EXECUTIVE SUMMARY………………………………………………………………..………………..

4
1. INTRODUCTION……………………………………………………………………………..……….5
2. RESEARCH DESIGN AND METHODOLOGY…………………………………………...…………7
3. MACRO ENVIRONMENTAL ANALYSIS………………………………………………….……….9
3.1. Economic Force…..…….……………………………………………………………………..
…...9
3.2. Political Force…...……………………………………………………………………….…….…
13
3.3. Social/Cultural Force…………………………………………………………………….….……
14
3.4. Environmental Force………………………………………..
…………………………………….15
3.5. Technological Force…………………………………………..………………………….
……….16
4. INDUSTRY AND COMPETITOR ANALYSIS………………………………………….……….…17
4.1. Industry Value Chain and Waterfall Chart………………………………………….……..….….19
4.2. Porter’s 5-Forces Model…………………………………………………….…………..
………..20
4.3. Strategic Positioning Analysis & Recommendation…..
………………………………………….28
4.4. Market Share, Size and Growth Trends…………………………………………….…..
………...31
4.5. Market Analysis……………………….
………………………………………………………….35
4.6. Competitive Profile Matrix (CPM)………………………….……………………………………
41
4.7. External Factor Evaluation (EFE) Matrix……………………………………….…………..……
59
5. COMPANY ANALYSIS……………………………………………………………………………..69
5.1. Company Vision and Mission Statement……………………………..………………….
……….69
5.2. Review of Vision/Mission Statement………….…………………………………………...
…….69
5.3. Mckinsey’s 7S Framework………………………………………………….……………………
71
5.4. Company Internal Audit…………………………………………………….……………………
81
5.5. Key Financial Ratios………………………………………………………………….……….
….86

Page 1 of 123
 5.6. Internal Factor Evaluation (IFE) Matrix……………………………………………….…………
91
6. STRATEGY FORMULATION………………………………………………………………………97
6.1. Strengths, Weaknesses, Opportunities, Threats (SWOT) Matrix………………………………..97
6.2. Strategic Positioning and Action Evaluation (SPACE Matrix)…………………………………
106
6.3. Boston Consulting Group (BCG)
Matrix………………………………………………………..108
6.4. GE Mckinsey Matrix………………………………………………………………………..
…...109
6.5. Grand Strategy Matrix…………………………………………………………………….
…….111
6.6. Internal-External (IE) Matrix…………………………………………………………..….
…….112
6.7. Summary of Strategies…………………………………………………………………….….…
113
6.8. Quantitative Strategic Planning Matrix (QSPM)…………………………………………….
….114

7. STRATEGIC CORPORATE & FUNCTIONAL OBJECTIVES AND RECOMMENDED

STRATEGIES…………………………………………………………………………………….…115
7.1. Recommended Revised Vision and Mission Statement………………………………..………115
7.2. Key Strategic Challenge and Recommended Corporate Strategic
Objective………………………………………………………………………………..………117
7.3. Recommended Functional Strategic Objectives………………………………………….
……..117
7.4. Recommended Strategies……………………………………………………………….….……
118
7.5. Recommended Departmental Programs and Actions………………………………….
………..121
7.6. Financial Projections……..……………………………………………………………..
……….116
8. STRATEGY EVALUATION, MONITORING AND CONTROL…………………………………131
8.1. Balanced Scorecard Strategy Map……………………………………………….………….
…..131
8.2. Balance Scorecard Objectives & Initiatives Matrix……………………………..…..……….…
132
8.3. Balance Scorecard Performance Monitoring Dashboard………………………..…….….
……..133
9. CONTINGENCY PLAN……………………………………………………………………...……..134

Page 2 of 123
EXECUTIVE SUMMARY

MAPECON is a company that is engaged in the business of providing integrated pest control
services to various clients in the residential, commercial and industrial sectors. Being in the business for
more than 55 years, it is considered as one of the largest and leader in the pest control industry. The
Company was founded and is headed by a proudly Filipino-inventor who formulates and manufactures
their own chemicals that are mostly based on locally sourced materials and are used in all of their pest
control operations. MAPECON’s trade name was originally registered as the Manila Pest Control
Company under the Securities and Exchange Commission in 1961. However, its founder, being a strong
follower of Jesus Christ, fully integrated Christian principles both in his personal life and his business.
With this, in 1981 the abbreviation of the company was eventually changed into “My Almighty’s Plan to
Exalt Christ Operates Now”.1
The change of the Company name has allowed very unique dynamics in its corporate culture.
This is evident in the daily gathering of all employees, including field technicians and sales agents
wherein at the start of the business hours, instead of the usual sales targets and objectives, daily prayer
meetings are held which consists of gospel readings, devotions and sharing of testimonials which are all
facilitated by no less than Mr. Catan. Finally, what’s so uniquely important is that, the highest position in

1
Amended Articles of Incorporation, April 14,2014

Page 3 of 123
the Company, that is being the President does not belong to its founder and lead inventor Mr. Gonzalo
“Jun” Catan, but to no other than Jesus Christ.
MAPECON has drastically changed the landscape of the entire pest control industry when it filed
and won a case against the Fertilizer and Pesticide Authority (FPA) in 2007. The Supreme Court of the
Philippines has decided the case in favor of MAPECON and it stated that “FPA has jurisdiction only over
agricultural pesticides, not over urban pest control products”. “It likewise held that urban pest control or
pesticide use in households, offices, hotels and other commercial establishments has nothing to do with
agriculture”. 2 Furthermore, under the law that created FPA, its mandate is to regulate pesticides and pest
extermination activities related only to food production and security. 3 With the exemption of licensing
authority of the FDA with respect to agricultural fumigators, since this activity is still related to food
production, the decision of the Supreme Court did not merely allow MAPECON to continue doing its
business without securing the necessary licenses from the FPA or any other government agencies, but it
has likewise deregulated the activities of the entire “urban pest control industry”. Although the Food and
Drug Administration (FDA) is still tasked to regulate all chemicals not falling within the jurisdiction of
the FPA, hence this includes chemicals for urban pest control use. However, with respect to the actual
application or activities being performed by urban pest control operators and applications, this is still not
within the purview of any government agency, effectively making the industry deregulated.
MAPECON’s IFE is 2.60 which may be attributed to the idea that as a pioneering company in the
pest control industry, it has established a good network of clients in the past 55 years. On the other hand,
its strength at the same time is becoming its weakness because in terms of looking at another 50 years in
the market, it appears to be a challenge in terms of making the MAPECON brand relevant to the current
generation of customers. Its founder, EVP and head inventor is already in his senior years and he is not
likely going to slow down for another couple of years. However there is a concern with respect to
succession planning since there is no clear corporate direction on how the Company will operate once Mr.
Catan is eventually gone. MAPECON’s market responsiveness in its EFE on the other hand is 2.65. As a
company that utilizes its own chemicals, it was able to maintain a certain level of price offering which
always becomes its competitive advantage over other pest control firms. Its chemicals are locally sourced
and manufactured based from natural ingredients, thereby allowing the Company not to depend on the use
of imported chemicals locally sold and distributed by multi-national companies such as Syngenta, Bayer
or BASF.
Based on financial analysis, despite the continuous increase in the yearly performance of the
Company, still its CAGR growth rate is at 6%, just slightly lower from the assumed industry rate of 7%.

2
FPA vs. MAPECON, GR No.161594, February 8,2007
3
Preamble of P.D. No. 1144 - Section 1. Creation of the Fertilizer and Pesticide Authority

Page 4 of 123
This CAGR performance is lower as compared to its rival competitors like Rentokil, Sterix Inc., Pest
Science which obtained rates between 6 – 19%. As part of MAPECON’s strategy to increase its CAGR
performance to at least 10% in the next three year, which is way above the industry growth rate, it needs
to implement specific strategies such as market penetration as well as market and product development.
These strategies would eventually allow sales growth of Php 389 Million for optimistic projections. It will
likewise provide a net income of Php 36 Million for the said optimistic projections. Applying these
strategies would ensure that in the coming years, the Company will be able to achieve its overall
corporate objective, of maintaining “top of mind”, hence be able to secure the growth of its market share
to at least 15% thereby allowing it to continuously dominate the industry by still being the largest and
leader in the pest control industry by 2019.

1. INTRODUCTION
MAPECON Philippines Inc. offers the best environmental-friendly solution to urban pest
problems. It is founded by Gonzalo “Jun” Catan Jr., a local from Negros Oriental -- an Agriculturist and
Entomologist with a minor in Chemistry from the Silliman University and University of the Philippines
Los Banos, he is the company’s majority stockholder, Vice Chairman of the Board of Directors,
Executive Vice President, and most importantly, the top inventor of all of its products. From a Php 400
capital in 1961, the company was established as Manila Pest Control. 4
MAPECON’s services are focused on the prevention and treatment of residential areas, office
buildings, condominiums, gardens and foliage, malls and restaurants against pests such as termites, ants,
rats and various crawling and flying insects. MAPECON’s track record consists of a strong and dynamic
practice of Christian principles and ethics in business, a long history of pest control expertise with 55
years of experience, 38 award-winning patents for its inventions, and most importantly having products
that are 100% uniquely and indigenously Filipino.

Table 1.A.: Key Services of MAPECON5

4
Retrieved from: http://www.mapecon.com/about.php
5
Information obtained from the National Committee on Urban Pest Control

Page 5 of 123
 Being a family corporation, the management team is mostly composed of the members of the
family as well as most senior and loyal employees of Mr. Jun Catan. Uniquely noticeable in the
management structure is the fact that the founder is not considered to be the highest official of the
company since he is merely the Executive Vice President, instead being true to its Christian values, its
head is considered to be Jesus Christ as President.
As per Mr. Catan, MAPECON is now considered not merely a corporation, but most importantly,
a “corporate church” wherein it emphasized on the spiritual foundation where the company is built upon.
It has what it calls the “Lord’s account where 1% of gross revenues or 10% monthly profits (whichever is
higher) is dedicated to finance the needs of its employees 6
The head office is located at MAPECON Building, 2459 Arellano Avenue, Malate, and Manila,
Philippines. Currently there are a total of 44 branches operating nationwide, with presence in key cities
such as Pampanga, Cebu, Davao, and Cagayan de Oro. In Luzon there are 25 branches, while in Visayas
10 are operating, and also there exists 9 branches serving the regions in Mindanao. Those areas that are
located outside NCR are handled by branches. On the other hand, some of the branches are operated by
franchisees. MAPECON’s Franchise Agreements are only offered to a select few individuals, mostly
comprised of former employees. MAPECON has 51% equity in the operations and revenues of its
franchises
Apart from their services, they likewise offer pest control products which are sold at branches and
there are various outlets in Metro Manila (Las Pinas, Citywalk Divisoria, Harison Plaza, Riverbanks Mall
Marikina, Sta. Lucia Mall Pasig). In the years 2012 to 2013, its revenue performance remained flat within

6
Retrieved from: http://mapecongreen.com/about-us/

Page 6 of 123
the 180M range, however with the help of aggressive marketing initiatives, the company achieved a
remarkable sales growth performance of 4.6% in 2015 with a Php200M revenue.
MAPECON’s competitive advantage over its competitors is its unmatched 55years presence in
the market. In 1989 it established its subsidiary company, MAPECON Green Charcoal Phil’s., Inc., a
company which focuses on the establishment of green alternatives through the manufacture, sale and
distribution of green energy for cooking (green charcoal) as well as utilization of organic fertilizers,
among other products invented by its founder . The company is continuously growing and currently has
over 400 employees nationwide, comprising of full-time office based workers performing administrative,
marketing and sales functions, along with a team of expertly trained applicators. 7

2. RESEARCH DESIGN, METHODOLOGY AND LIMITATIONS

The author in choosing MAPECON did not rely on any pre-existing knowledge or personal
connection with the said company. All information related to this paper were painstakingly researched and
obtained through various “out of the box” methods. As an initial approach, a couple of formal requests to
conduct a company visit and interview were made to MAPECON’s Assistant National Director, Bryan
Atienza was unfortunately personally declined. The reasons according to him are due to matters internal
to their organization. This development has led the author to improvise for ways to obtain first-hand
information about MAPECON. The author went to the depths of acting as a customer and asked
MAPECON’s sales agent to conduct an ocular inspection at home and requested for a quotation in order
to have a personal grasp on how their business is done.
Relevant information was obtained through research of files, data and video clips found in the
internet. Through the internet research, the author was able to know that the National Committee on
Urban Pest Control (NCUP), an organization co-founded by Mr. Gonzalo “Jun” Catan, which is located
just beside MAPECON’s office is conducting a Pest Control Seminar facilitated by former MAPECON
employees. The author signed-up, paid, attended and passed the three (3) days classroom seminar, which
includes another three (3) days of field training wherein the author was able to join and observe the
service teams of MAPECON in performing their actual pest control projects in Antipolo, Pasig,
Mandaluyong, San Juan and Quezon City. Each service unit is composed of three (3) individuals, a senior
(10-15 years), junior (5 to 10 years) and a new employee. All of whom provided their own perspective on
how the Company performs. The said engagement led to a NCUP-Certification and Accreditation as a
Certified Pesticide Applicator to which the author has now become an official pesticide technician.

7
Retrieved from http://mapecon.com.ph/. Mapecon Green

Page 7 of 123
 Overall pest control industry market information on the other hand was personally gathered by
the author through personal interviews with industry practitioners, competitor firms, various chemical and
equipment suppliers as well as past and present presidents and directors of the Pest Exterminators
Association of the Philippines (PEAP). The said organization is one of those actively involved in
promoting the standards and overall well-being of the industry. Market data were likewise obtained by
getting a paid subscription of chemical importation monitor coming from the Bureau of Custom (BOC),
as facilitated by Crop Life of the Philippines.
Likewise, competitor information were initially obtained through research using the EMIS
facility in the Ateneo GSB library, which was subsequently validated through gathering of financial
statements before the Securities and Exchange Commission (SEC) as well as business registration from
the Department of Trade and Industry (DTI).
All relevant laws and regulations were gathered and summarized in order to provide for a clear
and historical flow of information about the industry, from all government regulations over the past years
handled by the Fertilizer and Pesticide Authority (FPA), leading to the decision of the Supreme Court in
2007 which effectively deregulating the industry, and up to the present scenario of having legislations
filed by looking at the archives section of the Philippine Congress, and Senate of the Philippines, as well
as current and pending regulatory initiatives spearheaded by the Food and Drugs Administration (FDA).
Finally, this paper utilizes all the classroom learnings as well as the Strategic Management Concepts and
Cases (14th Edition) book by Fred R. David.
By way of limitation, as mentioned in the introductory portion of this paper, the urban pest
control industry must be distinguished from the general pest control which likewise includes those in the
agricultural sector. Urban pest control merely relates to the act of servicing households, commercial
establishments and industries against structural and non-structural pests such as termites, mosquitoes, rats,
cockroaches and the like. Likewise, based on the decision of the Supreme Court which extends up to the
status quo, there are no government agencies tasked to regulate the industry, and the industry itself is
policing its ranks through the several pest control associations located all over the country. Therefore,
there is no available single source of information related to the size of the market as well as other relevant
information related to the pest control industry. Most market information are based on calculated
assumptions based on historical sales, including performances in the construction (homes, buildings,
offices) and leisure industries (hotels, restaurants, malls). In terms of competitor analysis, this research is
merely focused on the servicing of the urban pest control industry. It does not include the sales,
distribution and service aspects of other activities not directly related to eliminating or controlling pests,
such as hygienic, janitorial and maintenance products and services.

Page 8 of 123
3. MACRO ENVIRONMENTAL ANALYSIS
3.1. Economic Force
3.1.1. Public and private construction boom in the country
According to the PPP Center, the present administration is expected to make its “boldest and
most ambitious” move in the construction industry by “pouring-in some P7 trillion (about $144 billion)
in the country’s infrastructure sector”8 Construction is divided between public and private. Public
constructions are those initiated by the government by developing roads, bridges and other infrastructures
benefitting the general public. The said increase in public construction would naturally lead to the growth
of the private construction which is initiated by private individuals that are developing office buildings,
malls, hotels, condominiums and residential houses. Industry giants are leading the pack of real estate
developers as well as pocket developers all over the country. The SM group has 50 malls and counting 9,
Ayala Land’s Vision 2020 is focused on fully expanding its operations 10, Megaworld’s 18 township
projects are still expanding11, and they are strongly followed by other big industry players 12 like the Villar,
Gokongwei, Double Dragon groups, among others.
In 2013 to 2014 alone, there has been a growth of 17% in the approved building permits in
residential projects, and 15% increase for non-residential. Based on that increase 21% came from the
13
CALABARZON area, next to NCR which has 38% of the total. The continuous increase in the total
number of residential houses being built, condominiums, offices in particular Business Process
Outsourcing (BPO) floor areas, malls, hotels and restaurants is a welcome development being at the
forefront clientele of the pest control industry practitioners.
Importance: The said overall growth in the number of structures being constructed significantly
increases the market not only for the entire pest control industry but most especially for MAPECON.
Structures, regardless if made from concrete or not are generally susceptible to the presence of termites
which naturally comes from the soil. Hence, the more structures are created, the more soil treatments are
needed to be done, giving a boost to the pest control business. Likewise, since construction is made to
benefit people, by nature when there are people, pests would naturally follow due to the wastes of
consumptions and consumerism that is being produced. Given that construction boom is not only limited

8
Philippine Daily Inquirer. (2017, January 9). Aggressive infra plan to sustain PH construction boom. Retrieved from: https://ppp.gov.ph/?
in_the_news=aggresive-infra-plan-to-sustain-ph-construction-boom
9
SM opens 50th mall, remains bullish on expansion in the Philippines (November 14,2014). Retrieved from: http://www.smprime.com/sm-opens-50th-mall-
remains-bullish-expansion-philippines
10
Doris Dumlao-Abadilla (2016, April 13). Philippine Daily Inquirer. Retrieved from: http://business.inquirer.net/209432/ayala-land-set-to-expand-hotel-mall-
operations
11
Retrieved from: https://www.megaworldcorp.com/
12
Wilson Lee (2014, December 8). Battle of the Philippine malls more exciting in 2015. Retrieved from: http://www.philstar.com/business-
life/2014/12/08/1399660/battle-philippine-malls-more-exciting-2015
13
Retrieved from: http://www.mb.com.ph/information-steady-growth-of-philippine-construction-industry/

Page 9 of 123
in NCR, but is scattered all over the country, MAPECON is at a competitive edge having 55 branches all
over the country.

3.1.2. High number of facilities related to leisure activities.

In data presented by the Department of Trade and Industry (DTI) 14 as of 2016, the national total
of all business establishments or facilities related to leisure activities such as restaurants, hotels, resorts,
retail shops, malls and the like is at 16,274. Out of the said total, 287 or 1.76% operates on a national
level while the rest of the establishments are concentrated in key regions such as NCR with 1.97% and
Region 4A (CALABARZON) with 1.28%, Region 3 or Central Luzon with .71%, followed by Central
and Western Visayas each with .33% and .21% respectively. Meanwhile, earning gathered from tourism
activities in 2015 grew by 8.24% 15. Furthermore, with the influx of foreign gaming companies such as
Resorts World, Solaire Resorts, City of Dream and Okada, Manila, the hospitality industry is seen on
upward trend until 2018.16
Importance: Given that leisure related businesses and facilities require the presence of customers,
tourists and the like, it is essential that they keep the said establishments clean and pest free. In having
information on the key areas where these establishments are proliferating, MAPECON can likewise
strategize its operations by focusing on the abovementioned key areas to establish its presence or
strengthen its business operations.

3.1.3. Office space supply is growing

Township projects incorporate work-rest-leisure in a single destination. According to a study
presented in 2013, “there are more than 1,300 hectares of developed land in 25 emerging business
districts” in Metro Manila alone. The leading areas are Makati CBD, Ortigas CBD and Bonifacio GC.
The 2016 estimate of the Office Property Market supply in the abovementioned business districts is at
17
8M sqm. This rapid growth is actually fueled by the demand in BPO office spaces. According to a
study commissioned by the Business Processing Association of the Philippines (BAP and partner
associations), an increase from US $15 to US $25 billion in revenues with a 1.3M employee base was
projected in 2016.18 Meanwhile the 2022 Roadmap looks at 1.8M direct jobs and US $40B in
revenues.19

14
DTI BNRS Helpdesk Inquiry, Program Management Team for Business Registration
15
Industry Performance for Travel and Tourism (October 2015). Retrieved from: http://www.tourism.gov.ph/pages/industryperformance.aspx
16
Roderick Abad (2015, September 12). Business Mirror. Retrieved from http://www.businessmirror.com.ph/hospitality-industry-seen-on-upward-trend-until-18
17
Lindsay Orr, COO, Jones Land Lasalle, Philippine Real Estate: Outlook and Opportunities for Investment Market, March 2013
18
Philippine IT-BPO Roadmap 2016: Driving to Global Leadership. Funded by the Commission on Information and Communications Technology (CICT)/ Office of
the President Retrieved from: http://www.ncc.gov.ph/files/lacdao_phil_it_bpo_roadmap.pdf
19
IT and Business Process Association of the Philippines. Retrieved from: http://itbpm-roadmap2022.ibpap.org/#about-the-philippine-it-bpm-roadmap-2022

Page 10 of 123
 These numbers in order to be attainable would necessarily need additional office spaces to cater
to their business requirements. In the quarterly report of Colliers International, the table below shows
their forecasted office spaced in the top 3 CBD’s in Metro Manila.

Table 3.1.3-A. Forecast New Supply, CBD’s (GLA, in sqm)20

Importance: Common offices and BPO’s require vast working spaces such as operations floor, training
rooms, and common areas. The entire pest control industry will benefit in this demand since buildings
not only require strong foundations, but also need effective termite control measures. Regular general
pest control in the workplace is needed to deal with irritating pests associated with human presence.
3.1.4. Growing demand for residential houses and condominiums
Currently there is a rapid growth in the housing sector due to development of various housing
projects, subdivisions and even condominiums that is catering to the needs of people from different socio-
economic classes. Figures show that in 2014, there has been a 16% increase in the total floor area (sqm)
of residential house, apartment, and condominium in the country 21. According to newspaper article, “Ph
housing bubble forming”, but an expert clarified that there is none yet 22. A study was presented showing
that for the years 2016-2020, there is at least 3M housing units that are still needed. 23

For condominiums on the other hand, especially those located in key developments, the following
are the forecasted number of units that are soon to be delivered to its clients.
20
Quarterly Report (2016 Q4), Colliers International. Retrieved from: http://www.colliers.com//media/files/marketing%20reports/4q2016_colliers_
%20quarterly_office.pdf
21
Comparative Construction Statistics: Statistics by Type of Construction Philippines: 2014 and 2013. Industry Statistics Division, Economic Sector Statistics
Service, Philippine Statistics Authority
22
Interview with Enrique Soriano 3rd, Ateneo program director for real estate and senior adviser for Wong+Bernstein Business Advisory Group. (2015
September 27). The Manila Times.Retrieved from http://www.manilatimes.net/ph-housing-bubble-forming-expert/220920/
23
The Philippine Housing Industry Roadmap 2012-2030. BOI Presentation. Subdivision & Housing Developers Association, in cooperation with Center for
Research and Communication, UA&P. Retrieved from: http://industry.gov.ph/wp-content/uploads/2015/05/3rd-TID-Mr.-Tanchis-Presentation-on-Mass-Housing.pdf

Page 11 of 123
 Table 3.1.4-A: Condominium Residential Supply in Key Developments24

Importance: In the point of view of the pest control industry, the more houses or condominiums
developed, the better it is for the said industry since there will be additional customers that would require
the management and treatment of urban pests. Condominium customers are two types, the actual unit
owner and the building administrator who is in charge of the units including the common areas.

3.2. Political Force

3.2.1. Colorful current political environment
The Philippine political environment is backed by the people’s popular support. President Rodrigo
Duterte won the recently held presidential race by a wide margin, garnering 16 million votes over 6.6
million more than his closet rival25. Barely a year after the recent presidential elections, the country has
been experiencing significant changes in the government. The current administration has an approval rate
of 83%26, which signifies that in a democratic process, more than the required number of majority
supports the government’s initiatives. The government is likewise viewed as giving a fresh outlook in the
economy by boosting spending through P8 trillion worth of infrastructure projects to be performed during
the entire term of the new administration.27
Importance: A stable political atmosphere provides for a safe haven for the influx and investments that
would eventually harnesses economic activity. This is beneficial to all businesses, in particular to the pest
control industry since people in general would easily have the capability to spend for these types of
24
Lalaine C. Delmendo (2016 July 21). Philippines: nationwide house prices rising strongly, but Metro Manila’s CBD is slowing, Global Property Guide. Retrieved
from:https://www.globalpropertyguide.com/Asia/Philippines/Price-History
25
CNN Philippines Staff. (2016 May 30). Official count: Duterte is new president, Robredo is vice president. CNN Philippines. Retrieved from:
http://cnnphilippines.com/news/2016/05/27/official-count-duterte-president-robredo-vp.html
26
Duterte approval rating at 83%- Pulse Asia (2017 January 6). Inquirer.net. Retrieved from: http://newsinfo.inquirer.net/859906/duterte-approval-rating-at-83-
pulse-asia
27
Lelila B. Salaverria. Gov’t to spend P8 trillion for infrastructure projects, Inquirer.net. Retrieved from: http://newsinfo.inquirer.net/840955/govt-to-spend-p8-
trillion-for-infrastructure-projects

Page 12 of 123
services. Likewise, in the infrastructure spending of the government, even prior to the pouring of cement,
pest control services for termite protection would naturally have a role to play, hence giving a big boost to
the industry in general.

