget for the promotion and advertising are properly allocated, together with the

correct presentation and execution of marketing materials for the advertisement. For

monitoring purposes, RPRC can always evaluate if the performance of the

advertisement is successful or need enhancement.

Lastly, to have a higher inventory turnover rate, which is determined by the

ratio of replaced inventory, there should be a time where RPRC offers promotional

sales discounts as a way of persuading customer to purchase the product. It is also

important to optimize inventory management process. It is the strategy of having just

enough inventory to satisfy target service levels while tying up as little capital as

possible in inventory to formulate better sales and purchase forecast, which can also

be of big help to achieve the said target. RPRC will have a well-balanced inventory for

sales and restocking of items if it achieves at least a 2.5 times turnover ratio within

the next 5 years of operation.

125
 CUSTOMERS

Objectives Measures Targets Initiatives

New Strategies
▪ Choose appropriate platform for
advertisements for online platforms.
▪ Hold a meeting with representatives from
Provide an chosen platforms to discuss advertising
effective High reach and 30% increase in sales guidelines. If a meeting isn't possible,
engagement of the and brand awareness manager and owner should be familiar with
promotional and promotional of the company guidelines or contracts in place for
advertising advertising strategy. advertising (price, duration, etc.).
strategy
▪ For e-commerce operations, create social
media profiles, a website, and online
publishing materials.

▪ Hold a meeting to discuss the execution

market's penetration.
Online marketing ▪ Discover or outsource a suitable online
platforms account 25% increase in new
Obtain access to marketing platform, or if they choose to
for a large customers develop their own, find or outsource a third-
online marketing proportion of daily party export that can assist them in doing so
platforms interactions or
▪ Look for institutions that offer e-commerce
orders.
training and seminars, particularly in their
preferred online marketing platform.

Maintained Strategies

▪ Create product strategy that includes

information about the target customers,
Selling brand Customer returns 100% positive competitors, company's vision, and macro
and high-quality are minimal to non- feedbacks from environment.
products existent. customers ▪ Implement a quality management system.
▪ Perform product and market testing.

▪ Provide or require employees to attend

training programs, seminars, or webinars to
Effective sales Employees have a improve their sales abilities and knowledge
representative higher accuracy and 25% increase in ▪ Delegate duties to employees by matching
and sufficient faster response number of closed deals tasks to skills.
employees. time.
▪ Measure and monitor staff performance on a
regular basis.

▪ Look at the important factors such as

capacity, employee usage, and current
resources.
Increase efficiency
Investing in in the employees ▪ Create a list of equipment needs and want.
complete involved in 30% improvement in Rather than making isolated purchases, look
managing the operation management at the overall needs of the business and plan
delivery and for the long term.
store equipment operation of the
company. ▪ Determine what should be outsourced and
whether it is cost-effective to do so due to
space constraints.

Table 30. Customer Growth Perspective

126
 Table above summarizes RPRC’s objectives, measures, targets, and initiatives

for its customers. It is divided into two categories: new strategies and strategies that

have been maintained. Customer engagement and satisfaction are vital in this section

for obtaining and retaining customers. Proposed vision statement for RPRC is to be

one of the leading providers and distributors of quality products in the refrigerant

industry throughout the Philippines. To achieve this vision, they must focus not only

on innovation but also on customer satisfaction by acquiring the new strategy while

maintaining the existing strategy.

To keep customers satisfied, RPRC should implement an effective promotional

and advertising strategy and gain access to online marketing platforms. These goals

can be accomplished by having RPRC arrange a conference to evaluate the

execution of market penetration, find or outsource an appropriate online marketing

platform, and seek institutions that offer e-commerce training and seminars,

especially in their desired online marketing platform. They might reach their target of

25% increase in new clients by implementing these methods. Provide a promotional

and advertising strategy that is in accordance with new strategies.

30% target increase in sales and brand awareness of the company could also

be achieved by selecting an appropriate platform for online advertisements; holding

a meeting with representatives from chosen platforms to discuss advertising guideline;

and for e-commerce operations, creating social media profiles, a website, and online

publishing materials, with high reach and engagement of the promotional advertising

strategy.

