VII. Objectives, Strategy Recommendations and Action Plans

Strategic Objectives

The strategic objective of DMCI homes is to be the clear second in the middle

market residential industry.

From the market analysis, there is a wide lead of the big three real estate companies

versus the lower real estate companies. The big three companies have competencies in different

segments of the market. Ayala Land through Ayala Land Premier and Alveo Land is dominant in

the luxury real estate market although it also has interest in the middle income segment (Avida)

and is entering the low cost segment. Megaworld is the market leader in the middle income

segment. Vista Land prevails in the low cost segment through its subsidiary Camella Homes

although it also has interest in the high end and middle income segment.

The other objectives of DMCI Homes are stated and defined in the revised vision and

mission statement of the company. DMCI Homes also wants to aim achievement in their best level

of satisfying their customers in improving its projects, programs and the like. DMCI Homes’

financial objective is to target monetary systems in measurable terms like the profits, percentage in

increase in sales through certain period of time and the like.

Year Sales Revenue Net Income

2015 62,217 11,852

2016 68,438 13,037

2017 75,281 14,340

2018 82,809 15,774

2019 91,089 17,351

* Increase revenue by 10% annually

* Recommended Business and Organizational Strategies

BUSINESS STRATEGIES

Take advantage of the foreign

retirees that are seeking for units

that will provide them

convenience of a tranquil

residential environment.

Since the country is being promoted as a retirement haven for

foreigners, DMCI Homes could use this opportunity to expand

their target market and cater to those who are not even

Filipinos. This particular market, if tapped, could generate

revenues for the company.

To penetrate this particular market, DMCI Homes should

establish a presence within foreign countries where a huge

number of foreigners show interest in retiring in the

Philippines, This would again end up in establishing

international sales offices to widen the distribution network of

the company.

Also, the Philippine Retirement Authority has made a list of

foreigners who have plans of staying in the Philippines right

after they retire. DMCI Homes could use this information to

gain insight as to what particular nationalities show intention

of having the last years of their lives in the Philippines.

Make use of developing

residential condominium units that

would target the rapidly growing

population of financially

empowered young professionals.

It has been the edge of DMCI Homes to construct resort-

themed condominiums at a lower price compared to their

competitors without compromising its quality. The generation

of young professionals that has emerged in recent years is

constantly growing and continuously adding up to the demand

for residential-type of buildings which are near their

workplace.

DMCI Homes should penetrate the key business districts in

Manila because it is where the large population of young

professionals are concentrated. These young professionals

have the mind- set of buying life-time investments that are

close to their workplace and to other commercial

establishments. This generation of the youth are those who

want to live in a dynamic setting where everything they want

is as close and as easy to grasp by the hand.

Pursue an integrated marketing

communications plan to

strengthen brand awareness

among OFWs.

Advertising through local and OFW channels will be used to

build up a long term image of the DMCI Homes brand as a

provider of high quality homes at a good value. Public

relations such as sponsorship of articles and blogs will be used

to re-enforce the DMCI brand further as a quality property

developer. Events such as real estate conferences and

participation in overseas trade fairs will be used to promote

specific projects. Lastly, personal selling done by external

brokers will be used to build up buyer preference, conviction

and deliver actual sales.

Enhance website to include e-

commerce capability and promote

it as an alternative distribution

channel.

The company has an existing website, dmciinternational.com,

but this acts only as a catalogue of the projects with only a

brief description of a development and contact information.

The website can be improved to allow for an interactive open

house that will allow users to explore in 3D a selected

property. The website will also build its e-commerce

capability by allowing for online reservations that will allow

for real time inventory monitoring and online payment of

reservations.

By enhancing its website, DMCI can strengthen its limited

distribution network buyers both locally and abroad.

Launch incentive program for

satisfied home owners to refer

family and friends to DMCI

Homes.

Use of word of mouth advertising would be an effective

strategy to penetrate the market further. Existing home buyers

will get either a cash incentive or a discount in the selling

price if they refer their family members and friends. This will

be especially effective given tightly knit family ties of

Filipinos as buyers may want to live close to their extended

family members.

To be able to effectively promote the referral program, DMCI

will need to intensify its Customer Relationship Management.

DMCI should continue to promote the DMCI brand and

products to its existing customers. A relationship manager

from customer care group should be assigned to maintain and

strengthen its relationships with existing home buyers and

will introduce the referral program to them. An intensive

database will also be kept to determine if existing buyers have

relatives or friends to refer to.

Encourage the market with the

capacity to buy condominium

units as a form of long-term

Homes are considered to be lifetime investments. They do not

depreciate but rather appreciate in value. This mind-set has

been prevalent among Filipinos. And the disparity, in terms of

investment. value, of owning a unit in a condominium is none than that of

owning a residential house.