3.2.2. Prohibition against “endo” or illegal job contracting

The present government administration has signed the Rules Implementing of Articles 106 to 109
of the Labor Code28, as amended to disallow the repeated hiring of individuals on short period or for only
less than 6 months, thereby circumventing the provisions of the law regarding security of tenure of
employment. Hiring of employees performing the same job function which are essential to a business for
less than 6 months has been prevalent in the labor force, allowing some abuses to be conducted by some
employers. This particular regulation issued by the government though will generally hurt the bottom line
figures of companies, is beneficial to the labor force that for years has been deprived of their right to
security of tenure.
Importance: In the pest control industry, the system of hiring employees for a short duration is
commonly practiced. Pest control service contracts are annually renewed, and with the very tight
competition in the industry, it is common for clients not to renew their existing contracts and opt for a
provider that would provide a much lower price. The natural response of Pest Control Operators (PCOs)
is to contract the service of technicians for a period of less than six (6) months, subject to renewal. The
issuance of the said regulation would greatly have an impact to those companies that cannot afford to
have a regular workforce, especially the small players since at least 30% 29 of the service cost goes to
employees. It would somehow stiffen the competition favoring bigger and more established PCOs.
Regularizing employees in turn would allow the said companies to compensate their labor force expense
by adjusting their service rates.

3.3. Social/Cultural Force

3.3.1. OFW’s, millenials are buying homes, instead of renting
Instead of paying for monthly rentals, consumers would rather invest in a real estate and allocated
monthly rental payments for monthly amortizations. This is especially true to those with high purchasing
power such as the OFW and the millennial BPO works. According to the World Bank, the Philippine’s
business process outsourcing industry is a key driver of growth for the economy as its 7.0 percent growth
projection in 2016 is expected to continue with a 6.8 percent growth in the years 2017 to 2018 30. BPO
employees are commonly comprised of millennial or those belonging to the generation of workers who

28
DOLE Order No. 174, Series of 2017. (2017 March 16).
29
2015 and 2014 Mapecon Financial Statement
30
Sustained growth enhances prospects for more broad-based growth in the Philippines – World Bank (2016 October 3) Retrieved from:
http://www.worldbank.org/en/news/press-release/2016/10/03/sustained-growth-enhances-prospects-for-more-broad-based-growth-in-the-philippines---world-bank

Page 13 of 123
were born between the years 1982-2000. 31. They are those who are capable of working the night shifts and
possess the necessary skills required for the job. In terms of buying capabilities, they are the seen as the
drivers of local condominium market.32
According to the Banko Sentral ng Pilipinas (BSP), OFW remittances in 2016 experienced growth by
5.1% year on year, representing $26.9Billion.33 BSP likewise said that according to a survey, 11 percent of
OFWs utilize their remittances for the purchase of real estate investments. 34
Importance: Individuals with high purchasing power would naturally incorporate in their living expenses
the need to conduct maintenance programs for the houses, apartments or condominiums that they
invested. These are the types of individuals who truly understand the value of having a pest control
professional to take care of their investments.

3.4. Environmental Force

3.4.1. Consumers are demanding green and environmentally friendly products
Customers are becoming more informed and aware of the value of patronizing eco-friendly and
green products. They are made aware of the overall harmful effects of long-term exposure to chemicals,
regardless of how they are marketed as safe and effective. This is equally applicable to all consumer
purchases be it food which are derived from organic substances, cosmetics that does not use too much
chemicals and technologies which help sustain the environment such as LED lights and inverter
technology electronics.
Importance: According to industry players such as MAPECON and the Pest Exterminators Association
of the Philippines (PEAP)35, if before the main concern is effectivity of treatment, nowadays, prior to
engaging the services of pest control applicators, customers are asking the question if the chemicals and
procedures utilized are safe and friendly to use. The use of chemicals with greater harmful effects to
people and the environment are being guarded by the Fertilizer and Pesticide Authority through its
continuous monitoring of the market in the use of banned and restricted pesticides. 36
Chemical manufacturers are promoting the use of green labeled products in the market. These
chemical have low toxicity rates and along with the proper handling and application practice, are

31
Jay Gilbert (2011 Sept-Oct). The Millennials: A new generation of employees, a new set of engagement policies. Retrieved from:
http://iveybusinessjournal.com/publication/the-millennials-a-new-generation-of-employees-a-new-set-of-engagement-policies/
32
Catherine Talavera (2016 February 28). The Millennials: A new generation of employees, a new set of engagement policies, The Manila Times. Retrieved
from: http://www.manilatimes.net/millennials-snap-up-condo-market/247448/
33
Charisse Dela Paz (2017 January 16). Remittance growth in November fastest in 8 Years. Retrieved from: http://www.rappler.com/business/158543-ofw-
remittances-november-2016
34
Bangko Sentral ang Pilipinas. Retrieved from:http://www.bsp.gov.ph/searchad.asp?cx=015957416565025896102%3Azzwpyumxdrw&cof=FORID
%3A11&q=ofw&sa=Search#gsc.tab=0&gsc.q=ofw&gsc.page=1
35
Personal interview with Mr. Arnel Café, senior service technician of MAPECON and Mr. Job Dayadante, President PEAP
36
Banned and Restricted Pesticides in the Philippines, FPA. Retrieved from:
http://fpa.da.gov.ph/images/FPAfiles/DATA/Regulation/Pesticide/BANNEDANDRESTRICTEDPESTICIDES.pdf

Page 14 of 123
generally safe to people, pests and general environment. Green banded chemicals are considered to be the
safest, while other chemical are labeled as include red, orange, yellow and blue and are categorized based
on their respective toxicity levels. MAPECON is highly confident with its products which are made from
environmentally sourced ingredients. They even claim that they can use their termiticide to as bath for a
dog infested with fleas without any effect on the dog.37

3.4.2. Dengue, Zika virus and common concerns on overall health

Zika virus is from the Aedes mosquito that is likewise responsible for the transmission of other
deadly vector borne diseases such as dengue, chikungunya and yellow fever. 38 The World Health
Organization has declared that zika virus is as a Public Health Emergency of International Concern. 39 This
declaration was specifically made because of rising cases of microcephaly which is attributable to small
heads of children recently born from mothers who are infected by the said disease. Likewise the WHO
also noted that currently there are no available vaccines to combat the said virus.
Importance: Although it may not be generally consider as overall welcoming, but the presence of Zika
virus in the Philippine has allowed PCO’s the opportunity to grow the business since the Department of
Health (DOH) is now on guard and is proactive in terms of informing the general public about this latest
epidemic. The urban pest control industry can generally contribute to the general welfare by ensuring that
it help to deal with dengue and zika virus, while at the same time securing profitability due to an increase
in the demand for their services.

3.5. Technological Force

3.5.1. Latest technological developments in safeguarding health
Oxytec, a British biotech company that has pioneered in the development of genetically modified
male mosquito aimed at dealing with vector diseases by means mating with female mosquito. This
particular mosquito is called OX513A 40 and it works by controlling female mosquitoes from breeding off
springs. This technologically advanced method of controlling pests is done through an environmentally
responsive manner which is an alternative to the use of traditional pesticides.
Likewise, the first anti-dengue vaccine was approved to be commercially released primarily in the
Philippines, among other tropic countries in the world experiencing the same problems caused by the
dreaded dengue disease. Though generally deadly to people of all ages, the said vaccine will primarily be

37
Personal interview with Mr. Arnel Cafe, 8 year in service as technician of MAPECON
38
Zika Virus, Health Topics. World Health Organization. Retrieved from: http://www.who.int/topics/zika/en/
39
World Health Organization. Retrieved from: http://www.who.int/mediacentre/news/statements/2016/emergency-committee-zika-microcephaly/en/
40
World Health Organization (WHO) Issues Positive Recommendation for Oxitec’s Self-limiting Mosquito (2016 March 21). Retrieved from
http://www.oxitec.com/world-health-organization-issues-positive-recommendation-oxitecs-self-limiting-mosquito/

Page 15 of 123
available to children starting nine (9) years of age and will be effective for adults until age 45. This will
have an 80% effectivity rate against four types of dengue viruses. 41
Importance: These technological developments are not worrying matters for the urban pest control
industry but in fact are a greatly welcomed because of its benefits to humanity. Since pests in general are
part of the environment, there will still so many of it to exterminate, most especially with respect to
structural pest control against termites. The business will still continue to prosper along with the help of
the abovementioned technological developments that will kill mosquitoes.

4. INDUSTRY AND COMPETITOR ANALYSIS

4.1. Industry Value Chain and Waterfall Chart

Figure 4.1.A. Structural Termite Treatment Cost Industry Value Chain

41
Retrieved from http://www.sanofipasteur.com/en/articles/sanofi-pasteur-dengue-vaccine-approved-in-the-philippines.aspx

Page 16 of 123
 4.1.1. Purchase and Inventory of Raw Materials
The most important part of any treatment process is the utilization of chemicals. Though there are
other modes of pest control treatment which does not necessarily need the usage of chemicals, however
given that clients are already seeking the help of a pest control provider, usually this signifies that the
infestation is already uncontrollable. Likewise if the treatment required is for the purpose of prevention,
there is a need to secure the structure using a more potent solution such as the use of chemical treatments.
In the market there are so many chemicals available, the usual ones used are those being distributed by
big multi-national companies such as Bayer, Syngenta and BASF. As for MAPECON, the company has
its own patented termite treatment formulation wherein raw materials are locally sourced and
manufactured. Cost associated with chemicals would normally starts from 15% of the total contract price
of the entire area to be treated.

4.1.2. Marketing and Sales

Given the number of industry players, competition is becoming stiff, especially in terms of
gaining and maintaining structural treatment clients for termite control and prevention. This particular
business is the “bread and butter” of the industry considering that it is more lucrative than General Pest
Control (GPC) since the ratio of total costs associated in doing the termite treatment vis-à-vis its income
potential is very much attractive, especially in huge treatment areas such as factories, warehouses and the
likes. Usually marketing costs would be set at 4% as this would include all Below the Line (BTL) and
even for some Above the Line (ATL) activities. The common and effective marketing tools would include
billboards strategically situated in target areas with number of subdivisions.

4.1.3. Administrative Processes

The usual costs associated with managing a business include overheads such as rent, electricity,
water, internet, and staff among others. In addition to this, an ocular inspection is critical because it will
determine the size of the property to be treated, the number of people involved in performing the services,
the actual quantity of chemicals to be used and more importantly is the prize per square meter that will
become a part of the contract. This step is likewise critical because in most cases, prior to the actual
application, a bidding process is held to determine the company which could provide the most value for
money to customers, therefore, this step is a make or break moment in getting any contract approvals. It is
the one step in gaining customers, however it is likewise associated with costs because not all prospective
clients who has been inspected would sign the contract proposal. In cases of an approved contract, the
cost would be 19% of the treatment price which already included VAT. One of the main difference
between a legitimately practicing pest control company and those considered to be as fly-by-nights is in

Page 17 of 123
the aspect of the payment of the proper taxes which are due to the government. The normal VAT tax rate
is 12% and this is fixed regardless of the amount of contract involved.

4.1.4. Technical Operations

Given this, pest control industry practitioner set a specific percentage on the contract to be
allocated on the salary or commission of the technicians. The number of technicians to be utilized would
generally be depending on the size of the area to be treated and depending on the level of infestation as
well. Normally the cost would be 8% of the totally contract price per person. Hence an estimate of 16% is
needed per project.

4.1.5. Warranties
Whenever a project has re-infestation of termites, the warranty provisions of a termite treatment
plan shall be applied. Said warranty covers 10% of the total cost which will be utilized for the purpose of
purchasing additional chemicals for reapplication on the re-infested area. If the contract has expired and
the warranty was not claimed, the said amount will therefrom form a part of the revenue.

4.1.6. Quarterly Maintenance

An estimate cost of 6% is allocated for fuel and other related costs in doing quarterly
maintenance programs. Oftentimes if the firm has other clients within the vicinity, costs related to the
quarterly visit such as for instance fuel, will already be absorbed in servicing other customers.

4.1.7. Key Findings and Insights

Competition is always high in the industry and there are constant threats from competitors that
are very much aggressive in getting contracts with potential clients. Likewise despite competitive pricing
structure there lies the threat of substitutes which are always available. This is especially true if the
customer has decided to do the actual pest control treatment on their own, given the ease of performing
the said task with just a matter of purchasing concentrated chemicals at any DIY or mom and pop stores,
and merely diluting chemicals in water.
In circumventing normal business practices and to avoid any marketing, administrative and
taxation costs while gaining lucrative business deals, fly-by-night companies usually lower their prices
way below the industry standards. Customers generally are more concerned with the price and the result.
They are not looking into the relevant costs incurred by a PCO.

Relevance to the firm: MAPECON as mentioned owns its patented formulation of locally sourced and
manufactured chemicals. Unlike imported chemicals which are more costly because of the infusion of
additional expenditures related to its eventual usage, which includes importation, taxes, licensing and
marketing costs, this is not an issue with MAPECON. In fact, being a Filipino invention, the products

Page 18 of 123
 42
used by the firm in all of its servicing are exempted from taxes. This particular advantage allows
MAPECON to move freely in terms of pricing, thereby giving it a competitive advantage if the basis of
gaining any contracts has already been based on pricing.

Figure 4.1.B. Waterfall Chart

4.2. Porter’s 5-Forces Model

4.2.1. Industry Definition and Direct Competitors
MAPECON is in the pest control business, doing services aimed at controlling and exterminating
pests that are commonly seen in households, commercial and industrial establishments, such as rats,
termites, ants, flies, mosquitoes and cockroaches. As an extermination business, it would follow that
chemicals are utilized in order to achieve the ends of the business. With this, in 1993, MAPECON was
disqualified to participate in a government bid for pest control services allegedly due to its non-
conformity with a the required Fertilizer and Pesticide Authority (FPA) license prior to operating its
business. The FPA is the government agency that is tasked to monitor, license and regulate chemicals used
in exterminating pests. The said disqualification was challenged by MAPECON in the courts, until it
reached the Supreme Court of the Philippines. The high court has decided the case in favour of
MAPECON43 by stating that FPA is not authorized to issue the said license 44.
It was held that “significantly, the above-quoted provision of P.D. No. 114445 sets the parameters
of the powers and duties of the FPA. First, the FPA is designated as an attached agency of the

42
RA 7459 – Inventors Incentive Act
43
G.R. No. 161594, Fertilizer and Pesticide Authority vs. MAPECON (February 8, 2007). Supreme Court of the Philippines.
44
Rey G. Pangilinan (2007 April 14). SC rules on urban pest control case. National News, Manila Bulletin.
45
Act Creating the Fertilizer and Pesticide Authority, abolishing the Fertilizer Industry Authority (1977 May 30)

Page 19 of 123
Department of Agriculture. Urban pest control or pesticide use in households, offices, hotels and other
commercial establishments has nothing to do with agriculture. Second, it spells out the purposes for
which the FPA was created, viz: for the purpose of assuring the agricultural sector of adequate supplies
of fertilizer and pesticide at reasonable prices, rationalizing the manufacture and marketing of fertilizer,
protecting the public from the risks inherent in the use of pesticides, and educating the agricultural sector
in the use of these inputs. All these purposes limit the jurisdiction of the FPA to agricultural pesticides.”
In addition, the Supreme Court said “that the FPA has jurisdiction only over agricultural
pesticides, not over urban pest control products. Pesticides in P.D. No. 1144 refer only to those used in
farming and other agricultural activities, as distinguished from pesticides used in households, business
establishments, and offices in urban areas”. Given that decisions of the Supreme Court forms part of the
law of the land46, at present there are no government agencies that had jurisdiction 47 of monitoring, issuing
licenses, adjudicating and hearing concerns related to the servicing aspect in the pest control industry.
In terms of company business registration 48, the industry where MAPECON belongs to is
classified in the category of maintenance of structures such as households and buildings. By checking on
the business registration in the SEC or DTI, there are at least a thousand of businesses that are registered
as pest control providers. However, some of the firms operating within the level of MAPECON which can
be considered as direct competitors in terms of number of employees, product offerings and nationwide
presence are Rentokil, Sterix, Pest Science and Pest Away.

5-Forces Analysis: Summary

Having a strong threat due to rivalry of players and to new entrants shows that the
indusry is attractive and can really provide profitability to new PCOs that is able to establish itself
well in the industry. Despite this, MAPECON can utilize this to highlight its competitive

46
Article 8 of the New Civil Code of the Philippines
47
Tetch Torres (2007 February 14). SC: Urban pest control not under gov’t jurisdiction. Inquirer Express.
48
Securities and Exchange Commission industry business registration classification

Page 20 of 123
advantage of being in the business for more than 55 years. Their expertise have been fully
developed with years of handling various clients nationwide. MAPECON’s scientific background
and solid years of experience would alwys ensure competitive advantage over other firms.

4.2.2. Rivalry of competition

RATING: STRONG
The urban pest control industry is considered by practitioners as an orphaned industry. There are
so many pest control practitioners in the market which are either operating as a single proprietor or
corporation. At least 1,000 pest control businesses are registered with the Department of Trade and
Industry (DTI) or Securities and Exchange Commission (SEC) 49. These registered pest control businesses
are listed as having a business operation either within the barangay, city/municipality, regional or national
levels. Other than the legitimate PCOs there are “fly-by-night” operators whom are non-registered entities
but are doing the business as a Pest Control Operator (PCO). These groups of individuals are considered
as such, simply because they do not have any documents or business registrations. Oftentimes, employees
of legitimate PCOs during their free time or over the weekend would service their own clients or worse,
talk to the existing clients of the PCOs they are working for, and offer the services outside of the contract,
obviously for a much lower price or any valuable considerations. The existence of so many pest control
practitioners in the market has stiffened the competition allowing for price wars. Usually the so called fly-
by-night operators are the ones the perpetrate these price wars because they can offer their services
without considering other cost factors associated in a legitimately organized company. Additional
discussion regarding this is presented further in this paper.
As a result of the decision of the Supreme Court in the MAPECON vs. FDA case, the
Department of Health through the Bureau of Food and Drugs (now Food and Drugs Administration 50)
stepped-in by issuing a memorandum for the transitioning of the registration of urban pest chemicals from
the FPA to the Department of Health-Bureau of Food and Drugs (DOH-BFAD) 51 which authority came
from PD 88152. Eventually, R.A. 9711 or the “FDA Act of 2009”53 was enacted which states that it shall
be the authority in registering hazardous substances or urban pesticides, including pest control
establishments.

49
Business Name Search. Department of Trade and Industry. Retrieved from http://www.bnrs.dti.gov.ph/web/guest/search
50
14th Congress - RA 9711, Section 1. “The Bureau of Food and Drugs (BFAD) is hereby renamed Food and Drugs Administration (FDA)”., August 18, 2009.
51
Department of Health: Bureau Food and Drugs. DOH BFAD Advisory No. 2008-003. Import Permits: Initial Registration and Renewal of Existing Certificates of
Product Registration covering Household Pesticide Products, as well as, Licenses to Operate of Entities Manufacturing or Importing/Exporting/ Distributing such
Products for Raw Materials. February 8, 2008.
52
Presidential Decree No. (PD) 881, January 30,1976, empowering the Secretary of Health to regulate Household Hazardous Substances. (HHS). AO no 303 s.
1976 provided guidelines on the registration of HHS and licensing of establishments engaged in the sale and manufacture of HHS.
53
The FDA Act of 2009 “The manufacture, importation, exportation, sale, offering for sale, distribution, transfer or retail of any drug or device; the manufacture,
importation, exportation, transfer or distribution …urban pesticides; or the operation of …pest control establishment without the appropriate authorization from the
FDA is prohibited”

Page 21 of 123
 The Food and Drug Administration (FDA) in its letter 54 states that the Center for Cosmetics
Regulation and Research (CCRR) of the Food and Drug Administration (FDA) is the only regulatory
agency in the Philippines as per RA 9711 “The FDA Acts of 2009” which is tasked to regulate the Pest
Control Operators (PCO) handling household/urban pesticides. It further states that the issuance of the
Administrative Order no. 2014-0038,55 was to provide guidelines, rules and regulation on issuance of
License to Operate as Urban Pest Control Operator (UPCO) and training and certificate for Certified
Urban Pesticide Applicators(CUPAs). However, CCRR is currently in the process of amending the
guidelines in which all the issues and concerns were taken in to consideration. Thus, the regulation on
licensing of pest control operators remains in status quo…”
This move was supported by the Philippine Federation of Pest Management Operators’
Associations, Inc. (PFPMOA, Inc.) which is an aggregation of groups that is composed of various
organizations such as the Philippine Association of Professional Fumigators Inc. (PAPFI), the Pest
Control Association of the Philippines (PCAP) Inc., the Pest Exterminators Association of the Philippines
(PEAP) Inc., the South Luzon Pest Management Operators’ Association of the Philippines (SL-PMOAP)
Inc., the North Central Luzon Pest Management Operators’ Association (NCL-PMOA), Inc. and the Pest
Control Association of the Visayas (PCAV) Inc.
However, there are other groups which are composed of entomologists and industry practitioners
to whom MAPECON belongs to, that are not in favor of this move by the FDA and PFPMOA.
Specifically, they are pointing out that it is the National Committee on Urban Pest Control (NCUP) that
56
should perform the role of accrediting pest control operators and providing for the necessary trainings.
MAPECON through the NCUP claims that the industry is governed not by any government agency, but
by the NCUPC which is a non-government organization established for the said matter. 57
Apart from pertinent laws58 such as the Sanitation Code59, Building Code60 in place that are
related to the practice of urban pest control, still there are various initiatives currently being implemented
54
Letter Addressed to Mr. Job Dayadante, President of Pest Exterminators Association of the Philippines (PEAP) which was Signed by Eng. Ana Trinidad F.
Rivear, MSc. Director IV, Center for Cosmetic Regulation and Research (December 6,2016).
55
“Rules and Regulations Governing Household/Urban Pesticides Licensing of Establishments and Operators, Registration of Their Products and for Other
Purposes”
56
Presidential Proclamation No. 2063 signed by President Gloria Macapagal-Arroyo. “Strengthening the and Expanding the Coverage of PP 990 of 1997, thus
giving substance to the February 8,2007 Supreme Court Ruling. Whereas, the National Committee on Urban Pest Control was organized by the Office of the
President of the Philippines with the task of implementing a program for Urban Pest Control through a sustainable franchise system…at no expense to the
National Government, which system was formalized in Department of Health Circular No. 155 and the 1991 MOA between NUCP (and various parties), Office of
the President, etc. “
57
Presidential Proclamation No. 990. Declaring the Fourth Week of September of Every Year as “Urban Pest Control Week”. Whereas, the observance of an
Urban Pest Control Week under the aegis of the National Committee on Urban Pest Control…will promote community participation and public awareness, and
enable to the Government and NGO’s to…4. Provide mechanism for mutual cooperation and harmonize laws and regulations relation to urban pest control”.
58
PD 522. Prescribing Sanitation Requirements for the Operation of Establishments and Facilities for the Protection and Convenience of the Travelling Public;
RA9003 Ecological Solid Waste Management Act; DOLE HC 155; RA6969 – Toxic Substances and Hazardous and Nuclear Waste Control of 1990; Book II, RA
9711 IRR, FDA Law
59
PD 856. Sanitation Code of the Philippines, Section 20,64, 79, 80 Vermin Control. (December 23,1975); Chapter XIV Section 63; Chapter XVI Section 69;
Section 70;
60
PD109. National Building Code of the Philippines, Section 905, Pest and Vermin Control

Page 22 of 123
to regulate the industry. FDA has initiated various public hearings and prepared drafts of its
Administrative Order (AO) related to Rules and Regulations Governing the Licensing of Urban Pest
Operators, Certification of Urban Pest Applicators and Training of Technicians and Workers, and for
Other Purposes. The said AO is meant as a prohibition from selling pest control chemicals over the
counter through traditional hardware and DIY shops, particularly those belonging to the red or yellow
band. Once this regulation is passed, pest control companies can no longer easily obtain their chemicals
from other sources apart from legitimately recognized dealers and distributors who have previously
applied for a license with the Food and Drug Administration.
Also, a bill was sponsored by Agham Party list by Representative Palmones 61 entitled, House Bill
Urban Pest Management Act of 2010 with the objective of regulating the pest control industry, which
was set for the 1st reading in Congress. Committee deliberations were started and interest groups were
invited to the public hearings. However, the Congressional term of the bill’s sponsor has ended and he
was never re-elected, and the bill was left hanging in the committee level.
Government regulation is a legitimate exercise of the Police Power of the state in order to
safeguard the safety and health of the people. Considering that the industry is involved in urban
pesticides, chemical risks exposure is high. Once the industry is regulated, it will provide for an avenue to
eliminate, if not reduce significantly “fly-by-night” operators. This will thereby allow the market to
proliferate in favor of legitimate and licensed pest control companies.

4.2.3. Potential for New Entrants

RATING: STRONG
With just a mere business registration with DTI or SEC, anybody can easily establish a pest
control company. Given the availability of chemicals even in hardware and DIY stores, and the ease of its
dilution (with just water), practically anyone who has know-how on the application of chemicals can
already acct as a pest control technician. A farmer for instance who is used to care for the fields and is
very much familiar with the utilization of pesticides can easily perform the job of an urban pest control
technician. The only difference is the care and handling of chemicals since coming from the practice of
agriculture, spraying are obviously done in the wide open field, but in the practice of urban pest control,
the application process will be different because it will now be inside the household or structural
premises. Nevertheless, the same act of spraying and targeting pests will be the same.

61
Personal visit in the Bills and Indexes Division of the Congress of the Republic of the Philippines

Page 23 of 123
 In terms of purchasing the necessary equipment, majority of the materials needed for the business
can easily be bought from the local hardware store or home depots. The average investment cost needed
to start in the said business is around Php 70,000.62

As a new entrant to the business, ideally they have to undergo the proper trainings, attend
seminars organized by pest control associations such as by the Pest Exterminators Association of the
Philippines (PEAP), as well as those that are organized and spearheaded by the National Committee on
Urban Pest Control (NCUP). In terms of regulations, the only requirement that must be provided to the
government is the application of business permit either with the SEC or DTI, including local government
certifications such as barangay clearance, sanitary permit, and mayor’s permit among others.

