Final Paper

EXECUTIVE SUMMARY

Keylargo Car Accessories Center is under the Hexagon Group of Companies which started as a

hardware & construction business. The founder, Mr. Simplicio Gamboa Sr., wanted to further

diversify his business thus Keylargo Car Accessories Center was established in 1984.

Keylargo Car Accessories Center is a company who manufactures and distributes different car

accessories, car parts and car care products in the Philippines. Some of their notable products

include California Scents fresheners, Sony Xplod subwoofers and speakers, seats and car

covers. In line with their mission, Keylargo is one of the leading providers of quality car

accessories, parts and car care products in the Philippines. Because of the growing demand on

car related products and services, Keylargo has gained competition in its industry. This study

was conducted to analyze the external and internal factors that affect the company’s

performance to identify its strengths and weaknesses in the industry. The findings are used to

formulate specific strategies that will minimize the effects of the threats in the business and will

maximize the opportunities available to the company.

A study of the external analysis of Keylargo revealed that there are a number of opportunities

that the company can seize. The increasing number of car owners, registered motor vehicles,

income per capita of the Filipinos and the growing economy especially in the motor vehicle

repair are opportunities that the company can seize and benefit from. Threats were also

identified like the ASEAN Free Trade Agreement, 12% Value Added Tax, online marketplaces

and electronic immobilizers which can adversely affect the business.

The internal analysis showcased Keylargo’s strengths and weaknesses. Keylargo caters to

different shops, produce products made from different countries, its financial stability, numerous

distribution channels, reduction of costs and having competitive strategic planning are the

commendable strengths of the company. On the other hand, the company’s long decision

making process, rebate and reimbursement from hardware and groceries, changing market

segment, few best selling products and high marketing expenses are the Keylargo’s

weaknesses.

By using the strategy formulation matrices - Threats-Opportunities-Weaknesses-Strengths,

Strategic Position and Action Evaluation Matrix, Boston Consulting Group Matrix, Internal-

External Matrix, Grand Strategy Matrix, and Quantitative Strategic Planning Matrix – strategies

formulated arrived at intensive strategies. The intensive strategies of Keylargo include market

1

development, market penetration and product development. Also, it is recommended for

Keylargo to employ integration strategies like forward, backward and horizontal integration.

Over all, the strategy that is suitable for Keylargo is market development.

2

LOGO ANALYSIS

The logo of Keylargo is

very simple. It is a text of the company name styled with a straight line on top with a globe on

the left. The logo was designed in such manner because simplicity never goes out of style and

for the consumers to easily recognize the brand. The straight line incorporated on top of the

logo means consistency and stability. Consistency and stability that the company will continually

provide products and services that are of good quality to cater the needs of the consumers. The

globe on the left represents that Keylargo is a company that can compete internationally. The

color Blue is used because it signifies strength, dependability, trust and efficiency.

Predominantly, the color preference of both the male and female is the color Blue.

3

KEYLARGO CAR ACCESSORIES CENTER

I. Introduction

Keylargo Car Accessories Center is an automotive distributor in the Philippines. It started under

the Hexagon Group of Companies, being owned and operated by SGS Holdings, Inc. It is a

company registered with the Securities and Exchange Commission.

The information regarding the company’s profile data, competitive advantage, competitors,

nature, history, organizational structure, mission statement, corporate values, product and

industry description, specialization and corporate social responsibility programs are discussed

further.

A. Company Profile Data

Corporate Information

Keylargo Car Accessories Center was established on January 9, 1996. It was founded by Mario

Gamboa. It was under the Hexagon Group of Companies, owned and operated by SGS

Holdings, Inc. It is also registered with the SEC as SGS Holdings, Inc. doing business under the

name and style of Hexagon Group of Companies.

History

The Hexagon Group of Companies started as a single entity in Bacolod City in 1947 engaged in

hardware & construction business.

Mr. Simplicio Gamboa, Sr. founded Bacolod Victory Hardware, which is now known as SGS

Hardware Corporation.

Hexagon Steel Corporation was started in 1974 as the first business venture in Metro Manila,

with its main lines included industrial steel products and construction materials.

The businesses further diversified into other fields including pump; water systems; industrial

electrical control ; equipment; car parts ; accessories; grain and feed ingredients; chemical and

refrigerant gas; dental supplies; equipment; pharmaceutical and veterinary products; finance

and leasing; commodities and stock investments and IT solutions.

In 1984, Keylargo International Pte. Ltd. was established in Singapore to start the South East

Asian business expansion.

4

HGC started acting as the management organization of the whole group of companies by the

early 90s. Autonomy of the business units was fully granted by the mid-90s.

Currently, HGC has twenty two (22) members/Unit Companies that it oversees which were

engaged in different lines. A part of HGC is Keylargo Car Accessories under KPI Manufacturing,

Inc.

Current President/CEO

Mario Gamboa is the Chief Executive Officer of the Keylargo Car Accessories Center. He is a

graduate of De La Salle University. He is a holder of a Bachelor of Science in Computer

Science in 1985.

Mission

Keylargo Car Accessories wants to be the company that is:

In pursuit of excellence, Keylargo Car Accessories Center commits to be a leading provider of

quality car accessories and related products for the satisfaction of our customers; best return to

our stockholders; well-being of our employees and the community we serve.

Corporate Values

Keylargo Car Accessories Center gives importance to the following:

Integrity – Using the moral principles and ethics as foundation in words and actions

Excellence – Achieving goals with the highest quality and distinction

Teamwork – Working in unity and harmony to achieve a common goal

Commitment – Putting the mission statement into actual practice

Concern –Giving utmost importance to customers, employees, stockholders and the

social community

Growth – Working toward continuous development

Organizational Structure

The organizational structure of Keylargo Car Accessories Center consists of 12 positions and

the President/Chief Executive Officer as the one on top of the structure. The President/Chief

Executive Officer of the company is Mr. Mario Gamboa. Mr. Gamboa oversees and controls all

of the other departments under him. Aside from being the President and Chief Executive Officer,

5

Mr. Gamboa is also the Research and Development Head. The Chief Operations Officer and

Chief Financial Officer both reports to Mr. Gamboa. The Chief Operations Officer is Ms. Julie

Gamboa who oversees the Sales, Marketing and Services departments. Under Ms. Gamboa

are the Sales Manager Mr. Don Gargaciran who is responsible for monitoring the sales of the

company’s products, Marketing Manager Mr. Francis Esaguirre who is responsible for coming

up with different schemes and advertisements for the promotion of the products and Services

Manager Mr. Jonatahan Aguilar who oversees the different personnel needed for the company.

On the other hand, the Chief Financial Officer is Mr. Jaime Molino who is in charge of the

Financial/Accounting, Information Communication Technology, Human Resource, Warehouse

and Logistics departments. The Financial/Accounting and Human Resource department is

managed by Ms. Ruth Suarez. Ms. Suarez is accountable to all the financial related dealings of

the company and she records all the, including but not limited to the, expenses, profits,

reimbursements and disbarments made by the company. The one in charge of the Information

and Communications Technology department is Mr. Edwin Aguilar. The Accounting, Credit and

Collections Manager is Ms. Ana dela Cruz. Lastly, the Warehouse and Logistics manager is Mr.

Agustin Ambrosio. The Warehouse and Logistics Manager is in charge of the storing of the

company’s products, how it gets shipped to the Philippines, the process of how the products is

delivered from the warehouse to the distribution channels.

Figure 1. Keylargo Organizational Structure

6

President / Chief Executive Officer

Chief Operations

Officer

Sales

Marketing

Services

Chief Financial Officer

Financial /

Accounting

Information

Communications

Technology

Human Resource

Warehouse and

Logistics

Executive AssistantResearch and

Development

Product and Industry Description

Keylargo Car Accessories Center is an importer and distributor of a wide range of car

accessories and car audio in Manila, Philippines.

It carries car audio and electronics such as stereos, amplifiers, speakers, security alarms; car

care products such as wax and car shampoo; car enhancements such as tint, roof railings etc.

It also provides custom wheels, grilles, headlights, chrome accessories, air intakes, and exhaust

systems.

Specialization

The company’s specialization is to provide proud drivers with top-tier aftermarket accessories

and premium auto parts that can boost the power of any vehicle you own, and add a distinctive

touch to its appearance.

Corporate Social Responsibility Programs

SGS Foundation expanding college scholarship program to 100 scholars, 30 of them from

Bacolod City and Negros Occidental.

The scholarship covers semestral tuition and miscellaneous fees, and the grantee is entitled to

a semestral allowance of up to P3,500, provided that the school fees and allowance do not

exceed P15,000.

It also organizes medical missions and outreach programs geared towards the social

development of the underprivileged.

B. Paper Design and Methodology

The creation of this strategic management paper needed numerous facts and information which

were acquired mainly through public and private sources. Information about the company were

obtained from an inside resource person.

Listed below are the websites of the government agencies which were accessed to get relevant

information needed as references for this study:

National Statics Coordination Board (www.nscb.gov.ph)

Department of Trade and Industry (www.dti.gov.ph)

7

Bureau of Customs (www.customs.gov.ph)

Philippine Chinese Embassy (www.ph.china-embassy.org)

Philippine Japanese Embassy (www.ph.emb-japan.go.jp)

Philippine American Embassy (www.manila.usembassy.gov)

Strategic management evaluation tools were also used to formulate strategies for the Keylargo

Car Accessories. These include:

Porter’s Five Forces Model

Competitive Profile Matrix (CPM)

External Factor Evaluation (EFE)

Internal Factor Evaluation (IFE)

The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix

The Strategic Position and Action Evaluation (SPACE) Matrix

The Boston Consulting Group (BCG) Matrix

The Internal-External (IE) Matrix

The Grand Strategy Matrix

The Quantitative Strategic Planning (QSPM) Matrix

8

II. Vision and Mission Statements

The Vision and Mission Statements are the important for a company because it defines the

company’s goals and objectives. A vision statement answers the question, “What do we want to

become?” On the other hand, mission statements are statements which have a purpose of

distinguishing one company from other business firms.

A. Statements of the Current Vision and Mission

A company’s mission statement answers the question, “What is our business?” It identifies the

scope of a firms operations in its products and terms.

Keylargo Car Accessories wants to be the company that is:

In pursuit of excellence, Keylargo Car Accessories commits to be a leading provider of quality

car accessories and related products for the satisfaction of our customers; best return to our

stockholders; well-being of our employees and the community we serve.

B. Critiquing of the Vision Mission Statements

To further critique the company’s vision and mission statements, the nine components were

used. The nine components include the customers, products or services, markets, technology,

concern for survival, growth and profitability, philosophy, self-concept, concern for public image,

and concern for employees.

Table1. Mission Statement Nine Components Critique of Keylargo Car Accessories

COMPONENT COMMENT

Customers YES

Products or Services YES

Markets YES

Technology NO

Concern for Survival, Growth and Profitability YES

Philosophy YES

Self-Concept YES

Concern for Public Image YES

Concern for Employees YES

9

The Mission Statement of the Keylargo Car Accessories has been assessed through the nine

components of the following:

1. Customers

Keylargo Car Accessories has included its customers in its mission statement. The

construction of Keylargo Car Accessories’ mission is addressed to its customers, on

a third persona. It was concerned with the customers’ satisfaction through its

products and services.

2. Products/Services

Keylargo Car Accessories has introduced itself to be the leading provider of quality

products or services to its customers being one of the portfolio companies of the

Hexagon Group of Companies to provide quality car accessories to its consumers.

3. Markets

It was shown in the mission statement that the company commits itself to be a

provider of car accessories to the current market.

4. Technology

The company has not provided in its mission any technological feature with regard to

its products and services.

5. Concern for Survival/Growth

The company is committed to growth and financial soundness. It is prepared to give

back to its customers, stockholders, employees and the community that the company

serves.

6. Philosophy

Keylargo Car Accessories is under pursuit of excellence in its mission. The company

is set to provide only products or services at its best, quality and for the well-being of

the people it serves.

7. Self-Concept

The company obligates itself to be a leading provider of the quality products and

services it offers. The advantage above others is that the company is handled to give

varied products and services unlike the other companies.

8. Concern for Public Image

Keylargo Car Accessories is responsive to its customers’ needs up for its

satisfaction.

9. Concern for Employees

10

The employees are a valuable asset to the company. It puts in mind the well-being of

its employees in pursuing their goals.

C. Recommendation of Revised VM Statements

Upon criticizing and analyzing the mission statement of the company, this is the proposed

mission statement that we recommend:

In pursuit of excellence, Keylargo Car Accessories commits to be a leading provider of top-tier

aftermarket accessories and premium autoparts to its customers. Being a company equipped to

offer products in a wide range according to the satisfaction of our clienteles, stockholders,

employees and the community that we serve.

D. Recommendation on the Effective Cascading of the VM Statements

In drafting the Keylargo Car Accessories’ Mission Statement, the company should have first

indicated its company name. Second, the company should have also shown the kind of

products they provide. It must also share its goal to the population which also served them.

Lastly, it should also put in mind the changing market of today’s industries.

11

III. External Analysis

The external analysis is the process of scanning and evaluating an organization’s various

external environmental sectors to determine positive and negative trends that could impact the

organizational performance. The external analysis is used to formulate company’s strategic

decisions which are influenced by a number of factors. The external environment is being

observed to effectively and competently carry out company strategies.

The external analysis includes the General Environment, Industry Analysis and Competitive

Analysis. The General Environment comprises the Social, Cultural and Demographic

Environment, Technological Environment, Economic Environment and Political, Government

and Legal Environment. The Industry Analysis refers to the Threat of New Entrants, Rivalry

Among Competitors, Threat of Substitues, Bargaining Power of Suppliers and the Bargaining

Power of Buyers. Competitive Analysis includes the profile of the competitors and the

Competitive Profile Matrix (CPM).

As a whole, the company’s external factors are assessed through its key opportunities and

threats. An External Factor Evaluation (EFE) Matrix is formulated to arrive at a company

recommended strategies for Keylargo Car Accessories.

A. General Environment

The analysis of the general environment deals with the different general factors that can affect

the business that is outside the control of the firm. In the analysis of the general environment,

the social, cultural and demographic environment, technological environment, economic

environment, political, government and legal environment are discussed. These variables are

used to study what changes in the overall general environment can impact the firm’s business.

The general environment analysis is broader in scope compared to an industry analysis

because an industry analysis is more specific and is limited to where the industry of the

company belongs to.

1. Social, Cultural and Demographic Environment

By doing an analysis of the social, cultural and demographic environment, a firm can assess

their opportunities and threats because of the changes in the people’s preference and

behaviour. These changes are shaping the way people live, work, produce and consume and

because of these changes, new trends are developed, different types of consumers arise and

need for different products increases.

12

a. Number of Registered Motor Vehicles

In a statistical report released by the Land Transportation Office, as of 2013 there are a total of

7,690,038 registered cars in the Philippines and 2,757,859 of it are registered in the National

Capital Region.

Table 2. Land Transportation Office List of Registered Vehicles in the Philippines

Motor Vehicle Type Mode of Registration 2013

CarsNew 73,651

Renewal 794,497Sub-Total 868,148

Utility VehicleNew 113,872

Renewal 1,680,700Sub-Total 1,794,572

Service Utility VehicleNew 46,535


TruckNew 23,702


BusesNew 2,946


Motorcycle / TricycleNew 1,140,329

Renewal 1,110,338Sub-Total 4,250,667

TrailerNew 4,765


Sub-TotalNew 1,405,800

Renewal 6,284,238Total 7,690,038

Source: Land Transportation Office Website

The number of registered vehicles in the Philippines is a good sign for the business because

there are millions of Filipinos who are possible consumers of the business’ products that can be

used for cars, sports utility vehicles, utility vehicles, motorcycles, trucks, trailers and buses. In

the National Capital Region alone 2,757,859 are the number of registered vehicles. The data is

helpful for the business because some of the company’s products like the car cleaners, air

fresheners and speakers will be needed by car owners.

b. Number of Special Interest Groups

13

Special interest groups are groups of people who share the same interest, love and concern to

a certain object or certain type of activity.