127
 For selling branded and high-quality products, maintaining a solid connection

with suppliers, having competent sales representatives and enough personnel, and

investing in complete delivery and retail equipment are all objectives that have been

maintained in the plan. RPRC should create a product strategy that includes

information about target customers, competitors, company's vision, and macro

environment; implement a quality management system; and perform product and

market testing. Following these initiatives can lead to complete customer satisfaction.

To have an effective sales representative and sufficient employees, RPRC

should provide or require employees to attend training programs, seminars, or

webinars to improve their sales abilities and knowledge, delegate duties to employees

by matching tasks to skills, and measure and monitor staff performance on a regular

basis. Having staff with higher accuracy and faster response times can result in a 25%

increase in number of completed deals.

Investing in complete delivery and store equipment, RPRC should consider

crucial elements such as capacity, staff utilization, and present resources. RPRC must

compile a list of equipment needs and demands and decide what should be

outsourced to determine whether it is cost-effective due to space limits. 30%

improvement in operation management can be accomplished by increasing efficiency

in the employees involved in managing the operation of the company. After

implementing the proposed strategy and maintaining the current strategy, RPRC can

expect an increase in sales and customers while maintaining customer relationships

and satisfaction.

128
 INTERNAL BUSINESS PROCESS

Objectives Measures Targets Initiatives

New Strategies
▪ Employees must undergo digital
marketing, promotion, and advertising
training or use various online marketing
Improve product Percentage of platforms.
At least 6%
marketing using daily engagements
engagement rate on ▪ Make use of various online marketing
various online through online
online marketing platforms
marketing marketing
platforms ▪ Build a strong content and social
platforms platforms.
presence

▪ Hold purchasing and logistics training

for employees
Number of ▪ Maintain communication with
At least 100 products
products customers about the products or
Improve service or services
successfully services to be delivered
delivery successfully delivered
delivered to
per quarter ▪ Keep delivery costs passed onto the
customers.
consumer low if not free

▪ Invest in equipment for efficiency

Percentage of
10% decrease in ▪ Properly train transferred employees
Improve process decreased steps
order processing-
efficiency to complete an ▪ May hire more employees or third-party
customer time.
operation. services

Maintained Strategies
▪ Retain customer loyalty and reputation
by selling branded goods of high quality

Percentage of 5% or less on loss of ▪ Leverage customer feedback surveys

Retain customers
customer churn clients or customers ▪ Make the most of social media for
tracking market needs and feedbacks

▪ Maintain good relationships with

Percentage of credible suppliers
Maintain credible
suppliers 100% of suppliers are ▪ Maintain regular communication with
suppliers and on-
maintained every maintained suppliers
time delivery
month
▪ Products must be delivered on-time

Continue to have ▪ Continue to meet market demands

Percentage
effective and 10% increase in ▪ Hire effective staff
increase in
efficient operating income
operations ▪ Closely monitor operations
operations
Table 31. Internal Business Processes

129
 Table above shows the objectives, measures, targets, and initiatives under the

internal business processes. It is divided between new strategies and maintained

strategies. In this section, quality of products provided must be used to assess

business operations. This views the quality and efficiency of the RPRC’s performance

related to the product, services, and other key business processes. To satisfy

shareholders and customers, RPRC’s business processes must excel at marketing

and promoting through online marketing platforms.

First objective in the internal business processes for new strategies to be

implemented is to improve product marketing using various online marketing

platforms. With this, RPRC must achieve a target of at least 6% engagement rate on

online marketing platforms which can be measured through the percentage of daily

engagements through their online marketing platforms. Engagement rate can be

derived from all likes, comments, and saves divided by the number of followers at the

time of the posting of the product. Engagement rate varies between 1% and 3.5%

which connotes an average or good engagement rate between 3.5% and 6% for a

high engagement rate, and above 6% for a very high engagement rate.

In order to achieve this objective, RPRC’s employees must undergo digital

marketing, promotion, and advertising training, make use of various online marketing

platforms and they must be able to build a strong content and social presence. With

this objective, it enables RPRC to build relations with customers and prospects

through regular, low-cost personalized communication, reflecting the move away

from mass marketing.