4.2.4. Bargaining Power of Suppliers

RATING: WEAK
Pest control chemicals are widely available coming from both multi-national manufacturers and
their local counterparts. Multi-national giants such as Syngenta, Bayer and BASF provide a wide array of
pest control chemical products which are used for agricultural and urban pest control applications. There
are likewise local companies63 which include Leads, Kemistar, Agchem, Texicon, among others that
manufactures and produces chemical brands of their own.
In 2015, more than 18,000 tons of pesticides were legally imported through the Bureau of
Customs by the said chemical companies in the country. Based on the said importation, 45% of the
chemicals are specifically related to household hazardous substances or those that are utilized for urban
pest control while the majority of which goes to the agricultural sector. 64 Apart from the said figures, there

62
Actual costs of registering the business with the SEC and City Hall of Las Pinas City for the year 2016
63
Crop Protection Association of the Philippines. Retrieved from: http://cpap.org.ph/members

Page 24 of 123
exist as well generic chemicals that are easily available locally which are sourced and imported cheaply
from China by local chemical distribution companies.
Bargaining power of suppliers is weak because PCOs has a wide array of suppliers available to
them. The FPA in 2011 alone has listed a total of 126 registered pesticide dealers in the country, 65 this
does not yet include individual retailers and those that are focused in selling urban pest control products.
Sourcing for chemicals basically allow PCO’s to have a higher leverage because in terms of supply, there
is a high volume of imported and locally manufactured chemicals available in the market. Likewise, there
are many distributors, dealers and retailers operating nationwide. What therefrom transpires is the
existence of a strong competition among chemical companies in the country because PCOs as industry
practitioners are considered as the actual end-users of their products.
This is the reason why, apart from the regular credit arrangements given by suppliers to PCOs,
various incentive schemes are likewise being offered. It has become a common practice in the chemical
sales and distribution industry to lay-down promotional tools in order to entice and encourage PCO’s to
stay loyal in using certain brands or products of chemical companies. PCOs can easily jump from one
supplier to another, especially when there are good credit terms being offered, hence a balance between
credit offers, year-long incentives or rebate schemes and monthly promotional offers must be regularly
given. However, for MAPECON this does not concern them because they locally source raw materials
and manufacture their own chemicals. The Company does not need to depend on any suppliers to provide
them with the necessary tools in performing their services to their customers.

4.2.5. Bargaining Power of Buyers

RATING: STRONG
Currently there are at least 1,000 Pest Control Operators (PCO) that are registered with
Department of Trade and Industry (DTI) and Securities and Exchange Commission (SEC) 66. The
deregulation in the industry in 2007 has led to the mushrooming of various business entities engaged in
providing pest control services all over the country. Given the huge competition in the urban pest control
industry, buyers have a very strong bargaining power. Buyers can easily bargain their way out of the
standard proposed prices of PCOs by easily comparing various proposals. This is especially true to buyers
who have bigger areas to be treated such buildings, malls, warehouses, factories and the like.

64
Importation Statistics and Monitoring, Bureau of Customs. Obtained from subscription of Business Development and Technical Services of Jardine
Distribution, Inc.
65
Fertilizer and Pesticides Authority, List of Pesticide Dealers and Fertilizers, as of December 2011. Retrieved from:
http://fpa.da.gov.ph/images/FPAfiles/DATA/Regulation/Pesticide/PESTICIDEDEALERSndFP2011.pdf
66
DTI Business Name Search. Retrieved from http://www.bnrs.dti.gov.ph/web/guest/search

Page 25 of 123
 Depending on the purchasing policies in place, usually contracting PCO services are done
through competitive bidding. Pest control companies therefore fiercely compete to the point of ensuring
that their prices are more favorable just to win the bid.

4.2.6. Potential for Substitutes

RATING: STRONG
Most of the time, once the services of a pest control professional is obtained, the level of pest
infestation is already high and it can no longer be contained. Due to the cost involved in hiring pest
control professionals, instead of primarily engaging their services, clients would usually utilize product
substitutes in dealing and combating pest problems. This is typically done through Do-It-Yourself (DIY)
methods. Chemical manufacturers for years have been able to supply the market with pesticides which are
for Read-to-Use (RTU) for DIY purposes. These chemicals are easily available in hardware stores and
DIY shops such as Ace Hardware, True Value, Handyman, Wilcon Depot and the likes. For instance,
most contractors have started doing the chemical application process themselves without consulting or
contracting the services of highly trained and PCOs. Household weekend warriors, most especially men,
are likewise undergoing pest control treatments by themselves, not being mindful if they lack the
experience and skills needed in doing urban pest control work, especially in terms of managing safety of
the people and pets within the general environment. Big industries on the other hand require their own in-
house pest control teams which cater to their internal needs.
Likewise product substitutes come in the form of aerosol insect sprays cans, electrical mosquito
traps, mosquito coils, fly traps, mechanical mouse traps, mouse glues and rat poisons which are easily
accessible and always available to consumers in any grocery or DIY stores. Usually these substitutes
already forms part of the grocery list of the household and are already seen as an essential tool in
managing the homes.
Unlike cities such as Alabang, Makati or Quezon City which requires having a one year pest
control contract for commercial establishments 67, those that does not have a regular pest control provider
are likewise utilizing the above discussed product substitutes for purposes of their on-the-spot pest control
treatments.
All Household/Urban Pest Control products (H/UPs) which are formulated for as Ready to Use
(RTU) are still within the authority of the Food and Drug Administration (FDA) by virtue of AO No.

67
STEPS for the issuance of Sanitary Permit 2016. The Local Government of Quezon City. Retrieved from: http://quezoncity.gov.ph/index.php/qc-
services/requirements-a-procedures/1923-steps-for-the-issuance-of-the-sanitary-permit-2016

Page 26 of 123
2013-003868. On the other hand, according to FDA 69, all mechanical and electronic devices used to kill or
to catch pests are not within their jurisdiction, but with the Department of Trade and Industry (DTI) as is
already constitutes just like a normal household electronic device and does not contain any harmful or
hazardous chemicals.
Having this point of view of strong potential for product substitutes, MAPECON has established
a small part of their business dedicated in selling chemical products that are formulated and manufactured
based on a “ready to use” purpose. They are not pushing for the pest control application services, but the
business mainly focuses on selling the so called, “substitutes”, for those who wish to perform DIY pest
control treatment on their homes, businesses and industries.

4.3. Strategic Positioning Analysis & Recommendation

Figure 4.3.-A: Perceptual Map for Price and Quality

68
DOH AO No. 2014-0038, “Rules and Regulations Governing Household/Urban Pesticides Licensing of Establishments and Operators, Registration of Their
Products and for Other Purposes
69
Personal interview with Ms. Esperanza D. Almenanza, Food and Drug Regulation Officer III, FDA, done on January 2017.

Page 27 of 123
 The x-axis represents total quality of service which includes customer service, professionalism
and product knowledge of technicians, adherence to safety protocols and effectivity of chemicals. Low
signifies no adherence to safety, chemical used are extremely harmful to people and environment and
chemicals are not effective. It may also include failure of sales agents and technicians to answer basic
inquiries of customers about characteristics of pests and simple determination of type of specie. High on
the other hand would represent that chemicals are branded, safe and environmentally friendly and are
manufactured or distributed by well-known and responsible companies such as Syngenta, Bayer, BASF
and its local counterparts like MAPECON. It would also represent that applicators are licensed
technicians utilizing advanced equipment and ensures that personal protective equipment are worn
properly during the performance of services.
On the other hand, the y-axis would provide for the price range multiplied by the total number of
per square meter of the entire area to be treated. This is likewise based on determination of complexity of
application and level of infection. Low is ideally good for customers who would prefer to save on pest
control treatment, but would somehow place a doubt on the minds of experienced customers because a
low priced service may mean the quality is not good. However, this is different for MAPECON since they
are the ones which manufacture their own chemicals, they can manage to reduce their prices and make it
competitive. High generally means a higher price since it is imported and came from the top chemical
companies producing them. It could also be reflected by the idea that chemicals are not diluted and are
prepared in a very precise manner, based on the recommendation and level of infestation.

Figure 4.3.-B: Perceptual Map for Effectiveness and Safety

Page 28 of 123
 Another set of important variables for the specific to the pest control industry is effectiveness and
safety of chemicals used in general. All chemicals regardless of color are generally harmful to humans
and pets which must be handled with extreme care. Account representatives who are naturally the front
liners in any pest control business are highly knowledgeable on how to conduct an estimate of the
premises to be treated, thereby knowing how much or what type of chemicals to be utilized by its
technicians. In the same manner, technicians are well trained in the safety protocols to be implemented
before, during and after the pest control treatment has been done. Immediately once a pest control
application has been performed, pests with direct contact would instantly die. Follow-up applications are
only necessary for offspring of pests and at the same time for maintenance purposes.

The x-axis would provide for the overall safety feature of the chemical, usually in terms of
chemical band or labeling or chemical hazard labeling, it is classified as yellow or green 70. Apart from the
color band, the dominant color in the chemical packaging per se would indicate the type of chemical and
its effect to the environment. The y-axis on its part provides for the total effectiveness of the chemicals in
dealing with unwanted pests. The chemical applications performed on the customer’s premises usually
require numerous visits and repeated treatments before all pests are eliminated. Qualities of chemicals are
always in in relation to the compliance of technicians with the proper protocols in terms of its application.
Apart from the chemicals and its application, likewise includes the quality of manufacturers and how
dealers or distributors handled said chemical products during transit.

Figure 4.3.-C: Perceptual Map for Experience and Warranty

70
Toxicity Label. Retrieved from: https://en.wikipedia.org/wiki/Toxicity_label

Page 29 of 123
 The last set of important variables would include the combination of technical experience and
warranty provisions. The x-axis gives a provision for any warranty claims wherein despite the success of
the treatment conducted, pests due to their natural instinct would somehow re-emerge in the area that was
previously treated. Warranties are usually available for a period of five years. This is a scenario where
during the actual application of chemicals, there will be an involvement of drilling or making trenches
which would naturally damage the surroundings, including gardens and paved floors and pathways.
MAPECON operates by using traditional chemicals, therefore becoming intrusive to its customers. A
well-established pest control company like MAPECON would not tarnish its reputation due to ineffective
chemicals and failed application services. This is the reason why warranties are well taken noted of
because this is how they establish a long term relationship with their clients. The y-axis on the other hand
gives an overview of the years of experience in the service of handling pesticide chemical applications
and dealing with pests. One aspect that reflects on expertise is whenever pest control companies that are
purchasing chemicals from dealers and distributors would naturally ensure that the area to be treated
would have the exact number of chemicals in terms of dilution rate as recommended by its manufacturers.
Recommendation:
The strategic positioning was done along with other players such as Rentokil, Sterix and Pest
Science because just like MAPECON, these are the pest control operators that are not only servicing
individual households, but also big firms and projects like malls, restaurants, condominiums, etc. In all
three (3) maps, MAPECON is strategically located on the right portion of the map, with the exception of
Figure 4.3.-A: Perceptual Map for Price and Quality since it went a little bit below the high mark. This is
indicative of the idea that it has competitive advantage over its competitors in terms of pricing. As a

Page 30 of 123
leading and trusted pest control operator, MAPECON’s prices would tend to be higher as compared to its
competitors, however given the advantage of MAPECON in developing its own chemicals which are both
effective and environmentally friendly it can manage to be in the position of being in a low price point
comparing it with its competitors.
One of the key formulas for the continuity of MAPECON’s business apart from being a pioneer
in the industry is the spirit of innovation that its founder is implementing. Mr. Catan as an expert
entomologist uses highly backed-up scientific research in inventing his own environmentally friendly
chemicals. Other pest control companies are mainly in the service of application of chemicals, but for
MAPECON, their own inventions are exclusive to their service, an example would be the white termite
powder that they place on electrical boxes.
However, despite the current success of MAPECON, their products and technology has been in
place for the past 55 years and there are no signs showing that there are changes made to improve and
further developed the said technologies. Example is the development of non-repellant soil termiticides. 71
Given that the competition in the pest control industry is getting fierce, with the onset of other new and
dynamic companies such as Pest Science, Inc. (founder is a former MAPECON employee), MAPECON
should continue on its spirit of innovation, most especially beyond the years of Mr. Catan who currently is
already in his prime years.

4.4. Market Share, Size and Growth Trends

As discussed in the initial parts of this paper, the urban pest control industry is deregulated, hence
there are no government bodies monitoring the said industry. The industry itself is policing its own ranks
through professional organizations such as PEAP, PCAP and PFPMOA. However despite this, there are
still no available data to measure the total market size of the industry. In an article 72 written by Dr. Partho
Dang, he said that “the Philippines is one of the fastest growing urban pest control market…There is no
survey or consolidated data available in the Philippines to gain an estimate on the volume of present
business. However, consolidating number from various industry sources it could be estimated that the
annual market size is around 5 to 8 million in US Dollars”
On the other hand, Importation Monitor Data of all Household Hazardous Substances (HHS)
coming from the Bureau of Customs reflects that in 2015 the total value of all imported chemicals

71
Personal interview with Ranyner Lorenzo (President and CEO) and Ruby Vida F. Lorenzo (VP Finance/Marketing), Pest Science Inc., done on January 2017.
72
Agro News: Future in Urban Pest Control Market in Philippines. (2012 October 18). Retrieved from: http://news.agropages.com/News/NewsDetail---8163.htm

Page 31 of 123
reached to almost PHP One (1) Billion, which is a 27% increase from 2014 and 5% from 2013 and almost
the same with 2012, respectively. 73
In order to obtain the proper market size of the pest control industry, there is a need to make
certain qualifications about the given data. The figure given by Dr. Partho Dang as well as the Importation
Monitoring of the Bureau of Customs, although helpful in generating a reasonable market assumption, it
is not yet a total indicative of the urban pest control market size. The reason is due to the fact that these
figures merely pertain to chemicals alone. Specifically, the Importation Monitoring merely reflects the
values as either raw materials or active ingredients which will still further be processed, repacked and
labeled. Other importations are made as finished goods, but these will still incur associated costs such as
taxes and regulatory fees. Likewise, other operational costs would include logistics, warehousing,
marketing and sales, among others.
In summary, using the given data is a solid starting point in making a reasonable assumption of
the total market size of the pest control industry, but there are still other factors to be considered because
the said industry is service oriented and there are other costs involved in performing the actual pest
control service. Additional sources of information utilized to measure the said industry include the review
of Financial Statements of top performing pest control companies in the country. Finally, this information
were validated through opinions of seasoned industry practitioners 74 wherein based on separate
interviews, each provided a reasonable assumption that the total size of the industry as at 2015 is around
PHP Two (2) Billion Pesos.

Table 4.4.-A.: Market Size in Php 2011-2015

Company performances in the pest control industry remains reasonably strong since it is highly
dependent on the trends and other market forces in the economy of the country. The industry wide CAGR

73
Importation Statistics and Monitoring, Bureau of Customs. Obtained from subscription of Business Development and Technical Services of Jardine
Distribution, Inc.
74
Personal interview with Gil Aguila of Aguila Pest Control and 2013 President of the Pest Exterminators Association of the Philippines and 2014 President, Job
Dayadante done on April 2015.

Page 32 of 123
reflects the total rate of 7% over a period of 5 years. Basically companies presented 75 performed within
the range of the market size, this includes all other combined companies. It is noteworthy to point out
though, that the values presented for Rentokil was adjusted to reflect only their pest control business.
Hence, that figures shown were divided between its pest control and hygiene business. By doing this, the
market share will fully be determined because all companies will now be compared with each other on an
equal footing. Despite this though, it would show that Rentokil is outperforming MAPECON which is the
industry leader in terms of CAGR with 7% as compared to the latter with only 6%. Still though, in terms
of the urban pest control industry, MAPECON’s 6% CAGR is already a good indicator of performance
over the past years considering that it is only a mere 1% behind the total market size. Noteworthy to point
out here is the 19% CAGR of Sterix which posted a substantial growth three times over the market rate.
This may be attributed to the fact that the Sterix is focusing its services on industries, providing
fumigations works which are not the focus of the other firms shown here. Pest Science on the other hand,
being headed by a former employee of MAPECON, is an aggressive firm, having posted significant
growth over the past five years and is performing within the 7% market size CAGR.

Table 4.4.-B.: Market Shares 2011-2015

MAPECON still remains as the leader in terms of being the biggest pest control service provider
in the country having operations extending beyond Metro Manila which includes areas in Visayas and
Mindanao. Having a total of 55 branches operating nationwide has ensured that it retained its 12% market
share among thousands of industry practitioners all over the country, most especially by pitting it against
the direct competitors as shown above. It would appear based on the figures that MAPECON through its
aggressive presence in the market was able to recover the 1% market share which was taken from the
overall competitors since its market share was slightly reduced from 73% in 2014 to only 71% in 2015.

75
EMIS. Euromoney Institutional Investor Company. Ateneo Professional School library.

Page 33 of 123
Nevertheless, MAPECON still is able to maintain its strong presence it market by having an average of
12% market share spread over a period of five year from 2011 to 2015.

Table 4.4.-C.: Growth Trends and Changes 2011-2015

The overall industry which includes key players are experiencing steady growth trends over a
period of five years. This coincides along with the demands of various industries. For instance, the leisure
and services sector, BPO and construction industries are booming, hence opening additional markets to
perform the basic services of a pest control provide. In 2014 alone, the BPO sector has posted an 18.7
revenue% growth.76 There is likewise a 5.1% growth in the construction industry in 2014 alone. 77
Furthermore, tourism sector is likewise experienced a growth of 8.24% in 2015 compared to last year. 78
This reflects an increase in the activities of hotels, restaurants and leisure venues. Therefore the 10.07%
growth posted the overall urban pest control market is not an accident but is really based alongside the
performance of the previously mentioned industries.

Relevance to the firm:

MAPECON as an established pest control operator would naturally be able to benefit from this
growth trend in the economy for the reason that as long as industries are growing that naturally includes
the expansion of labor forces, pests would naturally follow the wastes created by people. In this situation,
the more activity there is, the more urban pests would propagate, hence, the more business opportunities
available for MAPECON.
MAPECON is still the leader in terms of being the biggest pest control service provider in the
country having operations extending beyond Metro Manila which includes areas in Visayas and
Mindanao. However, it is the tight competition among industry practitioners that is creating the decline
the market share of the company. In addition to this, other companies are more aggressive given that

76
Army P. Remo (2015 March 19) IT Sector posted positive growth in 2014, Inquirer.net. Retrieved from: http://business.inquirer.net/188861/it-bpo-sector-posted-
18-7-revenue-growth-in-2014
77
National Accounts of the Philippines - Highlights - GNI and GDP by Industry, Philippine Statistics Authority. Retrieved from:
http://nap.psa.gov.ph/sna/2015/3rd2015/2015gnpi3.asp
78
Industry Performance for Travel and Tourism (January 2015). Retrieved from: http://www.tourism.gov.ph/pages/industryperformance.aspx

Page 34 of 123
unlike MAPECON which has already established a strong foothold in the industry, some are on a start-up
venture and are actively involved in marketing and promotion of their businesses.
Although MAPECON itself has experienced dramatic increased in its sales which resulted to a
6% CAGR, still what must be looked into is the market share wherein over a period of 5 years it has
dipped a bit, barely maintaining its market share between 11 to 12% while on the other hand, its
competitors are experiencing a growth in their respective market shares. It thereby reflects the effect of
having too many players in the industry and most likely the proliferation of fly-by-night operators are
affecting the overall market share performance of MAPECON.

4.5. Market Analysis

4.5.1. Market Segments
Pest Control Operations is segmented into three (3) distinct markets, the household, commercial
and industrial. PCOs typically focus their expertise and resources depending on the markets they are
targeting. For instance, MAPECON is well known in the residential market, given their 55 years of
presence in servicing the homeowners. Usually the household have already become accustomed to the
presence of and services offered by MAPECON, which would sometimes include the familiarity with the
designated service technician. Oftentimes, once members of the said household become capable of
purchase or construct their own homes, they will naturally obtain the services of the said company. On the
other hand, Pest Science being a new and dynamic pest control company is focusing its resources in
servicing the commercial industry such as hotels, malls and most recently, they have acquired a contract
as the official pest control provider of Okada, Manila. On the part of industrial accounts, Sterix is utilizing
its credentials as entomologists in servicing the need of various industries, especially those that are related
to food storage and production. Part of this is in providing fumigation services to the food industry.
Despite the three (3) distinct market segments, PCOs still generally operate regardless of which segment
their client comes from.

4.5.1-A: Pest Control Operations Segmented Service Offerings

Page 35 of 123
 The urban pest control industry is generally divided into two (2) service categories, first is the
Termite Control or structural pest control and the second is General Pest Control (GPC) or the non-
structural pest control. Termite Control could be fully segmented between the pre-construction and post-
construction projects. The third aspect which is fumigation though within the purview of structural pest
control, is mostly utilized for the purpose of preserving and eradicating pests in stored food products.
Likewise, the chemicals, process and technology behind fumigation is totally different, this is the reason
why the said activity is regulated by the Fertilizer and Pesticides Authority. 79 Fumigation therefore does
not fall within the purview of urban pest control.
In terms of the pests involved, Termite Control and GPC are totally distinct from each other.
Termite Control would focus on treating termites that causes damage to household and industrial
structures, in lay man’s understanding, they “eat materials which are composed of wood”. The proper
technical explanation though is that termites eat the cellulose materials which are normally found in
wood. On the other hand, GPC is a treatment against vector carrying pests like flies, mosquitoes,
cockroaches and rodents which are causing direct or indirect harm to humans. Mosquito bites causes
dengue while presence of fly would attract harmful bacteria to the surroundings, same as with
cockroaches and droppings of rodents. Apart from the type of pest, it would likewise vary on chemicals
used, equipment utilized as well as technical procedures of treatment.

4.5.1 –B: Behavioral Segmentation Termite Control Service Offer

79
Personal interview with members of the Philippine Association of Professional Fumigators, Inc. (PAPFI)

Page 36 of 123
 The emergence of new ways in treating termites has allowed another segmentation offer based on
the traditional and non-traditional methods. There are some clients, in particular meticulous ones who do
not want to go out of their homes during treatment procedures. Also, their manicured lawns were
expensively done hence it must not be disturbed. Clients especially those belonging to the upper class
could naturally afford to have a non-traditional approach in their option for termite management. Since
this process is merely done through a baiting system, there is no need for voluminous liquid termiticides
to be applied in the property. Likewise, the premium price provides the benefits of having their privacy
secured because there is no longer a need to conduct the same termite process yearly. In this particular
situation, termite baiting products like Sentricon which is an American brand 80 and Exterra from
Australia81 come in handy. Both respective manufacturers of the said products accredit only a few pest
control companies in the country to distribute and use the said brands. The process of using these products
is unlike the traditional concept where chemicals are poured on the soil. What is only required of these is
to drill holes and place the baits were termites are present. In this situation, chemicals usage is minimized
and drilling holes or trenching on the lawns and the surrounding premises is totally avoided.

Relevance to the firm: Having a segmented service offer such as Termite Control and GPC offers a
unique technical approach in performing them. This is relevant to MAPECON because the investment
required per category is different from the other as well as the process done on its treatment. For termite
control, it would be more complicated hence would naturally need at least 2-3 manpower compliment
who would be bringing in all of the equipment, drilling holes on the pavement or creating trenches on the
ground. The equipment itself would need the use of service vehicles which would give additional costs to
the company such as gas and allowances. For the General Pest Control on the other hand, it is simpler

80
Retrieved from: http://www.sentricon.com/en-US
81
Retrieved from: http://www.exterra.com.au/

Page 37 of 123
since what is needed is only a single handheld device which can be operated by one person who can
merely conduct the said service and visit the customer by using a motorcycle or even public transport.

4.5.2. Market Forecast by Segment

PCO SEMENTED SERVICE OFFERING FORECAST (VALUE)
Last Assumed
(In Millions) 2011 2012 2013 2014 2015 Yr. 2016 2017 2018 Future
CAGR CAGR
Termite
Control 576 622 669 727 800 7% 880 968 1,065
Precon
173 187 201 218 240 7% 264 290 319
Postcon
10%
403 435 468 509 560 7% 616 678 745
GPC
863 933 1,004 1,090 1,200 7% 1,320 1,452 1,597

Total 1,439 1,555 1,673 1,817 2,000 7% 2,200 2,420 2,662

The amount as represented by the corresponding percentages in the segment size of every service
offering was obtained through information coming from seasoned experts and that operates their own
82
PCO’s. Market demand would naturally project a much higher percentage in allocated to the GPC
service segment because, unlike termite treatment, the former is regularly performed on a monthly basis
while the latter is done within a time frame of two (2) to three (3) years. It is still expected that there will
be 10% CAGR given the positive trends in the industry as presented in the EFE portion of this paper.

Relevance to the firm: This is important for MAPECON in order for the firm to concentrate on which
particular market segment they wanted to focus. One of the reasons why they are always the top of mind
of people whenever pest control is the topic of conversation is because they are focusing their services on
the household and commercial segments. Some other firms might not be well known as a pest control
provider, but they are doing well in terms of the market segment that they are servicing, like factories,
manufacturing firms and warehouses, which have a bigger area. If MAPECON would like to maintain its
market leadership in the futures, it must determine where to utilize its budgets and expenditures. For
instance, in 2013, it has allocated Php2 Million pesos in advertisements which created an impact in the

82
Based from interview with Mr. Job Dayadante and Mr. Gil Aguila, former presidents of the Pest Exterminators Association of the Philippines (PEAP).

