SWOT Analysis, Competitive and Cooperative Strategies

Strengths
STRENGTHS - S
The following are the strengths of Ayala Land, Inc.: S1 Financial strength from
stability of parent company
1. Ayala Land has its financial strength from its resources and
the stability of its parent company. S2 High quality projects and
service
2. Ayala land has its business stability, quality projects and
service strength. S3 Countrys largest
conglomerate for the time
3. Ayala is the country's largest conglomerate for the time.
S4 Organizational strength
4. Ayala land has its organizational strength because they just in hiring the best of the best
hire the best of the best.
S4 Largest project outputs in
5. They have the largest malls, residential area, prestigious the country
hotels and resorts here in the country.
S6 Faster lead time in
6. They also have faster lead time in construction of projects construction of projects
than competitors.
WEAKNESSES W
Weaknesses W1 High selling price of
The following are the weaknesses of Ayala Land, Inc.: shares, low buying for
investors
1. The buying opportunities in the share price of the Ayala W2 Fewer distribution
Corporation because of its high selling price. channels abroad (weak export)
2. The weak export of their products. W3 Slower inventory
turnover of 1.26 vs. industry
3. Slower inventory turnover than industry average.
of 1.86

Opportunities OPPORTUNITIES - O
O1 More idle land, more
The following are the opportunities of Ayala Land, Inc.: projects
1. There are more idle land here in our country more O2 Higher population
opportunities for the corporation. increases demand for houses
O3 Continued growth of the
2. The population gets higher, there is need for more houses. BPO sector increases sales
3. The continued growth in the BPO sector increases target O4 Potential sales due to
market share. continued promotion of the
Philippines as a retirement
4. Promotion of tourism sector regarding the Philippines as a haven and relaxing of
retirement haven and relaxing of constitutional limitations on constitutional limitations on
land ownership. land ownership
O5 2% growth rate of high
5. A 2% growth rate of high rise residential segment. rise residential segment
Threats THREATS - T
T1 Interest rates are
The following are the threats of Ayala Land, Inc.: projected to rise
1. Interest rates are projected to rise. T2 Heightened risk of
flooding due to climate change
2. Heightened risk of flooding due to climate change
T3 SM Prime is Ayalas
3. The SM Prime is Ayala's biggest competitor, another famous
biggest competitor.
company with many projects as well.

Competitive Strategies
Cost Leadership Strategies
This can be used for allow cost producer within a mass, the cost leadership is often driven by
company efficiency, size, scale, scope and cumulative experiences. The Cost leadership Strategy
aims to exploit scale of production, well defined scope and other economies, the example is a good
purchasing approach, producing highly standardized products using high technology. The cost
leadership is different from price leadership. This is usually gained by companies that are able to
achieve economies of scale in production and marketing.
Differentiation Strategies

Approach under which a firm aims to develop and market unique products for different
customer segments. Usually employed where a firm has clear competitive advantages, and can
sustain an expensive advertising campaign.
Differentiation is used when offering something unique that is perceived by the consumer to
be better or different to other products. A differentiation strategy can provide
a competitive advantage by differentiating your business from your competitors and at the same time
offering what your customers need. A differentiation strategy will pursue a unique position among
your competitors. The aim of the strategy is for the business to become unique in the minds of its
customers. For example, you can offer a specific design that your competitors cannot offer and target
a specific group of consumers. The aim of differentiation strategy is to create brand loyalty, which in
turn can create price in elasticity on the part of buyers. As a result, customers will be less sensitive on
price decisions, and more sensitive on the actual product. In turn, it can erect competitive barriers to
entry, higher margins and possibly mitigate the power of buyers who will eventually lack acceptable
substitute products. When altering factors like design, technologies and more to differentiate
yourself, it is important to focus on the customers needs in order to design those factors
appropriately. Differentiating the product or service of the firm means creating something that is
perceived industry wide as being unique. Differentiation may take the form of design or brand image,
technology, product feature, customer service, dealer network, etc. Ideally, the firm differentiates
itself among several dimensions that are important to the customer. Differentiation does not mean
that the firm will ignore costs, although costs are not the primary strategic target. Achieving
differentiation may preclude gaining a high market share since it often requires a perception of
exclusivity. Achieving differentiation implies a trade-off with a cost position if the activities required
in creating it are inherently costly, such as extensive research.
Focus Strategies