130
 Second objective is for RPRC to improve their service delivery. RPRC must

have a target of at least 100 products or services successfully provided to customers

or clients per quarter. This can be measured through the number of products or

services successfully delivered to customers. To achieve this objective, RPRC must

be able to hold purchasing and logistics training for employees. It is also important to

maintain communication with customers about products or services to be delivered

and keep delivery costs passed onto the consumer low, if not free. This way the

company can gain and retain customers for a longer period of time. RPRC also needs

to invest in their customer service to enhance and seal a good relationship with their

customers and to portray a good brand image to outsiders especially stockholders.

Third objective under new strategies is to improve RPRC’s process efficiency.

RPRC must have a target of 10% decrease in order processing-customer time which

can be measured with the percentage of decreased steps to complete an operation.

To fulfill this objective, RPRC must be able to invest in equipment, properly train

transferred employees, and may even hire more employees or third-party services to

improve process efficiency. Continual process improvement can enable team

engagement and lead to the growth of RPRC. In line with that, RPRC must also take

note of its maintained strategies.

First objective under the maintained strategies is to retain RPRC’s customers

which can be measured through the percentage of customer retention. They must

have a target of at least 95% of clients or customers retention rate. In order to retain

customers, they must apply the following initiatives which are to sell branded goods

of high quality, leverage customer feedback surveys, and make use of social media

for tracking market needs and feedback. Customer retention measures, not only how

successful RPRC is at acquiring new customers, but also how successful they are at

satisfying existing customers.

131
 Second objective pertains to maintaining credible suppliers and on-time

delivery which should be measured through the percentage of suppliers maintained

every month that is to be targeted at 100%. In attaining this objective, RPRC must

have initiatives to maintain good relationships with credible suppliers, maintain regular

healthy communication with suppliers, and make sure that products must be

delivered on-time. Having great suppliers as part of the business improves both its

service to customers and efficiency.

Last objective under maintained strategies is to continue to have effective and

efficient operations which can be measured through the percentage increase in

operations which is to be targeted at 10% increase in operating income. In order to

achieve this, RPRC must continue to meet market demands, hire effective staff, and

closely monitor operations. Effectiveness is essential in the company’s growth. By

maintaining and increasing efficiency, RPRC saves both time and money, thus making

the business more profitable.

Effective promotions and advertising will capture a wider client base by raising

customer awareness, establishing a strong market position, and increasing business

sales. By infiltrating online marketing platforms, RPRC will be able to reach a large

audience cost-effectively. After using this strategy, a higher return on investment is

projected. Adding proposed new strategies to the business can potentially be

beneficial for the growth of the company especially on its internal management.

132
 FUTURE GROWTH

Objectives Measures Targets Initiatives

▪ Decrease expenses
Increase company Profit margin 5% increase in profit ▪ Increase turnover and productivity
profit percentage margin percentage
▪ Plan for change and growth

▪ Make use of online marketing

platforms for advertising
Percentage of 25% increase in ▪ Create promotions to increase the
Focus on market increase in revenue and market.
penetration revenue and customers
▪ Define specific niche segments within
clients
the target market to help define what
changes are necessary.

▪ Hold meetings for constructing

organizational structure, vision, and
Provide mission
Percentage of
professional 100% of employees ▪ Hold training for professional employee
employees trained
development for attended meetings development and learning programs.
and attended
the employees and training.
meetings. ▪ Recognize any weaknesses that the
and management
business may have and convert them
into achievable goals

Table 32. Future Growth Perspective

Table above shows the objectives, measures, targets, and initiatives for the

future growth of RPRC. RPRC’s proposed vision statement emphasizes that they

envision being one of the leading providers and distributors of quality and innovative

products in the refrigerant industry across the Philippines while focusing on innovation,

customer satisfaction, integrity, and social responsibility. To achieve this vision, RPRC

may be able to sustain the ability to change and improve by making sure that

strategies proposed are properly implemented and conducted within the given time

frame.

133
 To aid the RPRC’s operation, first objective set for future growth is to increase

company profit by having a target of 5% increase in profit margin percentage which

can be achieved by decreasing company expenses, increasing turnover and

productivity, and planning for change and growth. Higher profit margin indicates that

RPRC can make a reasonable profit on sales, as long as it keeps overhead costs in

control. Investors tend to pay more for companies that result with higher profits.