Page 38 of 123
household market. However, the said amount can likewise be used as representation expenses when
agents deal with administrators in the industries.

4.5.3. Key Service

The services offered by MAPECON listed above does not delineate from the usual service offer
of other PCOs in the industry. The terminologies listed per service offer were merely drafted for
marketing purposes in order for it to easily be communicated to customers. Overall, urban pest control
practitioners offer practically the same service. The only would distinction would be how the PCO would
market itself and prove to customers that it will live-up to its warranty and quarterly maintenance
promises. Since 1961, MAPECON Philippines, Inc. has become a forefront in the abatement and
prevention of pests in urban communities. Its more than 55 years presence in the country has made it a
very strong brand, the name which is on top of mind name when it comes to dealing with household,
commercial and industrial pests. The company is not merely considered as a leader and forefront in pest
treatment, but as a pioneer in the industry since for the longest time it has been inventing and
manufacturing its own chemicals which they proudly claim to be 100% Filipino. The combination of a
strong brand name and as well as being the manufacturer of their own chemicals has always been the
company’s strength especially in terms of winning project bids both in the government and private sectors
because they can always afford to drop their prices without sacrificing quality of work.

4.5.4. Pricing
Table 4.5.4-A.: Pricing Strategy

Page 39 of 123
 Pricing are independent and are not based on the distribution prices of chemicals sold by third
party intermediaries. On the part of MAPECON, it can allow dropping of prices because they are likewise
the manufacturer of their locally produced chemicals. Pricing is important as it is a definitive factor in
winning a bid. In any pest control requirements, usually lower priced quotations will always win. Prices
are based on competitive bidding because most competitors get their chemicals from the same source.
There are contracts involved wherein prices are based on competitive bidding. Pricing is important as it
is a definitive factor in winning a bid. In any pest control requirements, apart from the usual factors of
stability of the company, list of previous clients and manner of servicing, usually lower priced quotations
will always win.

4.5.5. Marketing and Promotions

Table 4.5.5-A: Marketing and Promotions: Strategies and Tactics 83

83
Retrieved from: http://mapecon.com/home.php; http://www.rentokil.com.ph/index.html; http://sterixph.com/company.html;
http://www.pestsciencecorp.com/new_site/

Page 40 of 123
 PCOs normally do not utilize Above the Line (ATL) but mostly, Below the Line (BTL) marketing
promotions in marketing their companies. Rentokil is relatively the strongest competitor of MAPECON
in terms of the capability to manage its key accounts. Being a market leader in sanitation care, it makes
use of this to market to penetrate the PCO business. It likewise emphasizes on its corporate structure of
being a foreign subsidiary company in order to easily attract industries, especially multinational clients.
Just like MAPECON, Sterix likewise is a company headed by expert entomologists. Though their
business model is concentrated more into performing fogging on warehouses where agricultural products
and consumer goods are stored, still they are capable of performing other basic pest control activities,
thereby competing head on with MAPECON. Pest Science is a company despite its humble beginnings is
slowly making a mark in the pest control industry. It can compete in terms of pricing since the company is
distributing pest control chemicals as well. It utilizes the newest technology in termite eradication as a
partner of Sentricon.

Page 41 of 123
Relevance to the firm: MAPECON’s strong advantage in the industry is its unmatched 55 years presence
in the market, which generally brings in a strong sense of expertise, while the rest of the PCO’s compete
primarily based on price. Strong emphasis on being a pioneer in the industry has been the primary focus
in all advertising campaigns. In addition is the use of products which are environmentally friendly and
based on its own inventions.

4.6. Competitive Profile Matrix (CPM)

Below are list of companies that are performing well in their corresponding servicing segments
and at the same time considered as direct competitors of MAPECON for the reasons herein illustrated.

4.6.1. Key Competitors

a. Rentokil (Initial) Philippines, Inc.
- Size: Php 200 Million (2015 Sales); Php 100M if the only pest control84
-Number of Employees: Around 200
- Market Share: 5%
- Reason for choosing: Incorporated in 1965 which is almost the same decade as
with MAPECON, it is a wholly owned subsidiary of Rentokil Initial plc. a corporation incorporated in the
in United Kingdom. Rentokil was initially established in the Philippines as a company engaged in the
hygiene business, distributing its hygienic products to commercial clients nationwide, after its acquisition
Thomas Cowan, a pest control company operating in the country, it eventually ventured in the pest control
business as well. It must be qualified that Rentokil is not being compared with MAPECON in terms of its
sales performance simply because a chunk of the business of the latter comes from its institutional sales
of hygienic products.85 This explains the reason why despite having a solid sales performance for 2015,
the market share in the pest control industry is merely 5%. Rentokil was actually chosen because it can be
directly compared with MAPECON in terms of capability to utilize its hygienic business in growing its
pest control business category. 86

b. Sterix Incorporated (Formerly Sterix Food Hygiene, Inc.)

- Size: Php 160 Million (2015 Sales)
- Market Share: 8%
- Number of employees: Around 185
- Reason for choosing: The Company was established in 2002
Just like MAPECON which was formed by an expert entomologist, Sterix Incorporated was started as
well by a group of entomologists with extensive background in agriculture and pest biology and
84
2015 FS, SEC. Total FS was divided into 2 to allow equal distribution assumption between the hygienic and pest control businesses
85
Telephone Interview with Ms. Joy Fabian, Marketing Manager of Rentokil Initial, Philippines. February 2017
86
Information retrieved from http://www.rentokil.com.ph/index.html

Page 42 of 123
integrated pest management. Unlike MAPECON which concentrates its business in the actual pest control
servicing using its locally invented chemicals, Sterix Incorporated conducts services mostly targeting the
industrial market, especially in terms fumigation services in food manufacturing and warehouses. This is
the reason why they have a registration with FPA, as licensed fumigators. 87

c. Pest Science Corporation

- Size: Php 85Million (2015 Sales)88
- Market Share: 4%
- Number of employees: Less than 100
- Reason for choosing: A relatively new comer in the pest control industry, Pest
Science has slowly increased in performance with a 7% CAGR increase over a period of 5 years. It is
concentrating its business in the commercial accounts. Pest Science is used as a benchmark against
MAPECON because of the management dynamics of its owners who are relatively young and new in the
business. Despite this however, they may still be considered as seasoned experts as the President of Pest
Science, Mr. Reyner Lorenzo was a former MAPECON technical employee. Also, in terms of application
of new technologies in the termite control industry, they are one of the few companies that are using a
baiting system, and are endorsing the product the Exterra baiting system brand. 89

4.6.2. Critical Success Factor (CSF)

a. CSF #1: Credibility and line-up of previous clients
CSF Type: Revenue Growth Driver
Importance Score: 8
Importance Weight: 16%
This factor is the 3rd most important revenue growth driver in the CSF that is why this is given a
score of 8 and an importance weight of 16%. It serves as a natural marketing tool in terms of obtaining
additional line up of clients based merely on previous transactions. This becomes extremely helpful
because even without the utilization of expensive marketing costs, new clients will easily be obtained,
especially if previous clients are well known personalities, companies or institutions. According to pest
control sales agents, it helps them to close a deal whenever they drop the names of well-known clients.
This is likewise true in dealing through a bidding process because one of the requirements is the
submission of list of previous clients. Weakness on this factor on the other hand does not immediately

87
Information retrieved from http://sterixph.com/company.html
88
2015 FS, Securities and Exchange Commission
89
Information retrieved from http://www.pestsciencecorp.com/new_site/

Page 43 of 123
equate to lack of chances in getting new clients because CSF #4 and 6 could are still available as primary
revenue growth drivers.
The common mindset and practice of most clients in looking for a pest control provider is to ask
for recommendations from friends and business partners. Referrals are basically a strong marketing tool
which is based on a solid foundation of trust emanating from credibility. Once referred, a PCO would
normally have a higher degree of certainty of closing the contract. Credibility is always associated with
the values of trust, honesty and adherence to confidentiality because as part of the nature of job of every
pest control practitioner, close proximity and all-access to clients’ inner sanctuary, even bedrooms are
inevitable. A PCO must maintain confidentiality in the affairs and businesses of the clients and merely
focus on the job itself of getting rid of pests. This is the main reason why it is highly important for PCOs
to have that certain level of credibility and invest in that trust so that the market itself will be the one to
approach them, instead of the other way around.
Still, for some, especially in the commercial and institutional segments, it is important to know
prior to engaging the services of a PCO if the said company has previous experiences in dealing well-
known clients, companies or brands. By establishing the line-up of previous clients, prospective
customers could easily approve the proposal of a PCO because it has already been determined that the
said pest control firm has followed certain accreditation requirements and procedures that allowed them
engage servicing its previous clients. The decision to hire a pest control company usually does not need
any intense probing if relevant certifications or any proof can be presented to testify that successful
services were performed to happy and satisfied clients. Usually PCOs upon the successful completion of
their pest management programs would ask for a certificate of completion from the building or business
administrator to prove that their performance as a pest control provider is noteworthy.

b. CSF #2: Technical expertise of sales agents and service technicians

CSF Type: Cost Management Driver
Importance Score: 5
Importance Weight: 10%
Most of the time, customers who are calling a PCO does not have any idea on what to do and how
to manage their pest problems. This is of course necessary for the business because if a client already
knows the solution to their problem, then there is no business to speak of. As a cost management driver,
this factor is given an importance score of 5 and an importance weight of 12% because having technical
experts and well-trained service technicians would allow the company to deal with customer concerns
instantly, avoiding any back-jobs which would naturally incur additional costs.

Page 44 of 123
 The first sign of expertise is manifested when agents are able to conduct an ocular inspection
systematically, with the end goal of explaining the type of pest infestation and the treatment process that
is to be applied. The determinant factor for clients to decide whether to get the services of a certain
company or not, is when they know that the employees of a certain PCO are knowledgeable on what they
are doing and can answer all pest management inquiries. In this way, a perception of professionalism and
expertise is created, hence trust of the client follows.

c. CSF #3: Effectivity of treatment procedures and chemicals used

CSF Type: Cost Management Driver
Importance Score: 6
Importance Weight: 12%
This factor is a Cost Management Driver and is assigned an importance score of 7 and
importance weight of 12% because there are warranty claims wherein PCOs must come back to the client,
and perform a second round of treatment, sometimes even to the point of utilizing a new set of chemicals
with a different active ingredients. This would entail additional costs in labor, fuel, time and overall
business reputation. The metric used in determining this is the total number of back-jobs a PCO performs
in a given number of months. Unsatisfied customers would naturally go to another company or settle for
substitutes like purchasing over the counter insect sprays as alternative. As the cliché goes, it is much
cheaper to retain old clients that obtain a new one.
PCOs should be able to properly determine the right treatment procedure based on the outcome
of the ocular inspection. In termite control for instance, there are options between the utilization of baiting
or traditional methods. The baiting systems do not require drilling or trenching, while traditional method
requires such. Likewise, chemical products vary between having a knock-down and residual effect,
meaning apart from killing pests, it will have a long lasting or residual effect as well. In termite control,
technical specification of effectivity range would be 3 to 5 years while for General Pest Control (GPC) at
most 30 days. However, due to numerous factors such as level of infestation, specie of pests, soil
condition, general environment as well of overall cleanliness and maintenance practices of clients,
termite treatments are done annually while GPC are performed twice a month or monthly basis.

d. CSF #4: Use of safe and environmentally friendly chemicals

CSF Type: Revenue Growth and Cost Management Driver
Importance Score: 9
Importance Weight: 18%

Page 45 of 123
 Chemicals would generally be considered as safe if it is registered with the Food and Drugs
Administration (FDA). The said government agency regulates and ensures all chemicals used in
households, commercial establishments and institutions are safe through its issuance of Certificate of
Product Registration (CPR). Though chemical use is internal to any company, their chemical use can be
determined based on their affiliation with any pest control associations because these organizations
strictly promote the use of FPA registered chemical products.
The first question customers would ask regarding pest control is about safety. They will only
approve the contract for pest control if convinced that the PCO will use only safe and environmentally
friendly chemicals. This makes this factor critically important as a revenue growth driver. Gone are the
days when customers do not have any choice when it comes to chemicals used in treating the general
surroundings. Although there are still chemicals which is less-harmful like those belonging to the yellow
or blue band, nowadays the trend is to stick to the green band which are safer to use and more friendly to
the environment. Customers would naturally choose the greener alternative so that it might be effectively
harmful to unwanted pests, but friendly to their families and pests. Although generally speaking,
environmentally friendly and green band chemicals are more expensive in terms of its actual cost on
capital, in the long run it becomes a Cost Management Driver because there no need to repeatedly visit
and convince clients to obtain pest control services, hence this factor is assigned with an importance score
of 9 and importance weight of 18%.

e. CSF #5: Adherence to proper handling and application practices

CSF Type: Cost Management Driver
Importance Score: 4
Importance Weight: 8%

Adherence to proper handling and application practices avoids any untoward incidents on the part
of the technicians, and most especially the clients. This will definitely secure any unnecessary costs
associated with any untoward incidents which may happen. This is the reason why as a cost management
driver, this factor is given an importance score of 5 and importance weight of 10%.
Dealing with unwanted pests is critical because these are carriers of vector-borne diseases that is
why pest control technicians must be properly be knowledgeable on how to treat the infested area in order
to ensure that the process will become effective. However, apart from this, what is most important is the
knowledge on the practice of safe standards both on the part of the client as well as the technicians
themselves. The use of any pest control chemical regardless of how friendly it may be must be done with
extreme caution and tremendous care. On the part of the clients, technicians must ensure that during the

Page 46 of 123
treatment process, there are no individuals inside the premises which could inhale excessive chemical
fumes, these includes the pests as well such as dogs, cat, fish, etc. Likewise, in the kitchen or in
restaurants, prior to treatment all food items must be properly kept or covered in order for it not to be
exposed to chemical mists. Technicians on their side must at all times wear the proper personal protective
equipment during treatment. These include safety goggles, face mask, rubber gloves and protective
clothing.

f. CSF #6: Overall value for money and investment

CSF Type: Revenue Growth Driver
Importance Score: 10
Importance Weight: 20%
This factor is basically the total price of the pest control service in consideration of the other CSF
factors. This is the most critical and is considered as the #1 factor to consider among the revenue growth
drivers. Price viewed as a perception of customer on the total rate of every pest control service vis-à-vis
the overall level of customer and technical service that they will be paying. This is the most important
above all other factors and is considered as a revenue growth driver because regardless of the type of
service being offered, if it does not adequately suite the price it will not be approved by clients. Therefore,
this factor is given an importance score of 10 and importance weight of 20%.
According to pest control company presidents belonging to the Philippine Federation of Pest
Management Operators' Associations Inc (PFPMOA), industry prices vary between Php 350 to 450 per
square meter for traditional termite treatment, while the rate rages between Php 1,500 to 3,500 per
household for a general pest control treatment. Commercial and industrial rates would normally depend
on the total area to be treated and will be given to PCOs with the lowest amount of bid. Naturally, the
bigger to floor area to be treated, the lower the price of quotation would be given.
The pest control industry given the stiff competition as well as dozens of substitute alternatives is
highly concerned about pricing and its overall value to customer’s money. At the end of the day,
regardless of credentials, capabilities, branding and other factors to consider, it will all go down to
determining the proper price and its total value in terms of time and manpower compliments on the part
of the clients. Clients apart from paying for the services of a PCO will likewise need to perform ancillary
works and render other costs such as having additional manpower (security guard, admin officers,
janitors) and pay over-time rates to ensure that the pest control program is properly implemented. What is
important is the price should be competitive enough to win any business contracts, while at the same time
does not sacrifice company revenues and quality of service to customers.

Page 47 of 123
 g. CSF #7: Immediate response and availability, especially in warranty claims
CSF Type: Revenue Growth Driver
Importance Score: 7
Importance Weight: 14%
This factor though not considered as critically important, is the first step in obtaining clients, and
is considered as a revenue growth driver with an importance score of 5 and an importance weight of 10%.
Unlike other businesses, pest control service would require a visit first before an actual quotation could be
given to clients. If quotations are given without an actual visit, PCOs might underestimate the area to be
treated and quote a lesser price. Delaying a visit may lead to missed business opportunities, either clients
would be unhappy with the first impression or competitors would be able to seal the deal.
According to pest control professionals who are likewise members of the Pest Control
Association of the Philippines (PCAP), clients normally wants to be entertained immediately, and a
standard response time in visiting a client should be within a period of three (3) business days if it
pertains to conducting a free ocular inspection and seven (7) days if it is about servicing back-jobs. Once
a client calls the office and inquired about pest control services, they must immediately be visited by sales
agents who must conduct an ocular inspection. After this, a service proposal must be submitted for
approval of the client. Delaying this would allow competitors to submit their proposal as well, limiting
the chances for PCOs to obtain the signature of approval of clients. On the other hand, back jobs must be
immediately addressed to avoid irate clients who will complaint about the ineffective service which may
result to losing customers and referrals.
Most of the time after servicing there are pests which develops a certain tolerance to the
chemicals, hence are needed to be treated back using the warranty provisions. Clients would like
companies to be back immediately and should not take too much time in treating the areas once more.
The difficulty in revisits is if there are no available technicians that are assigned in the specific area to be
visited. If a PCO is located far away from the place of treatment, it would be costly to come back for
warranty. On the other hand, not coming back would result to unsatisfied customers and sometimes
withdrawn contracts. It is but natural, especially if properly explained to clients that re-infestation of
termites is inevitable. Clients would normally understand this, however, in instances when PCO’s take too
long to render warranty programs, clients would normally will no longer renew the contract and will opt
to look instead for other providers.

4.6.3. MAPECON Philippines, Inc. - CSF Ratings

CSF #1: Credibility and line-up of previous clients

Page 48 of 123
 Rating: 4
For over 55 years, MAPECON has been servicing the entire nation using its patented and
innovative pest control solutions which is suited to the every needs of the Filipino community. Having
been in the service for more than 5 decades, it has made the company a well-established top of mind
brand name in dealing with pests. With that span of corporate existence, it was able to gather a list of top
clients from homeowners in exclusive subdivisions such as Forbes Park, Dasmarinas Village, Ayala
Alabang, to the regular households nationwide. It maintains corporate and industrial accounts such as
Universal Robina and the SM Group among others.
Furthermore, the MAPECON has been dealing with government institutions and local
governments, participating in bidding process for the conduct of dengue operations. In fact, the landmark
case of Fertilizer and Pesticide Authority vs. MAPECON is about the company’s bid to conduct public
fogging services in the province of Negros. As testament to MAPECON’s strong network both in private
and public institutions, it is highly involved in the creation of the National Committee on Urban Pest
Control (NCUPC), a non-government organization which is highly recognized by the government as the
primary body that will spearhead the annual Urban Pest Control Week held every September. As
previously discussed, this responsibility is specifically given to NCUPC legally through two Presidential
Proclamations issued by both Presidents Fidel V. Ramos and Gloria Macapagal-Arroyo.

CSF #2: Technical expertise of sales agents and service technicians

Rating: 3
The company being a pioneer in the pest control industry was established by an expert
entomologist and at the same time inventor who graduated from the University of Philippines in Los
Banos, Mr. Catan. This alone is enough to prove that MAPECON is a highly reliable and expert company
in the field of pest control. The founder’s expertise is likewise shared to his loyal employees through
constant training and exposure to the needs of clients. MAPECON is the forefront of being the pest
control expert as compared to its competitors. A simple proof for instance, Pest Science’s owner
previously worked as purchasing manager of MAPECON and some key employees of other pest control
companies were former employees of MAPECON. Given this however, despite numerous trainings given
to sales agents and service technicians, still they don’t manage to achieve the certain level of expertise
that is supposed to reflect the company. Hence this is the reason why the rating is only 3 and this is
considered as a minor strength.

CSF #3: Effectivity of treatment procedures and chemicals used

Rating: 3

Page 49 of 123
 In the pest control industry, treatments cannot always be 100%, with this, the company is given a
CSF rating of 3. There will always be room for error because of various factors such as natural response
of pests to chemicals, the movement of the soil in terms of barrier protection in termiticide application, or
human factors such as over or under dilution of chemicals or even failure to find the termite queen.
According to interview with technicians of MAPECON, their schedule of services would have a 10%
visit to back-job sites, meaning out of 10 clients there would be 2 that they will be treating for the second
time.

CSF #4: Use of safe and environmentally friendly chemicals

Rating: 4
As an inventor, MAPECON’s chemicals are patented and come from plant based resources which
are sure to be environmentally friendly. This is a huge competitive advantage over competitors which
most of the time have the same chemicals with other firms because they obtain it from the same source,
mostly multi-national companies manufacturing chemicals. The present issue between MAPECON and
FDA with respect to the former’s neglect to register its products with the Food and Drugs Administration
(FDA) is another issue which is still at present is under discussion with the said government agency.
MAPECON claims that just as the Fertilizer and Pesticide Authority (FPA) does not have jurisdiction
over them, FDA likewise cannot force them to register their products and seek for the issuance of
Certificate of Product Registration (CPR). The claim of MAPECON is that they are a local company that
existed since 1961, way longer than the establishment of FDA in 2009.

CSF #5: Adherence of proper handling and application practices

Rating: 2
Being in the industry for a very long time does not necessarily mean that there is immunity of
technicians from the harmful long-term effect of chemicals. This is the very reason why MAPECON’s
technicians and other personnel are expected to always be on their toes with respect to the practice of
proper chemical application, handling and disposal. They should ensure that the safety of the customers
are the top priority, this is apart from their personal safety of course. In the company vehicles, along with
the chemical products and equipment, there is a fire extinguisher which is readily available if needed.
Personal protective equipment is likely provided to help ensure the health and welfare of the technicians.
In terms of the clients, they always inform the people around the surrounding establishments that pest
control treatment will be performed, or is being done so that they could keep and safeguard their food
items and even pests prior to the actual chemical application process.

Page 50 of 123
 Then again, despite all of these things, it will all go down into personal discipline and proper
management of personnel. MAPECON’s technicians with the strong belief that their chemicals are safe to
use, do not use any Personal Protective Equipment (PPE) whenever they perform their duties. PPEs are
oftentimes made as a mere tool to be used when the supervisors are watching or whenever it is a
requirement in certain project sites. This is the reason the company only obtained a score of 2 in this
factor.

CSF #6: Overall value for money and investment

Rating: 3
According to industry practitioners belonging to various pest control groups such as PEAP, PCAP
and PAFPI, their membership is based on friendly and self-regulation terms. However, with respect to
actual business practices, everyone act as competitors in the market. One of the objectives of the said
organizations is self-regulation in the practice of urban pest control. This self-regulation includes actual
application practices as well as the use of chemicals that are registered with the FDA.
MAPECON on its part does not belong to any of the said organizations and does not recognize
the powers of the FDA. MAPECON’s locally manufactured chemicals are being used without going
through the process required to comply with the issuance of a Certificate of Product Registration (CPR).
Likewise, despite not being a member of the said organizations, the company’s pest control practice is
within standard and is just the same with other firms. The only difference would be the quality and price
of chemicals that are used.

Table 4.6.3.CSF#6: Chemical Cost Comparison

Size Dilution in Coverage
Price (ml) Liters (in sqm) Price per liter
Brand S PHP 1,100 1000 75 15 PHP 73.33
Brand P PHP 1,800 1000 200 40 PHP 45.00
MAPECON F3D PHP 1,340 1000 200 40 PHP 33.50

In the table above, price comparison of termiticides is made between imported chemicals and
MAPECON’s own product. Based on the figures, MAPECON’s price per liter is lower by at least 30% as
compared with other brands. Since their chemicals are locally produced, they have a competitive
advantage in terms of pricing and they can assure that their prices especially in bidding are much lower as
compared to the competitors.

CSF #7: Immediate response and availability, especially in warranty claims

Page 51 of 123
 Rating: 1
Despite having a nationwide coverage, there are still numerous customer complaints regarding
non-compliance of MAPECON personnel with the agreed service schedule. It takes a long time to visit
their customers who have complaints and are seeking for the enforcement of warranty claims in their
contract. This is the main reason why the company oftentimes fails to get a renewal of their contract for
the subsequent year.
Based on an interview with one of MAPECON’s technicians, a normal termite control schedule is
two (2) clients per day, one in the morning and the other in the afternoon. This schedule already
incorporates the travel time and lunch break of technicians. At present they are handling an average of
three (3) client treatment per day. They are mostly prioritizing new accounts because it will bring in the
figures required for their monthly quota. Addressing back-job matters are the least priority because they
can only address it once their schedule would allow. This is one of the reasons why the company is
merely averaging 12% in its 5 year market share despite dominating the industry in terms of total sales
revenue.

4.6.4. Rentokil Philippines, Inc. - CSF Ratings

CSF #1: Credibility and line-up of previous clients
Rating: 3
Rentokil being a multinational company operating under the portfolio of distributing and
servicing the installation of hygienic products has eventually ventured into the pest control market in the
country. It was able to penetrate the industry upon its acquisition of Thomas Cowan Co., an established
pest control company in those days. Due to having an expansive and existing line-up of client such as SM
Malls, Ayala Malls, some offices located in Ortigas, Makati and BGC, among others in its portfolio of
hygienic products, it was able to obtain a foothold in the institutional market. In an interview, according
to their marketing manager, they merely depend on their hygienic business to pursue this venture of pest
control servicing, hence a rating of only 2.

CSF #2: Technical expertise of sales agents and service technicians

Rating: 3
The expertise of Rentokil is in the hygiene industry, however since pest control treatment is
relatively connected, they were able to combine both services in their business. The company’s entry in
the pest control market is through its acquisition of Thomas Cowan, Inc., a well-known pest control
company in those days. With the said acquisition, numerous employees who are pest control experts were

Page 52 of 123
absorbed by Rentokil. Likewise, employees of smaller pest control players have applied to Rentokil,
given that it is a much more established company to work with. Also, Rentokil is likewise a well know
pest control brand abroad, its technical expertise are shared to its local partners, hence the rating of 3 in
this CSF.