The identified special interest group where the firm can benefit from is a car club. According to

Wikipedia, a car club is a community formed by car enthusiasts who share common interest and

love for motor vehicles. A car club can be formed depending on the commonality of the type of

vehicle that they possess, the brand that they patronize or what kind of driving they are

interested in. The type of vehicle can range from Sports Utility Vehicles, pick-up trucks, vans,

trucks, cars, sports cars vintage cars. On the other hand, the different kinds of driving can be

off-road, drift, circuit and drag. Traditionally, car clubs charge membership fees in exchange for

publications and different events sponsored by the club. Traditional car clubs also host

gatherings for current members, non-members and prospective members (who are also car

enthusiasts) are invited to talk about cars, show-off their vehicles, discuss the latest trends in

cars, buy and sell car parts and accessories, where to get the best services for car

maintenance, and generally give advice to each other on how to maintain their car’s parts to

achieve optimum performance. Because of the advent of computers and the internet, there has

been growth in the number of online car communities. Online car communities are emerging

because it is free and open for all. In online car communities, there are numerous forums where

old and new members can converse with each other and give advice on car tuning, repair

information, provide trusted suppliers and refer mechanics and car dealers.

In the Philippines there are numerous car clubs and online forums where car enthusiasts share

their love for cars. Based on our research, there are sixteen car clubs listed in carsmanila.com.

On the other hand, based on an online forum discussion in pinoyexhange.com, there are other

emerging car clubs for specific types of cars like the Toyota Fortuner and Hyundai. There are

numerous established and emerging car clubs around the Philippines that are not specifically

listed and identified because as of writing, a car club directory is still in the works. Some of the

well known online communities for car lovers are northautoclub.com, kotse.com, tsikot.com and

Top Gear Philippines.

The number of interest groups in the Philippines can affect the business in terms of its number

of consumers and the reach of its products. Special interest groups somehow guarantees that

there are prospective buyers and the products of the firm have a market. Keylargo can

participate in their gatherings to advertise their products.

c. Per Capita Income

14

The per capita income of a population is computed by computing all the sources of income of a

person and then dividing it by the total population. For easier understanding, per capita income

means the income of each person.

Based on a study entitled Family Income and Expenditure Survey conducted by the National

Statistics Office in 2012, the average monthly income raked in by the richest respondents is

P60,000 while the poorest respondents earn P6,000 monthly. When translated to annual

income, the rich earn P715,000 and the poor P69,000. In the National Capital Region, families

earn an annual income of P380,000 on average.

Another study by the National Statistical Coordination Board classified the income of Filipinos

based on high income, middle income and low income families. A member of the high income

group earn P199,927 monthly, members of the middle income group earn P36,934 monthly and

the low income group earn P9,061 per month.

Figure 2. Income of Filipinos

Low Income (P9,061.00) Middle Income (P36,934.00) High Income (P199,927.00)0.00

50,000.00

100,000.00

150,000.00

200,000.00

250,000.00

9,061.0036,934.00

199,927.00

Source: National Statistical Coordination Board Website

Knowing the per capita income of the people in a country or city helps the firm determine if there

are possible consumers for their product and if the people will be able to afford the products that

they are offering. Identifying the per capita income of the consumers can help determine the

niche market of the company and gauge how much they can sell their products and where to

intelligently place the products that people can afford in the certain area.

d. Lifestyles and Traffic Congestion

15

Aside from the hospitality of the Filipinos, another thing that is noticeable in the Philippines is

the heavy and horrible traffic that the country has most especially in the National Capital

Region. Because of the horrible traffic, a lot of Filipinos would rather be stuck in the confines of

their own vehicles rather than be stuck in traffic while in public transport. The traffic congestion

is caused by the lack of disciplined drivers, weak imposition of traffic rules and regulations,

weak road management and lack of public transportation solutions. To ease their way through

traffic, Filipinos buy motorcycles to squeeze their way out of traffic. According to a consumer

finance survey conducted by the Bangko Sentral ng Pilipinas, more than 54.9% of Filipinos own

motorcycles.

A study conducted by Nielsen Philippines showed that many Filipinos in the coming two years

are able to buy new cars because of their growing income and the growth of the middle income

sector. Buying cars are more affordable now because of the different payment schemes

presented to the buyers and promos which make car payments more manageable. The

Philippines is a third world country but the spending capacity of the Filipinos is rising. Because

of the capacity for higher spending by the Filipinos, the automotive industry is enjoying increase

in sales. The availability of affordable models of cars in the Philippine market paved the way to

the increase of sales in cars. According to the same study, 87% of Filipinos believe that cars are

tools for travel to get from one place to another. Many Filipinos also believe that cars are a

status symbol to display how successful they have been. Even luxury car brands here in the

Philippines have experienced an increase in sales even if their cars are worth millions of Pesos.

More Filipinos buying cars equate to more consumers who are likely to buy products of the firm.

Because some Filipinos view cars as a status symbol, it is more likely that they would take extra

care when it comes to their cars and spend more to make their car look and feel presentable

and clean towards other people. The downside of the traffic congestion experienced in the

National Capital Region is people are more likely to buy motorcycles to squeeze through traffic.

The increasing numbers of motorcycles decreases the potential customers to buy products of

the firm which are designed and made for cars.

e. Household Final Consumption Expenditure

The definition of Household Final Consumption Expenditure as defined by Trading Economics

is:

16

“Household final consumption expenditure is the market value of all goods and

services, including durable products (such as cars, washing machines, and home

computers), purchased by households. It excludes purchases of dwellings but

includes imputed rent for owner-occupied dwellings. It also includes payments

and fees to governments to obtain permits and licenses. Here, household

consumption expenditure includes the expenditures of nonprofit institutions

serving households, even when reported separately by the country. This item

also includes any statistical discrepancy in the use of resources relative to the

supply of resources.”

As displayed by the data in Table 2, transport is the seventh expenditure of Filipinos out

of the twelve listed in the table. Despite the increase in car purchases last 2014;

transport expenses of Filipinos still come at seventh place. Even though it is listed at

seventh place, the expenditure on transport grew at a rate of 11.5%. The annual growth

is good for the business because it shows that more and more Filipinos are buying

different modes of transportation for their own private use. More Filipino car owners

mean more potential customers for the business. Keylargo can use this data to introduce

more products and reintroduce current products to car owners.

Table 3. Household Final Consumption Expenditure

ITEMSAt Current Prices (In Million Pesos)

2013 2014 Growth Rate (%)HOUSEHOLD FINAL

CONSUMPTION EXPENDITURE

8,464,883 9,159,243 8.2

Food and Non-alcoholic beverage

3,605,777 3,868,950 7.3

Alcoholic beverages, Tobacco

110,059 127,588 15.0

Clothing and Footwear 116,635 127,205 9.1Housing, water,

electricity, gas and other fuels

1,062,100 1,149,574 8.2

Furnishings, household equipment and routine

household and maintenance

326,101 350,603 7.5

Health 218,729 250,472 14.5Transport 894,369 997,368 11.5

Communication 264,281 275,399 4.2Recreation and culture 154,391 166,089 7.6

17

Education 334,586 367,081 9.7Restaurants and culture 318,553 345,623 8.5

Miscellaneous goods and services

1,059,301 1,134,290 7.1

f. Carnapping in the Philippines

According to Republic Act No. 6539, "Carnapping is the taking, with intent to gain, of a motor

vehicle belonging to another without the latter's consent, or by means of violence against or

intimidation of persons, or by using force upon things.” On a press release by the Philippine

National Police Highway Patrol Group in 2012, carnapping incidents in April 2012 went down

compared to the recorded cases in April 2011 by 68.3%. The report also indicated the manner

in which the car was stolen. Vehicles were stolen while parking, forcibly taken and failed to

return.

Figure 3. Reported Carnapping Cases in the Philippines

April January-April0

50

100

150

200

250

300

350

400

450

500

123

460

39

327

20112012

Source: Philippine National Police Website

Only 39 carnapping cases were recorded in April 2012 compared to April 2011’s 123 cases. A

total of 327 carnapping incidents were recorded during the first four months of 2012, dropping

28.9% from the 460 cases recorded during the same 4-month period in 2011.

79% of the carnapped vehicles were stolen while parking, 18% were forcibly taken and 3% was

failed to return. This data is for the month of April 2012 only.

Figure 4. Manner of Carnapping

18

Stolen While Parking Forcibly Taken Failed to Return0%

10%

20%

30%

40%

50%

60%

70%

80%

90%79%

18%

3%

Among all of these recorded cases, 87% are recorded to come from the National Capital Region

and only 13% were recorded in Calabarzon. Manila and Quezon City topped the carnaping

prone areas followed by Parañaque and Makati.

The carnapping incidents in the Philippines, especially in the National Capital Region show that

car owners need more protection against carnappers. One of the ways to protect a car form

carnappers is the installation of security alarms. The protection against carnappers can be

provided by the firm because one of its products is security alarms for cars.

g. Regulation

The Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) is widely recognized

by government and private sector groups as the lead organization in the Philippine automotive

industry. According to CAMPI’s website, their main objective is “to promote the interests of the

automotive industry with the end in view of developing a viable domestic industry.” Their

objective is carried out thru its “active participation, among others, in the formulation of

government policies, programs, regulations and standards for the automotive industry.” CAMPI

advocates on the enhancement of industry competitiveness, skills enhancement, environment

protection, consumer protection and corporate social responsibilities.

Another regulatory agency when it comes to the importation of products is the Bureau of

Customs. The Bureau of Customs has the duty to regulate all of the products that come in and

out of the Philippines. The Bureau of Customs is also in charge of determining the import taxes

and duties that have to be paid before the product is released from the port. The Bureau is also

the one who permits and holds products if they find it illegal in the Philippines.

19

2. Technological Environment

In the analysis of the technological environment, the focus is on the different technological

advancement that can dramatically affect the organizations products, services, markets,

suppliers and distributors.

Automobile manufacturers today produce car parts faster and more efficient compared to

decades ago because of the rapid prototyping technology. Rapid prototyping technology is a

process where the car part is designed using a computer software especially made for this

purpose. After designing it, the design can easily be converted into something tangible through

a 3-D printer. Using this technology saves manufacturers lots of time in the designing and

constructing of the parts. Before, designing and constructing takes weeks but because of rapid

prototyping, it can only take days or sometimes even hours. Another benefit of using this

technology is the software can identify if there are flaws to the design before it hits the

production line saving time and money. 3-D printing is a process of making an actual life-size

and usable object from a digital file. For a 3-D object to be created, it goes through an additive

process. An additive process is where an object is created by laying down successive layers of

material until the entire object is created.

Aside from using rapid prototyping technology, many manufacturers have turned to robotics to

increase their efficiency. Many production lines have sought the technology of cobots

(collaborative robots) to aid in production. Humans use cobots as their assistants in performing

tasks such as moving heavy loads up and around the factory. Again, using cobots saves times,

boosts production, increases safety for humans in performing tasks and lessens the burden of

human workers. Cobots are preferred and replacing human workers because they have the

capacity to work for 24 hours a day without even getting tired, they don’t need to eat, they do

not get sick, they do not go to the bathroom basically they are more efficient in a manufacturing

line compared to humans.

On the technological advancement when it comes to car security, electronic immobilizers are

being integrated to a cars build for protection against car theft. As discussed by the website

askmen.com a car immobilizer is described as:

“For a growing number of modern vehicles, car keys and fobs play a more

effective role in protecting their cars thanks to integrated electronic immobilizers.

Specifically, keys and fobs are planted with built-in transponders or microchips

20

that send signals to the ignition and fuel-pump systems of the vehicle. When an

attempt is made to use the car without these signals, the car will refuse to start.

Based on the high-tech nature of these systems, car thieves often avoid makes

and models that were made after the introduction of electronic immobilizers.”

The introduction of the internet quickly changed the world and how everyone connect and

communicate with one another. The internet paved the way for people to transact business with

one another in a faster and more efficient manner. Because of the internet age, many

businesses are able sell their products online without the extra cost of renting a space to feature

their product. Products sold online can range from food, clothes, shoes, furniture, gadgets, and

little trinkets up to cars. Almost everything under the sun can be sold through the internet and

almost anything you can think of can be found and purchased online. Online buying and selling

has become a norm today that e-marketplaces are sprouting everywhere. In the Philippines, the

most popular e-marketplace is olx.com.ph which is similar to America’s eBay and have an

assortment of products for sale classified into phones, computers, appliances, clothes, shoes,

watches even motorcycles, cars and real estate are available in OLX.

Another online marketplace specifically designed for the online buying and selling of cars

is carmudi.com.ph. In the website, cars, motorcycles and trucks are the only things that

they sell. The main products that the website buys and sells are motor vehicles.

Figure 5. OLX website

21

Figure 6. Carmudi Website

The first two technological advancements mentioned are very advanced compared to

what the current technologies the company possesses. The cobots and rapid prototyping

are too advanced and expensive for the business to afford and to be used on the current

manufacturing of products. Using cobots are designed for large scale manufacturing of

products and compared to the current manufacturing process of the firm; acquiring

cobots would be more of a liability rather than an asset. Rapid prototyping and cobots

are of great help to some businesses but not to the present state of the firm; it is not

ready for it. The locally manufactured product of the firm is the seat covers which are

sown using basic industrial scale manufacturing sewing machines. The integration of car

immobilizers in new car models are a threat to the business because car owners would

not feel the need to buy security alarms. Electronic immobilizers being installed in new

car models reduces the chance of a car owner to avail of protection for his car’s security.

The car owner would not feel the need to install security alarms in his car anymore

because of this added technology of protection to his car. Because of this technology the

firm might lose business in the area of selling security alarms.

The internet being used as a platform for online marketplaces is one of the advancements that

the firm can manipulate in order to gain market share, reach its consumers more, introduce and

showcase new products and provide another area of distribution for the firm rather than the

present hardware stores and groceries. Using online marketplaces can enable the firm to

connect with their consumers rather than the usual set-up where the consumer goes to a

22

physical shop, buy and then leave. Opening and managing an online shop by the firm can

enable them to sell their products to new and loyal customers inside and outside the Philippines

who do not have the firm’s products available within their area.

3. Economic Environment

Economic forces are factors which have direct impact on the potential attractiveness of various

strategies of the firm.

a. Gross Domestic Product trends

The gross domestic product is used as a gauge to find out if the economy of a country is healthy

and is also used to measure the standard of living in the country. The gross domestic product is

computed by adding the entire consumer spending in the nation’s economy, the total

government spending, total businesses’ spending on capital in the country and the total net

exports of the country. The total net export is computed by subtracting the total imports to the

total exports.

The Gross Domestic Product in the Philippines expanded 6.90 percent in the fourth quarter of

2014 over the same quarter of the previous year. GDP Annual Growth Rate in Philippines

averaged 5.09 percent from 2001 until 2014.

Figure 7. GDP Annual Growth Rate

2012-2012 2012-2013 2013-2013 2013-2014 2014-2014 2014-20150123456789

6.47.3 7.7

7

5.6 5.36.3

7.27.9

6.3 6.46.9

Source: Trading Economics Website

The Philippine economy reached a growth of 6.9 percent for the last quarter of 2014. The

growth during the last quarter of 2014 was the strongest growth spurt in the economy mainly

because of the increase in exports, household and government spending.

23

In the Philippines 57% of the total GDP is from the services sector. Within services the most

important sectors are trade and repair of motor vehicles and household goods, real estate,

renting and business activities, transport, storage and communication, financial services, public

administration, defense and social security. When it comes to industry, it accounts for 31% of

the Gross Domestic Product. Manufacturing and construction are the most important industries

that contribute to the Gross Domestic Product. Lastly, the remaning12% GDP is contributed by

the agricultural industry.

Figure 8. Services in GDP

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%17%

11%

8%7%

4%

10%

Source: Trading Economics Website

* The remaining 10% in services was not provided for in the data obtained thus labeled as

“Other.”

A total of 17% was contributed by trade, repair of motor vehicles and household goods, 11% for

real estate, renting and business activities, 8% in transport, storage and communication, 7% for

financial services and 4% or public administration, defense and social security.

Figure 9. Industry in GDP

24

Manufacturing Construction Others0%

5%

10%

15%

20%

25%22%

5%

10%

*The remaining 4% was labeled as “Others” because there was no specific data about the

specifics of the remaining 10%,

Manufacturing accounted for 22% of the GDP and construction accounted for 5%. In totality, the

data presented above only shows 27% the remaining 4% was not provided for in the data thus it

was not stated.