Second objective is to focus on market penetration. With this, RPRC must have

a target of 25% increase in revenue and customers. RPRC must make use of online

marketing platforms for advertising, create promotions to increase the market, and

define specific niche segments within the target market to help define what changes

are necessary. Focusing on market penetration can help RPRC plan ways to enter an

existing market with an existing product. This can also help RPRC to evaluate the

market through quick improvement of their services and knowing the pros and cons

of competitors’ products. RPRC will also be able to quickly adjust the price of its

product to make it more appealing for customers.

Last objective pertains to providing professional development for the

employees and management. RPRC must have a target of 100% employee

attendance on meetings and trainings. To make this happen, RPRC must hold

meetings for constructing organizational structure, vision, and mission, create training

for professional employee development and learning programs, and recognize any

weaknesses that RPRC may have and convert them into achievable goals.

Constructing organizational structure, vision, and mission, will help RPRC to outline

performance standards and metrics based on the goals they want to achieve. Also,

employees that engage in professional development will feel more confident knowing

that they have skills needed to succeed in their line of work. By learning the right skills

for their career, employees will be more productive and efficient, thus helping RPRC

succeed.

134
 Future growth can be administered by RPRC’s strategies. Long-term

strategies include financial growth, will be achieved through financial strategies;

market penetration, will be achieved through strategic objectives; and organizational

growth, which will be achieved through organizational objectives such as

organizational structure creation, standardizing policies, effective leadership, regular

employee training, additional office equipment, healthy corporate culture, and

harmonious employee teamwork. RPRC must be able to uniformly monitor business

operations and make sure that objectives are being met in the long run. This is to

ensure that the business is still properly aligned with its vision and being stable in a

competitive market.

Balanced scorecard entails detailed measurements of what customers receive

in terms of time, quality, performance, and service, as well as cost. This guarantees

that management reporting is focused on the most essential strategic concerns and

that organizations can track how well their plans are being implemented. Since the

balanced scorecard includes measures that will tell how the action plan must be taken

and its results, it is suggested to be monitored quarterly for better assessment of each

perspective. As a monitoring tool, each objective is measured on how well they are

implemented, and each objective will be scored depending on how well it is achieved

by the business. To score if the objective had been done or not, simply put a check

or x mark on the box in the target column.

135
 Balanced scorecard monitoring and scoring tool will make it easier for RPRC

to achieve its goals over the following five years. Companies have a variety of options

for identifying and resolving issues with their internal processes to improve their

financial success. Balanced scorecards enable businesses to collect and to analyze

data from four critical areas: learning and growth, business processes, customers,

and finance. Immediate implementation of new strategic plans can serve as a road

map for RPRC to achieve its grand vision in practical ways. Changing an

organization's strategy can alter how it operates, affecting everything from

organizational structure to employee day-to-day routines.