CSF #3: Effectivity of treatment procedures and chemicals used

Rating: 3
Rentokil is an international company, having a set of standards and procedures that is proven to
work on an international level. They market their brand using their identity as having international
presences. The company boasts of a comprehensive approach in pest control which includes having
presence in 60 countries90. According to the company, they provide their customers with “responsive,
reliable and good value support services”.
A similar situation for other companies occurs when long lasting and residual effect may be
offered, but it does not guarantee a 100% result. All products regardless of the particular manufacturer it
comes from, needs the corresponding dilution rate which must be accurately prepared by any service
technician. High quality chemicals that were diluted properly will still not work in its maximum potential,
if the pest control technician will not properly use adequate training, experience and common sense in its
application. An example of this would be if the application is made during rainy season where the soil
condition is extremely damp as the chemicals will not adhere properly to the soil.

CSF #4: Use of safe and environmentally friendly chemicals

Rating: 2
Rentokil is a member of the Pest Control Association of the Philippines (PCAP), as just like with
other companies, they adhere to the use of chemicals with the standards set by its manufacturers. Despite
having the list of chemicals being used by the company is confidential, being a member of the said
association, they use what is generally available in the market that is likewise manufactured by reputable
companies such as Bayer, Syngenta and Dow.

CSF #5: Adherence of proper handling and application practices

Rating: 3
As a pest control practitioner, it would be but natural for Rentokil to know the entire basic and
necessary safety requirement in conducting their services to their clients. However, their being involved
in the hygiene business will not automatically connote that their personnel are aware how pest control

90
Retrieved from: http://www.rentokil.com.ph/about-rentokil/rentokil-initial-services/

Page 53 of 123
operation work. For instance, the use of personal protective equipment is a basic thing to do for all pest
control technicians, and these include safety goggles, face masks, rubber gloves and adequate clothing.
Normally, these are not utilized during the process of rendering services for hygienic products, like during
the installation of hand wash or air fresheners.

CSF #6: Overall value for money and investment

Rating: 2
Using the international presence as a way to brand the business, the market segment that Rentokil
is targeting is higher than the other pest control providers. Rentokil maintains a certain branding concept
given the image that it portrays from its website, to how their technicians and personnel appear before
their customers. Having been focusing on the commercial side of the business, Rentokil always ensure
that their hygienic products and services are provided vis-à-vis their pest control services. However, given
that their hygienic products are premium priced, this likewise is reflected in their pest control services.

CSF #7: Immediate response and availability, especially in warranty claims

Rating: 2
This factor would require Rentokil to immediately address the needs of their customers in a
timely basis. Responding to customers would either be through first time visit or whenever they provide
after sales services. As a subsidiary of a multination company, Rentokil is located only in key cities such
as Metro Manila, Pampanga, Bacolod, Cebu and Davao. Unlike MAPECON which has branches that
operates on a franchise system, Rentokil’s branches are maintained and operated by the head office based
in Manila. Said offices does not equate to urgency of response to after-sales services. Still, being a big
company, they have processed to follow which sometimes take time before they attend to the needs of
their clients.

4.6.5. Sterix, Inc. - CSF Ratings

CSF #1: Credibility and line-up of previous clients
Rating: 2
In terms of brand presence in the household and commercial general pest control, the company is
not on top of the list. The company has been in business serving the industrial as well as various firms,
especially those located in the CALABARZON region. Their clients are normally those in the food

Page 54 of 123
industry which usually operates its manufacturing firms as well as warehouses were foods are usually
stored.
CSF #2: Technical expertise of sales agents and service technicians
Rating: 3
The same as with MAPECON, Sterix was formed by expert entomologists. In this particular
industry, it is a big addition to the corporate image and performance to have somebody who really knows
what he is doing based on theoretical science and not merely experience alone. The company is likewise
engaged in fumigation services which is more technically challenging as compared with general pest
control. Fumigation services requires licenses from the Fertilizer and Pesticide Authority. Having a
license is a solid proof technical expertise of the company’s personnel.

CSF #3: Effectivity of treatment procedures and chemicals used

Rating: 3
This company is offering premium chemicals with residual effects in its servicing operations. Its
chemicals are imported and are manufactured by the stated top chemical companies in the world such as
Syngenta, Bayer and BASF. Effectivity of treatment is assured given their expertise as discussed in CSF
#2 along with the effectiveness of the premium chemicals that they utilize in their services.

CSF #4:Use of safe and environmentally friendly chemicals

Rating: 2
Same as with the other key competitors in the business, most of the chemicals of Sterix
Incorporated came from the same top manufacturers which offers and promises environmentally friendly
ingredients which are safe to be used in any urban pest control treatments.

CSF #5: Adherence of proper handling and application practices

Rating: 3
As a basic requirement to all pest control companies, especially those that use chemicals that has
high levels of active ingredients, it is necessary for all technicians to be provided and use safety
equipment much as face masks, gloves, goggles, etc. Fumigation as one of the services offered by the
company likewise requires the extensive us of PPE’s which Sterix adheres into.

CSF #6: Overall value for money and investment

Rating: 2

Page 55 of 123
 The focus of Sterix is in the industrial segment, especially in performing fumigation works. This
is why in terms of comparing the company with respect to other segments such as household and
commercial, its prices will be differently above market.

CSF #7: Immediate response and availability, especially in warranty claims

Rating: 3
The company being engaged in servicing industrial firms has been present in all key cities
nationwide. Its main office is located in Alabang which is the gateway to CALABARZON area which has
the presence of the huge market for warehouses and manufacturing firms. Given that they are maintaining
key institutional accounts, they manage to focus their resources in ensuring that all issues are addressed
immediately.

4.6.6. Pest Science Corporation CSF Ratings

CSF #1: Credibility and line-up of previous clients
Rating: 4
Pest Science is relatively considered as a new-comer in the industry. However, despite this
reason, the company has managed to accumulate a line-up top hotels, malls and commercial
establishments being served. Most recently they obtained the contract to service the newly opened Okada
Manila in this pest control maintenance needs. Pest Science has assigned a dedicated ten-man team to
fully focus on that project. Handling Okada Manila is another testament to their capability as a PCO
which will be thereon used to attack similar prospective clients.

CSF #2: Technical expertise of sales agents and service technicians

Rating: 3
As discussed, the owner of Pest Science used to work for MAPECON. Given all the trainings and
experiences he obtained from the said company, Pest Science likewise developed additional skills and
experiences by going abroad and bring said skill to the Philippines. The company is one of the few pest
control companies that have an ISO certification. Likewise, the company has managed to introduce new
technology of pest control in the market such as Exterra baiting system. This is totally an innovative

Page 56 of 123
approach compare to the traditional methods MAPECON and other companies are still implementing
until at present.

CSF #3: Effectivity of treatment procedures and chemicals used

Rating: 3
As a distributor, Pest Science Corporation is familiar with all manufacturers and producers of pest
control chemicals as well as its active ingredients and effect. They are likewise offering residual effect
chemical products. As a distributor of pest control chemicals, it has the advantage of being familiar with
all of the available chemicals in the market. It can compare all chemicals in terms of its quality, active
ingredients and the manner it operates to kill unwanted pests. In fact, the company likewise is developing
their own chemicals which are considered to have capabilities beyond the active ingredients of other
brands could provide.

CSF #4: Use of safe and environmentally friendly chemical s

Rating: 2
As a distributor, Pest Science Corporation maintains a certain volume of target for its chemical
sales. All of the chemicals they use in their pest control services obviously come from their own stocks.
As mentioned above, the company has the liberty to choose and compare which particular chemical brand
is more effective to use while at the same time has the ability to claim superior environmentally friendly
characteristics among other brands available in the market.

CSF #5: Adherence of proper handling and application practices

Rating: 3
As previously discussed, being a pest control provider, the company is likewise aware of the all
safety procedures and requirements needed to render pest control services. It is but a basic rule that all
individuals handling, using and disposing chemicals must be aware of the proper way of utilizing the
same not only for the benefit of the customers or clients, but most especially to the workers who are daily
exposed to the said chemicals.

CSF #6: Overall value for money and investment

Rating: 2
Pest Science is importing the chemicals it uses, despite the fact that they are not using premium
brands from top manufactures. Unlike for instance MAPECON which locally source its active ingredients
and manufacture their own brands, Pest Science through its subsidiary has their own set of brands which

Page 57 of 123
are sourced and manufactured in China. The importation of chemicals will still add to the overall value of
pest control treatment, especially whenever big projects are involved.

CSF #7: Immediate response and availability, especially in warranty claims

Rating: 2
As a relatively new entrant in the pest control industry, they managed to expand their business
operations in certain key areas such as Bacolod, Bohol, Cebu, Davao, Dumaguete, Iloilo, Laguna and
Tacloban. Still this does not equate to immediate response to the needs to eh clients as there are certain
processes to be followed like for instance scheduling the visit to the client.

Table 4.6-A: Competitive Profile Matrix

Through the Competitive Profile Matrix, MAPECON has live-up to its claim of being the biggest
pest control company with a huge network of branches all over the country. It is also the most established
pest control company in the country using 100% environmentally friendly products that are invented by
its founder who is a scientist and entomologist. Because of this, it has garnered a score of 2.98, being the

Page 58 of 123
highest among its competitors. There are certain factors that are innate in the competitive nature of the
said industry such as CSF#3 – Effectivity of treatment procedures and chemicals used. Regardless of what
type of chemical is being used in the treatment, the skill and expertise will still come into play during the
treatment process.
MAPECON’s leadership in the industry must be necessarily protected especially in CSF#7,
because this is where it is losing its customers. The company is having a difficult time in handling its
growth because it is already failing to fully attend to the needs of all of its customers. Failure to consider
this factor would result for them to lose grip on their clients in the next few years. On the other hand,
focusing their resources in improving this factor may result to an increased market share percentage and
further improve its business relations to existing and future clients.

4.7. External Factor Evaluation (EFE) Matrix

4.7.1. Opportunities and Importance Weights
O1. Increase in the total floor area of structures for residential and non-residential
purposes
Importance: 20%
From 2011 to 2015, a gradual growth of 27% was realized in in the construction industry. 91
Likewise, the Philippine IT-BPO sector has released its 2016 roadmap of having a 19% CAGR growth,
thereby requiring additional office space for rent, “depending on the strength of the industry and support
of the government”92. Furthermore, the tourism sector is expecting an upward trend. 93 According to a
news article, the Department of Tourism inbound visitors reached almost 5 Million visitors in 2015. This
year, they are hoping that visitors would balloon to six million up to 10 million tourists 94. This would
make room accommodations and leisure establishments to naturally increase its occupancy capacities and
would eventually ensure pest control maintenance programs for their facilities.

91
Philippine Statistics Authority Quickstat - 2011 to 2015
92
Philippine IT-BPO Roadmap 2016: Driving to Global Leadership: Commission on Information Communication Technology/Office of the President. Retrieved
fromhttp://www.ncc.gov.ph/files/lacdao_phil_it_bpo_roadmap.pdf
93
Tourism information retrieved from the website http://www.tourism.gov.ph/pages/industryperformance.aspx
94
http://www.philstar.com/business/2015/02/18/1424847/2014-tourist-arrivals-3.25-4.8-m

Page 59 of 123
 The growth of the construction industry is the lifeblood of any pest control services. More
establishments mean more people where business and services will thrive. The bigger the number of
square meters available, the greater the business opportunity for pest control operators as the cost and
income ratio is dependent on the total number of square meters serviced. As an ancillary maintenance
requirement in any business entity, PCO services are necessary to ensure a safe and comfortable
atmosphere so that businesses will operate properly.

O2. Government and private sector regulatory initiatives aimed at reducing fly-by-night
operators in order to establish an environment of professionalism and expertise in the industry
Importance: 10%
Ongoing government regulation will hamper operation of fly-by-night operators, thereby limiting
the industry operation to legitimate practitioners and ensuring a healthier practice among legitimate
players. Fly-by-night operators by industry practice is defined as a person or group of people, who may or
may not be registered as a business entity, but are performing pest control services with no definite
consistency in terms of industry practice, manner of chemical dilution or even market presence. They
mostly do not adhere to a strict and safe chemical application process and most of the time offers
warranties but cannot be contacted or even located whenever there are back-jobs to be performed. 95
Supporting discussions were already presented in the Porter’s 5 Forces Model part of this papers.

O3. Population growth, especially in highly urbanized areas

Importance: 10%
“The country’s population is projected to reach 101.6 million this year, according to the
Philippine Statistics Authority”.96 In line with this projection, Philippine Population Census 2015
(PopCen2015) was recently launched by the Philippines Statistics Authority. It is aimed at conducting a
census to obtain an official count of the current population of the country. The most recent census was
conducted in 2010, and this latest census is aimed at verifying the growth rate projections to more
accurately determine the total number of population. According to data from the Philippine Statistics
Authority official webpage, in terms of population projection (Medium Assumption), from 2010-2015
there is a growth rate of 1.82%, providing for a jump in the total population from 94 Million to 102.9
Million by 2015.97

95
FDA Draft Memo, Rules and Regulations Governing the Licensing of Urban Pest Operators, Certification of Urban Pest Applicators and Training of Technicians
and Workers, and For Other Purposes. Retrieved from www.fda.gov.ph
96
The Philippine Star. Retrieved from: http://www.philstar.com/headlines/2015/08/11/1486749/philippine-population-hits-101.6-m-year
97
Philippine Statistics Authority. Retrieved from http://www.nscb.gov.ph/secstat/d_popnProj.asp

Page 60 of 123
 Pest control activities would naturally benefit from population growth not merely in terms of the
gradual improvement in the market vis-à-vis the increase in the number of people. In fact, there is a more
scientific basis on the need to introduce pest control services, in particular general pest control against
disease carrying mosquitoes because according to studies, apart from the scent of sweat, such insects are
attracted to the carbon dioxide that people emit by merely breathing. A study conducted in the University
of California in the United States was cited by the Department of Department of Science and Technology
(DOST) for this particular claim98.
Connecting mosquitoes with carbon dioxide that humans exhale would naturally cause severe
problems caused by vector borne diseases such as malaria, dengue or chikungunya, among others, and the
likelihood is closely related to communities that are not properly organized in terms of sanitation and
hygiene. This could be especially true in high density population areas that was plotted by the Philippines
Statistics Authority in 2012, “CALABARZON (Region IVA) which has the largest population with 12.61
million, followed by the National Capital Region (NCR) with 11.86 million and Central Luzon (Region
III) with 10.14 million”.99
As population increases, business opportunities would likewise thrive. In relationship to this is
the employment opportunity available to various enterprises such as in hotels, restaurants or even
Business Process Outsourcing offices. Naturally as people have livelihood, their households would
eventually need maintenance which a pest control providers could provide.

O4. Demand for much environmentally safe pest control methods and use of green chemicals
are increasing
Importance: 5%
Consumers are becoming more aware of the adverse effects of pest control chemicals in their
surroundings, thereby they are now seeking for greener methods in addressing their pest control needs.
Protecting customers and their general environment is important, it is likewise necessary to have pest
control methods and chemicals which are safe for operators and applicators. This is a big opportunity for
pest control operators to adapt to environmentally safe or green chemicals especially since the treatment
process applied for instance against mosquitoes are done within the close proximity of people. Nowadays,
using fogging treatments are no longer recommended 100, hence green chemicals as alternative are a big
opportunity to address any mosquito problems and other pest management needs.

98
Philippine Council for Health Research Development, DOST. Retrieved from: http://www.pchrd.dost.gov.ph/index.php/news/library-health-news/3984-
mosquitoes-attracted-by-exhaled-carbon-dioxide
99
Philippine Statistics Authority. Retrieved from https://psa.gov.ph/content/2010-census-population-and-housing-reveals-philippine-population-9234-million
100
Lecture on Urban Pest Management Program Designed for Certified Pesticide Applicators (CPA) Training, conducted by Mr. Jun Tibor, Director of National
Committee on Urban Pest Control (NUCP), January 27-29,2016

Page 61 of 123
 According to a recent article of the World Health Organization concerning the latest threat of the
Zika virus carrying mosquitoes, “Aedes aegypti, the principal mosquito species that transmits Zika,
dengue, and chikungunya viruses, has a number of breeding and behavioral quirks that make it extremely
difficult to control. Previously successful control programmers were replaced by the space spraying of
insecticides during emergencies, a measure with high visibility and political appeal but low impact,
unless integrated with other control strategies.”101
It is likewise necessary for PCOs to adapt green chemicals and environmentally safe pest control
practices to effectively deal with resistance of pests compared to the use of traditional chemicals. Pest
resistance is a natural adaptation to chemicals, which is especially true for the Aedes aegypti female
mosquitoes which has been responsible for bringing vector borne diseases such as dengue, malaria,
chikungunya and most recently causing an outbreak of the Zika virus in some countries. During the 2013
Federation of Asian and Oceania Pest Managers Associations (FAOPMA) convention held in Hong Kong,
Mr. Robert Fryatt, Director of Xenex Associated in UK, a leading strategic thinker in the global pest
management industry conducted a talk on the subject of increasing pest resistance due to climate change.
Apart from the natural occurrence of pest resistance to chemicals, he specifically discussed that once
pests found in tropical climate are now spreading in the frigid lands in the west such as UK, Germany and
France. Vector borne diseases are likewise spreading rapidly and can be found in other areas not usually
prone to such insects and eradicating such cannot easily be done. He also mentioned that there are even
species of mosquitoes that “is able to overwinter and establish indigenous colonies” whenever it migrates
to one part of the continent to another. Ignoring this opportunity would let PCO companies deal with
increasing warranty complaints, forcing them to invest more in terms of additional application just to
ensure pests will be totally eradicated.

O5. Less intrusive ways or methods of dealing with unwanted pests are becoming the trend
especially in the aspect of long term termite eradication
Importance: 5%
Clients in particular those who are meticulous households would always prefer less intrusive PCO
services where the normal daily activities are not hampered during treatment. They often prefer that there
will be no disturbances made to their existing structures, such that the plants, trees, grass or even fish
ponds in the garden will no longer be disturbed when doing termite control jobs. Likewise, there will be
no drilling of holes that will be done in case of concrete floorings, damaging tiles and floor finishes.
Cockroach and ant treatments can now be applied without the need to spray liquid chemicals, hence there
is no need to remove all items inside cabinets that are susceptible to liquid damage. This is important
101
Mosquito control: can it stop Zika at source?: World Health Organization. Retrieved from http://www.who.int/emergencies/zika-virus/articles/mosquito-
control/en/

Page 62 of 123
considering that home improvements made within the surrounding of houses are costly. In addition to the
damages caused by termites as well as the cost involved in the treatment, it would be such a waste if
existing improvements would be removed or destroyed just to give way to pest control jobs.
Presently, there are companies offering these solutions like the baiting system for termite control
that are manufactured and distributed by Sentricon from the United States and Exterra which is a product
of Australia. General pest control programs are now done using ant and cockroach gel baits. In addition,
the use of reticulation system for pre-construction termite control is still being promoted by some PCOs
that are capable in its installation.

4.7.2. Threats and Importance Weights

T1. Continuous proliferation of fly-by-night operators diluting the market share of the
legitimate industry practitioners
Importance: 20%
Fly-by-night operators are individuals/groups which are operating under the banner of a
legitimate PCO company and operate beyond the professional ethical practices set by pest control
associations such as PEAP. One of the key factors to be considered as a fly-by-night is posting advertising
services on electrical posts. This act is strictly prohibited by PEAP and doing so would constitute a fly-
by-night activity. Examples of these advertisements are placed by Wudtek, Metrokil, Zedricon and other
unnamed entities that are merely showing the words “Anay” along with their contact numbers.
There are fly-by-nights that are PCO employees who are doing part-time pest control work during
their free time. There are even instances wherein they attract and obtain existing clients of the PCO that
they work with. They will offer clients with the use of the same chemicals and application techniques, but
the only difference is there will be no paper works and receipts.
There are also instances wherein they pilfer chemicals from their companies and use it in their
operations. This is the reason why they can afford to charge a very low rate to their clients. Another way
to reduce their costs is to under dilute chemicals, which are generally not recognizable to clients, until
they realize that the treatment was not effectively performed due to the reinfestation of termites. Since
fly-by-nights do not pay taxes and other costs associated in running a business, their fees are usually 25 to
50% cheaper. Just like how termites operate in attacking a household, fly-by-night operators in the pest
control industry affects the market in a subtle manner, but is greatly causing a huge damage.

T2. Multi-national companies aggressively selling pest control chemicals Over the Counter
(OTC) for Do it Yourself (DIY) use
Importance: 15%

Page 63 of 123
 In 2014, the Department of Health (DOH) through the Food and Drugs Administration (FDA) has
issued its regulatory frameworks to regulate the manufacture, sale and distribution of household/urban
pesticides (H/UP’s) issue licenses for applicators of the same 102. However, despite the said regulation,
multinational companies apart from distributing to traditional pesticide dealers, who in turn markets the
same to the PCOs that are considered as the “end-users”, are likewise selling their products in malls and
hardware stores in the form of over the counter chemicals for DIY use. Detailed discussion was presented
in 4.2.6 Potential for Substitute of Porter’s 5 Forces Model in this paper.

T3. Non-licensing requirements for government and institutional pest control

programs
Importance: 10%
It appears that the said regulation of the DOH discussed above as is lacking in its content as it
failed to regulate the sale of OTC chemicals and require licenses for institutional or government
applicators, but it has merely focused its attention to PCO practitioners. This particular issue is the
subject of a case filed by the Philippine Federation of Pest Management Association Operator’s
Association, Inc. (PFPMOA, Inc.) against the DOH. 103 Due to the said case, the FDA has noted issues
involved and included the same in drafting their amended policies. FDA is planning to finalize the said
regulations and its target release is 2Q of 2017. 104 This particular threat if not addressed would greatly
reduce the profits of the pest control industry product substitutes are not freely available to anyone despite
not having previous trainings or experiences to do the same.

T4. Development of new mechanical and electric devices as well as alternative

products that claims to effectively “eradicate” pests
Importance: 5%
Insect light zappers though has been in the market for quite some time has become widely produced
that it can now be purchased for reasonable prices in any DIY shop or electronic stores. Also, there are
latest devices being sold in the market that claims to be an effective tool against pests. Some utilize sound
waves that would distract rats and cockroaches. Others are in the form of bulbs which repels flying
insects. Also, a local paint manufacturing company has introduced its anti-cockroach paint which claims
to kill cockroaches when it passes through the painted surfaces 105. Though these products could not
seriously dent the pest control market, they are considered as a threat because they distract the mindset of

102
DOH-AO NO. 2014-0038
103
RTC Quezon City, Civil Case No. R-QZN-16-06531-CV. Petition for Preliminary Injunction and Declaratory Relief
104
Personal Interview with Ms. Esperanza O. Almenanza, Food Drug Regulation Officer III, FDA. January 2017.
105
Retrieved from: http://www.boysen.com.ph/

Page 64 of 123
consumers by offering substitutes which are generally expensive, thereby redirecting the budgets which
instead of being allocated to PCOs are directed to these product substitutes.

4.7.3. Opportunities and Company Responsiveness

Opportunity 1: Increase in the total area of structures for residential and non-
residential purposes
Rating: 4
MAPECON has recently released an aggressive marketing campaign where it utilized the services
of Kuya Kim to help boost its sales and obtain awareness in terms of industry practice. Though mostly
would benefit the household pest control market, presence in terms of advertisements on television,
internet and billboards would definitely boost the product recall as well as consumer interest in the
MAPECON brand.

Opportunity 2: Government and private sector regulatory initiatives aimed at reducing

fly-by-night operations, in order to professionalize the industry
Rating: 1
Although MAPECON will somehow benefit from the regulation of the industry through the
reduction or removal of fly-by-night operators, still the company does not want to participate in any
initiatives conducted by the DOH-Food and Drugs Administration (FDA) 106 nor by any other professional
pest control organizations such as, PEAP, PCAP or even PFPMOA. MAPECON claims that since they are
inventors and not importers of chemical products, then they are not subject to the jurisdiction of FDA.
Furthermore, they claim that by virtue of the decision of the Supreme Court in 2007 107 in the celebrated
case they filed and won against FPA, it is the National Committee on Urban Pest Control (NCUP) 108 that
has the sole authority to regulate the said industry.

Opportunity 3: Population growth, especially in highly urbanized areas

Rating: 3

106
Personal Interview with Ms. Esperanza O. Almenanza, Food Drug Regulation Officer III, FDA. January 2017.
107
G.R. No. 161594 February 8,2007. Supreme Court of the Philippines
108
Presidential Proclamation No. 990. Declaring the Fourth Week of September of Every Year as “Urban Pest Control Week”. Whereas, the observance of an
Urban Pest Control Week under the aegis of the National Committee on Urban Pest Control…will promote community participation and public awareness, and
enable to the Government and NGO’s to…4. Provide mechanism for mutual cooperation and harmonize laws and regulations relation to urban pest control”.

Page 65 of 123
 MAPECON has allowed its loyal employees to venture into a franchise agreement wherein the
franchisees would be able to open a branch in an area which is lucrative to the business but is likewise no
longer practical for the mother company to reach. Branches are scattered nationwide, but are concentrated
on key locations such as Cavite, Pampanga, Davao, Cagayan de Oro City. These strategic locations are set
in areas where there are big clusters of subdivisions and developments that are capable to be serviced by
MAPECON.

