VI.

OBJECTIVES, RECOMMENDATIONS AND ACTION PLANS

6.1 Strategic Issues

 Decrease in the market share due to the entrance of new industry players that are also

engaged in non- fuel business.

 Dealing with the new Tax Reform and Acceleration and Inclusion Law (TRAIN Law) and

new policies of the government regarding modernization of vehicles such as electronic

busses and tricycles (e-bus and e-trike).

 Gradual response on the piled up environmental trends and concerns .

6.1.1 Strategic Objectives

Pilipinas Shell Petroleum Corporation should focus on adopting Market Penetration, Market

Development and Unrelated Diversification strategy. Knowing that there are new players that

entered the industry, this results to a decline in the company’s market share and the company is

still looking for ways on how to engage into renewable energy. Pilipinas Shell Petroleum

Corporation should take a closer look on the present trends in the other market specifically the

rapidly emerging e-commerce that uses the emerging local courier as a medium of its delivery

services. Entering into partnerships for long term use of petroleum for delivery services of local

couriers will help the company stay at float and widen its horizons in terms of generating profits.

In short, as more and more people are engaging and patronizing online shopping and using other

related e-commerce business, the likely of delivery services will rapidly increase leading for an

increasing demand on petroleum. Thus, if Pilipinas Shell will be the provider of the petroleum
used by these couriers it will be an advantage for the company in maintaining its competitive

position or elevating its market share.

Moreover, the company should also utilized the use of its current products and adopting or

engaging into producing another product which may serve the demands of consumers like ATMs.

Come up with creative advertisements; innovate the use of its current advertisement offers like

SM Advantage Card where points earned can also be used in purchasing items in Shell’s stations

nationwide or SM itself; and improve the product to meet the changing demands of the customers

and expansion of business through building more retail stations and looking for areas with less

access to the company’s products are some of ways the company can adopt.

However, new trends continue to emerge such as the Public Utility Modernization which

later on will be the reason of the declining numbers of vehicles that uses petroleum. Pilipinas Shell

should innovate, offer and install electric vehicle charging facility and install wireless connection

in every Shell retail station to provide better customer services. In line with this, the use of Shell

Card and SM Advantage card can be used for points earnings or claiming of earned points. On the

other hand, answering the environmental issues and the need for green movements to continue,

Pilipinas Shell should promote environmental-friendly activities and adopt any strategy that will

help the company respond to such trend.

The main objectives of Pilipinas Shell Petroleum Corporation include:

 Maintain or increase its market share to retain its rank as the second biggest industry player

in Philippine oil industry through long term partnership to other rapidly emerging

industries.

 Expand the business through building more retail stations.

  Innovate or improve the product and services.

 Be flexible to current trends through adopting new products or services while continuing

to sell the current products. Pilipinas Shell Petroleum Corporation should focus on

adopting Market Penetration, Market Development and Unrelated Diversification

strategies.

6.1.2 Financial Objectives

The financial objectives of Pilipinas Shell Petroleum Corporation will focus on the

company’s net sales and net income since majority of the company’s suppliers have undergone

through turbulent state.

 To achieve a continuous growth rate of 15% in the company’s net sales and net income.

Years Net Sales Net Income

2015 P 156,977,696 P 3,553,196

2016 P 136,763,286 P 7,443,775

2017 P 169,475,812 P 10,368,234
2018 P 218,868,676 P 5,076,326
2019 P 224,131,762 P 5,837,775
2020 P 257,751,526 P 6,713,441
2021 P 296,414,255 P 7,720,457
2022 P 340,876,393 P 8,878,526
2023 P 392,007,852 P 10,210,305
6.2 Recommended Business Strategies

6.2.1 Tie up with the emerging local couriers in the likes of LBC, Grab Express, 2GO

Express, Xend Business Solution, JRS Express, DHL Express, Ninja Van and Lalamove

The rapidly developing market for e-commerce can be attributed to the increasing number

of internet users which according to the 2018 Global Digital Report, the Philippines has 67 million

internet and active social media users. In which accounts the notion that e- commerce in the

country is seemingly growing. A survey done by Empowering business in Southeast Asia showed

that 39% of Filipinos bought something online and it continuous to grow year per year. The e-

commerce are part of the Small Medium Enterprises (SMEs) which also by trend and presence

continuous to increase. This lead to the increase in youth demographic consumption that has led

to an increased focus on demand for personal and small business convenience. This trend propelled

to a rapidly emerging local couriers in the Philippines. Despite of the limited time and busy

schedules of most of the people, Filipinos continue to live fast paced lifestyles where sending

packages, buying food and other related delivery services used by online sellers are becoming

easier, faster, and somehow more affordable these days; this is because of the courier companies

and delivery services in the Philippines in the likes of LBC, Grab Express, 2GO Express, Xend

Business Solution, JRS Express, DHL Express, Ninja Van and Lalamove.