136

Business/Operation Strategy
1. What are the current strategies of
Indicators
the company?
Evaluation Strong Points
and
Assessment ▪ RPRC has been selling branded and ▪ Infiltrate Online Market Platforms
high-quality products. Customers
base their decisions in buying a
product generally on durability and
price. By selling branded and high-
quality products, RPRC had been
meeting general criteria of
consumers since 2005 as high-
quality products are usable for
several months up to years and its
price range is directly proportional
to its product quality.
▪ RPRC has been proactive in
conducting product quality control.
RPRC has been complying with
government regulations on product
safety by ensuring that all their
products undergo product testing
before selling to the general public,
by adhering to RA 9514 or the Fire
Code, and choosing DENR-
Administrative Order-2013-25
compliant suppliers.
▪ RPRC has been maintaining stable
relationships with its suppliers.
RPRC is retailing flammable
products, such as Freon. Freons
also have limited number of
suppliers as this product is being
monitored by the government.
Stable relationships with its trusted
suppliers have been favorable for
RPRC since they experience
minimal difficulties in acquiring new
stocks when needed.
137
IX. C O N C L U S I O N
2. What are your recommended
strategies?
Usefulness
Considering that RPRC only
operates and sells products in its
physical stores, caters small
market, and has no marketing
schemes, this strategy would be
beneficial to support RPRC in
reaching wider or newer markets
and creating new customer base.
This strategy is also useful in
solving RPRC’s problem with
inaccessible branches since online
market platforms is not tied with
specific location. Online market
platforms can operate for 24 hours
a day and its customers can avail its
products regardless of their
location.
This strategy can also take
advantage of few opportunities
such as technological
advancements and absence of
online presence or social media
marketing. Since RPRC is only
starting to penetrate online market,
it can use and prepare the best
approach to position itself in the
new market. By penetrating online
market, RPRC can use the best and
latest technology that will help them
operate efficiently and effectively.
 Business/Operation Strategy
1. What are the current strategies of
Indicators the company?
▪ RPRC has been proactive to market ▪ Promotions and Advertising
needs. Consumers loved being
heard by businesses to provide their
needs. RPRC has been listening to
the demands of their consumers
which gained the company a lot of
loyal consumers.
▪ RPRC has been employing the products being offered. Through
sufficient number of employees.
Employees are the lifeblood of every
business. RPRC cannot operate
without its employees. Therefore,
RPRC has been investing to human
resources in order to operate
efficiently and effectively.
▪ RPRC has been recruiting effective
sales representatives. RPRC do not
have any marketing schemes for
the past 15 years which makes
employees’ performance critical to
the operations as profitability
depends on the efficiency and
effectiveness of employees.
▪ RPRC has been investing in
complete delivery and store
equipment. Aside from employees,
RPRC has been ensuring that the
employees always have complete
equipment to utilize to acquire cost,
time, and labor efficiency.
138
2. What are your recommended
strategies?
Taking into consideration that
RPRC has no sales/marketing
schemes and only caters small
market of customers, this strategy
would reach old and potential
customers and make them aware of
this strategy, it will boost brand
awareness and entice, not only new
consumers, but also potential
partners as promotions and
advertising will showcase the
benefits of doing business with
RPRC.
This strategy can also take
advantage of several opportunities
such as 450th Negosyo Center of
DTI in SM SJDM, Enactment of the
Philippine Public Utility Vehicle
Program, Tropical climate of 27.6°C
average monthly figures ranging
from 25.6°C in January and 29.6°C in
May, and 23% to 27% of total
residential households in the
Philippines are not yet using any air
conditioner. RPRC can maximize
and utilize these opportunities in
promoting and advertising its brand
to the general public.
 Business/Operation Strategy
1. What are the current strategies of 2. What are your recommended
Indicators the company? strategies?

Weak Points

▪ RPRC has been operating and

selling products at its physical
stores. One of the things that limit
RPRC in becoming domestically
known is its strategy to solely sell in
its physical stores. It also incurs
fixed costs which, regardless of the
situation, are mandatorily paid.

▪ RPRC has been catering small

market of customers. Due to its
decision to sell only on its physical
stores, RPRC has only been serving
small customer base or usually only
the people near the certain branch.
As a consequence, RPRC has less
brand recognition and may
experience future loss when future
consumers shift to different store or
suddenly closes.

▪ RPRC has been operating without

sales or marketing scheme. In a
generation where technology is fast
paced, not adapting and utilizing
emerging technologies can become
a future problem for RPRC. It can
obtain less brand visibility,
misinterpret consumer needs, slow
business growth, and few business
opportunities.

▪ Inaccessibility of SJDM branch

location. During pre-COVID era,
consumers are experiencing
difficulties in accessing RPRC’s
branches. Therefore, difficulty in
accessing may have increased
during COVID-19 phase where
government restrictions are
everywhere. This inaccessibility
may discourage loyal and potential
consumers and may even provoke
them to find new refrigerant parts
retailer is more accessible to these
customers.

139
 Business/Operation Strategy
1. What are the current strategies of 2. What are your recommended
Indicators the company? strategies?

Conclusion
Strong Points Overall Benefit

For the past fifteen (15) years,
RPRC has been using these set of
strategies in order to thrive in one of
the most promising industries in the
Philippines. These set of strategies
were effective as it has been helping
the company to obtain enormous
sales during pre-COVID era, to
survive during peak economic
recession of COVID-19 pandemic,
and to produce three active branches
in a span of fifteen years. Due to these
strengths and also based on what
Internal-External Matrix showed,
RPRC must hold and maintain its
current positions and strategies while
implementing the recommended
strategies.
Online market penetration can
be used to build meaningful
relationships with customers,
suppliers, and potential business
partners. Digital and physical
promotions and advertising can be
utilized to boost brand awareness of
old customers and potential
consumers. Ability to operate anytime
and anywhere, reduce fixed costs,
accessible to anyone, and increase
brand visibility. All things considered,
these two strategies can help RPRC in
turning weaknesses to strengths,
solving possible threats, and taking
advantage of opportunities.