A marketing strategy in which a company concentrates its resources on entering or

expanding in a narrow market or industry segment. A focus strategy is usually employed where the
company knows its segment and has products to competitively satisfy its needs. The focus strategy
targets a particular buyer group, segment of the product line, or geographic market. Whereas low cost
and differentiation are aimed at achieving their objective industry wide, focus is built around serving
a particular target or niche extremely well. The strategy rests on the premise that the firm can serve
its narrow strategic target more effectively or efficiently than more broadly based competitors. The
firm may achieve differentiation from better meeting the needs of the particular target or lower costs
in serving the target. If the firm is good or lucky, it may manage to do both. Even though the focus
strategy does not achieve low cost or differentiation from the perspective of the market as a whole, it
does achieve one or both in its narrow market target. The focus strategy always implies some
limitations on the overall market share achievable and involves a trade-off between profitability and
sales volume, but not necessarily a trade-off with overall cost position. Often the focus strategy of
filling a limited need or offering a product that only a few buyers will purchase allows for products to
be priced at a premium since the company is satisfying the desires of a small cluster of buyers. Most
winning midsize growth companies are leaders in market niches, often in markets they have created
through innovation. Such niche strategies are often born of necessity, since these firms lack the
resources to fight broad, head-to head battles with larger, entrenched competitors. They succeed by
seeking out niches that are too small to interest the giants. Alternatively, some firms pick niches that
can be captured and protected by sheer perseverance and by serving customers extremely well.
Cooperative Strategies
A strategy in which firms work together to achieve a shared objective. The Cooperative
Strategy involves Strategic alliances represents a shift from achieving strategic competitiveness and
above-average returns through competitive strategy (establishing strong positions against external
challenges, minimizing weaknesses, and maximizing core competencies) to achieving them through
cooperative strategies. There are a number of justifications or rationales for strategic alliances. These
reasons vary by market situation--slow-cycle, standard-cycle or fast-cycle. Reasons for entering
alliances in slow-cycle markets gaining access to a market that is not open to other entry strategies
establishing a franchise in a new market