This mentality among Filipino buyers should be reiterated in

ad campaigns of DMCI Homes. The company should use an

intensive integrated marketing approach to its potential

buyers. This will affect the brand awareness of Filipino

buyers relative to DMCI Homes.

In pursuing an intensive integrated marketing approach,

DMCI Homes should also strengthen its public relations.

Events outside of the country like international real estate

conferences should be utilized by the company to introduce

innovations in their developments and introduce DMCI

Homes to the global market.

With increased capitalization in marketing and promotions

and effective advertising, there is a possibility that it would

deliver sales globally. And with the funds gathered, DMCI

Homes could look into the possibility of doing an IPO to be

independent of that of DMCI Holdings.

Also, DMCI Homes could look into the opportunity of

borrowing money from banks for capitalization. With their

stable financial condition, DMCI Homes could now borrow a

huge amount of money to finance all their expenditures in

every new project.

Maximize the presence of the

company in cities where there is

The construction arm of DMCI Holdings which is a sister

company of DMCI Homes has been winning bids in

limited space and make use of the

shift in trends toward smaller unit

sizes.

constructing highways and other related private and

government initiated infrastructure construction projects.

Some of these projects are located outside of the metro and

are mainly in provinces. DMCI Homes could take advantage

of this and bid for untapped surrounding areas for residential

development.

To utilize the synergy among the businesses under DMCI

Holdings, DMCI Homes could be the first to construct a

community of high-rise residential buildings in provincial

areas to give potential buyers an urban feel. This will in turn

contribute to considering provincial areas as emerging growth

centers that would help boost the economy of the country.

To add up, tapping the provincial areas for development

would have DMCI Homes garner a huge market share in the

industry because there are only a few developers in those

areas, most of which are not known in the metro.

Partner with BPOs for DMCI to

provide housing solutions to BPO

workers.

One of the concerns of the BPO industry is its high turnover

rate. DMCI can offer a solution by partnering with BPOs and

banks to provide housing to BPO workers. DMCI can offer

discounts to employees of corporate accounts. BPO workers

can enjoy lower rates provided a bond with the BPO

company. 1 bedroom and 2 bedroom units can be marketed

directly to these employees. Additionally, DMCI can

approach BPO companies to buy several units that which the

companies can allow their employees to live in as part of their

benefits.

A corporate account manager under the sales division will

study this segment in detail and propose the best solution to

the housing requirements of the BPO sector.

Strengthen international presence

especially in untapped countries

by partnering with external

broker.

DMCI should increase the number of external brokers it’s

partnering with outside the country to widen its distribution

network to the growing OFW market. Currently, DMCI only

covers 12 countries but this can be increased by partnering

with external brokers in countries like the Saudi Arabia,

Germany and Norway. Saudi Arabia is the third most popular

destination for OFWs with year on year increasing by 5%.

Along with its Dubai office, this will strengthen DMCI’s

presence in the Middle East which currently only constitutes

22% of DMCI’s total international sales. The Middle East is

the area where Megaworld, the leader in the middle market

segment, sources most of its international sales from Germany

and Norway are also potential countries where DMCI can

venture into through a partnership with a local broker.

This strategy will be supplemented by an Integrated

Marketing Communications strategy (described later) that will

build brand equity to both local and international markets. For

the international market, DMCI will join real estate trade fairs

and hosts property conferences to build brand awareness for

both potential buyers and broker partners.

Target the families of OFWs and The portion of the population who has the rising purchasing

encourage them to purchase a

unit for their family member

abroad as a form of lifetime

investment.

power are those who are classified under the middle-income

segment of buyers. This segment is primarily comprised of

OFWs who remit their income from abroad to their families

in the Philippines.

To strongly penetrate the market of OFWs, DMCI Homes

should capitalize in establishing sales offices abroad. DMCI

Homes is behind its competitor in terms of its scope of

distribution network. But since DMCI Homes cannot compete

in establishing a global distribution network against its

competitors, the researchers advise to modernize the existing

website, dmciinternational.com, which acts only as a

catalogue of its projects with only a brief description of a

development and contact information.

ORGANIZATIONAL STRATEGIES

Additional positions for

relationship managers.

Launch incentive program for satisfied home owners to refer

family and friends to DMCI Homes.

For the incentive program strategy to be implemented,

existing clients should be satisfied. A relationship manager

will be used to market the incentive program to the DMCI

Home owners. An important duty will also to strengthen the

company’s CRM. Relationship managers would determine

potential home owners that would have possible referrals.

Additional personnel to A corporate sales unit will be added to form partnerships with

institutional sales. BPO companies in line with the market development strategy

to target BPO workers:

Partner with BPOs for DMCI to provide housing solutions to

BPO workers.

