strategic management

timer Asked: Oct 14th, 2013

Question Description

Restituto Dimaalis is VP Corporate Planning of Philippine Canning Corp. (PCC), one of the biggest fish canning companies in the Philippines with Sales of about PhP 12.0 B in 2012. Its main product is tuna with the cannery located in General Santos City, South Cotabato. Its secondary product line is sardines with the cannery located just outside Zamboanga City. The company’s head office is located in Makati. Reviewing company performance over the past few years, Resituto thought the picture looked good. The cannery in Gen San, together with the corresponding fish port was new, having been completed 5 years ago. The company had invested a little over PhP 500.0 M in this project but it seemed to be paying off both in terms of increased efficiency as well as capacity. Most of the machinery and systems (60% of cost) was financed through 10 yr. US$ denominated debt while 30% of the balance was funded through long term PhP denominated debt and the rest through Retained Earnings. The sardine cannery in Zamboanga had just been refurbished with modern equipment, the company having borrowed US$ 2.0 M in long term debt to finance it. However, efficiency and capacity were up also. The company had also just concluded negotiations for the supply of tin for their cans for terms that were quite favorable with a supplier in Indonesia. The company exported about 10% of its tuna produce while the rest was sold on the local market, which as of the present time, the company was garnering an 82% share. This concerned Resty a bit because this figure was down from 88% a year ago and 90% three years ago. This meant a decreasing market share in a market increasing in volume of about 5% per year, but it was comforting that they were still THE very dominant player. Their sardines cornered 23% of the market which, given the number of players in the market, was the most dominant. The products reached the market via a structure of wholesalers who were backed up quite strongly with advertising and promotional activities undertaken by the company. On the average, collections from these wholesalers were between 30 and 45 days. The company was owned by one family but given its performance over the past decade, many alternatives were being opened. Over the past months, many discussions had been held with the Board of Directors and the other members of top management and they all felt that the company was now at a crossroads. It was a consensus that they were peaking in terms of their existing markets and the question now arose “Where do we go from here?” Another question of significance concerned the supply of fish. What were the trends and how long could such supply be sustained? Earlier in the year, the company had been approached by a delegation from a South American country that had an excess of beef. Here there was the possibility of a fully sustainable source of raw material. Of course investments would have to be made. There was also a possibility that the company could enter the fruit juice market. Technology was also becoming available to process other fish products with sustainable supply. Again, investments would have to be made . . . but . . . what? Time reference is the PRESENT. Guide Questions: 1. What do you see as the main issue/s of the company? 2. Are there issues with the company’s vision and/or mission? 3. What external environment factors do you see as relevant to forming a strategic plan? Why? 4. How do these apply to the opportunities presented?

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