Opportunity 4: Demand for much environmentally safe pest control methods and use of green
chemicals are increasing
Rating: 4
MAPECON is well aware of this and they are proud to claim that all of their chemicals are 100%
safe and environmentally friendly. Having been sourced from natural ingredients, they are highly
confident about their products safety, in comparison with those chemicals manufactured and imported by
multinational companies and are registered by the FDA.

Opportunity 5: Less intrusive ways or methods of dealing with unwanted pests are
becoming the trend especially for termite control in homes
Rating: 1
The traditional approach to doing termite pest control is highly intrusive to people and their
surroundings given the need to utilize equipment such as long water hoses, power sprayer and drill. Until
now this is still the type of service approached practiced by MAPECON. The company being an inventor
tried to recreate a baiting system using locally sourced materials, but the effort was not a success. Baiting
systems as new technology in termite control are something which must be developed by MAPECON.
This is especially true since current products such as Sentricon and Exterra are not easily available in the
market. Even though they become accessible, are likewise expensive since its presence is merely limited
in major cities in Metro Manila and are distributed by specifically chosen business partners.

4.7.4. Threats and Company Responsiveness

Threat 1: Continuous proliferation of fly-by-night operators diluting the market share
of the legitimate industry practitioners
Rating: 1

Page 66 of 123
 Based on the author’s personal observation, investigation, interviews as well as on-the-job
training with MAPECON109, the company is not privy to the idea that some of their previous and even
current employees are performing fly-by-night operations. It is an open secret among service technicians
that they are operating as fly-by-nights during their free time or on weekends. What the technicians
normally do is to report to work on a daily basis and perform the necessary treatment in their assigned
projects. In terms of chemical use, they allocated less than the required to their clients, and pocket the
rest. With this, they will be able to save a considerable amount of chemicals which they can either sell to
other fly-by-night operator or even use the same for their personal operational use. It is quite unfortunate
that this is happening to MAPECON. These activities of some technicians definitely cannot be condoned
and is totally unacceptable, regardless of any other issues involved such as employee compensation. It
would appear that management initiatives in dealing with this matter is very weak, hence this system has
been happening for a number of years now.

Threat 2: Multi-national companies aggressively selling pest control chemicals over the
counter (OTC) for Do it Yourself (DIY) use
Rating: 4
MAPECON has established their own brands in the direction of selling for DIY use. This move is
aimed at directly addressing the increasing threat of substitutes thereby ensuring that despite the effect of
OTC and DIY products to their market share, they will be able to share in the revenues of the market that
are seeking for PCO substitutes.
However, given that the FDA is working hard to come up with a regulation effectively covering
the manufacture and sale of all urban pest control products, before the 2017 ends, it is expected that
MAPECON will eventually yield into the authority of FDA. But still, as discussed, MAPECON through
the NCUPC is the primary force that is blocking the said regulatory initiatives of FDA. Hence, given the
legal history of the pest control industry, it is expected that once the regulation has finally been released,
MAPECON through the NCUPC will eventually file a case this time against FDA. 110

Threat 3: Non-licensing requirements for government and institutional pest control

programs.

109
Included in the NUCP seminar that author attended
110
Personal Interview with Ms. Esperanza O. Almenanza, Food Drug Regulation Officer III, FDA. January 2017.

Page 67 of 123
 Rating: 2
As mentioned, MAPECON has been an active advocate of the usage of locally
manufactured pest control products and it claims not to be within the purview of any government
agencies, most especially the FDA 111. They are in constant talk with FDA and have been openly
reiterating that the NCUPC is in charge of all regulatory matters pertaining to the pest control
industry.

Threat 4: Development of new mechanical and electric devices as well as alternative

products that claims to effectively “eradicate” pests
Rating: 1
MAPECON’s tool is knowledge and education. They explain that pest control treatment is only
done when it is already necessary. The company have been constantly promoting its brand and has been
providing educational campaigns to the public of the need to render a general approach in dealing with
pests. It has been partnering with the NCUP to educate business owners, institutional accounts as well as
pest control technicians about the relevant facts relating to the natural means on how pests thrives.
Through its information campaigns, they explain to the public that pests are naturally part of the
environment, and eradicating these unwanted creatures is not possible because being part of the eco-
system, it cannot be totally disappear. The proper approach would be pest management such that a general
pest abatement program is not necessary and not by simply having a targeted approach in dealing with
pests.

Table 4.7.3-A.: External Factor Evaluation (EFE) Matrix

111
Ibid

Page 68 of 123
 MAPECON’s market responsiveness is in the rate of 2.45. Being a pioneer in the industry,
MAPECON has established itself as one of the most trusted and reliable name in the pest control industry.
Its founder has the expertise and seasonality in the industry which is truly unmatched by other companies.
Furthermore, based on MAPECON’s expertise, it is able to create its own brands and chemicals without
depending on any multi-national companies or other importers and inventors of pest control products.
Despite its stability and influence in the industry, the government, is trying to penetrate the industry by
creating certain rules and regulations to govern it.
The current revisions being done on the Administrative Order of the Food and Drug
Administration (FDA) is something that will indeed greatly shake the entire pest control industry.
Whatever regulations that may be implemented in the future, all industry practitioners must adhere to and
despite being a key industry player, MAPECON is likewise not exempt from complying with it.
MAPECON is a company that follows Christian principles, even having Jesus Christ as its corporate
president. By not recognizing DOH-AO NO. 2014-0038 or the authority of the FDA to issue licenses to
pest control operators, issuance of permits on manufacturing and registration requirements of urban pest

Page 69 of 123
 control products, MAPECON does not seem to obey the teachings that Jesus Christ has personally taught
the Pharisees when he said, “So give back to Caesar what is Caesar’s, and to God what is God’s.”112

5. COMPANY ANALYSIS
5.1. Company Vision and Mission Statement
5.1.1. MAPECON Vision Statement
“MAPECON strives to be a living example of Professional Excellence at all times, creatively
working to make the best better, with MAPECON becoming the prayer: “My Almighty’s Plan to Exalt
Christ Operates Now through the power of the Holy Spirit.”

5.2. MAPECON Mission Statement

“MAPECON is committed to create employment and build the MAPECON Corporate Church
with Jesus Christ as Head. With members whose temporal and spiritual needs are being attended to,
MAPECON is able to serve customers and friends better and more safely through honest and integrated
pest control and environment protection using award-winning patented products.”

5.3. Review of Vision/Mission Statement

Table 5.3.-A: Company Vision Statement Evaluation
Parameter Yes / No Why
Does it clearly answer No The vision is very vague. It does not state anything about the
the question: What do company, except for its name that is twice mentioned. Without the
we want to become? mentioned name, the said vision can be interpreted at first
reading, to be a vision not of a business but that of a religious
organization. It must at least state the nature of the business of
being in the urban pest control industry, offering chemical
products and application services.
Is it concise enough yet No It does not provide any information about the business. Although
inspirational? unquestionably, whenever God is included in any statement, it is
inspirational. However, the statement revolves alone on the
exaltation of God, and does not speak of anything about the
business.
Is it aspirational? No In a spiritual sense, it is aspirational, since Divine Providence is
the prayer. The statement “professional excellence at all times”
is so generic that it can be applied to any company which looks at

112
Matthew 22:20-22New International Version (NIV)

Page 70 of 123
 excellence as a way to do business. There should be a more
specific declaration of vision that is commensurate to the nature
of the business.
Does it give clear No The visions does not signify any hint as to what the business is all
indication as to when it about, much more as to when it should be attained. Given that
should be attained? MAPECON is more than 55 years in the industry, a clear
direction towards the next decade must be provided, especially if
it is looking at conquering the 100th year mark.
The company is utilizing all industry best practices in its approach to constantly improve the
management of the business. Its executive team managers are trained and prepared to lead using strategic
management concepts adequate to the needs of their firm. However, its Mission and Vision statements do
not provide a clear goal that is measurable in a financial aspect. What were discussed were matters
pertaining to spiritual involvement, rather than the market performance of the firm. Mr. Catan as the EVP
exercises direct authority and control over his subordinates who are members of his family. A clear
example to this is the mother-son tandem of the Marketing team where the mother heads the department
and the son works as the assistant. His grandson is working for the firm, handling a junior role.
The children of Mr. Catan are well educated in the field of business while the other members of
the executive team are seasoned and loyal employees who have been involved in the business for a given
number of years. However, the present family oriented management style of the company proves to be
lacking because based on the results of the market analysis, though the sales are increasing the company’s
market share is merely averaging by 11% to 12% in 5 year span. Its CAGR over a period of five (5) years
from 2011 to 2015 has been 6%.

5.3.1.Marketing
The firm as an established entity in the pest control industry has maintained its market leadership
over a period of more than 55 years. Its brand name is on top of mind of the customers and other pest
control organizations are looking up to MAPECON an example on how they will perform on their
businesses.
Alongside with any other marketing initiatives that been taking place such as ATL and BTL
programs, the company likewise utilizes its greatest marketing tool 113 that other PCOs does not have, the
National Committee on Urban Pest Control (NCUPC). Although its creation is not clearly defined, it is a
considered as a non-government organization since its not under the jurisdiction of any government body,
it does not have a specific mandate from any law, ordinance. It is an organization which was co-founded
113
Author’s personal observation after attending the Lecture on Urban Pest Management Program Designed for Certified Pesticide Applicators (CPA) Training,
conducted by Mr. Roque G. Tibor, Jr., Assistant Director of National Committee on Urban Pest Control (NUCP), January 27-29,2016 as well as being certified as
a Franchised Urban Pest Control Applicator

Page 71 of 123
by no less than Mr. Gonzalo “Jun” Catan Jr., who both acts as MAPECON’s EVP and NCUPC’s
Technical Director.114 It is obvious that NCUPC is still directly connected with MAPECON since the
office is located beside the main office of the latter, in the parking area to be exact. NCUPC’s active
officers and employees are former employees of MAPECON who appears to be merely seconded.
NCUPC provides public trainings that are open to individuals who would like to establish a pest
control business. However, almost half of the training program appears to be a segue of promoting the
products of MAPECON. After the said training, trainees are given an examination, once passed they are
given an ID and a certification or license as service technician. Most noteworthy is the requirement to pay
franchise fee and become accredited to have an exclusive access to purchase MAPECON products with
discounts ranging from 15% – 35%.
MAPECON likewise utilizes NCUPC as a forefront organization in dealing with issues in the pest
control industry, in particular its claims of usurpation of powers and jurisdiction by various government
agencies with respect to the issues of registration and accreditation of pest control operators and products
respectively.115
The company’s senior managers are family members of Mr. Catan who are well educated in good
schools and who have been working in the company since their younger years, thereby giving them all the
experiences and skills necessary to work in the pest control industry.

5.3.2.Finance and Accounting

In the years 2012 to 2013, its revenue performance remained flat within the Php180M range. The
company has subsequently invested around Php2 Million pesos for its creation of TV advertisement and
billboards which are placed in strategic areas all over Metro Manila. With the help of aggressive
marketing initiatives, the company achieved a remarkable sales growth performance of 9% in 2015 with a
Php 221 Million revenue. Based on the financial ratio analysis, its financial standing is higher than the
current industry standards. Its debt to asset ratio is in the .24 level while the debt to equity ratio is .31
It has a debt to equity ratio of .31 as per the ratio analysis. The firm has sufficient working capital,
especially since 55% of its annual sales are exempt from income tax, being inventive products sold in the
market. The company was able to improve its performance over a period of five (5) years evidenced by its
CAGR growth of 6%, within the standard of 7% growth rate in the industry.

5.3.3.Production and Operations

114
NCUPC Brochure on Urban Pest Management Program
115
Letter addressed to Dr. Melodio A. Palayapay and Mr. Gonzalo O. Catan, Jr, NCUPC. Signed by Atty. Michale B. Peloton, Technical Assistant, Presidential
Management Staff, Office of the President, dated December 12,2016.

Page 72 of 123
 The head office is ideally located in Arellano Ave., Manila (besides College of St. Benilde). The
operations are divided into five (5) regions namely, Metro Manila, North Luzon, South Luzon, Visayas
and Mindanao. Currently there are a total of 48 branches operating nationwide, with presence in key cities
such as Pampanga, Cebu, Davao, and Cagayan de Oro. In Luzon there are 25 branches, while in Visayas
12 are operating, also there exists 11 branches serving the regions in Mindanao. The company is
projecting that since each region has its own funding and manpower complement, each will be handling
Asean operations starting 2017.116
Businesses located outside NCR are handled by branches, while some of the branches are
operated by franchisees. MAPECON’s Franchise Agreements are only offered to a select few individuals,
mostly comprised of former employees. Employees who have proven through the years (7 to 10 years)
their honesty, loyalty and competence in the company are considered as deserving to handle the said
franchises. MAPECON operates on the basis of having 51% equity in the operations and revenues of its
franchisees.
MAPECON has its manufacturing site in Alaminos, Laguna that is being shared with its subsidiary,
Mapecon Green Charcoal, Inc. according to its website, it has the “capacity to produce about 1000 MT of
activated carbon per year. MGCPI has the capacity to produce about twenty tons of Vermicast (100%) per
month. This organic fertilizer hast to replace all harmful chemical fertilizers not only in the Philippines
but in Pacific region as well.” 117 However, for the manufacturing of urban pest control products, it
typically uses traditional and basic manufacturing processes. Their raw materials are typically sourced
locally and are even made from biodegradable materials. This is the reason why they do not necessarily
need to bloat their inventory levels.

5.3.4. Research and Development

The firm possesses all the capabilities of a R&D institution since as repeatedly discussed in other
parts of this paper, Mr. Jun Catan is a recognized inventor. In fact, they are even given by the BIR with
tax exemption on the sale of its invented products by virtue of RA 7459 118 as implemented by Revenue
Regulations No. 19-93 dated July 27, 1993. Mr. Catan heads the Research Development and
Manufacturing Division, as well as other projects. He is assisted by qualified and competent people under
his direct supervision. Mr. Catan has been given various local and international awards as recognition for
his achievements and contributions to science and for the development of locally made products that help
improvement of the lives of people.

116
Based on television interview with EVP Mr. Jun Catan, Asenso Pinoy Show. Retrieved from: https://www.facebook.com/people/Mapecon-
Baguio/100006956285435
117
Retrieved from http://mapecongreen.com/about-us/
118
The 2005 Implementing Rules and Regulations of RA No. 7459 Otherwise Known as Investors and Invention Incentives Act of the Philippines

Page 73 of 123
 In connection to his R&D capabilities, MAPECON in 1990 has established its subsidiary,
MAPECON Green Charcoal Philippines, Inc.119 Its products are mostly made of the materials that comes
from kitchen wastes and even locally sourced materials such as water lilies found in the Pasig River
which is converted into green energy products like charcoal. The said company also produces activated
carbons used as a raw material to other products, including urban pesticides that they produce. The
company is proud to speak of having non-toxic pesticides. Their products are recognized and awarded for
quality not only in the Philippines, but also abroad. They emphasize that they are “more than a pest
control, for they likewise impart love for country, love for innovation and love for the environment.” 120

5.3.5. Computer Information Systems

Just like with any other businesses and companies, the members of the management team are well
versed in the utilization of basic information technology systems. The company is not focusing its efforts
in the information technology because it is not a requirement to do the job of a pest controller. Database
management is done by the usual windows operated systems. Passwords are used as basic tools for
security purposed in emails and computer accounts. Technicians does not even use email or make reports
using the computer because most are handwritten and directly submitted to their supervisors upon
completion of their daily projects. They are utilizing the tools like the internet in connecting to its client,
though the design aspect is another matter. The website itself is not updated and looks old as compared to
the sites of its competitors. Also, the inquiry form in the website does not provide for immediate
feedback, nor any feedback at all, apparently nobody is checking their mails.

5.3.6. Sales Audit

The segment that is growing is the General Pest Control (GPC), as explained in the Economic
Forces in this paper, that there are various industries that are growing and there is a continuous demand
for pest management services that must be done on a regular basis. GPC is normally performed once or
twice a month for a period of one (1) year. This segment is considered as the bread and butter of
MAPECON considering that said services are usually performed through entering a contract which is
valid for a period of one (1) year. On the other hand, pre-construction Termite Control treatments, though
has an effectivity range of one (1) to three (3) years after initial treatment, still has constant demand
because of the booming construction industry. The GPC market segment is the income driver of any pest

119
Retrieved from: http://mapecongreen.com/about-us/
120
Based on television interview with its Chief Operating Officer, Mr. Mars Catan. Asenso Pinoy Show. Retrieved from:
https://www.facebook.com/people/Mapecon-Baguio/100006956285435

Page 74 of 123
control company due to the overall scope of work required as well as the ease of performing the said
services.

Table 5.5.7-A: Company Sales per Category

Table 5.5.7-B: Company Sales Profit Table

Relevance to the firm: Through this breakdown, the company is capable to reviewing what particular
aspect of the business it is gaining well. It can likewise determine the flow of the transactions to allow
them where to focus their resources for further growth.

5.4. Key Financial Ratio Analysis

5.4.1.Liquidity Ratios
Table 5.6.1-A: Liquidity Ratios

RATIO
MAPECON

Page 75 of 123
 KEY COMPETITORS' INDUSTRY
RATIOS TYPE 2015 2014 2013 AVE.
AVE. AVE.

Current
3.1 2.8 2 2.6 3.5 3.1
Ratio
Liquidity
Quick
2.4 2.3 1.7 2.1 3.1 2.8
Ratio

MAPECON has more than enough cash to pay its liabilities. It has a current ratio as of 2015 of
3.1, it is just a few points behind competitor’s average of 3.5 which does not have significant different at
all. Looking at the company’s average current ratio of 2.6 based on the previous years, it can be
concluded that it was able to improve on its performance and has manage to increase its current ratio to
match the industry average rate of 3.1.
MAPECON has a stable financial standing in meeting its short-term obligations even without the
need to sell its inventories, having a ratio 2.4. However, there are still more work to be done if comparing
it with the competitors and industry’s average of 3.1 and 2.8 respectively.
Strategy: The Company is doing well in terms of its liquidity stance considering the continuous
increase in its sale with a 6% CAGR over a period of 5 years. Its heavy investments in advertising and
aggressive operations over the last three years period (2013 to 2015) proves to be effective in allowing a
growth in the liquidity of the company where in a span of 3 years it had a 8% CAGR rate. The company
may continuously utilize the marketing tools of ATL advertising in order to continuously grow its
business and increase its market share.

5.4.2.Leverage Ratios
Table 5.6.2-A: Leverage Ratios
MAPECON
KEY COMPETITORS' INDUSTRY
RATIOS TYPE 2015 2014 2013 AVE. AVE. AVE.

Debt to Asset
.16 .24 .28 .23 .4 .41
Ratio

Leverage Debt to Equity

.13 .13 .4 .28 .9 .78
Ratios Ratio
Long Term
Debt to Equity .04 .07 .05 .06 .2 .19
Ratio

MAPECON has a low debt to asset ratio in comparison with its key competitors. Again, this may
be due to the fact that the chemical products of MAPECON as their own formulation, hence unlike its
competitors which need to look for supplier of chemicals and utilize its borrowing capacity, MAPECON

Page 76 of 123
does not need to do the same. MAPECON needs to continue on building its resources of maintaining the
raw materials it needs in creating its own products. Continuous innovation is needed especially if they are
considering at depending on locally sourced materials in creating their chemicals. In this particular aspect
it appears that MAPECON is healthy financially because it has lesser debts. MAPECON may continue on
building its financial strength and maintain by maintaining its position in terms of performance vis-à-vis
any available forms of borrowings.
Strategy: The Company must maintain its steady financial standing in order for it to utilize its
resources into other profitable and equally important ventures which includes its subsidiary company,
Mapecon Green Charcoal.

5.4.3. Activity Ratios

MAPECON KEY COMPETITORS' INDUSTRY

AVE. AVE.
RATIOS TYPE 2015 2014 2013 Ave.
Inventory
7.8 8.0 6.4 7.4 1.19 1.2
turnover
Fixed Assets
2.6 2.8 2.8 2.7 40.3 30.9
turnover
Activity Total Assets
1.9 1.2 1.2 1.4 4.4 3.6
turnover
AR turnover 10.5 5.7 4.3 6.8 11.8 10.3
Average
35 64 84 61 87.2 82.2
collection period

MAPECON’s inventory turnover average of 7.4 signifies that it is able to perform well in terms
of the capability to produce goods and utilize them at the same time. The said inventory are either used
for the operation of the main office or allocated to the various branches nationwide. Being the
manufacturer and end-user at the same time is the advantage of MAPECON over its competitors because
it can maintain an inventory level sufficient for its requirements without having too much impact on costs
because. On the other hand, the company has a low fixed asset turnover rate of 2.7 as compared to the
industry average. In general the assets of the company have been significantly depreciated and still
continuously being utilized in the performance of their daily business functions. Total asset turnover of
1.4 is likewise lower comparing it with competitors as well as the industry average. This only reflects that
in the fixed asset is not an essential component of the business. As a way to adjust its pricing mechanism,
MAPECON offers staggered payments in its contracts even to its residential customers. This would
explain the low AR turnover rate of 6.8 as compared to the industry average. One of the reasons why the
company was able to perform really well in 2015 sales as compared to the other years is its capability to

Page 77 of 123
obtain a good collection rate of 35 compared with previous years. This is likewise far better than the
average collection period of its key competitors as well as that of the industry average.
Strategy: Part of the strategic objective presented in this paper is to improve on overall customer service
process of the sales agents and service technicians. This improvement is specifically directed in terms of
measuring the time requirement that they have to connect with customers in terms of physical presence
and attending to their needs. This specific strategy would likewise further improve on the aspects of AR
turnover and Average collection period. Frequent and prompt presence to clients would have an impact of
allowing a smooth flow of business transactions, especially in terms of actual payments. Eventually this
simple strategy would have an impact on improving revenues through further reduction on the time
needed for cash to flow to the company.

5.4.4. Profitability Ratios

MAPECON
KEY COMPETITORS' INDUSTRY
RATIOS TYPE 2015 2014 2013 Ave.
AVE. AVE.
Gross profit margin 76% 76% 80% 77% 80% 94%
Operating profit
10% 6% 6% 7% 3% 4%
margin
Net Profit Margin 9% 6% 5% 7% 2% 3%
Profitability
Return on total
17% 7% 6% 10% 10% 9%
assets
Return on
14% 9% 8% 11% 16% 14%
stockholders' equity

The company’s average gross profit margin is 77%, on the other hand, in terms of the operating
profit margin, the company poses a higher average of 7% as compared to only 3 to 4% key competitors
and industry averages. The net profit margin of 7% is higher than both key competitor and industry
average by 3 to 4%. This means that MAPECON is performing well as compared to its competitors in
terms of its sales vis-à-vis handling of all its related expenses. The company has the same rate with the
industry and competitors respect to ROA ranging in the average of 10%. This signifies that in the overall
industry, total assets are effectively utilized in the running of the business. Finally in terms of return on
stockholder’s equity, MAPECON’s average is slightly lower than key competitors and the industry
average. This may be explained by the company being a family corporation directing its resources in the
operation of the business and its allied businesses.
Strategy: MAPECON should consider into reviewing fully its gross profit margin considering that
it is lower compared to the performance of other companies in the industry. The company must maintain
its good performance and improve on other aspects that need are potential or delivery of additional
growth such as customer service and improved time of delivery of services to clients.

Page 78 of 123
 5.4.5. Growth Ratios
MAPECON
KEY COMPETITORS' INDUSTRY
RATIOS TYPE 2015 2014 2013 Ave.
AVE. AVE.
Sales 13% 8% 1% 7% 12% 10%
Growth
Net income 46% 19% 32% 33% 5% 9%
Earnings per
41% 22% 18% 27% 11% 14%
share

With respect to MAPECON’s average sales growth, it is partially behind, this despite having a
higher net income as compared to key competitors and the industry average. Their earnings per share
likewise is higher as compared to others. This can be reflected by the fact that the company is capable of
securing a higher margin in terms of using its capabilities of manufacturing its own locally produced
chemicals.
Strategy: MAPECON must further focus on improving its sales performance, given the favorable
external factors available at present. In fully considering the outcome of this ratio against industry
average, it would show that there is a need to boost the performance of the company because other firms
are overtaking the business. An improvement at par or above the industry on is sales and net income
would show that MAPECON is on track on its objective of maintaining brand leadership.

5.4.6.Operating Expense Analysis

In a five year period, from the year 2010 the company was able to reduce its biggest cost of
salaries and bonuses from 58% to 35% in 2015. Currently it has devised a system in terms of salaries to
its employees, in particular the more senior ones. All senior employees were already promoted to
receiving a certain percentage from the total contract price that is being charged from the client. Senior
employees would automatically get 14% from the total contract price in all termite treatments, while the

Page 79 of 123
mid-senior level will get 8%. If the treatment is general pest control, the commission percentage will be
much lower. However for the new employees who are less than seven years in the company, they still
receive the usual monthly compensation based on their employment contracts.
Some of the senior member of the team has already retired and was given a franchise to operate
MAPECON branches outside Metro Manila. As a necessary tool to increase productivity of the company,
improvements in terms of staff competitiveness became the constant focus for a period of 5 years. A big
percentage from the year 2010 to 2013 was utilized to create a strong marketing campaign. Kim Atienza
was hired as an endorser. He is a family member, most likely there were discounts in terms of talent fee.
Also, aggressive business development requires constant time to be spent outside, an increase in
communication, gas, transportation, representation and lodging are expected.
Relevance to the firm: The commission system has provided for a win-win situation both for the
company, and for the senior employees. The only difference would be, if there are fewer projects, then the
company will not suffer from paying the salaries because the commission based employees will merely
get whatever is available.

