Chapter I

INTRODUCTION

Rationale

Business is one of the elements that comprise the economy. In economics, the

market is where the economic activity takes place. The retail industry is undoubtedly an

important sector in the Philippine economy (Larry N. Digal,2001). Base on this notion,

business whether large or small has a great impact in the society. As a fact, there are

considerable numbers of entrepreneurs and businessmen who established their own

business and provided jobs to the people. (Bigal; Basitas Malaza 2010). Furthermore, as

an important element in the society, business also faces challenges which can be internal

and external. Starting a business is a big achievement for many entrepreneurs, but

maintaining one is the larger challenge (Investopedia). As businesses grow, it would face

problems that can affect them positively or negatively. This is so, because the economy is

not stable. We live in rapidly changing times, especially for the businesses. One side

effect of these rapid changes and growth is that no single CEO or any employee can be

expert in everything. (Hiscox, 2017)

“Bul-anon” is a retail industry located in Sogod, Southern Leyte. Clothing, bags,

foot wears and tailoring materials are just some of the products they offer. Few years ago,

it had been thriving and competing with their competitors within the same group of

marketers and a few outside but as years passed, various department stores offering the

same products were established that makes the competition more intense for them. As a

result, some of the owners decided to close their store. This implies that competition is

the major challenge that independent retailers face (K.M. Makhitha, 2016). Businesses

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regardless of forms and sizes meet challenges and “bul-anon” are not exempted to this.

According to Makitha, challenges faced by independent retailers are not unique from

those of other SMEs. They will need coping mechanisms in order to maintain their

business’ profitability and stability. Coping is the process of managing taxing

circumstances, expending efforts to solve personal and interpersonal problems, seeking to

master, minimize, reduce or tolerate stress induced by unpleasant and stressful situations

(Weiten and Lyoyd 2005; Wong, Yik and Kwong 2006). In business, effective coping

mechanisms are important to keep their firms survive and thrive. Coping is really

important for businessmen since entrepreneurs describe themselves as “working very

fast”, “working very hard”, and not having “ enough time to get the job done”,

(messter&Capobianco2001). In order to cope with the challenges in both market &

industry, owners must adopt strategies as their weapon to contend with these challenges

and survive.

Amidst the close competition and innumerable threats, there are still retailers in

Bul-anon that still continues to operate. With regards to this fact, the researchers were

curious about the reasons why these retailers still survived. According to Darwin’s

Theory of Survival, “The fittest would survive the longest”. Does the survival of the

present sellers in the “bul-anon” implies that they are the fittest? Or it means that they are

just surviving but not thriving anymore. In addition, we are also interested to know the

challenges “bul-anon” industry encountered and their coping mechanisms. This study

will also make the consumers or people aware of the present status of the said industry

especially the law making body. This will also be beneficial for other industry, since

industries regardless of the types and forms would also face certain challenges and must

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adopt strategies to contend. The result would make owners aware of some challenges that

they encounter unknowingly. We also aimed to device specific coping mechanisms for

the challenges identified from the “Bul-anon”.

Statement of the Problem

The main purpose of the study was to find out the different challenges faced and

coping mechanisms adopted by “Bul-anon” in Sogod, So. Leyte.

Specifically this study aimed to:

1. Determine the socio-demographic profile of the business in terms of:

1.1Duration of the Business Existence

1.2Source of Start-up Capital

1.3Monthly net Revenue from the business

1.4Credit/Loans

1.5Business Status (gaining, losing)

1.6Size of the Business

1.7Main Business’ products

1.8Source of Merchandise

1.9Form of Ownership

2. Determine the challenges faced by the “Bul-anon” in Sogod, So. Leyte in terms

of:

1.1 Competition

1.2 Employee Management

1.3 Marketing Management

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 1.4 Financial Management

1.5 Environmental Changes

1.6 Infrastructure and Logistics

1.7 Security

1.8 Debt/ Credit Control

1.9 Customer’s Perception and Loyalty

3. Identify the coping mechanisms adopted by “Bul-anon” in Sogod, So. Leyte.

4. Based on the findings of the study, propose guidelines to counter the challenges

faced by “Bul-anon”.

Significance of the Study

The result of the study is deemed beneficial to the following:

Owners – The result of this study can be used as a basis in the formulation of guidelines

in coping with identified challenges faced by the “Bul-anon” industry. They will also be

aware of some challenges that they encounter unknowingly and would be able to cope

with it. This study will also be a way for them to voice their opinions or problems about

their businesses to the sovereign.

Municipal Government- As an important element that affects businesses inside their

municipality, they also plays an important role for the improvement of this businesses.

Through this study, they will be aware about the current situation of the sellers in the

“Bul-anon”. They would also be a great help for the promotion of this businesses.