The growth of the Gross Domestic Product indicates that the top contributor in services is the

trade and repair of motor vehicles and household goods. The growth means that the economy

in the Philippines is growing and t o take advantage of this growth, Keylargo can use this as an

opportunity to introduce their products to auto-repair shops and freelance mechanics. This also

means that many car owners are availing the services of car mechanics to repair their cars.

b. Tax Rates

Taxes are paid by individuals living in a country as a compulsory contribution to the nation for

the government to function and provide services to its people. Taxes are the source of revenue

of the government thus the lifeblood of the government and it is a necessary evil. In the

Philippines, one of the taxes to be paid is import taxes and duties. Import duties and taxes are

paid by a natural person or a juridical entity when importing and exporting goods to and from

outside the Philippines. In the Philippines, aside from the import duties a sales tax such as

Value Added Tax is also added to imported goods. Import duty and taxes payable are computed

in complete shipping value which includes the cost, insurance and freight manner.

25

Duty Rates

The average duty rate in the Philippines is 10.5%. Some duties are rated as 0% and some even

reaching up to 65%. Laptops and other electronic products may be imported to the Philippines

free of charge under certain conditions as provided by the law.

Excise Taxes

As defined by the Bureau of Internal Revenue, excise tax is “a tax on the production, sale or

consumption of a commodity in a country. Excise taxes are charged on goods manufactured or

produced in the Philippines for domestic sale or consumption or for any other disposition and on

goods imported.” Excise taxes have two types, namely specific and ad valorem. A specific tax is

an excise tax in which the tax is computed based on the weight of the goods or any unit of

measurement. On the other hand, an ad valorem tax refers is computed based on the selling

price or the specific value of the goods.

SpecificTax=No .of units∨othermeasurements×Specific TaxRate

AdValoremTax=No .of units∨other measurements×Selling priceof any specific value per unit × AdValoremTax Rate

Computations of Taxes

Total Duties∧Taxes=Customs Duty+Value AddedTax+ Import Processing Fee+ExciseTax(if applicable)

Customs Duty=CustomsValue (DutiableValue )×ForeignExhange Rate ×Rate of Duty

DutiableValue=Cost of Goods+Freight+ Insurance+Other Charges∧Costs

Value Added Tax=12% of Total LandedCost (TLC)

Total Landed Cost=DutiableValue+Bank Charges+Customs Duty+Brokerage Fee+ArrastreCharge+Wharfage Due+Customs Ducumnetary Stams (CDS )+ Import Processing Fee (IPF)

Customs Documentary Stamp=P265.00(¿ Amount)

Table 4. Dutiable Values

DV of Shipment IPF/entry

Up to P250,000 P250.00

Over P250,000 to P500,000 P500.00

Over P500,000 to P750,000 P750.00

26

Over P750,000 P1000.00

Computation for Motor Vehicles

TotalCar Value=BookValue+Accessories (if any )

DepreciationValue=TotalCar Value−Depreciation(based on yearmodea l∧cc )

Cost=DepreciationValue×80(less :20%wholesaleallowance)

DutiableVale (¿$ )=Cost+ Insurance+Freight

Customs Duty=DutiableValue (¿ $ )×Rate of Exchange× Rateof Duty

LandedCost∨AVT Base=Customs Duty+DutiableValue∈Php+Miscellaneous Expenses

AdValoremTax=LandedCost∨AVT Base×Rate of AdValoremTax

Value Added TaxBase=AdValoremTax+Landed Cost

Value Added Tax=Value Added Ta x Base×12% (Rate of VAT )

Total Duties of Taxes=Customs Duty+AdValoremTax+VAT+ IPF

c. ASEAN integration policies

The Association of Southeast Asian Nation integration aims to connect the different countries in

the Southeast Asian Nation through its different integration policies. The aim of the integration is

to bridge the gap between the member countries and to bring the countries closer. These

policies aim to provide support the development in the member countries including economic

developments.

One of the policies created for the ASEAN integration is the ASEAN Free Trade Agreement or

AFTA. The AFTA is an agreement regarding the trade of products and goods between the

member countries and the different tariffs applicable on the products. Included in the AFTA is

the Common Effective Preferential Tariff Scheme or CEPT wherein it aims to lessen the tariffs

of products traded in Southeast Asia. The following are the some of the 11 industries

enumerated in the Priority Integrated Sector, automotives, air travel, electronics, rubber-based

27

products, e-ASEAN, textiles and apparels are the industries that can affect the business. CEPT

aims to lower the tariff rates to 0%-5% and to eventually remove the tariff rates.

The effect of the Asian Free Trade Agreement to the business is both positive and negative.

Lowering the tariff rates and eventually eliminating of it to some products around the South East

Asian region would be a threat to the business because it will create more competitors. Other

businesses in South East Asia who have similar products can penetrate the Philippine market

easily because of the AFTA. On the other hand, automotive and textiles are included in the PIS

indicating that products like car and fabrics will have lower tariff rates. Low tariff rates of

automotives means a higher chance of people affording to buy cars and it would pose as an

opportunity for the firm to gain more consumers. The production and manufacturing costs of the

locally made seat covers would also be lowered because of the minimal tariff rates of textiles.

4. Political, Governmental and Legal Forces

These forces are those which create regulations for small and large organizations alike that can

create opportunities and can quickly turn into threats. Government regulations, tax rates and

economic relations with other countries are discussed in this chapter.

a. Government Regulations

In Republic Act No. 426, entitled “An Act to Regulate Imports for Other Purposes” there is an

import quota that the government has set. A person who wants to import must apply for a quota

allocation to be able to import products to the Philippines. A quota allocation is the value of

imports that is allowed to an importer; imports may be any product. An import license was not

mentioned in Republic Act No. 426 but only a quota allocation. The said act was repealed by

Republic Act No. 650 which is “An Act To Regulate Imports and For Other Purposes.” The

Republic Act No. 650 provides for an import license that must be issued and acquired before a

commodity may be imported in the Philippines. Certain exemptions are provided in the Republic

Act but will not be further discussed because it does not concern the business.

An import license is a license issued by the Philippine government to give authorization for

license holders to import goods and articles in Philippine territory. Issuance of import license by

the government is a good way of regulating all the products that goes in to its territory and

safeguarding legitimate importers’ prdocuts from smugglers. The regulation of the government

is good for the business because it cuts down the incidence of smuggled goods of the same

28

product as the business might have and are sold to the public in a lower price. Less smugglers

means more profit for the business.

b. Tax Laws

Because of the fast-paced and ever changing environment of the country, laws have to keep up

with the present need of the people. Thus, Republic Act. No. 9337 was enacted to amendment

some laws that are not relevant to today’s world anymore. According to Republic Act. No. 9337,

the former VAT of 10% to imported goods will be increased to 12%.

“SEC. 5. Section 107 of the same Code, as amended, is hereby further amended

to read as follows:

"SEC. 107. Value-Added Tax on Importation of Goods. -

"(A) In General. - There shall be levied, assessed and collected on every

importation of goods a value-added tax equivalent to ten percent (10%) based on

the total value used by the Bureau of Customs in determining tariff and customs

duties, plus customs duties, excise taxes, if any, and other charges, such tax to

be paid by the importer prior to the release of such goods from customs custody:

Provided, That where the customs duties are determined on the basis of the

quantity or volume of the goods, the value-added tax shall be based on the

landed cost plus excise taxes, if any: Provided, further, That the President, upon

the recommendation of the Secretary of Finance, shall, effective January 1,

2006, raise the rate of value-added tax to twelve percent (12%), after any of the

following conditions has been satisfied:

"(i) Value-added tax collection as a percentage of Gross Domestic Product

(GDP) of the previous year exceeds two and four-fifth percent (2 4/5%); or

"(ii) National government deficit as a percentage of GDP of the previous year

exceeds one and one-half percent (1 1/2%).”

The imposition of a 12% Value Added Tax puts the business at a disadvantage because the

amendment caused the tax rate to go up by 2% which will result in added expense of the firm.

The firm buys products and raw materials in quantities resulting to a higher VAT to be paid by

29

the firm. The increase of 2% of the Value Added Tax also means that the prices of the product

will also increase.

Another amendment is about the tax credits that can be applied to purchasing or importation of

goods. Input tax is the tax charged when a company that is registered for Value Added Tax

buys goods from another supplier. An output tax is when a company sells its goods and charges

its customers with VAT. When the input tax is greater than the output tax, then the company can

claim credit from the government. In the amended law, certain tax credits are given to

purchased or imported goods that are for sale, to be converted in to products or products that

are needed in the course of the business.

“SEC 8. Section 110 of the same Code, as amended, is hereby further amended to read as

follows:

"SEC. 110. Tax Credits. -

"(A) Creditable Input Tax. -

"(1) Any input tax evidenced by a VAT invoice or official receipt issued in

accordance with Section 113 hereof on the following transactions shall be

creditable against the output tax:

"(a) Purchase or importation of goods:

"(i) For sale; or

"(ii) For conversion into or intended to form part of a finished product for sale

including packaging materials; or

"(iii) For use as supplies in the course of business; or

"(iv) For use as materials supplied in the sale of service; or

"(v) For use in trade or business for which deduction for depreciation or

amortization is allowed under this Code.”

c. Economic relations with other countries

30

China

The economic relationship between China goes way back up to the 7th century. Economic ties

were enjoyed between Filipinos and Chinese even during the olden times. Trade investments

between China and the Philippines provide a solid evidence of the economic friendly

relationship of the two countries. The bilateral agreements between the two countries have

grown to a staggering 41.77% in 2000. During that time, the Philippines were selling more

products to China rather than buying products from China. The economic relationship between

China and the Philippines has grown stronger especially during the presidency of former

President Gloria Macapagal-Arroyo. The improving relationship was proven further by the visit

of Chinese President Hu Jintao and Wen Jiabao and former President Gloria Macapagal-Arroyo

visiting China. Based on the data in the Chinese Embassy website, “China is the Philippines’

3rd top trading partner in 2006, moving up from 9th place in 2002. China is the Philippines’ 4th

largest export market and 5th largest supplier of imports in 2006. Exports of Philippine products

to China have increased more than three-fold.”

China and the Philippines have good economic and trade relations between each other because

of the influence of Chinese businesses in the Philippines. Most of the major companies in the

Philippines are owned and managed by Filipino-Chinese nationals. Many products sold here in

the Philippines are manufactured and imported from China. But the recent territorial disputes

have strained political and economic relationship of the two countries. Despite of these disputes,

many products from the Philippines and China and vise versa are still traded.

United States

The relationship of the Philippines and the United States goes way back during the Spanish Era.

At one point the Philippines was owned by the United States because of the Treaty of Paris.

Because of this history, it can be inferred that the relationship between the two countries is

close to a hundred years. A number of economic agreements have been established between

the two countries. One of them is a memorandum concerning the stopping of illegal

transshipments of textiles and apparels. The Philippines is also one of the top trading partners

of the United States. In 2012, $24 billion totaled to the goods and services that have been

exchanged between the Philippines and the United States. Based on data provided by the

American Embassy website “The Philippines is currently our 37th largest goods trading partner

with $17.7 billion in total (two ways) goods trade during 2013. Goods exports totaled $8.4 billion;

31

Goods imports totaled $9.3 billion. Trade in services with the Philippines (exports and imports)

totaled $6.2 billion in 2012 (latest data available). Services exports were $2.5 billion; Services

imports were $3.7 billion. The U.S. services trade deficit with the Philippines was $1.2 billion in

2012.”

The recent visit of President Obama to the Philippines and President Aquino’s visit to the U.S. a

few years back shows the harmonious relationship between the Philippines and The United

States of America. Trade between the countries is also growing strong as seen with the

emergence of supermarkets which mostly sells American products, one example is S&R

membership shopping.

Japan

Japan and the Philippines a few decades ago did not have a harmonious relationship because

of World War II. The Japanese people caused so much havoc and destruction in the Philippines

during the war causing thousands of lives and damaged the economy of the Philippines. The

relationship between the two countries was improved during the end of the Vietnam War in 1975

and the first ever ASEAN Summit in 1976. The economic relationship between Japan and the

Philippines improved with the ratification of the ASEAN-Japan Comprehensive Economic

Partnership and the Japan-Philippines Economic Partnership Agreement. The ASEAN-Japan

Comprehensive Economic Partnership (AJCEP) provides more support from the Japanese in

the ASEAN region because of the decrease of American influence. The AJCEP will provide for

more economic opportunities and free trade agreements between Japan and the Philippines.

The recently ratified Japan-Philippines Economic Partnership will open new industries within the

Philippines. Both agreements will enable the Philippines to have free trade with Japan where we

can exchange goods and services. The agreements will open opportunities for the Philippines to

earn revenue because Japan is the second largest trading partner of the Philippines. According

to the Japanese Embassy website, Japanese investors are the biggest source of investment in

the Philippines.

B. Industry Analysis

An industry analysis is based on Michael Porter’s Five Forces which analyses the threat of new

entrants, bargaining power of suppliers, rivalry among competitors, bargaining power of buyers

and threat of substitutes. A Porter’s analysis is made to analyze the level of competitiveness

within the industry and also the profitability of the business to which industry it belongs.

32

Figure 10. Porter’s Five Forces

1. Threat of New Entrants

The threat of new entrants in the industry is high because of the increase in consumption,

income and purchasing of the Filipinos. Overall the industry of car care products and

accessories are growing and is becoming lucrative. The growing number of car owners means

that there will be an increase in the need of car care products and accessories and this increase

will be an enticing factor for people who want to open up a business in the same industry.

Growth of the GDP in general means that the purchasing and consumption of the Filipino

people are increasing annually. The industry of repair and service of motor vehicles was among

the top contributors in the increase of the GDP. Among the Household Final Consumption

Expense of Filipinos, the top 7 was the expense in transport. The per capita income of Filipinos

is also increasing that’s why more Filipinos are able to afford cars. The ASEAN AFTA also plays

a role in the threat of new entrants in the industry because of their policy on 0%-5% of tariff

rates among products in the South East Asia. Another agreement that may be a threat is the

JPEPA where in there will be a free trade of goods and services between Japan and the

Philippines. The market for car accessories and parts are not saturated in terms of major

players and high quality products. Establishing a business here in the Philippines is very much

encouraged by the Philippine government because it gives the government additional revenue

and helps boost the economy of the Philippines.

2. Rivalry Among Competitors

33

Rivalry among existing

competitors

Threat of new

entrants

Bargaining power of buyers

Threat of substitute products

Bargaining power of suppliers

The rivalry among competitors is low because there is only one identified competitor who offers

the same products in competition to the firm’s products. The rivalry is low because Keylargo has

more products offered in the market compared to Miles & Levels. The pricing is also different

because the firm’s products are priced from a wide range; cheap to expensive. Some products

of Keylargo are cheaper than the other firm and some are more expensive. The product

offerings are different too and only a number is similar to each other. The preference of the

consumer is another factor in rivalry. Consumers might prefer cheaper rather than expensive

products. Additionally, some products that the consumer need might not be offered by the

competitor.

3. Threat of Substitutes

Threat of substitutes is moderate because of the emergence of other imported car care products

and accessories in the market. The known places to find imported brand new and surplus car

accessories are from shops in Banaue, Quezon City and Evangelista, Makati. The hundreds of

shops in both Banaue and Evangelista is a haven of different imported car accessories.

Newcomers in the market are the Daiso, Saizen, Japan Home Centre and American Bazaar

shops opening in malls. These shops import Japanese, Korean and American products to the

Philippines and they sell a range of goods from cookware, to bathroom accessories, office

supplies, foods and drinks, party ware and car accessories and car care products.

4. Bargaining Power of Suppliers

The bargaining power of suppliers is high because the firm’s products are branded and are

exclusively distributed by the firm in the Philippines. The suppliers have a great control on the

pricing of the products because they are the only ones who manufacture the products. Each

product or a group of products is exclusively outsourced from one company only. The increase

in the production cost of the products will greatly affect the retail price of the products in the

Philippine market because the increase in production cost is directly proportionate to the

increase of the net cost of the product.

5. Bargaining Power of Buyers

The bargaining power of the buyers is low because even though there are substitutes in the

market because the firm’s products are of higher quality and are established brands already.

The consumers are paying for the premium quality of the product. The products have few

competitors when it comes to product in the same market niche.

34

6. Summary of Porter’s 5 Forces of Competition

Over-all Keylargo is in an advantageous position because they have been in the industry for 19

years and there is an increase in the number of cars and car owners in the Philippines. There

are about 7,000,000 registered cars all over the Philippines. The products that the firm offers

are of trusted quality and are established brands overseas. The products are of better quality

compared to the substitute products in the market because the firm’s products are for long term

usage. The prices of the product are reasonable and give the consumer’s money’s worth.