Maintaining Market Stability

Reasons for entering alliances in standard-cycle markets:
1. Gaining market power
2. Gaining access to complementary resources
3. Overcoming trade barriers
4. Meeting competitive challenges from other competitors
5. Pooling resources for very large capital projects
6. Learning new business techniques
7. Reasons for entering alliances in fast-cycle markets
8. Speeding up the development of goods/services
9. Speeding up new market entry
10. Maintaining market leadership
11. Forming an industry technology standard
12. Sharing risky R&D expenses
13. Overcoming uncertainty
A strategic alliance is the primary cooperative strategy and represents a partnership between
companies whereby companies' resources, capabilities, and core competencies are combined to
pursue mutual interests to develop, manufacture, or distribute goods or services. They represent
explicit forms of relationships between companies.
Types of Alliances
There are three basic types of explicit strategic alliances:
A joint venture is an alliance where a new, independent company is formed from two or more
partners, with each partner company contributing assets.
An equity strategic alliance is an alliance where partner companies own unequal shares of
equity in the venture and are considered to be superior at passing on know-how between companies
because they are closer to hierarchical control than non-equity alliances. For example, Ford Motor
Company and Mazda Motor Corporation formed a long-standing equity strategic alliance.
A non-equity strategic alliance is an alliance where a contract is given to supply, produce, or
distribute a company's products without any equity sharing. Other types of non-equity strategic
alliances include licensing, distribution agreements, supply contracts, and marketing agreements
(such as code-sharing agreements among airlines).
For example, OPEC seeks to manage the price and output of oil companies in member
countries. These strategic alliances represent explicit alliances. However, there also are implicit
cooperative alliances such as tacit collusion, which exists when several companies in an industry
tacitly cooperate to reduce industry output below the potential competitive level to maintain higher-
than-competitive-level prices.
Another form of tacit collusion is mutual forbearance, which is a recognition of
interdependence. These forms of cooperative alliances are illegal unless regulated by the
government, which is currently the case in the power industry. The number of companies with
multiple alliances continues to increase. Companies use alliance networks as a foundation for a
network cooperative strategy for several reasons: to share complementary resources, capabilities, and
competencies to exploit emerging technologies to share the risk and cost of large capital investments
to keep pace with or establish industry standards.
This last reason is particularly important in the computing and telecommunications
industries, in which the standard-setter can potentially dominate (consider Windows and Intel in the
personal computer industry). Alliance networks are also important in industries in which rapid
change and company reinvention are necessary for long-term survival. Networked companies can
gain exposure to an array of developing technologies and provide the company with strategic,
technical, and operational options for experimentation. There are several issues that should be
addressed when forming an alliance network: determining whether the alliance should be horizontal
or vertical deciding the number of companies to be networked so that effectiveness and efficiency are
maximized determining how to minimize member company conflicts specifying the strategic intent
of the alliance so that all members benefit determining how the network will be managed.
Failure to address these issues reduces the potential for alliance success. Because companies
that are cooperating also may be competing with each other, significant risks accompany cooperative
strategies. These risks include: poor contract development that may result in one (or more) of the
partners acting opportunistically and taking advantage of other venture partners misrepresentation of
partner companies' competencies by misstating or exaggerating an intangible resource such as
knowledge of local market conditions failure of partner companies to make complementary resources
available to the venture being held hostage through specific investments (whose value is associated
only with the venture or partner), especially if laws in a foreign country do not protect investments in
the case of nationalization (or re-nationalization with a change in governments) misunderstanding a
partner's strategic intent.
In addition to the risk that a partner may cheat or act opportunistically, there also are
competitive risks to cooperative strategies, such as: the capability to form and manage a joint venture
effectively, the capability to collaborate, the ability to identify trustworthy venture partners. Trust
between partners increases the likelihood of alliance success and may be the most efficient
mechanism for governing economic transactions. Trust creates confidence between partners that
actions taken will serve both parties' interests. Trust increases the probability that a company will
understand its partner's actual strategic intent as it participates in an alliance, which leads to more
predictable partner actions. If both partners are trustworthy, companies are able to allocate fewer
resources to monitor and control the alliance. Trust is valuable, rare, imperfectly imitable, and often
non substitutable, thus yielding competitive advantage when forming and using cooperative
strategies. Partner trustworthiness reduces the company's concern about the inability to control or
influence each operational aspect of an alliance through a contractual agreement.
The two basic approaches to managing cooperative strategies that come out of this discussion
are: cost-minimization and value-creation maximization.
1) The cost minimization approach requires companies to develop capabilities to create
effective partner contracts and contract monitoring capabilities. However, these contracts have
drawbacks. Writing protective contracts and developing effective monitoring systems are costly.
Protective contracts and monitoring, by shielding parts of each organization from the other, may limit
opportunism and preclude the organizations from taking advantage of unforeseen opportunities.
2) The value-maximization approach requires partners with complementary assets and
emphasizes trusting relationships. As a strategic asset, trust can enable partner companies to reduce
the cost of contracting and monitoring because the probability of opportunistic behavior is reduced if
partners are able to trust each other. Trust also may enable the venture to take advantage of
unforeseen opportunities. Thus, because trust will enable partner companies to reduce venture
related contracting and monitoring costs-and add to the venture's flexibility, a venture between
partners that can be trusted is more likely to be able to both reduce costs and add or create value.
Financial Statement and Reports

Annual Report the most important report that corporations issue to stockholders for effective
decision making.
Four basic financial statements
Balance Sheet - shows what assets the company owns, and who has claims on those assets as of a
given date.

Current Assets consists of assets that should be converted into cash within one year.
o Cash and Cash Equivalents
o Inventories

Long-Term (Fixed) Assets assets that are expected to use for more than one year.
o Plant, Property and Equipment
o Intellectual Property (Patents and Copyrights)

Current Liabilities consists of claims that must be paid off within one year.
o Accounts payable
o Accrual (Wages, taxes)
o Notes payable

Long-term Liabilities (Debts) bonds that will mature in more than a year

Stockholders Equity It represents the amount that stockholders paid the company when
shares were purchased and the amount of earnings the company has retained since its
origination
o Paid-in capital
o Retained Earnings
Income Statement shows the firms sales and costs during some past period.
Statement of Cash Flows shows how much cash the firm began the year with, how much cash it
ended up with, and what it did to increase or decrease its cash.
Statement of Stockholders Equity shows the amount of equity the stockholders had at the start of
the year, the items that increased or decreased equity, and the equity at the end of the year.