In response with this, Pilipinas Shell Petroleum Corporation should take advantage of this

developing industry and should be eager to be the provider of the petroleum used by these couriers

in which be the all-pervading strategy to stay at float in widening the margin of customers and

generating more income while maintaining its competitive position or elevating its market share.
6.2.2 Build more retail stations in emerging places in the country

Locate and build more retail stations that feature Shell refuelling and maintenance and repair

services such as Shell Select, quick-service restaurants, ATMs, deluxe comfort rooms, and

Pilipinas Shell’s latest café concept offering, deli2go, in Shell stations. This stations and branches

must reach urban areas with less or no retail station at all. With this, SM advantage card can use

for points which they can use to either claim or purchase at any Shell stations or SM nationwide.

According to Architect Felino A. Palafox Jr., emerging cities outside Metro Manila include

Puerto Princesa, Zamboanga, Clark, San Fernando, Laoag, Vigan, Legazpi, Balanga, Batangas,

Lucena and Iloilo. These emerging cities bring very good opportunities for Pilipinas Shell as these

would bring growth potential for the company. Considering that Palawan is a very well- known

tourist destination, the number of tourists continuous to increase and the likelihood of increase in

the demand of petroleum due to transportation can be anticipated. In fact, an international travel

magazine, Travel+Leisure, included Palawan particularly El Nido Palawan in its top 15 list of Best

Beach Destination for January 2018. But there are only 3 places in Palawan with Shell retail

stations: 5 Shell retail stations in Puerto Princesa, 2 Shell retail stations in Narra and 1 Shell retail

station in Quezon. Pilipinas Shell Petroleum Corporation should consider building gas station

along the route from Puerto Princesa to El Nido as this would allow motorists passing by such

route to have an easy access to the company’s products.

In view of the suggested strategy of Market Development and Diversification for the

company, building more retail stations will give the company an opportunity to expand its electric

vehicle charging station business now that local government units are now engaging into public

utility vehicle modernization pushing forward the use of e-bikes, e-trikes and e-jeepneys in their

community.
6.2.3 Install electric vehicle charging facility, install wireless connection in Shell retail

stations, create charging posts and waiting area.

The Duterte Administration has already implemented the actualization of Public Utility

Vehicle Modernization Program. The aim of using electric vehicles caught many as this unique

look provides financial and environmental benefits. In fact, the Aboitiz in collaboration with QEV

Philippines Electromobility Solutions and Consulting Group Inc., introduced the green jeepney on

July 20, 2017 in the same year of the implementation of the PUV program. Green jeepneys are

powered by lithium-ion batteries that cost 30% less than the average liter of diesel for every 15

minutes of charging and with zero-carbon emissions. Lithium-ion batteries could take 2 to 4 hours

to be fully charged. Pilipinas Shell Petroleum Corporation is advised to install at least 10 fast

charging stations every year until 2023.

In response to this trend, Pilipinas Shell Petroleum Corporation should install electric

vehicle fast-charging posts in over 100 retail stations nationwide with a waiting area that has

comfortable couches, good ventilation and has wireless connection that will provide every

customer with better Internet connectivity. This strategy intensifies the company’s mission to be

technologically competent and to transform every retail station into one-stop-shop where the use

of Shell Card and SM Advantage card can be used for points earnings or claiming of earned points

that in most of what the customers need for convenience may be found right in every retail station.

This strategy also advocates the aim of the company for growth not only in terms of generating

income but also growth in building smarter cities leading to the progress and growth of the

company. This initial step of Pilipinas Shell into adopting new trends is a strategy that allows the

company to keep its current products and at the same time adopt new products as this helps in
answering the environmental issues pointed to many different factors and one is the gas emission

due to petroleum.

6.3 Recommended Organizational Strategies

6.3.1 Have creative ideas and resourceful strategic actions for continuous innovation and

creations.

In a fast growing industry, the best way to stay at float is to be flexible in adopting to

changes that may arise and in creating innovations. Hence, the area of Research and Development

must be strengthened by the Pilipinas Shell Petroleum Corporation as well as its marketing

department in order to take strategic actions that will help in achieving competitive advantages

among other players in the industry. This also includes maximization of technology advancement.

Thus, investing in these areas will be beneficial for both short and long term.

6.3.2 Allowing the employees to participate in the growth of the company by giving them

equal work opportunities.

Since employees are the very reason behind the success of every company, Pilipinas Shell

Petroleum Corporation must invest in giving its employees the equal opportunities in the work

place through regular trainings, work incentives and proper compensation and benefits. There must

be proper dissemination of information and strategies that the company plans to take. By

intensifying employee value proposition, the efficiency and effectivity of each individual may be

attained resulting to growth and progress in operation and in the rest of the areas of the company.
Allowing the employees to participate is a way of getting feedback and constructive criticism of

the smallest detail in the day to day activities in the work place so that better work atmosphere can

be elevated. A diversified workplace where genders, race, religion and individuality are accepted

and inclusivity is celebrated.

6.4 Strategy Map

PERSPECTIVE
FINANCIAL
INCREASE INCREASE
PROFIT NET SALES

PERSPECTIVE
Improve

CUSTOMER
Provide convenience
to customers so that
customer brand awareness will
satisfaction be achieved.