C. Competitive Analysis

1. Profile of Competitor

According to their website, Miles and Levels Philippines Incorporated is established in 1988,

“Miles & Levels Philippines Inc.. is a young and dynamic organization that specializes in the

marketing and distribution of consumer and industrial products. Miles and Levels Philippines

Inc. is composed of highly skilled and innovative local professionals dedicated to covering the

following industries: export, construction, risk mitigation and retail. With the goal of uplifting the

lives of Filipino consumers in mind, Miles & Levels has put together an impressive lineup of

multinational brands and strategically partnering it with a committed distribution pipeline that

extends through Luzon, Visayas and Mindanao. Included in the M&L portfolio of internationally

tested products are brands such as Henkel, HannsGuard, Sun-Gard Window Films, Auto-Gard

Car Care Products, Komy (Japan) Convex Mirrors, Neltex uPVC Pipes and Hannstape.

With close to 25 years of thriving operations, management gives credit to quality products and

effective marketing efforts combined with excellent customer service as the key foundations to

M&L’s success and accomplishments.” The company states that:

“We Deliver The Yes Factor, Do More with Less and Love The Change. We Are

Passionate & Determined. We Embrace The Fun and The Little Weirdness. We

Build Open and Honest Relationships with Communication. We Are Humble and

Strive to Build Our Family Spirit. We Never Stop Learning.”

Vision

“Positive, never ending and always driven with the passion and determination in embracing the

change. Go More towards helping our environment and our country by continuously growing our

business enabling us to better give back.”

Mission

35

“Go Hard is taking the pedal to the metal, pushing ones limits to their performance.

Each of us have our own Go Hard, this is a call to action, to rise up to our own challenges and

to surpass ourselves. Go hard and Deliver YES!”

2. Competitive Profile Matrix

A Competitive Profile Matrix is a tool used to compare the strengths and weaknesses of a firm

from their competitors. The critical success factors are listed down to determine what factors

would be of comparison to determine the strengths and weaknesses of the firm and its

competitors. To determine this, each critical success factor is given a weight based on its

importance to the firm. The lowest weight which is .00 means that the success factor is of low

importance and a weight of 1.00 indicates high importance. A rating is then given after to the

critical success factor as an indication on how the firm reacts to the critical success factor. The

rating is based from a scale of 1-4; 1 meaning a major weakness and 4 meaning a major

strength.

A Competitive Profile Matrix was used to compare the strengths and weaknesses of Keylargo

and Miles & Levels based on the weight and rating given on the critical success factors. The

most important critical success factors determined with a weight of 0.15 are the market share of

the firm and product quality. Market share was chosen because it is a very good indicator

whether the product is sufficient to serve its use to the consumer. The product quality came in at

second because a product would be patronized because of its quality and it will increase the

market share of a firm thus building its reputation as a trusted brand. Successful new

introductions, product design, variety of products, effective social media management and

strong online presence were all given a 0.08 weight because they work hand-in-hand together

to create profit increase and brand patronage for the company.

In the analysis, Keylargo and its competitor Miles & Levels have close scores on some of the

critical success factors. In spite of the close scores between the two, Keylargo garnered a score

of 2.97 which is 0.54 higher than the 2.43 score of Miles & Levels. Keylargo was mostly at an

advantage except for strong online presence and effective social media management. The

online presence of Miles & Levels has more impact and their website is more appealing

compared to Keylargo’s. Miles & Levels is at an advantage when it comes to social media

because they are present in Facebook.

Table 5. Competitive Profile Matrix

Keylargo Miles & Levels

36

Critical

Success

Factors

Weight Rating Score Rating Score

Market Share 0.15 3 0.45 2 0.30

Product

Quality0.15 3 0.45 2 0.30

Brand

Reputation0.12 4 0.48 2 0.24

Successful

new

introductions

0.08 2 0.16 2 0.16

Variety of

distribution

channels

0.09 3 0.27 3 0.27

Product

design0.08 3 0.24 2 0.16

Variety of

Products0.08 4 0.32 2 0.16

Effective

Social Media

Management

0.08 1 0.08 3 0.24

Strong online

presence0.08 2 0.16 3 0.24

Parent

company

support

0.09 4 0.36 4 0.36

Total 1 2.97 2.43

Market Share – a 0.15 weight is given to market share because of its importance in determining

whether the firm has an advantage and can gain advantage from its competitors. The market

share can also determine whether the products offered by the firm are profitable or not. A rating

of 3 was given because Keylargo has bigger market share because of the brands that they have

in the market are more well-known and are likely bought by consumers.

37

Product Quality – the second factor given importance with a 0.15 is product quality because

consumers pay attention to the quality of the product to ensure that the purchase is tantamount

to their money’s worth. 3 was the given rating to product quality of Keylargo because some of its

products remain competitive but still have room for improvement to cope with the changing

needs of the people today.

Brand Reputation – this critical success factor was given a weight of 0.12 because when

consumers purchase a product, they look at the brand to gauge whether the product is good

enough or not. Brands have reputations whether their products are of good quality or not. 4 was

the given rating for Keylargo’s brand reputation because they have been in the business for 19

years and their products are proven and tested.

Variety of Distribution Channels – 0.09 was given because it is important to have a wide

network of product distribution to reach more consumers. A rating of 3 is given because the

company can still utilize the use of online marketplaces to reach more consumers aside from

the usual hardware stores.

Parent Company Support – the support of the parent company, especially to one like Keylargo

which is part of a group of companies controlled by a parent company, is crucial for the

business to survive and flourish. The parent company of Keylargo which is Hexagon is very

supportive as the back bone of one of its sub-companies.

Successful New Introductions – was given a 0.08 because new product introductions means

that the company if evolving and paying attention to the present and ever changing needs of the

consumers. Successful new introductions of products would mean there is a possible new

market that can be tapped by the company.

Product Design – product design is important because the product must be appealing, useful,

and easy-to-carry to attract consumers in buying the product. 3 was given because Keylargo’s

products are well presented and are easily identifiable by the consumers.

Variety of Products – was given a 0.08 weight because variety of products is important for the

business to cater to the growing needs of the consumers and to stay relevant. A rating of 4 was

given because of the numerous products offerings of Keylargo of different car parts, accessories

and car care products.

38

Effective Social Media Management and Strong Online Presence – in today’s world, almost

everything can be found online. People tend to rely to the internet to find what they need and

where to buy it. It is given a weight of 0.08 because having a strong online presence and social

media is an important tool that can be utilized by the company to its advantage.

D. Summary and Conclusions

1. Summary of Key External Factors

The external factors that can affect the business were mostly advantageous to the business.

Based on the External Factor Evaluation Matrix, the most important critical success factor

identified was the growing GDP trend of the Philippines. It was given a rating of 0.12 because

the growing GDP trend signals that the economy of the Philippines is healthy, improving and

growing which means that the business would benefit from it because one of the greatest

contributors in the growing GDP trend is the repair of motor vehicles. Keylargo’s response to

this opportunity is above average because of the firm’s product offering which can be used to

aid motor vehicle repairs. A 0.11 rating was given to the 12% Value Added Tax imposed upon

goods which are imported and are intended to be sold in the Philippines. The firm’s response is

rated as above average because the burden of the Value Added Tax was shifted to the

consumers.

2. External Factor Evaluation Matrix

The EFE Matrix is where in the opportunities and the threats in the external forces are listed

down and each is given a weight based on their effect to the company’s business. The rating of

1-4 is placed based on how the current strategies of the company are reacting on the

opportunities and threats.

Table 6. External Factor Evaluation Matrix

Critical Success FactorsWeight Rate Score

Opportunities

Social

Number of

interest group in

the Philippines

0.06 2 0.12

Technological Online 0.08 2 0.16

39

marketplaces

Social

Rise of

carnapping

Cases

0.06 2 0.12

EconomicGrowing GDP

Trend0.12 3 0.36

Social

Transport as 7th

place in the

HFCE

0.09 3 0.27

Social

Number of

Registered Motor

Vehicle in the

Philippines

0.06 2 0.12

SocialPer Capita

Income0.10 3 0.30

Competitive

Keylargo has

more products in

the market than

competitor

0.08 3 0.24

Threats

Economic

ASEAN

Intergration

AFTA

0.10 2 0.20

Political12% Value

Added Tax0.11 3 0.33

TechnologicalOnline

marketplaces0.08 1 0.08

Technological Electronic 0.06 1 0.06

40

immobilizers

Total 1 2.36

Number of interest group in the Philippines – is identified as an opportunity because car clubs

are growing because of the increase in the number of car enthusiasts and the number of people

who can afford cars. It was given a weight of 0.06 because not all of the members of the car

clubs and enthusiasts would be guaranteed to buy the products.

Online marketplaces – online marketplaces is rated with 0.08 because of the advent of the

internet age. It is an opportunity because it can be utilized to reach a wider number of

consumers.

Rise of carnapping cases – it is given a 0.06 weight because it might be an opportunity for the

company to sell their security alarms but its increase is not a good indication of the public safety

of the people.

Growing GDP trend – was given the highest weight because it is an over-all indication of the

economy of the Philippines. It puts the company at an advantage because the biggest sector to

contribute to the growing GDP is the repair of motor vehicles.

Transport as 7th place in the HFCE – it is given a weight of 0.09 because it is identified as an

opportunity because more Filipinos are having allocations for their transportation expenses.

Number of registered motor vehicle in the Philippines – the number is seen as an opportunity

because it means that there are an increase in the number of possible consumers and

patronage of the product. But it is given a weight of 0.06 because the increasing number might

provide new consumers but it may also discourage people to buy new cars.

Per capita income – is identified as an opportunity because of the increase in income of the

people and thus their capacity to buy a car also increases. The increasing capacity in car buying

means that there would be more car owners in the Philippines which belong to the target market

of the company. It is given a 0.10 weight because the income also identifies the buying capacity

of the consumer to purchase the firm’s products.

Keylargo has more products in the market than competitor – it is given a 0.08 weight because

Keylargo has more market share because of the number of products that they offer compared to

41

those of the competitors. The number of products also gives an advantage to the brand’s

reputation and the consumers’ awareness of the brand.

ASEAN integration –a 0.10 weight is given because it is posed as a threat because of the Asian

Free Trade Agreement wherein tariff rates between the products for trade in the Southeast

Asian region will be lowered to 0%-5%.

12% value added tax – is given a 0.11 weight because the value added tax increases the retail

price of the products even though the burden is passed on to the consumer.

Online marketplaces – is given a weight of 0.08 because of the threat that they pose to the

business. Many shoppers prefer browsing and purchasing products online because it gives

them the freedom to window shop without any constraints. Online marketplaces also provide

shoppers the luxury of staying home, cashless transactions and products are delivered to their

doorstep.

Electronic immobilizers – is given a weight of 0.06 because newer car models are being

equipped with this new technology. It is given a lower weight compared to the others because it

is still a new technology and earlier model cars are not equipped with it yet which means that

some still need security alarms installed in their cars.

IV. Internal Analysis

Internal Analysis is a review of the business’ strengths and weaknesses. It involves analysing

the company’s competencies. The company’s competencies are evaluated through its

management, marketing, finance and accounting, production or operation, research and

development and management information systems functions.

The internal analysis serves as basis for a business’ objectives and strategies from the internal

strengths and weaknesses. Through internal analysis, it showcases a firm’s competencies that

cannot be easily matched or imitated by other firms. It also involves taking advantage of its

distinctive competencies.

Keylargo Car Accessories’ internal analysis was made through the information it has from its

management, marketing, finance and accounting, production or operation, research and

development and management information systems.

42

Resource Based View

The resource based view theory asserts that resources are actually what helps a firm exploit

opportunities and neutralize threats. For a resource to be valuable, it must be either rare, hard

to imitate, and not easily substitutable. The more a resource is rare, non-imitable and non-

substitutable, the stronger a firm’s competitive advantage will be and the longer it will last.

Physical Resources

Keylargo Car Accessories is financially stable to support the business. With its financial

capability, the company can invest in different areas that it could to gain profit. It has its own

plant and equipment where money is not a problem for the company to sustain. Keylargo Car

Accessories choose to invest in equipment and machines as its own to incur less cost on its

part.

Keylargo Car Accessories is strategically located all over the Philippines. This is considered as

one of the strengths of Keylargo Car Accessories. It extends to different cities in the Philippines

such as Cebu, Bohol, Davao, Leyte, Iloilo, Bacolod and Isabela.

Human Resources

The personnel and employees of Keylargo Car Accessories are hired on the usual basis. But

the way Keylargo Car Accessories open positions for possible employees is different. First, the

company assess the positions that it will need in its operations. The possible candidates will be

conducting tests and interviews. They value the health and well being of the possible candidates

through conducting medical tests. Upon the evaluation of the human resource, the company will

hire the person and Keylargo Car Accessories will deploy the employee according to his

knowledge and capabilities.

Organizational Resources

The company is protecting its patents on all of its products. These include patents on rain

visors, gutters and design of California Scents. The trade name, brands and labels helps the

supplier to continue distributing products and sell through Keylargo Car Accessories.

Integrating Strategy and Culture

Organizational culture is the values and behaviours that contribute to the unique social and

psychological environment of an organization. It includes an organization’s expectations,

43

experiences, philosophy, and values that hold it together. It is expressed in its self-image, inner

workings, interactions with the outside world and future expectations. These are based on

shared attitudes, beliefs, customs and written and unwritten rules.

Keylargo Car Accessories’ has a relaxed working atmosphere. Although the company has

employed working policies, Keylargo Car Accessories has a friendly atmosphere as well. The

employees and managers have time to know each other personally. They hold Christmas

parties and celebrated anniversaries with the upper management, Hexagon Group of

Companies.

The company is strict in employing policies through its own Code of Discipline. The company is

also conservative in implementing the uniform policy on weekdays. However, the employees

can wear proper civilian attire on Saturdays. Keylargo Car Accessories only hire when needed.

The company also recognizes the employees by giving recognitions on awards night. Other way

of employee recognition of the company is promoting those best performing employees.

A. Management

Management is the organization and coordination of the activities of a business in order to

achieve defined objectives. It is the process of reaching organizational goals by working with

and through people and other organizational resources.

Portfolio companies are the companies in which a private equity firm invests. All of the

companies currently backed by a private equity firm can be spoken of as the firm’s portfolio.

Keylargo Car Accessories Center is a portfolio company of Hexagon Group of Companies. It is

an importer and distributor of wide range car accessories and car audio in Manila, Philippines. It

carries car audio and electronics such as stereos, amplifiers, speakers, security alarms, car

care products such as wax and car shampoo, car enhancements such as tint, roof railings, etc.

The other portfolio companies of Hexagon Group of Companies are the SGS Hardware

Corporation, Keylargo Steel Industries, International Distribution, Keylargo Commodities

Trading, Keylargo Industrial Sales, Hexagon Mechanelec Systems, Inc. Hexagon Chemical

Corporation & Sun Biotech Corporation, Hexagon Healthcare Corporation, IT Group, Inc. and

Sun Properties Development Corporation. SGS Hardware Corp. Is a dealer of Hardware and

Construction Supplies in Bacolod City. Keylargo Steel Industries is a dealer and distributor of

steel bars and pipes. The International Distribution is a Singapore based international trading

company that trades throughout the South East Asian Region. Keylargo Commodities Trading is

44

an importer and distributor of Feed Ingredients and Agri-Aqua Cultural Products in Bacolod and

Manila, Philippines. Its products include Soya, Cracked Corn, Copra Cake, Skim Milk, Fish

Meal, Corn, Fermented Soya Bean Meal etc. Keylargo Industrial Sales is an importer and

distributor of Industrial Pumps, Refrigerant Gas, in Manila, Philippines. Hexagon Mechanelec

Systems, Inc. is an importer and distributor of Industrial Electrical Controls & Mechanical

Equipment. It distributes nationwide products from renowned brands such as Schneider, Omron

and Western Electric. Hexagon Chemical Corporation is an importer and distributor of

Pharmaceutical, Veterinary Raw Materials and Food Ingredients. It offers a wide range of

products to suit the needs of local pharmaceutical and veterinary laboratories nationwide. Sun

Biotech Corporation was founded in 2004 with its banner product; Sunbio-888. The company

started with a commitment to develop new innovative animal nutritional products that provide

optimum performance. Intercast Dental Corp is a member of the Hexagon Group. Intercast is a

distributor and retailer of dental products and services to dental offices, laboratories and dental

colleges/schools. IT Group Inc.’s traces its roots to the Management Information System

Department formed to serve the IT requirements of a Philippine-based conglomerate with

diversified interest in trading, distribution and manufacturing. Sun Properties Development

Corporation is a real estate developer and the management arm of HFIC’s properties.