Other Entrepreneurs- Businesses regardless of forms and size will meet some of the

same challenges every day. The output of this study will help them relate it to their own

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businesses. This could also be their basis in coping with the challenges they encounter in

their management.

Future Researchers- The findings of the study will serve as a basis in their future

research works.

Scope and Delimitation of the Study

This study focused on the challenges faced and coping mechanisms adopted by

“Bul-anon” located in Sogod, Southern Leyte. The result of the research will only be

based on the information and data from the owners or employees and not their

customers.

Definition of Terms

In order to facilitate a better learning and understanding of the study, the

following terms are defined:

Markets. This refers to the individual and organization who are interested in and willing

to buy a good and services to obtain benefits that will satisfy particular needs.

Industry. This refers to a group of firms that offer a product or class of products that are

similar and close substitutes for one another.

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Bargaining power of supplies. It refers to the impact that can be significant, particularly

when it come to the limited of number of suppliers services several different industries.

Customers. This refers to the people who use or buy a product.

Marketing. This refers to the organizational function and set of process for creating,

communicating, and delivering value of the customer relationships in a ways that benefit

the organization and its stakeholders.

Foreign Direct Investment (FDI). An investment made by a company or individual in

one country in business interests in another country, in the form of either establishing

business operations or acquiring business assets in the other country, such as ownership

or controlling interest in a foreign company.

Chapter II

REVIEW OF RELATED LITERATURE

The Retailing Industry

All businesses that sell goods and services to consumers fall under the umbrella of

retailing. For starters, there are department stores, discount stores, specialty stores and

even seasonal retailers. Each of these might have their own little quirks; however, for the

most part the analysis overlaps to all areas of retailing. Over the past couple decades,

there have been sweeping changes in the general retailing business. What was once

strictly a made-to-order market for clothing has changed to a ready-to-wear market.

Flipping through a catalog, picking the color, size and type of clothing a person wanted to

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purchase and then waiting to have it sewn and shipped was standard practice. At the turn

of the century some retailers would have a storefront where people could browse.

Meanwhile, new pieces were being sewn or customized in the back rooms. In some parts

of the world, the retail business is dominated by smaller family-run or regionally-targeted

stores, but this market is increasingly being taken over by billion-dollar multinational

conglomerates like Wal-Mart and Sears. The larger retailers have managed to set up huge

supply/distribution chains, inventory management systems, financing pacts and wide

scale marketing plans. (Investopedia) Retailers have never had more information about

their customers, but many are struggling to figure out what it all means (Mark Di, 2012).

The Bul-anon can be classified into a retailing market because it operates on the same

function as retailing markets does. Growth continues to be highly relevant for the success

of a retail company, but at the same time is more difficult to achieve, because of several

factors. These include the power of large retailers and the crowding out of independent

retailers and small chains as well as the already high and increasing level of

concentration in many retail markets combined with market saturation in many product

categories (Tanase, 2007).

Other Institution and Government’s Role

FDI plays a great rule in the retail market. Many small vendors and shop owners

feel they can’t compete with large stores and will lose their business in long run, and the

domestic organized retail sector will not be in a position to compete; these are the key

disadvantages been talked about against FDI retail sector investment (Venkatesh, 2013).

In developed countries, small business sectors are supported by the government and/or a

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range of institutions (Lee, 2014). For example, banks in developed countries are

dedicated to helping small business owners to clear bankruptcy laws and support strong

industry associations (Thuy & Ruwitch, 2011). In addition, the country of China, the

government aggressively supported financial subsidizes and provided new information

technology (IT) to local Chinese retailers in order to improve small firm’s performances

in the retailing industry (Maruyama & Trung, 2012). Domestic Vietnamese entrepreneurs

have received relatively little supports from government or business assistance

organizations. As a result, a number of domestic Vietnamese small business

entrepreneurs are facing numerous difficulties. Superficially, Vietnam’s government says

that it supports SMEs, but their actions do not indicate supportive policies. For instance,

participants conveyed that Vietnam’s government plays a passive role in supporting small

business sectors. As a result, the domestic small business owners are facing difficulties in

accessing information about how to get government support (Lee, 2014).