The new unit will forge partnerships with corporate

institutions to provide housing solutions to their employees.

Concentrate DMCI’s real estate

business to DMCI Homes.

To reduce operating cost and increase business focus, DMCI

Holdings should concentrate all of its property businesses to

DMCI Homes. Currently, there is a small portion of its

housing business belonging to its construction arm. These

projects should be transferred to DMCI Homes to fully utilize

the infrastructure and property development experience of

DMCI Homes.

Additional personnel to support

international sales divisions.

This is in line with market penetration strategy to extend

further its presence to the OFW market.

Increase international presence by adding in house sales and

partnering with external brokers abroad.

Additional personnel will be used to manage and support the

operations of the different international offices. Personnel will

be used to develop partnerships with brokers abroad and to

help DMCI comply with foreign regulations in establishing

sales offices.

* Financial Projections

The following table shows the comparison of values in the income statement of

DMCI Homes taken from the notes section of the consolidated income statement of DMCI

Holdings from 2015 to 2019. DMCI Homes is aiming to have at least 10% increases in

revenues annually.

2015 2016 2017 2018 2019

Sales Revenue 62,217 68,438 75,281 82,809 91,089

Cost of Goods Sold 42,708 46,978 51,675 56,842 62,526

Gross Profit 19, 508 21,458 23,603 25,963 28,559

Selling, General and Administrative

Expenses

6,917 7,608 8,368 9,204 10,124

Interest and Other Income (Expenses) 476 523 575 632 695

Income Before Tax 14,162 15,578 17,135 18,848 20,732

Taxes 1,196 1,315 1,446 1,590 1,749

Net Income 11,852 13,037 14,340 15,774 17,351

Dividends 7,003 7,703 8,473 9,320 10, 252

Retained Earnings 40,795 44,874 49,361 54,297 59,726

* Computed using the 2014 Financial Statement

* Growth Ratio

2015 2016 2017 2018 2019

VOLUME

Number of Units 5,732 5,095 7,265 8,254 9,333

Total Residential Units 3,439 3,057 4,359 4,952 5,600

Volume Growth 62% 11% 43% 14% 13%

REVENUE

Sales and Reservation 9,800 8,711 12,642 14,362 16,240

Recognized Revenues 3,905 3,711 6,953 7,899 8,932

Revenue Growth 103% 6% 87% 14% 13%

TOTAL MARKET SHARE

Market Size 418,396 426,764 435,299 444,005 452,885

Market Share 0.8% 0.9% 1.6% 1.8% 2.0%

Market Share Growth 0.3% 0.0% 0.7% 0.2% 0.2%

MIDDLE INCOME MARKET SHARE

Market Size 211,031 215,251 219,556 223,948 228,427

Market Share 1.7% 1.7% 3.2% 3.5% 3.9%

Market Share Growth 1.7% 0.1% 1.4% 0.4% 0.4%

INCOME

Net Income 11,852 13,037 14,340 15,774 17,351

Income Growth 233% 74% 14% 21% 19%

* Departmental Programs

MARKETING DEPARTMENT

a. Integrated Marketing

Communications

Marketing will lead in the planning and execution of the integrated

marketing communications plan of the company to raise brand

awareness.

The IMC plan’s target audience will be middle income OFWs

looking to settle in the Philippines or provide homes to their

families. The communication objective is to build brand awareness

or the ability to identify the DMCI brand among OFWs in the

housing category.

Overall advertising message will be that DMCI Homes delivers

their dreams for their families to have a quality house they can call

home. The marketing department will contract an advertising

company to propose and execute the ad campaign based on this ad

message.

Given the Integrated Marketing approach, DMCI will utilize several

communications mode to deliver a coherent and effective message

and promote brand awareness. TV advertisements will focus on the

DMCI brand (as opposed to a specific project) as a property

developer that offers optimal quality and value for money to their

families in the Philippines. Events will also be organized to inform

both external brokers and buyers of the features and Unique Selling

Propositions of specific developments. DMCI will participate in real

estate fairs and organize buyer conventions.

Publicity will be used by sponsoring magazine articles and property

blogs to write about specific projects.

b. Referral Program Marketing will support customer care in the referral program.

Marketing will provide the needed printed materials to properly

communicate the message of the referral program. The material

should not only emphasize the possible monetary rewards of

referring a family member to DMCI developments but the chance to

be close to your extended family and friends.

SALES DEPARTMENT

a. Online Sales Strategy The sales division will lead in the execution of the e-commerce

strategy. The Sales team will develop the infrastructure to be able to

handle the logistics of an e-commerce capable website. Sales will

link their inventory management system to the enhanced website so

both buyers and brokers are made aware of specific units that are

still available in real time. Sales will also assign sales personnel to

handle the reservations coming online and ensure that adequate

follow-ups are made to convert the reservations into actual sales.