Weak Points

However, these current

strategies have limitations that prevent
RPRC in keeping up with its
competitors and current
environmental situations. These
limitations provoke the need of RPRC
to implement the recommended
strategies such as: infiltrate the online
market platforms and promotions and
advertising.

140
 Business/Operation Strategy
1. What are the current strategies of 2. What are your recommended
Indicators the company? strategies?

Possible Outcomes

As RPRC will penetrate online

market, various opportunities may
come. Healthy communication
between customer and RPRC will take
place since RPRC is now available to
answer inquiries. RPRC can operate
efficiently and effectively in both
physical store and online market.
Increase of market reach and share
due to widened accessibility of RPRC
in the market. RPRC may obtain long-
term brand visibility.

As to promotions and
advertising, increase of sales in and
growth of user base may bound to
happen. RPRC can also use
advertising in exchange of incentives
to solve the warranty-free products
being sold by the business. Possible
collaborations and partnerships with
businesses and social media artists
may happen to further promote the
products of RPRC. Development of
the best type of advertising that will
work for the business. RPRC may use
given opportunities to boost brand
awareness, brand reputation, and
business connections.

141
 Business/Operation Strategy
1. What are the current strategies of 2. What are your recommended
Indicators the company? strategies?

Outcome Towards Other Retailers

COVID-19 made online selling a

necessity for businesses to survive.
Physical stores have been emptied
since COVID-19 crisis happened
which forced brick-and-mortar stores
to embrace online selling.

Ace Hardware Corporation, one

of the biggest hardware retailers
around the world, has successfully
penetrated e-commerce in 2019 or
during pre-COVID era. Ace Hardware
launched Buy Online, Deliver from
Store scheme where customers can
order online and have the goods
deliver the same day, next day, or
standard delivery options. It aims to
provide the most convenient online
shopping experience of customers
where they have the option to pick the
product at the store and even have the
access to check the availability of
products in different Ace Hardware
stores. In 2020, Ace Hardware
reported a revenue of $7,800,000,000
from their 2019 revenues. Even during
the COVID-19 crisis, Ace Hardware
managed to earn an 21.79% increase
on their revenues and 125.7%
increase on their net income. 272% of
their revenues were contributed by
their e-commerce store.

142
 Business/Operation Strategy
1. What are the current strategies of 2. What are your recommended
Indicators the company? strategies?

Tin Pot Creamery, one of the

food retailers who successfully used e-
commerce as a strategy to survive
during COVID-19 crisis. The owner
stated that 97% of their revenue came
from their physical stores. As COVID-
19 hit their business, they made a
gradual transition of using online
market platforms such as DoorDash,
Uber Eats, and GrubHub to deliver
their goods, and BigCommerce to
operate their online business. They
also started using social media to
promote their business and to let their
consumers know that they are open
during COVID-19. Tin Pot also started
collaborating with other retailers, such
as Fleet Street Café, in order to
promote their goods. In exchange,
they also promote their business
partners’ products. As a result, Tin Pot
maintained its market position as one
of the most beloved ice cream chains
in Silicon Valley.

Table 33. Summary of Business/Operation Strategy

143
 Organizational Strategy
Indicators
1. How do you assess the current
2. What would you recommend to the
company/organizational performance
top management to improve/better its
of the company (i.e., operation,
current company performance?
marketing, finance?)

Evaluation
or
▪ Absence of Organizational ▪ Creation of Organizational Structure.
Assessment
Structure. Maintaining this action Constructing this will not only provide
may result to confusions within job RPRC with increase efficiency in
positions, lack of teamwork among operations and improved employee
employees, lose the chance to share performance but will also benefit its
ideas, delayed decision making, and customers since they will have
failure to mitigate fraud, theft, and insights of how RPRC handles its
error within the workplace. internal management and organize
its operations. It will also improve the
▪ Non-existence of Vision and Mission. communication and relationship
Continuity of this will result to among its employees.
aimless, senseless, and unfocused
drive to achieve something towards ▪ Non-existence of Vision and Mission.
the following years. Establishing these statements will
help RPRC in aligning its business
▪ Lack of Segregation of Duties. events to their financial and strategic
Ongoing absence of separation of objectives, guide its employees to
duties may put the business at the right focus and path, and provide
various risks such as fraud, and error the right mindset for everyone within
which can later result to business the company.
loss and scandals.