5.5. Internal Factor Evaluation (IFE) Matrix

5.5.1. Strengths and Importance Weights

Strength 1: MAPECON is established by an entomologist and is a pioneer in the field of urban
pest control with established set of clients nationwide
(7S Mckinsey/ Internal Audit Checklist)
Importance: 15%
For more than 55 years, the company has established a brand as the “top of mind” in terms of pest
control. Local government agencies are the top clients of the company, followed by established
institutions and firms nationwide. At present they are attending to the project of DMCI, Ilocos Norte one
of the country’s top contractor and developer.
Not all PCO’s are operating with an entomologist in its organization. Though it is not a
requirement in a pest control business, still having one is a big advantage especially since the business
will have a sense of expertise towards dealing with pests. Given that in operating a pest control business,
not all client situations are the same because there are so many species of pests that are existing. Each
type of pest or even specie of the said pest, poses a unique problem which requires a different approach in

Page 80 of 123
dealing with, which an entomologist could only understand. Mr. Catan, being an entomologist has
managed to develop the business from a simple company, to one of the largest pest control companies in
the country. MAPECON definitely will not prosper if not for the technical expertise of Mr. Catan who is
likewise a recognized inventor.

Strength 2: Services are backed by scientific knowledge and technical expertise of its
technicians and sales agents
(7S Mckinsey/ Internal Audit Checklist)
Importance: 15%
Given the fact that MAPECON was established by an expert entomologist, its approach when it
comes to pest eradication and control is based on proper science. This is opposed to other PCOs that are
pretending to fully know all scientific approaches in pest management. Oftentimes, said PCOs merely
learn about the business primarily from seminars, as well as word of mouth knowledge, eventually
through direct on the job experience. MAPECON has a department solely dedicated in doing scientific
research, which is inspired by its founder’s passion to look for other ways to improve the lives of
Filipinos through constantly innovating and inventing things will be helpful to the people.

Strength 3: Chemicals utilized are based on own inventions, hence providing for competitive
advantage in terms of overall value for money
(7S Mckinsey/ Internal Audit Checklist)
Importance: 10%
Unlike other companies that are sourcing their chemicals abroad, MAPECON is the one that
invents and manufactures its own chemicals by using economies of scale model. The raw materials and
active ingredients (AI) are locally obtained which generally helps the locally communities as well. Its
local subsidiary, MAPECON Green Charcoal, Inc. provides the activated carbon component used in all
termite powders. The only imported parts used in the production of their liquid chemicals are the “carrier
solutions” that are used to bind with the AI’s to create the final product.
Imported chemicals usually go along various channels such as distributors and retailers prior to
finally arriving at the hands of PCOs. There are relative costs associated in importing and distributing
chemicals which includes apart from taxes, logistics, warehousing, distribution and marketing. Due to
this, MAPECON’s chemicals would be at a competitive advantage when it comes to costs.
PCOs can actually purchase chemicals from MAPECON, after undergoing accreditation through
the Franchised Urban Pest Control Operator of the Philippines (FUPCOP) franchise system organized by

Page 81 of 123
the National Committee on Urban Pest Control (NCUPC). As a franchise holder, PCOs are allowed to
purchase MAPECON products with discounts ranging from 15% to 30%. 121

Strength 4: Use of environmentally friendly, safe and effective chemicals

(7S Mckinsey/ Internal Audit Checklist)
Importance: 5%
At present there are various types of chemicals that are offered in the market. These are mostly
manufactured by big multi-national firms based in Germany and the UK. In terms of chemical
classification, a colour coding scheme is used whereby RED would be labelled as highly toxic and is
indeed detrimental to the environment. Other colours would include BLUE, YELLOW and ORANGE
which are classified according to its respective toxicity levels. GREEN on the other hand is
environmentally friendly and is the most popular choice as well to active consumers. Unfortunately,
GREEN band chemicals despite being good for the environment, is the most expensive chemicals
compared to the other labels. MAPECON having the capability to manufacture their own chemicals is
likewise capable of focusing on the environmentally friendly features of its products

Strength 5: The Company is covered by income tax exemptions on the sale of its invented
products
(Internal Audit Checklist)
Importance: 5%
By virtue of RA 7459, otherwise known as “Inventors and Invention Incentives Act of the
Philippines” as implemented by Revenue Regulations No. 19-93 dated July 27, 1993, as a bonafide
inventor of products, the company is exempt from payment of taxes on the sale of the said inventions.
The total annual revenue is composed of 55% of product sales which are covered by the said
exemption. This is important because only the income of the company in the servicing operations which
is composed of 45% or Php90M is subject to income tax. This is a big help in terms of cost savings for
the company because instead of allocating for the payment of tax, the said amount can be used for other
related operational costs.

5.5.2. Weakness and Importance Weights

Weakness 1: Founder and EVP, Mr. Catan is in his senior years and has physical
limitations already
(7S Mckinsey/ Internal Audit Checklist)
121
Information obtained from the NCUPC Training Director. Retrieved from: http://rgt020663.blogspot.com/2013/08/urban-pest-management-program-
designed.html

Page 82 of 123
 Importance: 15%
Mr. Gonzalo Ortaliz Catan, Jr. is the majority stockholder and Vice Chairman of the Board of
Directors and at the same time the Executive Vice President of MAPECON Philippines, Inc. He is the one
who is handling the Research, Development and Manufacturing Division, at the same time he spearheads
new projects and international operations. Not to mention is the fact that he is also heading the subsidiary
company, MAPECON Green Charcoal Philippines, Inc. The entire operation of MAPECON is still
revolving around the business practices of its founder, Mr. Catan. Since he is already of seniority, in terms
of age and experience, the company is still dwelling its operations based solely on how its founder would
like its directions to be set. There are best practices which work best during the previous generations,
however there is no assurance that the same would work in the years to come.
The overall corporate culture revolves around the presence of Mr. Catan. This is primarily evident
by the fact that the people who are closely working with him are either family members or seasoned
employees who has been with the company for a given number of years, almost the same age as Mr.
Catan. The upper management is plainly composed of individuals who have a very close relationship with
him. There is now this question regarding succession, what will occur if the head of the family and
company is gone? Will the family members or his trusted managers be able to continue on the legacy that
he will leave behind?

Weakness 2: Poor integration of streamlined marketing communication programs

(7S Mckinsey/ Internal Audit Checklist)
Importance: 10%
MAPECON has 48 branches operating nationwide 122 and it is important that customers can easily
contact them through the said branches in their respective areas. Therefore, there is no need for customers
to connect with the head office in Manila for any queries regarding the services offered by the company
as each branch offices have their own local contact details such as landlines and mobile phones. However
with respect to social media and the use of the internet, since this is a very powerful marketing medium,
there must be a single site where customers can reach them. It is observed that MAPECON has numerous
websites existing apart from the main site maintained by the head office. Almost every branch is
managing its own website, although its content is mostly the same from each other and related entirely
with MAPECON. This is confusing to customer and creates an impression that there is no solid
communication platform to establish a solid brand.

Weakness 3: Technicians do not adhere to safety and proper application of chemicals

122
Retrieved from List of Branches: http://mapecon.com.ph/GoogleMapSlider/branchesR.php

Page 83 of 123
 (7S Mckinsey/ Internal Audit Checklist)
Importance: 15%
Until now, based on actual comments of customers, MAPECON personnel still utilizes the
traditional approach of determining if the house for instance is infested by termites or not. This is done
not based on the use of highly technological gadgets to scan termites, but by the utilization of primitive
approaches and techniques such as tapping the walls with a household hammer. This approach looks to be
effective and is impressive since it can only be done by those who are already experienced in the trade,
however, oftentimes it does not provide accurate information because what is being determined is the
hollowness of the sound in the wood and not the termite presence per se. Likewise, with the belief that as
stated in S4 that they use environmentally friendly and safe chemicals, technicians there is laxity in the
use of personal protective equipment during treatments.

Weakness 4: Confusing corporate business direction

(7S Mckinsey/ Internal Audit Checklist)
Importance: 5%
As a company who has been in the industry over a period of 50 years, there should be enough
milestones which would truly establish the firm and secure their presence in the next 50 years or more.
When looking at the Mission/ Vision of the firm, there are no clear indication on where it is and what
direction it wanted to go. The corporate structure may be interpreted as something belonging to a
religious group, instead of a business. The company itself is described as a corporate church headed by
Jesus Christ as the President.

Weakness 5: Slow response and availability upon call of customers

(7S Mckinsey/ Internal Audit Checklist)
Importance: 5%
The company has been growing its business steadily for a period of five (5) years. Due to its
aggressive marketing promotions such as billboards and radio commercials, there has been an increase in
the number of calls and inquiries regarding their services. Sales agents and service technicians on the
other hand are having challenges in meeting the demands of clients in terms of initial ocular inspections
and warranty claims. Ocular inspections need the coordination in the schedules of both the client and
MAPECON. There are numerous instances wherein due to the busy schedule and numerous client visits,
MAPECON can no longer attend on time and even can no longer entertain some of the calls.

Page 84 of 123
 Table 5.7.-A.: Internal Factor Evaluation (IFE) Matrix

Based on the table, MAPECON has an above average internal strength which is 2.75. Primarily
what greatly impacts the strength of the company is it being a well-established and pioneer in the pest
control industry. Undoubtedly for years, the name MAPECON has been the top of mind of direct
household consumers and decision makers such as business owners, purchasers, engineers and architects
in field of pest management and eradication. In addition to the years of the brands existence in the
Philippine market is the strong leadership of its founder, Mr. Catan, whose presence until now is
continuously felt in the overall structure and operations of the company.
However, despite all of this, MAPECON’s strength appears to be its weakness at the same time.
Given the commitment and hands-on nature of Mr. Catan’s management practices, the company is mostly
dominated by the established ways of doing things which plainly revolves around its owner-founder.
Given that Mr. Catan is already in his prime years, his company in the next five years may either continue
on its usual corporate practices, or it may opt to be more aggressive by connecting become more

Page 85 of 123
attractive and relevant to the new generation of homeowners, business owners and industry decision
makers.

6. Strategy Formulation

6.1. Strengths, Weakness, Opportunities and Threats (SWOT) Matrix

6.1.1.Strengths – Opportunities (SO) Strategies

SO1. Extensively utilize as a basic spiel in all marketing campaigns long term expertise, industry
leadership especially list of previous clients in targeting new clients (S1, O1)
SO2. Aggressively establish brand presence in regions with high development prospects, especially where
real estate developers are concentrating. (S1, O3)
SO3. Fully promote to clients exclusivity of MAPECON’s own chemicals which are not available
elsewhere (S2, O4)
S04. Increase awareness of potential customers to the firm’s scientific track record by providing copies of
documents, certificates to customers in all site visits and inspections. (S2, O1, O4)
SO5. Utilize as comparison to competitors number of hours allowed for occupants to re-enter the
house/establishment as basis to establish safety of chemicals used during servicing (SO3, O4)
SO6. Invent and conduct free demo of baiting system products (S1, O5)

Page 86 of 123
SO7. Make use of any additional savings to benefit its loyal employees to prevent from creating their own
PCOs (S5, O2)

6.1.2. Strengths-Threats (ST) Strategies

ST1: Highlight accomplishments, list of clients over a period of fifty five (55) years to inform clients of
their expertise as compared to fly-by-night operators. (S1, T1)
ST2: Through the NCUPC, represent the company in questioning moves of FDA in its policy issuances
(S1, T3)
ST3: Increase distribution of sales by listing in hardware stores and groceries the company’s ready to use,
“over the counter products” to compete against available DIY brands in the market (S2, T2)
ST4: Continuously educate the public that eradication of pests is not possible because they are part of the
general environment. Also, pest must be done in attacking the root cause and by not merely killing or
driving-away pests (S1, T4)
ST5: Encourage industry practitioners and explain the overall positive impact to the community of using
locally produced chemicals rather than the imported ones manufactured by multi-national companies (S3,
T2)
ST6: Solidify MAPECON’s influence through the NCUPC in ensuring that all industry players and those
who would want to enter the business will undergo trainings and licensing with the said agency. This in
effect will encourage PCOs to patronize local vis-à-vis imported chemicals. (S4, T2)
ST7: Make us of any tax exemptions it obtained in inventing new products (S5, T4)

6.1.3. Weakness-Opportunities (WO) Strategies

Page 87 of 123
WO1: Organize as an official accrediting body and provide for a yearly “Gonzalo Catan Jr.” excellence
award by sponsoring an event to recognize legitimate practicing firms and individuals (W1, O2)
WO2: Assign experienced workers or hire a new set of employees to handle emerging markets (W1, O1,
O3)
WO3: Create a marketing communications department to handle and monitor all communication efforts,
tools, adverting and monitoring of websites. Incidentally, retire other website and focus all efforts in the
mother website (W2, O1, O3)
WO4: Emphasize through all marketing communications directed to all stakeholders the superiority of
products use in terms of safety and environmental friendliness (W3, O4)
WO5: Organize planning workshop to plot growth potential areas in the business and establish corporate
direction and new set of relevant objectives (W4, O1)
WO6: Educate all customers on the value of traditional methods of pest control which significantly has
an effect of longer treatment time and unavoidable delays in delivering the necessary services (W5, O5)

5.1.1. Weakness-Threats (WT) Strategies

Page 88 of 123
WT1: Amend the corporate structure or include in the last will and testament of Mr. Catan, his future
vision for the company, especially the leaders who will succeed the business. Corporate transition should
start the soonest. (W1, W4, T1)
WT2: Reinvent the company image that will be relevant to current generation by revitalizing print ads,
billboards and website to remind everyone, especially new customers about MAPECON, being the No. 1
pest control provider in the country (W2, T1)
WT3: Utilize all the available resources to come-up with technologically adaptable pest control products
apart from the usual chemicals and sprays (W3, T4)
WT4: Fully launch MAPECON's OTC brands in the DIY market (W4, T2)
WT5: Incorporate in the company’s capabilities in performing integrated services in institutions and
government contracts and not merely as pest control applicators in the commercial and household market
(W5, T3)

6.1.4. Grouping of SWOT Strategies

a. Market Penetration Strategies

Page 89 of 123
 SO4 / WT1: Revitalize the company image to be able to adapt to the new generation of
customers. This may be done first by changing the logo, mascot and releasing a nationwide campaign of
new print ads, billboards and social media placements. This would allow existing and potential
customers to be reminded that MAPECON is still the largest and leader in pest control. (S2, O1, O4/
W1, W4, T1)
Make the firm relevant to the changing needs of time, especially since some of their customers
may already be in the prime of their lives and their children are now managing their homes/properties.
Given that for the past 55 years, there are at least two new generations of loyal customers who would not
hesitate to continue on trusting the legacy of service that MAPECON has provided in their households
and businesses. Hence, there is a need to refresh the corporate image to be relevant to the new generation
of existing customers.

SO1 / SO7 / ST1 / WO1: Organize itself as a “center of excellence” by establishing a

standardization program through an annual “Gonzalo Catan Jr.” excellence award. MAPECON shall
sponsor an event where it will act as an award giving body to recognize legitimate practicing pest control
firms and their respective certified applicators. This will maintain brand superiority and will allow the
market to always look up to them as the top pest control company in the country. (S1, O1/ S5, O2 / S1, T1/
W1, O2)
In order to recognize the expertise of Mr. Catan in the industry, the firm can serve as an accrediting
body to other pest control companies thereby creating an image of superiority among its competitors. This
idea is based on the fact that customers, especially big companies prior to choosing a pest control
provider, are initially looking at the best practitioners in the industry. This would provide for a
competitive advantage for MAPECON knowing that the market would always be looking at
MAPECON’s standard of how pest control company works. Given that MAPECON has been a pioneer
in the industry and a market leader for over 55 years, the credibility of the company, especially the name
of its founder cannot be surpassed by any individual, company nor government agency.

SO3 / ST5 / WO4: Fully promote in all its advertising campaigns, the exclusivity of MAPECON’s
environmentally safe, patented and locally manufactured chemicals which are not available elsewhere
(S2, O4/ S3, T2 / W3, O4)
Customers are now well aware of the harmful effect of pest control chemicals in their environment.
Emphasizing to customers the specific type of chemicals that are patented and used exclusively by
MAPECON would provide the basic peace of mind to customers. This would allow for continuous
patronage of their services knowing that the chemicals they use are not only effective, but more
importantly are safe. Advertising campaigns through ATL and BTL efforts must be strategically
implemented in key areas that have big potential for the growth of the business.

Page 90 of 123
 SO1/ ST1: Extensively utilize as a basic spiel in all marketing campaigns industry leadership and
55 years of serving Filipinos, especially in targeting potential markets (S1, O1 / S1, T1)
There is growth potential in new establishments, especially new homeowners, administrators and
business owners. That is why it must be communicated that their properties and investments must only be
handled by industry leaders who has good track record. This move would help increase the market share
of the company by attracting new customers.

S05/WO6/WT5: Increase awareness of potential customers to the firm’s scientific track record by
providing copies of documents, certificates to customers in all site visits and inspections. (S3, O4 / W5,
O5/ W5, T3)
Due to the number of pest control practitioners as well as the stiff competition in the business which
mostly utilizes attractive pricing schemes to win bidding contracts, MAPECON can utilize its most
powerful weapon, which are scientific and government certifications that would prove that they have the
pioneering and solid expertise in the field or urban pest control. Customers who are following operational
compliance protocols would consider track record proven by documentary records rather than good price
points.

ST2 / ST4 / ST6 / SO7 / WO1: Conduct education campaigns directed to industry practitioners
and shareholders the overall benefit of utilization of Filipino-invented and locally produced pest control
chemicals which are likewise friendly to the environment, instead of patronizing imported chemicals.
Patronizing locally produced chemicals would somehow help in securing employment to Filipinos and
thereby assist in nation building. (S1, T3/ S1, T4 / S4, T2 / S5, O2/ W1, O2)
All pest control chemicals promises the same thing, effectiveness of the product with the
combination of the proper ways of dilution and applications. There must be focus in delivering all
marketing communication initiatives the idea that pest control products is not all about effectiveness of
the chemicals but the primary importance in this industry is safety not only of the applicator, but most
importantly of the members of the household, their pests, plants and the general surroundings.
MAPECON’S chemicals are proven not only to be effective, but are likewise safe to humans, pets and
plants Whenever customers are asked regarding pest control treatment, the first two questions raised were
safety and effectiveness. With the increasing awareness of people towards the harmful effects of
chemicals, the public now is more aware of the complexities of involved between the conflicting sides of
safety and effectiveness. On the part of MAPECON, its chemicals are specifically designed to provide
both safety and effectivity in dealing with pests. This is the reason why technicians are confident with the

Page 91 of 123
product and its application because they know that it will not cause serious harm to themselves whenever
they are exposed to it on a regular basis. The superiority of a pest control product must always put as its
primary objective the safety of the people, while at the same time being deadly to pests.
MAPECON, given its founder’s extensive knowledge and experience in the field of entomology,
he was able to source locally available raw materials which are generally safe for use and is friendly to
the environment. Having a patented and locally manufactured chemical is a big advantage in terms of its
price and stock availability. Much more, if only the entire industry would be able to grasp the idea of
using locally produced chemicals, this would help in terms of nation building because more Filipinos
would be able to gain livelihood from producing such chemicals, unlike those that are coming from big
multi-national companies.

SO3/ ST4: Initiate a campaign against mechanical or electrical based pest control instruments
which works in a temporary basis and does not totally address the root cause of the problem in terms of
proper pest management, unlike performing traditional pest control methods (S2, O4/ S1, T4)
The basic premise in a pest control treatment is that pests are part of the environment. Just like
the wind that flows through the window, its breeze can be prevented from entering the house by closing
all the windows. However, nothing or nobody can totally stop the wind because of the fact that it is part of
the environment. For instruments and equipment that claims to totally eradicate pests, it is but a false
statement because pests will always be present. Hence, the promise of eradication is not accurate because
pests can merely be controlled or managed. Likewise, technology in any chemical products does not
depends on the efficiency of chemicals per se, but it is but a tool which is dependent on proper science
and experience that only a pest control technician truly understands. The quality of any pest control
instruments or other related products are only effective when integrated approaches to pest management
are followed by both technician and its customers.

ST2 / ST5 / ST6: Vigilantly act to let the current government administration be reminded of
authority given to the National Committee on Urban Pest Control (NCUPC) by previous government
administrations. (S1, T3 / S1, T1 / S1, T2)
MAPECON plays an active role with the NCUPC which was organized by the government to
spearhead pest control programs such as the annual Urban Pest Control Week 123. Presidential
Proclamation 990 signed by President Fidel V. Ramos on April 15, 1997 authorized the NCUPC to
“provide mechanism for mutual cooperation to harmonize laws and regulations relating to urban pest

123
Presidential Proclamation Number 990, May 15, 1997

Page 92 of 123
control.” It is likewise the committee that is conducting intensive training programs for pest control
applicators, providing for accreditation of both technicians and companies.
NCUPC providing for stringent requirements in terms of training and accreditation helps the
industry in general to prosper. The presence of the said organization limits the business to those which are
capable of safe practices, thereby protecting the general public and likewise enhancing the overall image
of the pest control industry. Likewise, one of the tasks of NCUPC is to lobby for the banning of use of
imported chemicals and provides that only locally produced chemicals must be used by industry
practitioners. The playing an active role in the NCUP, as an inventor and manufacturer of locally made
chemicals, MAPECON is incidentally cornering the market, ensuring the promotion in the use of its own
chemicals.

b. Market Development Strategies

SO2 / WO2 / WO5: Assign experienced workers or hire a new set of employees to handle
emerging markets (S1, O3 / W1, O1, O3 / W4, O1)
Real estate developers are constantly creating vertical projects in the Metro Manila area and are
now venturing into the horizontal market located in various key cities nationwide. Despite growing the
business to have 44 branches nationwide, there constant focus must be maintained in key regions that has
strong potential for growth such as Cebu, IloIlo and Cagayan de Oro City. It is not enough to have mere
branches in the said regions, but the operation must be as dynamic as the teams in NCR where local
talents are employed and deployed around the region. Locally employed employees with vast knowledge
and network in these places have an advantage in ensuring that the company would win future contracts
and maintain existing ones.

c. Product Development Strategies

SO6 / ST7 / WT3: Invent and conduct free demo of baiting system products
(S2, O4 / S5, T4 / W3, T4)
MAPECON must utilize its skills and resources of being an innovative company by creating non-
traditional products and method of termite abatement. In terms of investments in this venture, the
company can utilize all available incentives as inventor from the government. This is important in order
not to be obsolete in terms of the methods and technologies used in termite treatment. MAPECON’s
product development is at its core unlike other companies which do not look into innovative ways of
dealing with pests, but merely focuses on what multi-national companies provide and asks them to do.
Mr. Catan being an inventor and is a holder of various patents is generally capable of matching all
existing technologies in pest control, a feat which part of the long legacy of the company. A locally
produced termite baiting system would be more economical and cost-effective than the ones that are
currently being imported and used by competitors. Knowing that MAPECON has the capabilities to

Page 93 of 123
develop new products, the sales of these inventions may likewise be exempt from the payment of income
tax, providing for an increased financial advantage to the firm.

SO2/ ST3/ WT4: Solidify the retailing aspect of the business by re-launching its brand of
“ready to use” DIY chemical products in the through aggressive marketing campaigns and widening
distribution placements in DIY stores, groceries and “mom and pop” stores. (S2, S3, 03 / S2, T2 / W4,
T2)
The said products would serve that customer who cannot obtain the services of MAPECON. It
will still allow customers to use MAPECON’s patented and environmentally friendly products through
DIY use. The firm must solidify its presence in the commercial market and directly compete against
companies that are engaged in providing for pest control service substitutes. This move will ensure that
despite a reduction in pest control service market share, the overall corporate revenues will be protected
because of the move to have a retailing business of selling “ready to use” DIY chemicals. MAPECON is
confident about the quality and effectiveness of its products, most especially it being environmentally
friendly as opposed to those which are generally harmful. In this aspect, the company was able to
establish a new line of “ready-to-use” chemicals which are safe and easy to use for the layman. This is
specifically marketed to those individuals or a firm who does not wish to get a pest control provider, or if
already has one, would be able to conduct their own pest control in-between services. By having these
products, MAPECON is ensured of penetrating the market of DIY users and ensure increase of chemical
sales.
d. Cost Leadership
SO3 / ST5: Continuously provide for competitive price advantage by having adjustable rates
and quotations to ensure that bidding contracts for pest control services are always obtained.
(S2, O4 / S3, T2)
MAPECON being the inventor of its locally produced products is highly capable of reducing
their prices without sacrificing the quality of their service. The company has its locally sourced,
manufactured and patented chemical products which are at par in terms effectiveness with imported
brands. They do not have to deal with importation costs, furthermore, being an inventory, they enjoy the
tax breaks provided by the government on the sale of their invented products. In every pest control
quotation, chemical cost would usually range between 20-30%, depending on the size of the project.
Whenever prices are compared, as long as chemical dilution will be not altered, MAPECON’s brands
always have the competitive advantage based on its total price per liter or price per sqm.

e. Cost Improvement Strategy

WO3 / WT2: Specifically create a marketing communications department for proper
coordination and monitor all market related activities and expenditures such as advertisement and social
media interactions. In connection with this, retire other websites created by its franchises located in

Page 94 of 123
different provinces and focus all efforts in the main website of the firm in order not to create confusion
among its existing and potential customers (W2, T1 / W2, O1, O3)
Solidify all internal and external communications in order to avoid any conflicting branding
related communication efforts. There must be a single department that will handle all activities related to
the branding of the company, this would include all guesting and interviews on television and radio
shows. This will likewise boost the image of MAPECON as a leader in the industry, ensuring that
customers will remain loyal and trustful in their business. Having a single internet platform would allow
control on how messages will be sent across to relevant shareholders.