Figure 11. Hexagon Group of Companies

45

HEXAGON GROUP OF

COMPANIES

Keylargo Car

Accessories Center SGS

Hardware Corporation

Keylargo Steel

Industries

Int’l Distribution

Keylargo Commodities

Trading

Keylargo Industrial

Sales

Hexagon Mechanelec

Systems, Inc.

Hexagon Chemical Corporation & Sun

Biotech Corporation

Hexagon Healthcare

Corporation

IT Group, Inc.

Sun Properties

Development Corp.

A firm intends authority, responsibility to flow with its formal organizational chart. It depicts the

different managerial functions and subdivisions as linked with decision making power. A

company would not be possible without its organizational chart.

Figure 12. Organizational Structure

Source: Keylargo Car Accessories company profile

Keylargo Car Accessories Center adapts a three-level organizational chart. Tasks and authority

are granted by the Chief Executive Officer, down to its Executive Assistant and to the Chief

Operating and Chief Financial Officers. The company has different subdivisions such as Sales,

Marketing and Services under the Chief Operating Officer. On the other hand, subdivisions such

as Financial and Accounting, Human Resource, Information Communications Technology,

Accounting and Credit and Collections, and Warehouse and Logistics are under the Chief

Financial Officer.

There are five basic management functions that make up the management process.

Management consists of the interlocking functions of creating corporate policy and planning,

organizing, motivating, staffing and controlling an organization's resources in order to achieve

the objectives of that policy.

Planning

Planning refers to all managerial activities in order to prepare for the future. It includes

forecasting, establishing objectives, devising strategies, developing policies and setting goals.

46

PresidentChief Executive Officer

Mario Gamboa

Executive AssistantDominador Lacson, Jr.

Chief Operating Officer

Julie Gamboa

Sales Manager

Don Gargaciran

Marketing Manager

Francis Esaguirre

Services Manager

Jonathan Aguilar

Chief Financial OfficerJaime Molino

FinancialAccountingManager

Ruth Suarez

Human ResourceManager

Ruth Suarez

Information and Communications Technology Head

Edwin Aguilar

Accounting and Credit

and Collections Manager

Ana dela Cruz

Warehouse and Logistics

ManagerAgustin

Ambrosio

According to Henri Fayol, it requires an active participation of the entire organization in order to

draw up a good plan of action. It must be linked to and coordinated on different levels with

respect to time and implementation. The organization’s available resources and flexibility of

personnel are the things an organization needs to consider in this activity.

Managers of Keylargo Car Accessories Center gather in a meeting frequently. Meetings are

held not just within the company but also to its respective departments. Keylargo Car

Accessories Center plans yearly and after every three years. The annual planning involves the

firm’s plan for a year. On the other hand, Keylargo Car Accessories do strategic planning for five

years. They hire a professional management company named Guthrie Jensen Consultants to

Management. Guthrie Jensen is the leading management training and consultancy firm in the

Philippines and one of the largest in Southeast Asia. The organization conducts various training

programs and seminars in Asia, Europe and North America. The Guthrie Jensen Management

Consulting Group facilitates the strategic plan for five years. It usually happens in seven

sessions, starting from August and ending in January. The consulting group advises if the

company is viable to continue. It also gives them the strengths, weaknesses, opportunities and

threats of Keylargo Car Accessories.

Organizing

The organizing activity includes all managerial activities that result in a structure of task and

authority relationships. It includes activities such as assigning work and granting authority. An

organization can function well if it is well-organized. Sufficient capital, staff and raw materials

are important to build a good working structure. The organizational structure and the division of

functions and tasks are important in this management activity.

After the strategic planning is done, Keylargo Car Accessories starts to organize what is needed

for the business. Through the organizational structure of the company, it aims to address the

needs of every department until it reaches the Chief Executive. Since Keylargo Car Accessories

Center is a portfolio company of Hexagon Group of Companies, the company first starts to

organize from the lower management rank until it reaches the upper management and the

Hexagon Group of Companies decide for Keylargo Car Accessories Center.

The company is financially capable to support its raw materials and production costs. It has the

capability to accommodate its staff and give the products it offers. The staff and employees are

47

organized through the job qualifications and specifications related to the company’s product line

and services.

Motivating

Motivating involves the efforts directed towards shaping human behaviour. Motivating involves

the leadership, communication, work groups, behaviour motivation, job enrichment, job

satisfaction and employee morale and managerial morale.

The Keylargo Car Accessories applies the reward system. The firm values loyalty, performance

evaluation and employees corporate culture appreciation. The Hexagon Group of Companies’

anniversary, an awards night is held to give recognition to different employees and managers of

its portfolio companies including the Keylargo Car Accessories Center. It is usually held every

second Saturday of April. The firm is able to give certificates and cash to reward the employees.

From the usual course of line, Keylargo Car Accessories Center employees are given cash

incentives and bonus coming from the upper management of Hexagon Group of Companies

based on the performance evaluation of each to motivate them.

Staffing

The staffing activities refer to personnel or human resource management of the firm. It includes

the wage and salary administration, employee benefits and how they hire the people for the

business. It is the recruiting, selecting, training and developing employees to achieve the

company’s goals.

Staffing is based from Keylargo Car Accessories Center’s needs. If the people requirement is

established from Keylargo Car Accessories, it will be passed to the upper management,

Hexagon Group of Companies. Job descriptions and job specifications will be made by the

Human Resource Manager of the Hexagon Group of Companies.

Under the Human Resource Department of Hexagon Group of Companies, it selects the

possible candidates who are qualified to work for the company. Once that there is a qualified

candidate, the human resource manager will conduct a preliminary interview. Tests will also be

administered after being interviewed. The candidate will be endorsed to the unit which is the

Keylargo Car Accessories.

The company will conduct a background investigation on the person. He will also undergo

medical tests. Once the person has undergone the tests, the contract signing will follow. The

48

Hexagon Group of Companies human resource manager is tasked to assign the candidate to

train before they are deployed to Keylargo Car Accessories Center. Also, the company extends

its human resource through referrals from its employees and subscriptions from Job Street.

The employees’ salaries and wages are dependent on the company’s salary scale per position.

The company also provides transportation or gas allowances to employees which their line of

work needs so, especially those in field positions. The mandatory benefits such as vacation and

sick leave are granted also to the employees of Keylargo Car Accessories.

Controlling

Controlling refers to all managerial activities directed toward ensuring that actual results are

consistent with planned results. It includes quality, financial, inventory, expense control, analysis

of variances, rewards and sanctions.

The Keylargo Car Accessories Center has a code of discipline. This code of discipline is to

employ company policy. It is also aligned with the company’s mission and vision. The Code of

Discipline’s objective of Keylargo Car Accessories is to provide employees with guidelines and

procedure for the administration of employee discipline for purposes of fairness, justice and due

process, in the imposition of corrective actions. It covers all employees within and/or outside

company premises while performing official duties. The references of the Code of the Discipline

include the Labor Code, Republic Act No. 7877 on Anti-Sexual Harassment Act of 1995,

Republic Act No. 9165 on Comprehensive Dangerous Drug Act of 2002 and DOLE Department

Order 53-03 and the Data Privacy Act of 2012.

Keylargo Car Accessories Center monitors the employees’ attendance through its daily time

record. The company also have a uniform policy that the employee needs to comply. Once an

employee have conflicts with its punctuality and decorum inside the office, Keylargo Car

Accessories Center’s human resource development assesses and evaluates the employee and

give necessary sanctions to that certain personnel.

The procedures of an employee who have violated the Code of Discipline are the conducting of

initial investigation, issuance of citation form, preventive suspension, temporary assignment,

investigation/citation, until the decision/referral is made.

Figure 13. Procedures in case of Violation of the Code of Discipline

49

Source:Keylargo Car Accessories Code of Discipline

Initial Investigation is when an employee, regardless of rank or position level, who is observed

by his immediate superior or reported to the latter by a concerned employee, a member of the

security force, or an outsider (e.g. customer, supplier, contractor, service provider, visitor, etc.)

to have committed any violation of the company rules or this Code of Discipline, shall be initially

investigated by his immediate superior and cited accordingly upon a finding of probable cause

within seven (7) calendar days. If no probable cause to cite exists, the immediate superior shall

accordingly advise the concerned parties that there is no basis to cite.

A citation form shall be issued or sent to the employee’s last known address on record by

personal delivery by at least two (2) servers or if not possible, by registered mail or courier

service, within the prescribed period in reference to the nature and gravity of the offense

committed, indicating or attaching documents detailing therein the following:

1) alleged infraction committed;

2) the acts/ omissions constituting the offense and attending circumstances;

3) manner of commission;

4) the place and time;

5) date of commission;

6) the period within which he should submit a written explanation with a notation that failure

to submit a written explanation shall constitute a waiver of his right to be heard and to

challenge the allegation and complaint against him, and

7) all other pertinent data or evidence.

If the continued employment of an employee undergoing investigation, poses a serious or

imminent threat to the life or property of the Company or his co-employees, the said employee

may be placed under preventive suspension in accordance with the provision of the law. During

the period that the employee is under preventive suspension, the employee shall not receive

any pay, provided however, that he shall be entitled to payment of full back wages should he be

cleared of the charges against him. No preventive suspension shall last longer than thirty (30)

50

Initial Investigation

Issuance of Citation Form

Preventive Suspension or

Temporary Assignment

Investigation or Citation

Decision or Referral

calendar days. No notice of preventive suspension shall be issued without permission of the

Head of Human Resources and Administration (HRA) and approved by the concerned

Department Head.

In case of a temporary assignment, to prevent or avoid a situation wherein an employee subject

of an initial investigation or who has been cited and whose case is being heard, may:

1) gain access for the purpose of destroying, modifying or hiding documents or other

evidences relating to the case for which he/she is being investigated/cited, or,

2) unduly influence or intimidate co-employees, or contracted personnel from giving

testimony in his/her favor or against him/her,

The assignment shall be temporary and shall in no case go beyond final resolution of his/her

case. The assignment shall be covered by a written memo, stating the tasks/functions that the

employee will perform and duration.

During the period of his temporary assignment, the functions, tasks and responsibilities shall be

assumed by his Immediate Superior or duly appointed “officer-in-charge”, whose appointment

will be in writing, stating the tasks/functions that the employee will perform and duration.

Within five (5) calendar days from receipt of the employee’s response to the CF, or any

extension thereof within which to reply, a formal investigation shall be conducted. The

Immediate Superior shall advise the employee in writing through a Notice of Meeting, of the

date, time, and venue of the investigation, and his right to have a counsel/lawyer of his own

choice during the proceedings, which he is to acknowledge and sign. The Immediate Superior

shall conduct the investigation and make the corresponding recommendation.

The Immediate Superior’s findings and recommendation will then be referred to Human

Resources for review and concurrence prior to submission to the concerned Next Level

Superior/Department/Division Head for approval. However, if the penalty for the offense is

termination, the recommendation of Immediate Superior shall require the validation/approval of

Human Resources. Any dispute between the Business Unit Head and Human Resources shall

be referred to the Office of the Chairman for resolution.

In deciding the case, the following factors are to be considered:

1. Whether the citation for the alleged violation is supported by the findings;

2. Intent relative to the offense;

3. Employee’s record of conduct and behavior (i.e. 201 file, testimonies) on progression of

penalty; and

4. Similar cases, if any. Determine, for example, whether other similar instances have

occurred and been condoned previously.

51

B. Marketing

Marketing is the process of defining, anticipating, creating and fulfilling customers’ needs and

wants for products and services. The seven basic functions of marketing are customer analysis,

selling products or services, product and service planning, pricing, distribution, marketing

research and opportunity analysis. Understanding these basic functions of marketing helps

identify marketing strengths and weaknesses of the firm.

Marketing mix is used to describe the different kinds of choices organizations have to make in

the whole process of bringing a product or service to market. The 4Ps is one way of defining the

marketing mix, and was first expressed in 1960 by E J McCarthy. The 4Ps are Product (or

Service), Price, Place and Promotion.

Figure 14. 4P’s of Keylargo Car Accessories

Product

Keylargo Car Accessories Center is an importer and distributor of a wide range of car

accessories and car audio in Manila, Philippines. It carries car audio and electronics such as

stereos, amplifiers, speakers, security alarms; car care products such as wax and car shampoo;

car enhancements such as tint, roof railings etc. They also provide custom wheels, grilles,

headlights, chrome accessories, air intakes, and exhaust systems. Other products are shown in

the appendices.

Table 7. Products of Keylargo Car Accessories

52

Productcar audio and electronics

stereos, amplifiers, speakers, security alarms,wax and car shampoo, car matting

car enhancements - tint, roof railings,

PriceP 75 - 10,000 price range of car accessories

PlaceMain Office: 221, Gregorio Araneta Avenue, Tatalon, Metro Manila, Quezon City, 1113

1077 Cielito Homes Subd. 177 Caloocan City Metro Manila

PromotionPrint ads, displays, car shows, website,

electronic mail, promos

Marketing Mix

Source: Keylargo Car Accessories website

Price

Keylargo Car Accessories Center offers its customers various car accessories targeting one’s

needs to protect one’s automobile. However, competitors also provide the same car accessories

to their customers. Car Accessories companies only differ in prices it proposes. For Keylargo

Car Accessories, the product prices vary depending on the type of accessory and technology

each accessory it possesses. The whole price list is in the appendices.

Place

Choosing a strategically located area will enable a company to develop and grow in the current

market the company is in. The location affects the company’s advantages. It also allows the

company to formulate corresponding strategies to overcome the weaknesses of the company’s

location. The vicinity map of Keylargo Car Accessories is as follows.

Figure 15. Vicinity Map of Keylargo Car Accessories

53

Source: Google Maps

Keylargo Car Accessories is located at 1077 Cielito Homes Subd. 177 Caloocan City, Metro

Manila. The place is located within Metro Manila which the company can deliver Keylargo Car

Accessories’ products to various parts of Luzon. It is strategically located in Caloocan which it

can manufacture the products, produce and distribute to its respective distribution channels.

Promotion

Keylargo Car Accessories Center promotes its products through print ads, displays, car shows,

website and via electronic mail. Print ads promotions are through flyers, magazines and sign

boards. The products are also shown through gondola displays. Other ways to promote its

products are through car shows and exhibits. The company joins in road shows and motor

shows. The lowest amount that Keylargo Car Accessories has spent in joining in car shows was

around 600,000 pesos car with the products of the company featured. Keylargo Car

Accessories also sponsor in car shows. Promos are also being considered. They have product

bundling. For example, tint on a rainy season, a customer chooses to buy 10 rolls will be given

additional 2 rolls for free. This is because the number of car tints being sold on this kind of

season is very low. Keylargo Car Accessories Center has a website through which it can

advertise its products. Also, the company is also sending electronic mail messages to its

customers in case there are new products to be sold.

Customer Analysis

54

Customer Analysis is the examination and evaluation of consumer needs, desires and wants. It

involves the initiation of customer surveys, development of customer profiles and determination

of optimal market segmentation strategies.

Keylargo Car Accessories Center gives customer feedback twice a year. The feedback

identifies the respective marketing agenda on complaints and customer survey. Through the

customer survey, it identifies if the marketing objectives are being met. If the marketing

objectives are not met, the company will initiate a corrective preventive action report. After

consolidating and collating the customer feedback, a management review will be held every six

months. The customer feedback is essential because it gives the company an idea of whether

there is a low customer survey or if there is a complaint on their products.

Selling Products/Services

To sell products or services includes marketing activities on advertising, sales promotion,

publicity, personal selling, sales force management, customer relations and dealer relations. It

pursues market penetration strategy.

The market size of Keylargo Car Accessories Center is composed of car manufacturers and car

dealers. To advertise and promote its products, Keylargo Car Accessories have ways to keep

the consumers aware of and be moved to buy its products.

The company is frequently handling flyers to advertise its products. For about 5 million pesos,

Keylargo Car Accessories choose to spend its budget for its promotional activities. Keylargo Car

Accessories also promote its products in malls through gondola displays. The company also

spends money for gondola displays in malls per space it occupies. Also, they promote through

print ads and in magazines especially those magazines leading in the automotive industry.

Aside from the usual paper ads and promotions, Keylargo Car Accessories also promote the

products through an e-mail messaging blast to customers.

There is competition in the car accessories industry. As of the moment, new players are coming

making their or own house brands or carrying China brands. With respect to demand and

supply, the spending power of the middle class market consumers is increasing.