PERSPECTIVE
Marketing Actions on
Invest in
INTERNAL
strategy offer of employees’ feedback
innovated
Research and and work
Development environment
products and
criticism
services

Improvement of
EMPLOYEE

Employees Compensation
GROWTH

and benefits technology

training
6.5 Financial Projections and Overall Evaluation of the Strategies of Pilipinas Shell Petroleum Corporation for December 31,

2018 to 2022

Projected Income Statement

(All amounts in thousands of Philippine Peso)
Annual Amounts Growth Rate and Margins Average
2015 2016 2017 2018 2016 2017 2018
NET SALES 156,977,696 136,763,286 169,475,812 194,897,184 -12.88% 23.92% 15.00% 8.68%

Less: Cost and Expenses

(Income)
Cost of sales 136,976,853 112,461,546 143,070,566 196,573,873 -17.90% 27.22% 37.40% 15.57%
Selling expenses 11,060,933 10,562,727 11,570,642 11,644,884 4.50% 9.54% 0.64% 5.06%
General and administrative expenses 2,234,101 2,500,333 2,289,457 2,741,716 11.92% -8.43% 19.75% 7.75%

Other operating income, net -212,239 -470,707 -489,417 -583,862 121.78% 3.97% 19.30% 48.35%
150,059,648 125,053,899 156,441,248 210,276,611

INCOME FROM OPERATIONS 6,918,048 11,709,387 13,034,564 8,492,065 69.26% 11.32% -34.85% 15.24%
Other Income (Charges)
Finance Income 69,130 175,707 68,393 45,117 154.17% -61.08% -34.03% 19.69%
Finance Expense -1,781,265 -1,058,018 -721,905 -1,245,034 -40.60% -31.77% 72.47% 0.03%
Other non- operating income, net 17,092 1,041 1,379,168 -93.91% 132384.92% -100.00% 44063.67%
-1,695,043 -881,270 725,656 -1,199,917

INCOME BEFORE INCOME TAX 5,223,005 10,828,117 13,760,220 7,292,148 107.32% 27.08% -47.01% 29.13%
Provision for Income Tax 1,669,809 3,384,342 3,391,986 2,215,822 102.68% 0.23% -34.67% 22.74%
NET INCOME 3,553,196 7,443,775 10,368,234 5,076,326 109.50% 39.29% -51.04% 32.58%
 Projected Annual Amounts
2015 2016 2017 2018 2019 2020 2021 2022 2023
NET SALES 156,977,696 136,763,286 169,475,812 218,868,676 251,698,977 289,453,824 332,871,898 382,802,682 440,223,085

Less: Cost and Expenses (Income)

Cost of sales 136,976,853 112,461,546 143,070,566 196,573,873 226,059,954 259,968,947 298,964,289 343,808,932 395,380,272
Selling expenses 11,060,933 10,562,727 11,570,642 11,644,884 13,391,617 15,400,359 17,710,413 20,366,975 23,422,021
General and administrative expenses 2,234,101 2,500,333 2,289,457 2,741,716 3,152,973 3,625,919 4,169,807 4,795,278 5,514,570

Other operating income, net -212,239 -470,707 -489,417 -583,862 -671,441 -772,157 -887,981 -1,021,178 -1,174,355
150,059,648 125,053,899 156,441,248 210,276,611 241,933,103 278,223,068 319,956,528 367,950,007 423,142,509

INCOME FROM OPERATIONS 6,918,048 11,709,387 13,034,564 8,592,065 9,880,875 11,363,006 13,067,457 15,027,575 17,281,712
Other Income (Charges)
Finance Income 69,130 175,707 68,393 45,117 51,885 59,667 68,617 78,910 90,746
Finance Expense -1,781,265 -1,058,018 -721,905 -1,245,034 -1,431,789 -1,646,557 -1,893,541 -2,177,572 -2,504,208
Other non- operating income, net 17,092 1,041 1,379,168 0 0 0 0 0
-1,695,043 -881,270 725,656 -1,199,917 -1,379,905 -1,586,890 -1,824,924 -2,098,662 -2,413,462

INCOME BEFORE INCOME TAX 5,223,005 10,828,117 13,760,220 7,292,148 8,500,970 9,776,116 11,242,533 12,928,913 14,868,250
Provision for Income Tax 1,669,809 3,384,342 3,391,986 2,215,822 2,663,195.30 3062674.595 3522075.784 4050387.152 4657945.225
NET INCOME 3,553,196 7,443,775 10,368,234 5,076,326 5,837,775 6,713,441 7,720,457 8,878,526 10,210,305
 Projected Financial Position

August 31, 20XX

(All amounts in thousands of Philippine Peso)
6.6 Departmental Programs
6.6.1 Product Development

Activities Team Responsible Timeline

6.6.2 Market Penetration

 Activities Team Responsible Timeline

6.6.3 Market Development

Activities Team Responsible Timeline

VII. Strategy Evaluation and Monitoring and Control
7.1 Balance Scorecard

Financial Perspective
Objective Indicator Target Initiatives

Customer Perspective
Objective Indicator Target Initiatives
 Internal Business Perspective
Objective Indicator Target Initiatives

Learning and Growth Perspective

Objective Indicator Target Initiatives
VIII. Appendices