6.2. Strategic Positioning and Action Evaluation (SPACE Matrix)

Page 95 of 123
Page 96 of 123
 The results of the SPACE Matrix above shows that MAPECON falls on the aggressive position.
Being a pioneering enterprise in the business always ensure that the company has competitive edge
relative to years of experience and presence in the market as compared to other players. In this particular
quadrant, the following strategies are best suited to be applied by the firm: horizontal integration, market
penetration, market development, product development and related diversification.

6.3. Boston Consulting Group (BCG) Matrix

Star Question Mark

Cash Cow Dog

The entire business divisions appear to be falling in within the purview of Question Mark. The
fact shows that they have the potential to generate bigger profits given the proper opportunity and timing.
This is a hold and maintain scenario with a given set of strategies that include the focus on market

Page 97 of 123
penetration and product development. Indeed for these types of services, there is a need to push further
the activities of the firm in order to gain a deeper foothold on the market.

6.4. GE Mckinsey Matrix

Industry Attractiveness

Business Unit Strength

Business units are positioned in the medium quadrant. In particular the matrix provides that the
general pest control business unit must be constantly and elevate its performance in order to harness
growth in the business because there is constant demand available in the industry. What must be fully
focused on is the general pest control market because there is huge potential growth in that particular
aspect in the industry. For the termiticide business unit, the post construction must be given additional

Page 98 of 123
attention in order for it to maintain its relevance in the market. MAPECON must intensify its presence in
the market with continuous relevant advertising campaigns in order to reach a much broader audience
base. It must not content itself with the traditional billboards found along major roads but must likewise
utilize other modes of advertising, especially the internet which brings along a fresh perspective in terms
of marketing any products and services.

Chart

Looking at the above GE Mckinsey Matrix, all of the services belong to the medium business
strength wherein the termite business is placed in the Hold position, while for the GPC, it is in the Grow
position. Recommended strategies for these would be market penetration, market development and
product development.

6.5. Grand Strategy Matrix

Rapid Market Growth:

The company has a strong competitive position in a market with rapid growth potential. The
move to create a new campaign to boost industry leadership is an effective way to remind people about

Page 99 of 123
MAPECON and introduce the brand to new markets which are comprised of the younger generations who
now own their own houses or even businesses.

Strong Competitive Position:

Having a skillful set of sales employees and pest control technicians is greatly necessary and has
a positive effect in the business. Usually the tendency of prospective clients before engaging the services
of a pest control operator is to ask numerous technical questions regarding their problems with pests. It is
only when their concerns are addressed and all of their questions answered will they commit to the
services of a given company.
The company is utilizing all industry best practices in its approach to constantly improve the
management of the business. Its Executive team managers are trained and prepared to lead using strategic
management concepts adequate to the needs of their firm. All aspect of the business are closely monitored
and given serious coordination in order to avoid any conflicting scenarios which may arise. Case in point,
in terms of servicing the clients, call center operators are the forefront who will eventually give the
customer information to the members of the sales team. The sales team on the other hand will be
responsible for the quotation of the price and preparation of the contract. After such, the technical team
assigned specifically to a given area will be the one to conduct the actual application and pest
extermination. This set-up avoids any conflicting scenarios and provides for a more dynamic approach in
terms of human resource management because each personnel are focused in performing their particular
tasks.

Page 100 of 123

6.6. Internal-External (IE) Matrix

Based on the results of the External Evaluation Matrix, MAPECON obtained a score of 2.75
which provides it competitive nature in terms of external factors affecting the pest control industry. On
the other hand, its internal mechanisms provide a moderate position having a score of 2.45 which
suggests that there are constant improvements to be done to propel the company to greater heights. In
utilizing the IE Matrix, the company falls under the V score which states that it must focus its resources in
the “hold and maintain strategy”. In this case, MAPECON should focus its resources on both Market
Penetration and Product Development strategies.

6.7. Summary of Strategies

Page 101 of 123

 Based on the summary of all strategies presented above, it could be summarized that the best
recommended strategies for MAPECON to pursue are market penetration, market development and
product development.

6.8. Quantitative Strategic Planning Matrix (QSPM)

Page 102 of 123

Total: Market Penetration = 6.6Market Development = 6.15
Product Development = 4.5

Page 103 of 123

 As presented in the above QSPM matrix, MAPECON’s most ideal strategy to implement is
Market Penetration having a score of 6.6, to be followed by Market Development with a score of 6.15 and
finally Product Development with 4.5 score.

7. STRATEGIC CORPORATE & FUNCTIONAL OBJECTIVES AND RECOMMENDED

STRATEGIES
7.1. Recommended Revised Vision and Mission Statement

Recommended Revised Vision Statement

“To be the leading company that equally values both Christian principles and professional
excellence in providing integrated pest management solutions to customers by the year 2021 and
beyond”

Revised Vision Statement Evaluation

Recommended Revised Mission Statement

““MAPECON is committed in building the nation and its “corporate-church” by providing secured
employment to individuals who become part of its family, through the means of giving an effective,

Page 104 of 123

environmentally sustainable and technically proficient pest control products and services to its
customers.”

Revised Mission Statement Evaluation

7.2. Key Strategic Challenge and Recommended Corporate Strategic Objective

7.2.1. Key Strategic Challenge

Page 105 of 123

 How can MAPECON sustain “top of mind” market leadership in a highly competitive and
deregulated industry, given that its overall revenue performance over the last five years of 6% is
slightly below the 7% industry CAGR.

7.2.2. Recommended Corporate Strategic Objective

“Improve brand strength and “top of mind” image by obtaining a market share of 15% by
2019. In relation to this, attain at least 10% GAGR and grow above the industry CAGR rate by 2019.”

Primary goal is to still maintain industry leadership all over the country and clearly establish a solid
claim on being the “top of mind” in the pest control business. There must also be an improvement to the
6% CAGR revenue growth rate obtained in last past five (5) years by at least overtaking the industry
GAGR rates by at least 3%. Meaning if current industry CAGR is at 7%, MAPECON should have at least
10%. Based on its 2014-2015 performance, it is possible to achieve at least a 10% growth rate over a
period of two years. The Philippine market must fully be exhausted by expanding the company network
all over the country, including secondary cities. Grow company revenues further by inventing additional
products such as a pest control chemical that is non-toxic and environmentally friendly effectively acts as
a hygienic product as well.

7.3. Recommended Functional Strategic Objectives

Alongside the corporate strategic objective, it is necessary likewise to perform functional strategic
objectives in order to fully attain the Company’s goals. These include the following:

Functional Strategic Objective No. 1 (Marketing) To be the company on top of mind in all
aspects of household, commercial and industrial pest control maintenance programs, having a good track
record while offering good value for money.

With over 55 years of presence in the market, the company’s name has already been synonymous
with pest control. However, as discussed in this paper, competition is becoming strong, hence there is a
need to reinvigorate the company name to existing and most especially to prospective clients. Given the
MAPECON is a well-known brand, it is necessary to constantly have a strong relationship to customers
and make them understand that instead of discussing with amateur PCOs they should talk to the veteran
of the business. MAPECON is the leading company that they can trust in all of their maintenance and pest
management concerns.

Page 106 of 123

 Functional Strategic Objective No. 2 (Financial) To increase sales to Php390M with a 70% in
its net income growth while obtaining a market share of at least 15%
The existing market share of the Company over a period of five (5) years from 2011 to 2015 remains flat
at an average of 12%. This may be understandable due to several factors such as aggressiveness
competitors as well as the increasing number of new players in the industry which equally eats a portion
of the said market share. Company sales over the past 5 years is at 6%, however in its recent performance
from 2014-2015, it grew more than double to a rate of 14%. This is the same rate expected as a high side
revenue projection of Php 389M which is likewise equal to a net income growth of Php 35.9M. This
performIncreaance will yield to a growth in the net income by 70% and an increase in the market share to
15%.

Functional Strategic Objective No. 3: (Internal Process) To improve delivery of customer

service by having adequate turnaround time in attending to the needs of every client
As part of the growth strategy of the company of further increasing brand strength, market share
and financial performance, it must be supported by adequate and strong workforce. The company must be
able to hire and train additional personnel who will cover key expansion areas as well as current areas in
order to support the existing sales and technical teams.
Adequate training must be given to all employees and franchisees in terms of providing with a
strong customer service that will value both time of clients and overall quality of work performance. By
delivering an efficient and quality customer service, it would allow the company to achieve its other
functional strategic objectives since happy and satisfied clients would always bring overall good results.

7.4. Recommended Strategies

Based on the results of the recommended strategies as provided by the matrices in the previous
discussions, the 3 applicable strategies that must be taken into consideration are market penetration,
market development and product development.

Strategy No. 1. Market Development – Make the brand still relevant to the new generation of
customers and expand further to other markets
In line with the market development strategies, develop a comprehensive program to educate and
update key accounts and prospective customers of MAPECON’s superior technical expertise and years of
experience in the business through the conduct of free demonstrations, safety lectures and discussions,
including product seminars and the like. Given that MAPECON has been in the business for quite some
time, most likely the loyal clients that it has maintained over that long period of time is already in their

Page 107 of 123

senior years and the management of the household or business is already transferred to their children
who may not be aware of MAPECON.
As connected to the development of a streamlined marketing communications program, all
information pertaining to the technical requirements of the business, corporate profile, list of previously
services clients, chemical compositions among other must come from a single source and should not be
scattered in numerous locations such as websites of franchise operators. All customers must be provided
by a safety record, business registration and product Material Safety and Data Sheet as needed. In having
all these documentations in place, the company may now be able to properly establish its leadership and
expertise in the industry, allowing it to easily win the contracts of new clients and even in every bidding
process for pest management services. As discussed in this paper, highlight the important role that the five
MAPECON key areas (North Luzon, South Luzon, Visayas, Mindanao)

Strategy No. 2: Market Penetration – Implement an integrated marketing communications

program.
Totally overhaul the brand image and re-launch with a new look that is more relevant to the
present generation, while maintaining the essential company message of being the largest and leader in
pest control serving the Filipino people for over 55 years.
It is necessary for the company to have a new look, especially in dealing in key emerging areas
beyond Metro Manila because the surge of new pest control companies has the tendency to allow new
customers to forget about the long-standing existence and good service record of MAPECON in the past
years. The following must be implemented:
1. The new look must be a simultaneously done using Above the Line (ATL) and Below the Line
(BTL) campaigns. All social media related contents must be directed towards a single platform, such that
all MAPECON franchises that are operating their own websites must retire their sites and direct all
content to a single source (website, youtube, facebook, instagram, twitter);
2. A dedicated marketing communications department must be established composed of existing
employees and well as fresh hire in order to give the company a new perspective;
3. This team must be led by one of the children of Mr. Catan and no longer be under his
supervision, however final approval will still be coming from him;
4. This project must be done through partnership with an external advertising agency that will
coordinate all media placements in major broadsheet newspapers with wide circulation all over the
public;

Page 108 of 123

 5. Likewise, exchange deals must be agreed with well-known bloggers who will provide blog
entries on MAPECON’s free services to their households so that the internet will be flooded with
MAPECON hits;
6. The new image of the company will be complimented by a new mascot and MAPECAT will
already be retired. The mascot must be fun and exciting and must appear to be cute and entertaining to
allow brand recall;
7. Finally the launch date of the new company image must be synchronized to allow a grand
introduction nationwide.

Strategy No. 3: Product Development – Reinvent new forms of pest management chemicals,
tools and equipment that even works as hygienic care
The Company is fully capable of inventing new products for termite control and at the same time
GPC products which function serves to achieve the necessary needs for pest control and at the same time
penetrate the needs of the hygienic market.
By having a baiting system, it can penetrate other markets which prefer the use of the baiting
system. This new offering will be able to complement the missed opportunities when it did not obtain
new business contracts for lacking the said technological products. Likewise, to improve the product
offering of the firm, hygienic products which at the same time works as a general pest control or termite
treatment must be invented. In this way, the company will be able to diversify its product offerings and
may even have the opportunity to enter into the hygienic business that is dominated by one of its
competitors, Rentokil, Philippines.

Strategy No. 4: Process Improvements – Create an extensive “people first approach” in both
internal and external mechanisms of the firm
The company must be able develop a different level of thinking in performing its duties in pest
extermination. The pest control business is actually a people oriented business. The main essence of the
business is not merely about killing pests, but it is related to providing serenity, safety, and peace of mind
to clients. It is all about giving them quality customer service which leads to an assurance that they can
live their lives normally without being disturbed or not thinking too much about pests that could damage
their properties or cause sickness to them and their families. Likewise, being a people first approach, the
welfare of the employees must be secured, in particular the technicians who are exposed to chemicals
used in pest control services.
In connection with this, the following must be implemented:

Page 109 of 123

 1. Apart from basic operational processes and basic entomology trainings, include in the module
holistic customer care management. This includes manners of approaching customer, valuing their time,
etc. By having high regard for customer service, the company will be able to totally value its relationship
will all existing and prospective customers, allowing the company to improve on its weakness of poor
response time to customers;
2. Implement to stringent mechanism of reward and punish employees concerning adherence of
employees to safety. Provide recognition to those who serve as good examples in utilizing basic safety
equipment during services, while issue sanctions to those who constantly violate such policy on safety;
3. Company must hire additional workforce to augment existing teams in order to allow having a
reasonable ratio between number of teams and size of area being handled. In this manner, sales agents and
technicians will be able to attend to the needs of customers at a faster approach;
4. Succession planning must be clearly established not only for the purpose of continuous
operational flow of the company, but more importantly for personal growth of its employees, for them to
be motivated at work, by having the opportunity for promotion.

7.5. Recommended Departmental Programs and Actions

Strategy No. 1. Market Development – Make the brand still relevant to the new generation of
customers and expand further to other markets

Page 110 of 123

 Strategy No. 2: Market Penetration – Implement an integrated marketing communications
program.

Page 111 of 123

 Strategy No. 3: Product Development – Reinvent new forms of pest management chemicals,
tools and equipment that even works as hygienic care

Page 112 of 123

 Strategy No. 4: Process Improvements – Create an extensive “people first approach” in both
internal and external mechanisms of the firm

Page 113 of 123

7.6. Financial Projections
7.6.1.Basis and Assumptions
General Assumptions
Based on the economic forces positively influencing construction and housing and
entertainment/leisure industries, there are positive signs of expected growth for the entire pest control
industry as well. Naturally MAPECON would be able to harness this opportunity, given the fact that it is
still the market leader. The Company was able to pose a strong performance within a period of five (5)
years, from 2011 to 2015, having a CAGR of 6%. It is noteworthy to point out that between the years
2013 to 2015 or within three (3) years time, the CAGR is at 8%. Likewise in a single year, from 2014 to
2015, it posted a growth rate of 14.4%. With this, given the recommended strategies, it is of high
probability that it would be able to maintain such performance and maintain its growth, if not exceed
such.
Recommended Strategy No. 1 will provide a solid footing to all marketing efforts of the
Company, hence it will have an effect of decreasing all costs related to marketing expenses.
Recommended Strategy No. 2 will allow solid nationwide presence and top of mind marketing
leverage against competitors, thereby increasing market and overall sales performance.
Recommended Strategy No. 3 will have an effect of reducing costs especially in terms of those
associated with the usage of chemicals.

Page 114 of 123

 Recommended Strategy No. 4 will have an effect of helping in boosting sales that are lost due to
product substitutes. Furthermore, enhancement of distribution of products would help in promoting the
business to other areas not commonly reached by any other forms of marketing activities.
Recommended Strategy No. 5 will definitely increase cost on human resources due to increase in
salaries and benefits, and training costs. However, any human resource investments made will be
recovered in a long term basis.

The recommended strategies given above is capable of helping the Company to have a fresh
perspective of best practices in its operations while at the same time maintaining the traditions it has been
practicing in the past 55 years. These will further enhance Company’s performance by being able to
penetrate new markets while at the same time further develop existing ones.

7.6.2.Projected Income Statement (2017-2019)

High Side Projections

Page 115 of 123

Low Side Projections

Income Statement
- With the most recent sales performance of MAPECON at 14% growth rate, it is projected to
increase by at least the same rate given the economic factors mentioned in the EFE until the year 2019
- continuous high side performance at 14% by 2019 will give a revenue of Php389M or a 70%
increase from 2015
-Along with the sales growth, operating expenses would likewise grow because of the additional
marketing initiatives that is going to be implemented based on the strategies noted herein. Included here
are the regular expenses related to salaries, allowances, transportation, representation and the like
-Low side projection is expected to average within the industry performance of 7%, hence it will
yield a 41% growth in the net income as compared to a 70% for the high side toward 2019

Page 116 of 123

 5.1.1. Projected Balance Sheet (2017-2019)
High Side Balance Sheet
MAPECON PHILS., INC.
Balance Sheet
High Side
2015 2016 2017 2018 2019
Trade and cash equivalents 11.6 13.2 15.1 17.2 19.6
Trade and other receivables 21.9 25.0 28.5 32.4 37.0
Inventories 8.6 9.8 11.2 12.7 14.5
Prepayments 0.9 1.1 1.2 1.4 1.6
Total Current Assets 43.0 49.0 55.9 63.7 72.6
NONCURRENT ASSETS
Investment 33.6 38.3 43.7 49.8 56.7
Property and Equipment - net 88.4 100.8 114.9 131.0 149.3
Other Assets
Total Non-Current Assets 2.5 2.9 3.2 3.7 4.2
TOTAL ASSETS 124.6 142.0 161.9 184.6 210.4

CURRENT LIABILITIES
Account payable -trade 3.5 4.0 4.5 5.2 5.9
Accrued expenses 9.0 10.3 11.7 13.3 15.2
Loans payable-current 1.2 1.4 1.6 1.8 2.0
Total Current Liabilities 13.7 15.6 17.8 20.3 23.1
NONCURRENT LIABILITIES
Due to related parties
Long-term liabilities 5.9 6.7 7.7 8.7 10.0
Total Noncurrent liabilities 5.9 6.7 7.7 8.7 10.0

TOTAL LIABILITIES 19.6 22.3 25.5 29.0 33.1

STOCKHOLDER'S EQUITY
Share Capital 52.0 59.3 67.6 77.0 87.8
Retained earnings 72.7 82.9 94.5 107.7 122.8
Appraisal surplus 23.2 26.4 30.2 34.4 39.2
Total Stockholders Equity 148.0 168.7 192.3 219.3 250.0

TOTAL LIABILITIES AND

STOCKHOLDER'S EQUITY 167.6 191.1 217.8 248.3 283.1

Page 117 of 123

 Low Side Balance Sheet

MAPECON PHILS., INC.

Balance Sheet
Low Side
2015 2016 2017 2018 2019
Trade and cash equivalents 11.6 12.4 13.3 14.2 15.2
Trade and other receivables 21.9 23.4 25.1 26.8 28.7
Inventories 8.6 9.2 9.8 10.5 11.3
Prepayments 0.9 1.0 1.1 1.1 1.2
Total Current Assets 43.0 46.0 49.2 52.7 56.4
NONCURRENT ASSETS
Investment 33.6 36.0 38.5 41.2 44.0
Property and Equipment - net 88.4 94.6 101.2 108.3 115.9
Other Assets
Total Non-Current Assets 2.5 2.7 2.9 3.1 3.3
TOTAL ASSETS 124.6 133.3 142.7 152.6 163.3

CURRENT LIABILITIES
Account payable -trade 3.5 3.7 4.0 4.3 4.6
Accrued expenses 9.0 9.6 10.3 11.0 11.8
Loans payable-current 1.2 1.3 1.4 1.5 1.6
Total Current Liabilities 13.7 14.7 15.7 16.8 18.0
NONCURRENT LIABILITIES
Due to related parties
Long-term liabilities 5.9 6.3 6.8 7.2 7.7
Total Noncurrent liabilities 5.9 6.3 6.8 7.2 7.7
0.0 0.0 0.0 0.0 0.0
TOTAL LIABILITIES 19.6 21.0 22.4 24.0 25.7

STOCKHOLDER'S EQUITY
Share Capital 52.0 55.6 59.5 63.7 68.2
Retained earnings 72.7 77.8 83.2 89.1 95.3
Appraisal surplus 23.2 24.8 26.6 28.4 30.4
Total Stockholders Equity 148.0 158.4 169.4 181.3 194.0
0.0 0.0 0.0 0.0 0.0
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY 167.6 179.3 191.9 205.3 219.7

Page 118 of 123

 5.1.2. Projected Statement of Cash Flows (2017-2019)

High Side Cash Flow

MAPECON PHILS., INC.
Statements of Cash Flow
High Side
CASH FLOW FROM OPERATING ACTIVITIES 2015 2016 2017 2018 2019

Net Income from Operations 14.1 16.0 18.4 21.0 24.0

Adjustments:
Depreciation 10.2 11.6 13.3 15.2 17.4
Other income 2.1 2.3 2.7 3.1 3.5
Stock dividend (57.2) (65.2) (74.6) (85.3) (97.6)
Interest Expense 2.1 2.3 2.7 3.1 3.5
Net operating income before working capital (32.0) (36.5) (41.8) (47.8) (54.7)

Decrease (increase)in:
Accounts receivable 8.0 9.1 10.4 11.9 13.7
Inventories (1.1) (1.2) (1.4) (1.6) (1.8)
Prepayments (2.6) (3.0) (3.4) (3.9) (4.5)
Other assets (1.0) (1.1) (1.3) (1.5) (1.7)
Increase (Decrease) in:
Accounts payable (3.8) (4.3) (4.9) (5.6) (6.4)
Accured expenses (7.1) (8.1) (9.3) (10.6) (12.1)
Loans payable-current 0.5 0.5 0.6 0.7 0.8
Net cash generated from operation (38.9) (44.3) (50.7) (58.0) (66.4)
Provision for income tax (1.5) (1.7) (1.9) (2.2) (2.5)
Net cash provided (used in) operating activities (40.0) (45.6) (52.2) (59.7) (68.3)

CASH FLOW FROM INVESTING ACTIVITIES

Acquisition of property and equipment (16.7) (19.0) (21.8) (24.9) (28.5)
Interest income received 0.1 0.1 0.1 0.1 0.1
Net cash provided (used in) investing activities (16.0) (18.3) (20.9) (23.9) (27.3)

CASH FROM FROM FINANCING ACTIVITIES

Increase in long-term liabilities 3.7 4.2 4.8 5.5 6.2
Paid-up capital 57.2 65.2 74.6 85.3 97.6
Net cash provided by (used in) financial activities 60.6 69.1 79.1 90.5 103.5

NET INCREASE IN CASH AND CASH EQUIVALENTS 3.2 3.7 4.2 4.8 5.5
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF
THE YEAR 9.4 10.7 12.2 14.0 16.0
0.0 0.0 0.0 0.0 0.0
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 12.7 14.5 16.6 19.0 21.7

Low Side Cash Flow

MAPECON PHILS., INC.

Page 119 of 123

 Statements of Cash Flow
Low Side
CASH FLOW FROM OPERATING ACTIVITIES 2015 2016 2017 2018 2019 2020

Net Income from Operations 14.1 14.5 16.5 18.9 21.6 24.7
Adjustments:
Depreciation 10.2 10.5 12.0 13.7 15.6 17.9
Other income 2.1 2.1 2.4 2.8 3.2 3.6
Stock dividend (57.2) (58.9) (67.2) (76.8) (87.9) (100.6)
Interest Expense 2.1 2.1 2.4 2.8 3.2 3.6
Net operating income before working capital (32.0) (33.0) (37.6) (43.0) (49.2) (56.3)

Decrease (increase)in:
Accounts receivable 8.0 8.2 9.4 10.8 12.3 14.1
Inventories (1.1) (1.1) (1.3) (1.4) (1.7) (1.9)
Prepayments (2.6) (2.7) (3.1) (3.5) (4.0) (4.6)
Other assets (1.0) (1.0) (1.1) (1.3) (1.5) (1.7)
Increase (Decrease) in:
Accounts payable (3.8) (3.9) (4.4) (5.1) (5.8) (6.6)
Accured expenses (7.1) (7.3) (8.3) (9.5) (10.9) (12.5)
Loans payable-current 0.5 0.5 0.6 0.6 0.7 0.8
Net cash generated from operation (38.9) (40.1) (45.7) (52.2) (59.8) (68.4)
Provision for income tax (1.5) (1.5) (1.7) (2.0) (2.3) (2.6)
Net cash provided (used in) operating activities (40.0) (41.2) (47.0) (53.8) (61.5) (70.4)

CASH FLOW FROM INVESTING ACTIVITIES

Acquisition of property and equipment (16.7) (17.2) (19.6) (22.4) (25.7) (29.4)
Interest income received 0.1 0.1 0.1 0.1 0.1 0.2
Net cash provided (used in) investing activities (16.0) (16.5) (18.8) (21.5) (24.6) (28.2)

CASH FROM FROM FINANCING ACTIVITIES

Increase in long-term liabilities 3.7 3.8 4.3 4.9 5.6 6.4
Paid-up capital 57.2 58.9 67.2 76.8 87.9 100.6
Net cash provided by (used in) financial activities 60.6 62.5 71.2 81.4 93.2 106.6

NET INCREASE IN CASH AND CASH EQUIVALENTS 3.2 3.3 3.8 4.3 4.9 5.6
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE
YEAR 9.4 9.7 11.0 12.6 14.4 16.5
0.0 0.0 0.0 0.0 0.0 0.0
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 12.7 13.1 15.0 17.1 19.6 22.4

8. STRATEGY EVALUATION, MONITORING AND CONTROL

8.1. Balanced Scorecard Strategy Map

Page 120 of 123

8.2. Balance Scorecard Objectives & Initiatives Matrix

Page 121 of 123

8.3. Balanced Scorecard Performance Monitoring Dashboard

Financial Goals - Dashboard Target Responsible When

Perspective

Increase Gross ● Above Php 395 M Php 395 M Company President; Annual
Revenue Operations Manager check
● Php 300 M to 395 M

● Below Php 300 M

-----------

Page 122 of 122