Product and Service Planning

55

The product and service planning refers to activities important to a company’s product

development or diversification. It includes test marketing, product and brand positioning,

warranties, packaging and activities providing for customer service.

Keylargo Car Accessories has a strategic and annual plan. If the marketing has met the

objectives, it initiates the procedures through the customer feedback. An action plan is

formulated which includes the target, projections, percentage of customers and support

department to meet the objectives.

Pricing

The consumers, government, suppliers, distributors and competitors affect the pricing decisions

of a firm.

Keylargo Car Accessories’ pricing decisions is not delegated to any employee by the Chief

Operating Officer. The Chief Operating Officer has the duty to price. It has the expertise in field

markets. Also, the pricing is kept with utmost confidentiality with regards to the costs. Pricing is

made by the Chief Operating Officer.

Distribution

Distribution includes warehousing, distribution channels, coverage, locations, inventory levels

and locations, transportation carriers and retailing and wholesaling. It also involves how a firm

sells its products.

Products are being distributed through after-markets, car accessories and individual car

accessories stores. It extends to the household section in supermarkets and groceries and

kiosks. Also, the company is open with direct marketing through bus companies, taxi operators

and restaurants.

Currently, total brand new cars are increasing every year by more than 10%. In the Philippines,

Ace Hardware and Handyman keep on opening new outlets. Also, the second hand car market

is active.

The distribution of Keylargo Car Accessories is being evaluated through a credit investigation.

The company is able to pay for a credit investigation to be done.

Marketing Research

56

Marketing research is the systematic gathering, recording, and analyzing of data about

problems relating to the marketing of goods and services. It can uncover the critical strengths

and weaknesses. Through market research, researchers employ numerous scales, instruments,

procedures, concepts and techniques to gather information.

Keylargo Car Accessories is a member of a suppliers association of car manufacturers. It is a

member of the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI, Inc.) The

CAMPI, Inc. is an organization to protect the interests of the automotive industry in the

Philippines. It is an organization recognized by the government and private sector groups in the

Philippine automotive industry.

With the aid of the CAMPI, Inc., the marketing research is being held by the Keylargo Car

Accessories. Through the updates and news released by CAMPI, Inc., the company knows the

development of the transportation industry in the country. Through this, Keylargo Car

Accessories is not incurring costs and expenses to conduct a marketing research.

Opportunity Analysis

Opportunity analysis or the cost/benefit analysis involves assessing the costs, benefits and risks

associated with marketing decisions. It is used to evaluate the company’s ways to be socially

responsible.

The opportunity analysis of the Keylargo Car Accessories is included in the strategic plan.

Currently, the opportunity that Keylargo Car Accessories is realizing is the ASEAN Free Trade

Area (AFTA). The Philippines, being an ASEAN country and included in the AFTA, has an

impact on Keylargo Car Accessories. An opportunity of the company is the potential product of

Keylargo Car Accessories for the AFTA is California Scents.

C. Finance/Accounting

Financial and accounting analysis is used to know the firm’s competitive position and overall

attractiveness to investors. It determines an organization’s financial strengths and weaknesses.

The functions of finance or accounting comprise three decisions: the investment decision, the

financing decision and the dividend decision.

Keylargo Car Accessories Center covers the three financial decisions – the investment,

financing and dividend decision. The finance unit of Keylargo Car Accessories is being

managed by the Treasury Fund Management Unit of the Hexagon Group of Companies. The

57

Trust Fund Management Unit is assigned to decide on how to invest the funds with the other

portfolio companies under Hexagon Group of Companies including the Keylargo Car

Accessories.

The Trust Fund Management Unit is in charge with the financing decision through cash

collections and cash payables. If there are excess funds, it is the Trust Fund Management Unit

that keeps the fund for pending decision for the company.

Also, the dividend decision is also considered. Board meetings are held for the dividend

decisions of the company. The managers choose to decide whether they would declare the

dividends of the company.

Financial Ratio Analysis

Financial ratio analysis is the most widely used method for determining an organization’s

strengths and weaknesses in the investment, financing and dividend areas. Financial ratios are

used to signal the strengths or weaknesses in management, marketing, production, research

and development, and management information system activities.

Liquidity Ratios

Liquidity ratios measure a firm’s ability to pay off its short-term obligations. Having higher value

of liquidity ratios, the company has a larger margin of safety that it can possess to cover the

short-term debts. The ratios under liquidity ratios are the current ratio and the quick ratio.

Current Ratio

The current ratio measures the firm’s ability to meet its short-term obligations with its short-term

assets. With a high current ratio, there is a higher ability of a firm to meet its short-term

obligations. The formula for the current ratio is as follows:

Current AssetsCurrent Liabilities

Table 8. Current Ratio

2012 2013 2014

Current Assets 308,388,356.28 344,322,508.67 333,953,167.58

58

Current Liabilities 107,088,432,20 104,712,073018 40,226,242.73

2.88:1 3.29:1 8.30:1

As for Keylargo Car Accessories, the company’s current ratio has increased for the years 2012

– 2014. This means that the company is still able to turn its products into cash within the three

year span. The year 2014 has the highest current ratio while the lowest current ratio is the year

2012. In the year 2014, Keylargo Car Accessories is much more able to turn cash to meet its

short-term abilities.

Quick Ratio

The quick ratio measures the firm’s ability to meet its short-term obligations without the

inventories. A high quick ratio means that the company has the financial strength while a low

quick ratio means that the company has a financial weakness. The formula for the quick ratio is

as follows:

Current Assets−InventoriesCurrent Liabilities

Table 9. Quick Ratio

2012 2013 2014

Current Assets -

Inventories

308,388,356.28-

104,580432.20

344,322,508.67-

115,926,828.11

333,953,167.58-

116,873,564.60

Current Liabilities 107,088,432,20 104,712,073018 40,226,242.73

1.90 2.18 5.40

The Keylargo Car Accessories’ quick ratio for the year 2012 has been increasing until the year

2014. It means that the company is even more able to meet its short-term obligations with its

most liquid assets for the year 2014. Keylargo Car Accessories’ has the financial strength each

year to meet its short-term obligations without the inventories for the year 2014.

Leverage Ratios

59

Leverage ratios measure the extent to which a firm has been financed by debt. It is used to

compute the financial leverage of the firm to get an idea of the company’s ways to finance and

meet its financial obligations. Leverage ratios are used to measure a company’s operating costs

and how will it affect the operating costs from the company and the industry. The leverage ratios

are debt to total assets and debt to equity ratios.

Debt to Total Assets Ratio

The debt to total assets ratio is the percentage of total funds that are provided by its creditors.

The formula for the debts to total assets ratio is:

Total DebtsTotal Assets

Table 10. Debt to Total Assets Ratio

2012 2013 2014

Total Debts 107,088,432.20 104,712,073.18 40,226,242.73

Total Assets 324,450,091.60 361,093,612.19 354,397,345.46

0.33 0.30 0.11

Keylargo Car Accessories Center’s debt to total assets ratio is higher in the year 2012 and lower

in the year 2014. Having a low debt to total assets ratio shows that, in the year 2014, there is a

low degree of leverage. Therefore, there is low financial risk on the part of Keylargo Car

Accessories Center.

Debt to Equity Ratio

The debt to equity ratio is the percentage of the total funds of a firm provided by creditors versus

the owners. The formula for the debt to equity ratio is:

Total Debts

Total Shareholder' s Equity

Table 11. Debt to Equity Ratio

60

2012 2013 2014

Total Debts 107,088,432.20 104,712,073.1

8

40,226,242.73

Shareholder’s Equity 217,361,659.40 256,381,539.0

1

314,171,102.72

0.49 0.41 0.13

In the year 2014, the company has showed a low debt to equity ratio. The debt to equity ratio is

used to show the proportion of equity and debt that the company is using to finance its assets.

By this, the Keylargo Car Accessories could potentially generate more earnings in the past

years 2012 and 2013 than it would have without its debts in the year 2014.

Activity Ratios

Activity ratios measure how effectively a firm is using its resources. These are the ratios that

can measure a firm’s ability to convert different accounts within its balance sheets into cash or

sales. The activity ratios are used to measure the relative efficiency of a firm based on its use of

its assets, leverage or other such balance sheets items. It is important in determining whether a

company’s management is doing a good enough job of generating revenues, cash and others

from its resources. The activity ratios are inventory turnover, fixed asset turnover and total asset

turnover.

Inventory Turnover

The inventory turnover determines whether the firm holds excessive stocks of inventories and

whether a firm is slowly selling its inventories compared to the industry average. It is a measure

of the number of times the inventory sold or used in a time period as such a year. A low turnover

implies poor sales and excess inventory while a high ratio implies either strong sales or

ineffective buying. The formula for the inventory turnover is:

SalesInventory of Finished Goods

Table 12. Inventory Turnover

61

2012 2013 2014

Sales 368,745,112.0

0

401,794,000.00 481,972,000.00

Inventories 104,580,004.2

8

115,926,418.12 116,873,564.60

3.53 3.47 4.12

Keylargo Car Accessories Center’s inventory turnover decreased from the year 2012 to 2013

and increased from 2013 to 2014. The inventory turnover of the company is high in the year

2014. It shows that the company’s inventory turnover ratio shows a high sales and increasing

inventories until the year 2014.

Fixed Asset Turnover

Fixed asset turnover ratio measures sales productivity and plant and equipment utilization. It is

a financial ratio of net sales to fixed assets. It measures a company’s ability to generate net

sales from fixed-asset investments, specifically property, plant and equipment and the net of

depreciation. A higher fixed-asset turnover ratio shows that the company has been more

effective in using the investment in fixed assets to generate revenues. The formula for the fixed

asset ratio is:

Sales¿ Assets

Table 13. Fixed Asset Turnover

2012 2013 2014

Sales 368,745,112.00 401,794,000.0

0

481,972,000.00

Fixed

Assets

10,599,168.58 11,155,275.47 13,711,051.25

62

34.79 36.02 35.15

The fixed asset turnover of Keylargo Car Accessories Center is increasing from the year 2012

up to year 2014. It shows that the company is more effective in using its assets in the year 2014

and a little has been increased from the year 2013.

Total Asset Turnover

The total asset turnover determines whether a firm is generating a sufficient volume of business

for the size of its asset investment. It is used to measure the ability of the company to use its

assets to efficiently generate sales. The ratio considers all assets, current and fixed. The lower

the total asset turnover ratio, the company is more sluggish when it comes to its sales. The

formula for the total asset turnover is:

SalesTotal Assets

Table 14. Total Asset Turnover

2012 2013 2014

Sales 368,745,112.00 401,794,000.0

0

481,972,000.00

Total

Assets

324,450,091.60 361,093,612.1

9

354,397,345.46

1.14 1.11 1.40

Within the years 2012 and 2013, the total asset turnover ratio decreased. However, in the year

2014, the total asset turnover ratio increased from the year 2013. This means that Keylargo Car

Accessories Center is able to generate more sales with its invested assets.

Profitability Ratios

Profitability ratios measure management’s overall effectiveness as shown by the returns

generated on sales and investment.

63

Gross Profit Margin

Gross profit margin ratio measures the total margin of a company which is available to operating

expenses and yields a profit. It is used to assess a firm’s financial health by revealing the

proportion of money left over from revenues after accounting the cost of goods sold. The

formula for gross profit margin is as follows:

Sales−Cost of Goods SoldSales

Table 15. Gross Profit Margin

2012 2013 2014

Sales 368,745,112.00 401,794,000.0

0

481,972,000.00

Cost of Goods

Sold

206,383,202.00 235,534,000.0

0

286,209,000.00

Sales 368,745,112.00 401,794,000.0

0

481,972,000.00

44% 42% 41%

The gross profit margin of Keylargo Car Accessories has been decreasing since 2012 to 2014.

From 44% in the year 2012, the company decreased to 41%. At the end of each day, Keylargo

Car Accessories sells and earns 41% of their products in the year 2014 unlike in the year 2013

which is 42%.

Operating Profit Margin

The operating profit margin measures the profitability of the firm without concern for taxes and

interest. It shows how much cash is thrown off after most of the expenses are met. It identifies

whether the company has good cost control or that sales are increasing faster than the costs.

The formula for the operating profit margin is the following:

64

Earningsbefore Interests∧TaxesSales

Table 16. Operating Profit Margin

2012 2013 2014

EBITDA 77,786,393.00 81,402,000.00 105,276,411.72

Sales 368,745,112.00 401,794,000.00 481,972,000.00

21% 20% 22%

Keylargo Car Accessories Center’s operating profit margin ratio shows that the company is

profitable from 21% in the year 2012 until it gained 22% in the year 2014. The company has

less money that was thrown off after the expenses are met in the year 2013 with 20% operating

profit margin ratio. Keylargo Car Accessories Center has high operating profit margin in 2014,

with 22% which means that it has good cost control and that its sales are increasing faster than

it occur costs.

Net Profit Margin

The net profit margin ratio shows the after-tax profits per peso of sales. It shows how good a

company is at converting revenue into profits available for shareholders. The formula for the net

profit margin is:

Net IncomeSales

Table 17. Net Profit Margin

2012 2013 2014

Net

Income

39,068,893.00 39,019,879.61 57,789,563.71

Sales 368,745,112.00 401,794,000.00 481,972,000.00

65

11% 10% 12%

For the years 2012 to 2014, Keylargo Car Accessories’ net profit margin in the year 2013 is

much higher than in the year 2014. It means that in the year 2013, Keylargo Car Accessories is

less profitable than in the year 2014 for it has better control over its costs compared to its

competitors. Since it has a low profit margin in the year 2013, there should be some adjustment

in the pricing strategy and there should be impact on margins.

Return on Assets

Return on assets is the after-tax profits per peso of assets. This is also called as the return on

investment. It tells what earnings were generated from the invested capital or assets. Return on

Assets formula is the following:

Net IncomeTotal Assets

Table 18. Return on Assets

2012 2013 2014

Net Income 39,068,893.00 39,019,879.61 57,789,563.71

Total

Assets

324,450,091.60 361,093,612.1

9

354,397,345.46

12% 11% 16%

Keylargo Car Accessories Center shows an increasing return on assets ratio. Even though it

decreased in the year 2013 from 12% to 11%, it gradually increased in the year 2014 which is

16%. With a high return on assets ratio number, Keylargo Car Accessories is earning more

money on less investment.

Return on Equity

Net Income

Shareholder ' s Equity

66

Table 19. Return on Equity

2012 2013 2014

Net Income 39,068,893.00 39,019,879.61 57,789,563.71

Shareholder’s Equity 217,361,659.40 256,381,539.0

1

314,171,102.72

18% 15% 18%

Return on Equity is used to evaluate a company’s stock. The return on equity is much higher in

year 2014 than the year 2013. It shows that Keylargo Car Accessories is profitable. It shows

that the company generates profit more with the money the shareholders have invested in.

D. Production/Operation

The production or operations function of a business consists of all those activities that transform

inputs into goods and services. It deals with inputs, transformations, and outputs that vary

across industries and markets. Production or operation is how raw materials, labor, capital,

machines and facilities are transformed and converted into finished goods and services. Roger

Schroeder suggested the five functions or decision areas: process, capacity, inventory,

workforce, and quality.

Process

All materials and supplies of Keylargo Car Accessories are being imported from various

countries such as Japan, China, Indonesia and Thailand. Alternative products are readily

available in the Philippines in event of shortage. The facilities, equipment, machinery and offices

are in good condition. These facilities are maintained regularly applying the preventive

maintenance program.

The products that are being manufactured by Keylargo Car Accessories Center are covers such

as seat cover and car covers. Also, the company manufactures car matting. In making the

covers and matting, the company choose to make it themselves with the aid of its personnel.

Since covers and matting are being manufactured, these care covers and seat covers are

personally sewn, making it a true product of Keylargo Car Accessories.

67

Capacity

Keylargo Car Accessories is capable of manufacturing its very own products. It is never an

issue of the company. The reason behind its capacity to produce its products is that the

company hired a subcontractor. If ever the machines do not work well, the subcontractor will

delegate the task to Keylargo’s personnel.

Inventory

Inventory-control policies and procedures are effective within the firm. Quality-control

procedures and policies are also effective. The company has huge inventories of its products.

Keylargo Car Accessories is maintaining its stock level within eight months inventory. Money is

not put to waste in terms of the company’s inventory levels. Keylargo Car Accessories choose

to maintain the inventory within eight months to avoid the situation like the pork congestion. The

inventory anticipates the future conflict that Keylargo Car Accessories may get into the way.