▪ Business Entity Principle Issue.

Constant mixing of personal
transactions with business expenses
can result to future losses and risk of
being caught by government
agencies that will lead to paying
penalties and having records of false
deductions.

144
 Organizational Strategy
Indicators 1. How do you assess the current
company/organizational performance
of the company (i.e., operation,
marketing, finance?)
Conclusion
Assessment on these
organizational issues shows that these
organizational issues may hinder
RPRC in achieving their goals and
objectives. These issues can become
destructive when left unsolved. These
issues induce recommendations of
constructing organizational structure
and establishing vision and mission
statements.
Table 34. Summary of Organizational Strategy
145
2. What would you recommend to the
top management to improve/better its
current company performance?
Organizational structure will
serve as the framework of RPRC.
RPRC can implement this to
understand what the business needs,
help employees achieve operational
efficiency, improve communication
among employees, centralize the flow
of information, solidify customer
satisfaction, and boost company
growth. Vision and mission statements
will serve as the guidelines on how
employees will think and act. It will
assist RPRC in determining
performance standards, entice
potential talented employees, reduce
conflicts, increase collaboration, and
motivate employees in becoming a
productive and efficient individual.
Business strategies will become
useless if the internal management
issues were left unsolved and
unorganized.
 Competitive Edge Summary
Indicators
Pili-Aire Aircon
Critical
RPRC KWIKKOOL FMD & Refrigeration
Success
Parts Trading
Factor
Once strategies are
implemented, RPRC
may have various active
Inexistent social Inexistent social Has active
Marketing social media accounts
media sites. media sites. Facebook page.
or even a website to
conduct its online
business.

SJDM is one of the

most trusted branches
of technicians when it
Fair reputation
comes to refrigerant Slightly good Slightly good
due to issues with
Brand parts retailing. Brand reputation due to reputation due
association of
Reputation reputation will also affordable to affordable
technicians for
increase since new and products. products.
faulty pricing.
potential customers will
become aware of the
products of RPRC.

San Jose Del Monte,

Bulacan; Marilao, San Pedro,
Commonwealth,
Location Bulacan; Apalit, Quezon City Laguna &
Quezon City
Pampanga; and Social Facebook
Media Sites or Website
Branded and high-
quality products since
Slightly above
all products undergo
average and
product testing by Average quality of
generic
Product TESDA and one of the generic products Average quality of
products which
Quality suppliers are registered not tested by generic products
were more on
importer of Ozone TESDA.
replacement
Depleting Substances
products.
(ODS) and its
Alternative Chemicals.

Slightly above Slightly above

Increased customer Good customer
average average
Customer satisfaction since service due to
customer service customer service
Service customers can now nationwide
due to availability due to availability
order online. delivery.
of technicians. of technicians.

* Highlighted parts are the improvements of RPRC if the two strategies were implemented.

146
 Competitive Edge Summary
Indicators
Pili-Aire Aircon
Critical
RPRC KWIKKOOL FMD & Refrigeration
Success
Parts Trading
Factor
Have loyal customers
since the business Slightly not loyal Slightly not loyal No fixed user
Customer commenced operations, customers since due to the issue base due to
Loyalty such as Villa Antonio de products are not with association online
Dave and Grotto Vista of high-quality. of technicians. transactions.
Resort.

Immense product range

since it offers nine (9)
types of freon, eighteen
Widest product
(18) types of car
range since it Slightly wide
compressors, laminated Limited products
Product offers computer range as it
evaporators for different being offered to
Range parts and also offers vehicle
type of cars, different market.
offer cellphone parts.
types of drier for
repair.
refrigerators, and several
types of welded drier for
home air conditions.

Table 35. Competitive Edge Summary

147
 What are your realizations in writing this Strategic Management paper?

Having a strategic management subject is beneficial for us, accountancy

students, because it not only enhances our skills in identifying both obvious and

hidden issues within an organization’s system, but it also challenges us to think

outside the box and to come up with feasible solutions that would solve organizational

issues in the most efficient way. In strategic management, we do not just come up

with plans; we strategize. We maximize outputs and results while striving to minimize

inputs and costs. This is an essential training for future accountants, like us, so that

in the near future we can say that we have definitely been trained to work efficiently,

effectively, and economically as strategic managers.