The sales team will coordinate with the other departments for the

other components of the website. Marketing will provide the sales

team the ad content of the website. The content will be in line with

the integrated marketing communications plan of marketing.

Construction will provide pictures and updates of current projects to

be able to update buyers of the status of their investment and to

emphasize a key strength of DMCI which is its fast delivery time.

Design will provide the look of a particular development. This will

be uploaded in the website as a part of the 3D Open House feature

of the website.

b. Development of the OFW

Market

Another market development strategy is to tap the OFW segment.

The sales department will lead this initiative by forging partnerships

with various external brokers in countries DMCI has no presence in.

An external broker will be employed to market DMCI in Saudi

Arabia, whose OFW deployment is growing at 5%. Germany and

Norway are also among the top destinations of OFWS but DMCI

does not have presence. The sales team will also partner with

external brokers in these European countries. Aside from widening

DMCI’s presence in popular OFW destinations, DMCI will also

strengthen its hold over Canada and Japan which also has an

increasing number of OFW deployments.

c. Development of the BPO

Market

BPO workers will be targeted as a possible new market to tap, to be

able to innovate a housing solution to BPO workers, the key

accounts unit under sales will lead this initiative. Together with

marketing, finance and construction, they will formulate a corporate

housing package specifically geared toward BPO workers.

CUSTOMER DEPARTMENT

a. Customer Care Customer care will lead in the market penetration strategy to tap the

more than 10,000 existing home owners of DMCI. For the referral

program to work, existing home owners should continue to remain

satisfied. The relationship manager within the customer care

department will be in charge of this. A more important duty of the

customer care group is to update the CRM of DMCI not just for

prospective clients but for existing home owners. In satisfying the

current needs of the home owners, customer care will also data mine

for possible referrals that can be obtained from existing home

owners. The relationship manager will then concentrate his/her

efforts in these identified customers and introduce the existing

products of DMCI as well as the financial incentive of referring

someone to the program.

BUSINESS DEVELOPMENT

a. Expansion of Property The Business Development division will lead in the company’s

expansionary strategy in the BGC area. The business development

will approach the BGC administration and other realtors to acquire

new tracts of land such as the newly opened Northern BGC area.

Expansionary activities will occur within three years after the

planned IPO. Investment in properties will grow from the current

price. Additional properties will be utilized for additional mid and

high rise developments.

FINANCIAL DEPARTMENT

a. IPO Strategies Finance will own the IPO strategy. If the IPO is well received, the

remaining capital requirement can be sourced thru a re-launch of

the stocks. If not, the remaining capital raising can be either

deferred until market conditions improve or it can be funded via

debt.

Finance will use the proceeds of the IPO not only to fund

expansionary strategies (such as strategic land banking strategy) but

also to pay off its short term debt. Bulk of the company’s debt are

short term debt. Given that interest rates are expected to rise further.

Paying off the short term debt of DMCI will save on finance cost

and improve the company’s profitability.

CONSTRUCTION DEPARTMENT

a. Sales and Operations

Planning

Operations will chair monthly meetings with sales to determine

forecasted demand for units. Sales will provide indication as to the

type of units that are on demand (studio type, 1 bedroom, 2

bedrooms). Construction will design its developments based on the

projection provided by sales. Through Sales and Operations

planning, inventory levels will be monitored by the construction

department.

Operational synergy with DMCI group will also be strengthened to

reduce cost and manage quality better. All of the construction and

steel fabrication requirements of DMCI Homes will be coursed

through DM Consunji (construction) and AG&P (Steel fabrication).

Additionally, DMCI Homes’ purchases will be priced lower since it

is an internal counterparty of these DMCI subsidiaries.

DMCI Homes’ raw material requirements will be integrated to

DMCI Group’s requirements. This will give DMCI additional

bargaining power to lower the acquisition price of its raw materials

and reduce DMCI Homes’ build cost.

HUMAN RESOURCE DEPARTMENT

a. Additional Personnels Human resources will need to hire and train 50 additional personnel

to man the different strategies of DMCI such as the improvement of

its distribution channel. As a motivational tool for its employees,

DMCI will send high performing sales personnel to international

sales offices. HR will also launch training to prepare new hires for

the real estate licensure exam which is a requirement by the

government.

HR will also review the performance appraisal system to include

customer service to both new and existing customers as a key

performance indicator to sales and customer care personnel. Sales

quotas indicated in the performance appraisal system will be

revised to focus more on sales coming from OFWs and BPOs to

align it with the market development strategies.