Workforce

Keylargo Car Accessories has a regular workforce. The workforce is being hired by the

Hexagon Group of Companies. Some members of the workforce are not given permanent

positions, being temporary members of the workforce. These members are hired through

agencies. Temporary positions that help the company in its production or operations are the

promodisers, advertisers and the like.

Quality

The quality of products is being maintained by Keylargo Car Accessories. Quality is the utmost

and important in the industry. The company has quality control. Keylargo Car Accessories’

quality control is aligned with ISO Procedures. Right now, the firm is aligned with the ISO

Procedures and the company is planning to have it certified by 2015. The facilities, resources,

and markets of Keylargo Car Accessories are strategically located. The company have

technological competencies. Keylargo Car Accessories employed technical persons to inform

technical problems that require such expertise.

E. Research and Development

Research and Development of a company should be examined for specific strengths and

weaknesses. Firms pursuing a product development strategy need to have a strong R&D

68

orientation. It involves research for potential development of products of a company. These are

investigative activities that a business chooses to conduct with the intention of making a

discovery that can either lead to the development of new products or procedures. It is also to

improve of existing products or procedures.

The Research and Development of Keylargo Car Accessories is being outsourced from China. It

is cost-effective on its part because costs are less if they come from China. The MIS and

computer systems are adequate. It is a customized system developed by IT Group, Inc., a

member of Hexagon Group of Companies. Also, another system being used is an enterprise

resource program, Net Suite, a cloud based Enterprise Resource Planning (ERP) which is now

being used by the leading companies in the world.

The communication of R&D and other organizational units in Keylargo Car Accessories

communicate effectively since it comes from the Marketing that looks what the market needs.

Through the R&D, the sources it got from Marketing and other departments, the R&D develops

it.

Aside from the outsourced R&D of Keylargo Car Accessories, the company is relying on

CAMPI, Inc. trends. The latest trends on automotive industry give them the idea to improve or

develop new products of Keylargo Car Accessories. With the ideas as well of the Chief

Executive Officer of Keylargo Car Accessories, there is an advantage of travelling which makes

them see other trends in the industry. The application of the ideas gathered from CAMPI and

the Chief Executive Officer is being tried over the company. There are no costs as to which the

R&D for this matter is incurred. This R&D is continuing because it is dependent on market

needs. What the market needs, Keylargo Car Accessories choose to accessorize it especially

those what is the latest trend of the industry.

F. Management Information System

Management Information System is the organized approach to the study of the informational

needs of an organization’s management at every level. It is where data are being processed,

integrated and stored in a centralized database. It is constantly updated and made available to

all who have the authority to access it, in a form that suits their purpose.

In Keylargo Car Accessories, all managers use the information system to make decisions.

There is no CIO or Director of Information System in Keylargo Car Accessories. However, the

69

ICT Manager reports directly to the CIO of the Hexagon Group of Companies, the management

arm of Keylargo Car Accessories.

The data within the firm is updated regularly. Also, managers from all functional areas contribute

to the information system of Keylargo Car Accessories. There are effective passwords for entry

within the company’s information system. All systems used are security enabled system using

Computer Automated Public Turing test to tell Computers and Humans Apart (CAPTCHA).

Keylargo Car Accessories’ Management Information System is familiar with other firms’

information system. The Hexagon Group of Companies’ CIO Officer who happened to be a

Chief Executive of IBM before and also headed the SGV &Co’s CPA of the IT Department

during its prime; it is capable enough to be familiar with the information system not only of the

rival firms but also other businesses in the country. The information system of the company is

user-friendly. Users of the information system of Keylargo Car Accessories understand the

competitive advantages that its information provides. The company also provides computer

training workshops for the users. Lastly, the firm’s system is being improved regularly as well.

G. Summary and Conclusion

As a whole, the internal factors of Keylargo Car Accessories were analyzed. It showed the key

internal factors through its strengths and weaknesses. An internal factor evaluation matrix was

formulated to show the scores of each company’s factors.

1. Summary of Key Internal Factors

Keylargo Car Accessories is commendable for its management. The organizational structure of

the company is simple and is not that complicated. As for its Marketing, there is a growing

market size which helps the company gain profit from. Also, there is also the existence of

upcoming players in the market that could compete with them. For the years 2012-2014, the

company has a good financial condition. This means that the company has more opportunity to

maintain or improve for the years to come. The production and operations get the company’s

products from various countries. Keylargo Car Accessories has good facilities and equipment to

support the products it sells. The products are also under quality-control procedures. The

research and development department of Keylargo Car Accessories is being outsourced from

China which is very cost-effective. It has information system from Hexagon Group of Companies

and Net Suite. Keylargo Car Accessories’ managers use the information system in decision-

making. It is also being updated and secured with a password.

70

2. Internal Factor Evaluation (IFE) Matrix

The Internal Factor Evaluation (IFE) Matrix is a strategic management tool which audits or

evaluates major strengths and weaknesses of a company. It provides a basis for identifying and

evaluating relationships among these areas. It is also a tool used in strategy formulation.

Table 20. Keylargo Car Accessories’ Internal Factor Evaluation Matrix

Strengths Weight Rating Score

Caters to different shops 0.05 2 0.10

Products mainly made in different

countries

0.12 5 0.60

Financially stable 0.12 5 0.60

Numerous distribution channels 0.07 3 0.21

Cost Reduction 0.08 3 0.24

Has competitive strategic planning 0.10 4 0.40

Weaknesses

Long decision making process 0.07 3 0.21

Rebate and reimburse in Ace Hardware

and other hardware and car accessories

shops

0.05 2 0.10

Changing market segment 0.12 2 0.24

Few best selling products 0.12 4 0.48

High marketing expense 0.10 3 0.30

71

TOTAL 1.00 3.48

Internal Factors Matrix showcased Keylargo Car Accessories’ strengths that can help them

penetrate in the market. Since they are in the field of car accessories, they have products which

come from various countries which can help them gain profit. Since there are also products that

come from China, it helps them to save costs in the company.

Weaknesses as of the moment can be overcome in the future. Keylargo Car Accessories is not

the only company which provides car accessories in the market. In the current market, there are

new players that might get in the way. Also, car accessories are often being advertised in the

market makes it costly. The changing market segment is what the company is facing as its

major weakness for offering products to DIY shops gives these shops a percentage of the profit

from the products they sell. Also, groceries and supermarkets give little of its space to these

products with pay in order for it to be sold.

The key factors are highest for the strengths are the company’s financial stability and its

products mainly made from other countries. These key internal factors for the strengths have

0.12 as weight and 5 as rating resulting to 0.60 as score. The company is that financially stable

enough to provide the products to the market. With its financial stability, the company can get

products from other countries and enter it into the Philippine market. Also, Keylargo Car

Accessories sells products imported from various countries which is the company’s major

strength. These products coming from other countries are with top quality which is one of the

competitive advantages of the company.

On the other hand, the lowest among the key internal factor strengths is that the company

caters to different shops. It has a weight of 0.05, a rating of 2 and a score of 0.10. The company

is open for showing and selling its products with numerous shops. It may be a good factor.

However, selling products with hardware shops might be too costly for these shops have a

share of the company’s profits.

The highest among the company’s key internal factor weaknesses is the company’s few best

selling products. This internal factor has a 0.12 weight, 4 rating and 0.48 score. It shows that the

company may have numerous products but only a few are best selling. By this, only the best

selling products are known in the market. The lowest internal factor weakness is the rebate and

reimbursement of the company in hardware shops. It has a 0.05 weight, 2 rating and 0.10 score.

72

The rebate and reimbursement of the company in hardware shops is low because it does affect

the company’s profits but since the company is financially stable. The company is available to

fund these hardware shops without ease.

V. Strategy Formulation

Strategy formulation is the process of developing a company’s strategies. The strategies being

formulated are assessed through the different strategic management matrices. The matrices

include Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix, Strategic Position and

Action Evaluation (SPACE) Matrix, Boston Consulting Group (BCG) Matrix, Internal-External

(IE) Matrix, Grand Strategy Matrix and the Quantitative Strategic Planning Matrix (QSPM).

A. The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix

The Threats-Opportunities –Weaknesses-Strengths (TOWS) Matrix is an important matching

tool that helps managers to develop four types of strategies: Strengths Opportunities (SO)

Strategies, Weaknesses Opportunities (WO) Strategies, Strengths Threats (ST) Strategies and

Weaknesses Threats (WT) Strategies. It matches the key external and internal factors of the

company.

Table 21. TOWS Matrix of Keylargo Car Accessories

Strengths Weaknesses

73

1. Caters to different shops

2. Products mainly made in

different countries

3. Financially stable

4. Numerous distribution

channels

5. Cost Reduction

6. Has competitive strategic

planning

1. Long decision making

process

2. Rebate and reimburse in

Ace Hardware and other

hardware and car

accessories shops

3. Changing market segment

4. Few best selling products

5. High marketing expense

Opportunities

1. Number of

interest group in

the Philippines

2. Online

marketplaces

3. Rise of

carnapping

Cases

4. Growing GDP

Trend

5. Transport as 7th

place in the

HFCE

6. Number of

Registered

Motor Vehicle in

the Philippines

7. Per Capita

Income

8. Keylargo has

more products in

the market than

competitor

SO Strategies

1. Produce more products

concerning automotive

security (S2, O3)

2. Extend online shopping (S1,

O2)

3. Invest more on products

(S3, O4)

WO Strategies

1. Advertise other products

online (W4, O2)

2. Effectively plan a product

that concerns automotive

security (W1, O3)

3. Extend to new markets (W3,

O1)

Threats ST Strategies WT Strategies

74

1. ASEAN

Intergration

AFTA

2. 12% Value

Added Tax

3. Online

marketplaces

4. Electronic

immobilizers

1. Potential entry of California

Scents to AFTA (S2, T1)

2. Competitively plan to online

marketing (S6, T3)

3. Produce more products

integrated with technology

(S2, T4)

4. Competitively plan for the

entry to AFTA (S6, T1)

1. Free promotional activities

online (W5, T3)

2. Extend more promos online

(W4, T3)

3. Extend to international

market (W3, T1)

Keylargo Car Accessories has potential in extending into new markets when both the

opportunities and threats together with the strengths and weaknesses combine. The company

has competitive strategies that it can to be able to maintain in the industry. Keylargo Car

Accessories can use the SO strategies by exploiting its internal strengths and take advantage of

the external opportunities. The company can also improve its internal weaknesses by taking

advantage of the external opportunities through the WO strategies. Since the company has

competitive strategic planning for five years, it can consider in the plan for online marketing. It

can also plan the potential entry of Keylargo Car Accessories to the ASEAN Free Trade. A firm

can use its strengths to avoid or reduce the impact of external threats. It can extend to new

potential markets. Keylargo can effectively plan a product that concerns the automotive security.

Also, it can advertise products online.

The company can also reduce the impact of its weaknesses and threats through the WT

strategies. Since there is the innovation of technology, Keylargo Car Accessories can extend

into the online world. It can extend to promoting its products or extending promos online.

B. The Strategic Position and Action Evaluation (SPACE) Matrix

The Strategic Position and Action Evaluation (SPACE) matrix is another important matching

tool. Its four quadrant framework indicates whether aggressive, conservative, defensive or

competitive strategies are most appropriate for a given organization.

Table 22. SPACE Scores of Keylargo Car Accessories

FINANCIAL POSITION RATING

1. Liquidity

2. Leverage

3. Inventory

6.0

2.0

4.0

75

4. Working Capital

5. Return on Investment

5.0

4.0

INDUSTRY POSITION

1. Growth potential

2. Profitability

3. Financial Stability

4. Resource Utilization

5. Capacity Utilization

6.0

5.0

7.0

5.0

4.0

STABILITY POSITION

1. Technological Changes

2. Demand Variability

3. Price Range

4. Competitive Pressure

5. Risk involving business

-3.0

-4.0

-2.0

-3.0

-3.0

COMPETITIVE POSITION

1. Market Share

2. Product Quality

3. Brand Reputation

4. Variety of Products

5. Online Presence

-3.0

-2.0

-2.0

-1.0

-3.0

Conclusion

SP Average is -15 / 5 = -3.00 IP Average is 27 / 5= 5.40

CP Average is -11 / 5 = -2.20 FP Average is 21 / 5 = 4.20

Directional Vector Coordinates: x-axis: 4.20 +

(-2.20) = 2.00

y-axis: 4.20 + (-3.00) = 1.20

CONCLUSION: Aggressive

Figure 16. SPACE Matrix of Keylargo Car Accessories

76

Keylargo Car Accessories is under the aggressive quadrant. A firm with an aggressive quadrant

is in an excellent position to use its internal strengths to take advantage of the external

opportunities, to overcome the internal weaknesses and to avoid the external threats. The

company is feasible to face market penetration and development, product development,

forward, backward or horizontal integration or diversification. Keylargo Car Accessories is a

financially strong firm that has achieved its advantages in a growing industry. The dominating

factor in the industry of Keylargo Car Accessories is its financial strength, making it as an

aggressive profile company.

C. The Boston Consulting Group (BCG) Matrix

The Boston Consulting Group Matrix is a valuable tool for helping companies to understand its

potential. It displays the various business units on a graph of the market growth rate vs. market

share relative to competitors. It aims to identify high-growth prospects by categorizing the

company’s products according to growth rate and market share.

Figure 17. BCG Matrix of Keylargo Car Accessories

77

Market Share: 30%

Market Growth: 20%

Cash Cow

The Keylargo Car Accessories is a cash cow. Keylargo Car Accessories that it makes a lot of its

products. It has high market share but low growth prospects. Most products, especially

California Scents, do not need enough effort to be produced in the market. It only requires little

investment and generates cash that can be used to invest in other businesses. By this, it is

noted that Keylargo Car Accessories can provide required to return, pay the costs and service

debts in relation to the business.

D. The Internal-External (IE) Matrix

The Internal-External (IE) Matrix is a matrix that is based upon the internal and external factors

of the organization. It is an important strategic tool which comes under the portfolio

management considered much similar to BCG Matrix. It is used to plot the organization divisions

in nine cell diagram, each cell have some meaning associated with suggest strategies. The

Internal-External Matrix is used to analyze the current position of the divisions and suggest the

strategies for the future for better results.

Table 23. IE Matrix Scores

78

EFE Total Weighted Score 2.25

IFE Total Weighted Score 3.48

Quadrant I: Grow & Build

Figure 18. Internal – External (IE) Matrix of Keylargo Car Accessories

EFE TOTAL

WEIGHTED SCORESIFE TOTAL WEIGHTED SCORES

4.0 3.0 2.0 1.0

3.0I

Keylargo Car Accessories

II III

2.0 IV V VI

1.0 VII VIII IX

Keylargo Car Accessories is under Quadrant I which is the Grow & Build quadrant. Companies

within this quadrant are prescribed to intensive or integrative strategies. The Intensive strategies

such as market penetration, market development and product development are appropriate for

a Grow & Build company. Keylargo Car Accessories can also invest into integrative strategies

like the forward, backward or horizontal integration.

E. The Grand Strategy Matrix

The Grand Strategy Matrix is a very useful instrument for creating different and alternative

strategies for an organization. The Grand Strategy Matrix has four quadrants. Each quadrant

contains different and the entire firms along with their respective divisions must fall in one of the

quadrant. The matrix has two dimensions which are the competitive position and market growth.

The GS matrix has four strategy quadrants namely:

Quadrant I – is the best strategic position. It depicts rapid market growth and strong competitive

position of a certain company.

Quadrant II – has a growing market however needs to re-evaluate its competitive strategies;

Quadrant III – market growth moves slowly and has a weak competitive position. Diversification

and defensive strategies should be pursued and prioritized;

Quadrant IV – has strong competitive position but has a slow growth in industry. Diversification

and joint ventures are the best way to improve a firm’s growth.

Figure 19. Grand Strategy Matrix of Keylargo Car Acessories

79

Char

The figure shown presents the grand strategy matrix of Keylargo Car Accessories. The firm is

said to be under Quadrant I meaning the company is an excellent strategic position. Strategies

focusing on markets and products under Quadrant I are suitable. Keylargo Car Accessories

should utilize its strengths well and improve on its weaknesses in order to seize the

opportunities, achieve the continuing market growth and sustain its strong competitive position.

Quadrant I strategies include market development, market penetration, product penetration,

forward integration, backward integration, horizontal integration and related diversification.