Mary Jane H. Cardona

Chief Strategic Officer

Doing this strategic management paper was an eye-opener for me.

It highlighted the fact that although there are a lot of factors that may affect our

strategic plans, it is impossible and unfeasible to take them all into account. We should

rate each factor according to its impact on the organization to assess its degree of

relevance. Likewise, applicable both in the business perspective and also in our own

lives, we cannot solve all problems all at once. It is just a matter of identifying which

issues require urgency, executing effective prioritization, and coming up with

strategies that would best solve them promptly with the most benefits and least costs.

Alyssa Niña M. Nebres

Executive Secretary

148
 Writing a strategic management paper is difficult. It requires a thorough

analysis of data from both internal and external sources in order to pinpoint which

aspects are relevant for formulating strategies and which aspects must be set aside.

Oftentimes, not all information is readily available since some market data require

extensive surveys to gather, while internal information may be confidential. However,

such obstacles can be overcome by solid effort and awesome teamwork. Partaking

in writing this paper is very beneficial for us because it honed our skills that we would

definitely use in the future when coordinating, cooperating, and collaborating with our

colleagues when coming up with strategic plans.

Carl Joseph C. Cantor

Head for Decision Making

Strategic management not only helps businesses identify problem

areas, but also ensures that the business is going in the right way and stays on its

track to success. With the help of strategic management, businesses can properly

align their actions according to their mission, vision, and objectives. Like a compass,

these three will guide entities in formulating plans that are aligned with their objectives

and goals. It also applies in our everyday lives as our actions should always be

towards the achievement of our goals in order to reach the state that we have always

envisioned ourselves to attain.

Aliyah Cassandra O. Escobar

Head for Overall Monitoring

149
 Formulating strategic management plans from case studies have enhanced

our analytical and decision-making skills over time, and now that we have actually

created a strategic management plan for an actual small and mid-size enterprise, we

are very proud to say that we have applied all learnings and skills that we developed

along the way. We have poured in all our efforts in the creation of this paper, and we

are overjoyed that the SME we have chosen can actually implement our strategic

plans in order to enhance their competitive position and business performance. This

paper could also be used as a guide for other businesses who are experiencing the

same issues and are in need of a strategic plan.

Avegail M. Castañeda
Strategic Advisor

I believe that constructing a strategic management plan is vital for all

businesses as it acts as a blueprint of all actions that must be done in order to gear

the entity towards its goals. It is also very beneficial for employees and managers from

all levels of management to cooperate, to communicate, to brainstorm and to come

up with suggested strategies for each identified issue. The sense of involvement will

increase each employee’s sense of belongingness and at the same time participating

in these interactions will upskill each of them to be better in strategic management.

Employees gain by enhancing their skills while businesses gain by having skilled

employees.

Erika A. Barajan
Compliance Officer

150
 All businesses have plans, some businesses implement them, but only a few

businesses evaluate them. This is one of the most important lessons that we have all

learned from strategic management. Formulating plans is indeed the foundation of a

strategic management plan as these plans need to be meticulously thought through

to address issues identified. Nevertheless, evaluation is also necessary as it tells us if

the plans implemented are effective, and if not, it can determine what went wrong and

where so that we can revise the plan accordingly. It is beneficial to always seek

feedback in order to measure the status and progress of these strategic plans.

Through feedback, businesses can quickly respond to unexpected issues that may

arise and be flexible enough to address them.

Jay-r M. Geli
Strategic Initiative Officer

While doing this strategic management paper together, we were

able to learn more from each other and contributed our own skills and knowledge to

accomplish this paper’s completion. Each of us did our parts to create a very

comprehensive strategic management plan that is ready to be implemented by our

chosen SME, backed with thorough research and industry facts. Compiling and

creating detailed work was hard, and so our paper can be used by future strategic

managers and other students who are struggling to create their own strategic plans.

Not only does it make us happy that we would be able to help businesses to solve

their issues and to aid students to learn more, but it also makes us feel a sense of

accomplishment that we were able to craft something incredible and worthwhile.

Allissa Belle P. Janginon

Process Coordinator

151
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