F. The Quantitative Strategic Planning (QSPM) Matrix

The Quantitative Strategic Planning Matrix is a strategic tool which is used to evaluate

alternative set of strategies. It incorporates the earlier stage details in an organize way to

calculate the score of multiple strategies in order to find the best match strategy for the

organization. This QSPM method falls within so-called stage 3 of the strategy formulation

analytical framework.

The top 3 strategies is based on the matrices summary results being compared against the

stated opportunities and threats, and strengths and weaknesses from the external and the

internal analysis, respectively. WT means weight which is copied from the EFE and IFE

Matrices. The AS means attractiveness scores. The attractiveness scores range from 1=not

attractive, 2 = somewhat attractive, 3 = reasonably attractive and 4 = highly attractive. N/A or

not applicable can be applied as long as it is applicable to all three strategies being analyzed.

Lastly, TAS means total attractiveness scores. This is derived through multiplying the

attractiveness scores and the weight.

80

Rapid Market Growth

Slow Market Growth

Weak Competitive

Position

Quadrant IIQuadrant I

Keylargo Car Accessories

Quadrant IV Quadrant IV

Strong Competitive

Position

Figure 20. The Quantitative Strategic Planning (QSPM) Matrix of Keylargo Car Accessories

KEY FACTORS WT

INTENSIVE STRATEGIES

Market

Penetration

Market

Development

Product

Development

Opportunities AS TAS AS TAS AS TAS

1. Number of interest

group in the

Philippines

0.06 3 0.18 3 0.18 2 0.12

2. Online

marketplaces0.08 1 0.08 1 0.08 1 0.08

3. Rise of carnapping

Cases0.06 2 0.12 2 0.12 2 0.12

4. Growing GDP

Trend0.12 3 0.36 2 0.24 1 0.12

5. Transport as 7th

place in the HFCE0.09 3 0.27 2 0.27 2 0.27

6. Number of

Registered Motor

Vehicle in the

Philippines

0.06 3 0.18 3 0.18 4 0.18

7. Per Capita Income 0.10 2 0.20 2 0.20 2 0.20

8. Keylargo has more

products in the

market than

competitor

0.08 3 0.24 3 0.24 3 0.24

Threats

1. ASEAN

Intergration AFTA0.10 2 0.20 3 0.30 2 0.20

2. 12% Value Added

Tax0.11 1 0.11 1 0.11 1 0.11

3. Online

marketplaces0.08 1 0.08 3 0.24 3 0.24

81

4. Electronic

immobilizers0.06 3 0.18 2 0.12 2 0.12

TOTAL 1.00 2.20 2.28 2.18

Strengths

1. Caters to different

shops0.05 3 0.15 3 0.15 2 0.10

2. Products mainly

made in different

countries

0.12 3 0.36 3 0.36 3 0.36

3. Financially stable 0.12 3 0.36 2 0.36 3 0.24

4. Numerous

distribution

channels

0.07 2 0.14 1 0.07 2 0.14

5. Cost Reduction 0.08 2 0.16 1 0.16 1 0.08

6. Has competitive

strategic planning0.10 2 0.20 1 0.10 1 0.10

Weaknesses

1. Long decision

making process0.07 2 0.14 2 0.14 3 0.21

2. Rebate and

reimburse in Ace

Hardware and

other hardware

and car

accessories shops

0.05 1 0.05 3 0.15 2 0.10

3. Changing market

segment0.12 2 0.24 3 0.36 3 0.36

4. Few best selling

products0.12 3 0.36 2 0.24 2 0.24

5. High marketing

expense0.10 2 0.20 3 0.30 2 0.20

TOTAL 1.00 2.36 2.39 2.13

82

The QSP Matrix of Keylargo Car Accessories is shown above. The most attractive strategy for

Keylargo Car Accessories external factors is Market Development. It has a 2.28 total

attractiveness score. This is because of different marketing efforts taken into by the company.

However, product development was the least intensive strategy. It has a 2.18 total

attractiveness score. The reason behind this is because the company is known for its quality

products it can provide. Therefore, there is less developments that the company should employ.

The highest among the internal factors of Keylargo Car Accessories is Market Development.

The total attractiveness score of the Market Development is 2.39. On the other hand, the lowest

among the internal factors of Keylargo Car Accessories is Product Development. It has a 2.13

total attractiveness score. It means that internally, the company should be able to redress the

issues with market development. It should come from the internal management first before the

company can exploit the external management.

VI. Strategic Objective and the Recommended Strategies

After carefully analyzing and studying the company strengths, weaknesses, opportunities and

threats, the matrices were being made. Through the matrices, the company arrived at

suggested strategies. The strategies were being formulated according to its strategic and

financial objectives, business and organizational recommended strategies and financial

projections of Keylargo Car Accessories.

83

A. Strategic and Financial Objectives

Keylargo Car Accessories is a growing and developing car accessories in the automotive

market. It has the goal to provide its customers products with top quality to the automotive

industry. The following objectives are set to meet the goals of the company:

1. Keylargo Car Accessories should increase its sales by 5% every year using the

aggressive strategies due to the industry’s growth. The company should increase its

market share by 2-3% every year in order for it to be more profitable.

2. Keylargo Car Accessories must develop its current products and produce more

products. It must develop products concerning automotive security. One’s security is

more taken into consideration of a consumer. By this, more customers will consider

buying the company’s automotive security products and it will reflect in its sales and

profit.

3. The company should prepare itself for the ASEAN Integration AFTA. By this, the

company has a potential entry in the free trade. It will make Keylargo Car Accessories

known in the international market.

4. Since the world is coping with the technological advancement, Keylargo Car Accessories

should also step up in the electronic world. It should improve its company website. Also,

it should consider online advertisement and promotion through social media for efficient

and cost-free marketing expenses.

5. Keylargo Car Accessories should continue selling its products to different distribution

channels. The company, with the help of these distribution channels, will be able to

achieve its financial strategies.

After studying the matrices presented in the paper preceding the recommendations, there are

three main strategies that would help the company to grow and develop from its current

standing. The following are the recommended strategies of Keylargo Car Accessories:

1. Market Development

Keylargo should expand their distribution channels through offering exclusive partnership with

local repair shops and interest groups to supply car care products, parts, accessories. Doing

this strategy would secure that the products of the business will have a distribution channel and

no inventory would be stalled which can equate to a higher market share, continued patronage

and a reputation as a reliable supplier of good quality car care products, parts and accessories.

84

2. Market Penetration

The company should advertise and promote its products on-line. It should be able to enter more

of its products in the growing market. The company should improve on their online presence

and be more active in social media because of the growing number of people who are using the

internet as a means to connect with other people and as an online marketplace. The company

should make a Facebook, Instagram and Twitter page wherein they can upload pictures and

information about their products to use it as a tool to market their products through

advertisements and promotions. Utilizing social media to increase their online presence is a

good strategy to further increase their market share because it reaches a wider audience.

Additionally, utilization of social media is cheaper compared to printing out flyers and hiring

personnel to distribute the flyers.

3. Product Development

Keylargo should repackage some of their products to attract to the newer and younger

generation of car owners. Some products lose its touch because they are unattractive and

unappealing based on the preference of the consumer. Products fade into obscurity because

they are unable to cope with the changing times, the behavior and preference of the consumer.

B. Recommended Business and Organizational Strategies

Keylargo Car Accessories is one of the companies of Hexagon Group of Companies. It works

under a parent company. It has its own departments. However, 2-3 departments are being

headed by a Chief Officer and 5 departments are being headed by another Chief Officer.

It is highly recommended that the company employ the services of another Chief Officer or to

promote another employee to such position. It will aid the company with the other departments

that both of the current Chief Officers are holding. It must continue to follow its Code of

Discipline to regulate and observe its employees. It must efficiently shell out money to help the

research and development that is competitive in the industry. With these strategies, the people

and system of Keylargo Car Accessories will create a better company which would follow its

mission statement and employ good corporate values among its customers and employees.

C. Financial Projections and Overall Evaluation of the Strategies Proposed

In the long run, it is recommended that the financial standing of Keylargo Car Accessories be

increased. The sales of the company in the years 2012-2014 have been projected in three years

until the year 2017.

Table 24. Projected Sales

85

YEAR PROJECTED SALES

2012 368,745,112.00

2013 401,794,000.00

2014 481,972,000.00

2015 506,070,600.00

2016 531,374,130.00

2017 557,972,837.00

The financial was projected that Keylargo Car Accessories should increase its sales for about

5% each year. Since the automotive industry is growing and developing each year, Keylargo

Car Accessories should be able to improve its sales by increasing and maximizing

opportunities. With increasing sales, the company will be able to fund its expenses and open

improvements needed for the company.

VII. Action Plans and Departmental Programs

Measured in months

Tasks 1 2 3 4 5 6 7 8 9 10 11 12

Reconstruct marketing plan

Improvement of company website

Employ or promote a Chief Officer

Further implementation of Code of

Discipline

86

Invest in R&D of the company

Develop products

Online advertisements through social

networking sites

Expansion of distribution channels

Expansion in international market

Increase sales and market share

Plan for ASEAN Integration AFTA

To further show the plan of action and time table of the recommended strategy, a Gantt chart is

used to show the duration of each task under each recommended strategy. A Gantt chart is a

project management tool showing activities, tasks or events displayed against time. Each

activity is represented by a bar, the position and the length of the bar reflects the start date,

duration and end date of the activity. This tool allows you to show the various activities, when

each activity begins and ends, how long each activity is scheduled to last, where activities

overlap with other activities and by how much and the start and end date of the whole project.

Figure 21. Action Plan and Departmental Programs Gantt Chart

The tasks enumerated are measured in months. The first task, to reconstruct the marketing

plan, is measured in a month. To spearhead the corresponding tasks, the marketing plan

reconstruction is important. The improvement of the company website should be done in one

month. By this, the company will enable to improve the layout of the website and protect the

website with anti-virus so that most people will be aware of the company’s products and nature.

Many will access the website which will enable the company to attract customers in the industry.

Employing or promoting an employee to become a Chief Officer is done after the website has

been improved. It lasts in two months to further open the position not only in its advertisements

in newspapers but also in its newly improved website. Upon employment of a Chief Officer into

position, the Code of Discipline must be given strict implementation. It lasts up to three months.

The company should also invest in its R&D for four months. By this, the company will be able to

develop more products running in three months. These products will be further advertised and

promoted in the website. It shall also be advertised and promoted in social networking sites for

two months. Keylargo should expand its distribution channels in three months to see the

developed products in the market. The possible entry in the international market should start

after expanding in local distribution channels. It runs for four months. Simultaneously, it should

87

also increase sales and market share after having products developed. Lastly, it should plan for

the ASEAN Integration AFTA and its possible entry in the ASEAN market. The planning starts

together with the investing into the R&D of the company and lasts up to six months.

The recommended strategies must be given a designated department or person responsible for

each task. The delegation of tasks to the department responsible is as follows.

Table 25. Tasks and Department Responsible

TASKS DEPARTMENT RESPONSIBLE

1. Reconstruct marketing plan Marketing

2. Improvement of company website Information Communications and Technology

3. Employ or promote a Chief Officer Human Resource

4. Further implementation of Code of

Discipline

Human Resource

5. Invest in R&D of the company Operations

6. Develop products Operations

7. Online advertisements through social

networking sites

Information Communications and Technology

8. Expansion of distribution channels Marketing

9. Expansion in international market Marketing

10. Increase sales and market share Marketing

11. Plan for ASEAN Integration AFTA Top Management – Chief Executive Officer,

Chief Operating Officer, and Chief Financial

Officer

Keylargo Car Accessories is divided into departments. Four departments have a specific task to

accomplish in the long run. The Marketing Department should focus on tasks such as the

reconstruction of marketing plan, expansion of distribution channels and in the international

market and the objective to increase sales and current market share. Any task connected with

the technology, the Information Communications and Technology is responsible. It includes the

improvement of the website and the advertisement of Keylargo Car Accessories’ products. The

Human Resource Department is in charge with the employment of another Chief Officer and

observe the strict implementation of the Code of Discipline. Since the R&D is outsourced, the

Operations Department is the one responsible for the investment of an R&D. The development

88

of products is also put into consideration by the Operations Department. Lastly, the strategic

planning of the top managers, Chief Executive Officer, Chief Operating Officer and Chief

Financial Officer responsible for the plan of Keylargo Car Accessories for ASEAN Integration

AFTA.

VIII. Strategy Evaluation, Monitoring and Control

The Balanced Scorecard is a performance measurement system tool used to consider the

financial, customer, businesses and learning measures. The balanced scorecard translates the

organization’s strategy into four perspectives with a balance between the internal and external

measures, objective and subjective measures and the performance results and drivers of future

results.

The Balanced Scorecard includes the four perspectives:

Financial perspective is the measurement of the financial strategies being employed.

Customer perspective includes measures concerning the customers of the firm.

89

Business Process perspective includes measures such as the cost and quality, the production

and company operations.

Learning and growth perspective pertains to the measures concerning the employee

performance, satisfaction and retention.

To further give an evaluation of Keylargo Car Accessories’ recommended strategies, a balanced

scorecard is formulated.

Figure 22. Balanced Scorecard Diagram of Keylargo Car Accessories

The strategy evaluation of Keylargo Car Accessories revolves around the four perspectives,

Financial, Business Processes, Customer and Learning and Growth. The Financial Perspective

arrived at is the profitable growth. Keylargo Car Accessories’ Business Processes perspective is

towards the company’s product development. The Customer perspective of the company is the

increase in target market. Lastly, the Learning & Growth perspective of Keylargo Car

Accessories is to employ improved employee performance.

Each perspective of the Balanced Scorecard is measured through the objectives, measures,

targets and initiatives. The major objectives comprise those to be achieved by the company.

The measures are the parameters that will be used to measure the progress of each objective.

90

Learning & Growth

“Improved Employee Performance”

Business Processes

“Product Development”

Customer

“Increase Target Market”

STRATEGY

Financial

“Profitable Growth”

The targets should be specific target values for the measures. The initiatives are the action

programs that are needed to meet the objectives.

Table 26. Balanced Scorecard Objectives Measures Targets Initiatives of Keylargo Car

Accessories

Objectives Measures Targets Initiatives

Financial To show a

profitable growth

As shown in the

company’s sales

and market

share

Aimed to have

5% sales and 2-

3% market share

increase

Company should

first reconstruct

marketing plan

and achieve

financial

objectives.

Customer To reach more

customers who

use automobile

parts and

accessories

To open into

online market

To advertise in

the social

networking sites

Through the

feedback form

and customer

reviews

It also may be

measured by

online blogs and

websites.

Aimed to

increase 10% of

the target market

Company should

engage itself in

expansion of

distribution

channels,

international

market and

online market.

Business

Processes

To improve the

quality of the

products it chose

to offer

To repackage

the products

Through the

recognized

standard quality

procedure of the

company’s

operations

Target to

improve quality

of the products

to 3-5% of its

current quality

Keylargo Car

Accessories

must employ

research and

development

plans to improve

the quality of its

products.

Learning and

Growth

To maintain its

employees by

continuously

The objective

might be

measured by

It is targeted to

see 90%

employee

The firm should

give competent

trainings and

91

giving

performance

incentives.

To give further

employee

training and

related

experience to

improve

employee

performance

company’s

bonus and

incentives.

Also, the

objective may be

measured

through the

company’s given

training and

seminars for the

employees.

performance

from its current

employee

standing.

seminars for the

employees. It

should increase

bonuses and

incentives to

improve

employee

performance.

The objectives, measures, targets and initiatives of Keylargo Car Accessories are based on its

financial, business processes, customer and learning & growth perspectives.

The financial perspective is aimed to have a profitable growth. It shows that the company should

increase in 5% of its sales and 2-3% of its market share. It is the company’s task to reconstruct

the marketing plan to employ the financial perspective objective.

The customer perspective is aimed to have an increased target market. The target market

increased should be measured through customer feedback and reviews. A prospective 10%

increase in the target market shall be employed if the company would expand its markets.

Business processes perspective of Keylargo Car Accessories includes the improvement of the

products’ quality and repackaging of the company’s products. It will be recognized through the

company’s standard quality product operating systems. About 3-5% improvement of the current

quality should be developed from the products. This perspective should be initiated through

research and development in the products it chooses to offer.

The Learning & Growth perspective is improved employee performance. It should be initiated

through the company’s giving of competitive seminars, trainings and giving of satisfactory

employee benefits and incentives. By this, a 100% employee performance is expected.

92

Final Paper

Documents

Transcript of Final Paper