Challenges Faced

The small and medium businesses (SMEs) play a vital role in the economic

development of a country (Muhammed, Char, Yasoa & Hassan, 2010). A study by

Radipere & Van Scheers (2005) found that SMEs face challenges such as marketing of

products, locality, and lack of knowledge of the market. Lehkanya supported the idea

supported their idea through the result of his study saying that there are certain challenges

facing marketing challenges in the retail sector. Further to these findings, Van Scheers

(2011) stated that SMEs face challenges with marketing of their products, lack of

understanding the market and cannot perform market need analysis. They are unable to

segment the market and cannot successfully and effectively market their products (Van

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Scheers, 2011). Lekhanya (2010) also found marketing to be a major challenge for SMEs,

since his study identified lack marketing knowledge and expertise and limited use of

marketing strategies as major challenges. However, Huang and Brown (in Simpson &

Taylor, 2002) posited different factors, although marketing was still considered a major

challenged. Additional factors identified were human resources, general management and

production and operations. Padma and Shanthi (2016) added that employee management

is also an important challenges identified. In addition to marketing related factors, Lewis

(2005) pointed to supply chain inefficiency as one of the most prevalent issues facing

SMEs. Thakkar et al., (2008), reiterated that SMEs face severe pressure to produce the

‘‘best’’ product, at the cheapest price, and with the shortest manufacturing lead time.

Furthermore, Rogerson (2001) pointed lack of access to finance as a major limitation for

small enterprises affecting their survival (Rogerson, 2001; Migiro & Ochola, 2005, p.

292). Chun (2001) identified challenges in financial management most specifically is

financial constraints. According to Chiliya, Herbst & Roberts-Lombard (2009), SMEs

fail to embark on extensive marketing practices due to lack of finance. Additional factors

affecting SMEs are inability of SMEs to prepare a business plan, ineffective in acquiring

and retaining of employees, capital inadequacy and lack of access to commercial land

which increases cost of doing business.

Furthermore, SMEs lack time, resources, technology or expertise to research and

develop new business ideas and innovations the business needed to drive the performance

of their businesses. Hence, on the study of Omar, Kiasamy and Ismael, 2009, they

identified environmental changes such as technology and the government regulations and

interventions as part of the challenges faced by SMEs. Lall (2001) gives emphasis to

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government legislation/intervention as a major challenge in the environmental changes.

SMEs also lack of necessary education and training; and face challenges such as

insufficient finance and bargaining power; finance costs; limited or no access to markets

and poor products demand; trade regulations; and improper infrastructure (Hyder &

Lussier, 2016, Chiliya & Robrets-Lombard, 2012; Cant & Lightelm, 2003).

Challenges faced by independent retailers are not unique from those of other

SMEs. However, it is important to outline specific challenges as laid out in literature that

specifically affect independent retailers. (K.M. Makhitha,2016) Das Nair and Dube

(2015) identified a number of challenges that independent retailers in South Africa are

facing. This included access to finance, lack of business management skills and lack of

retail capabilities. Factors such as the regulatory barriers (zoning, packaging and labeling,

health and safety requirements, etc.) were regarded as minor challenges for independent

retailers. Since the majority of independent retailers’ trade in grocery related items, they

compete directly with supermarkets. These supermarkets offer the supplementary service

of arranging a wide assortment of other, non-food, products selling concurrently in a

convenient setting and location with a focus on quality, service, ‘onestop’ shopping and

an overall shopping experience (Basker & Noel, 2013) that some independent retailers do

not, thus, create a competitive disadvantage. Supermarkets also invest in logistics,

distribution centers, networks and inventory maintenance more than independent retailers

(das Nair & Dube, 2015).

According to Pandey (2015), business infrastructure and logistics are also

included on the list. Security is also one of the challenges faced by retailers (Bowen,

Morara, Mureithi, 2009). This is because of the present of thugs and lifters. Debt and

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credit control was added to the list (Wade, 2012), these are present in small retailers.

Even if offering credits can help counter the challenges with regards to competition

(Bowen, Morara, Mureithi, 2009) collecting debts is also a challenge. Credit recording

errors also jeopardize their business’ profitability. Customer related challenges are also

present specifically the customer’s perception that retailers only offer low quality

products (Amyx, 2005). Retailers only have limited consumer insights (Kearney,2006).

There is also a lower customer loyalty in the retail sector (Chun,2001).

Base on the result of the study of K.M. Makhitha (2016), competition is the major

challenge that independent retailers face which is supported by existing research findings.

Other challenges included costs of buying the products, high inventory costs and high

rental costs. Furthermore, this study found that marketing related challenges are major

challenges compared to finance related challenges. Independent retailers need to market

the businesses appropriately in order to survive and do better than their competitors. In

the study of Padma and Shanthi (2016), competition from unorganized retailers, changing

consumer preference, entrants of global retail giants are just some of the major challenges

faced by a retailing industry. Growth continues to be highly relevant for the success of a

retail company and at the same time is more difficult to achieve, because of several

factors. These include the power of large retailers and the crowding out of independent

retailers and small chains as well as the already high and increasing level of concentration

in many retail markets combined with market saturation in many product categories

(Tanase, 2007)

Coping Mechanisms Adopted

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 For most small business owners, marketing is an overwhelming concept. Business

owners need marketing solutions that will ensure a long-term, profitable business (Leslie

Hamp, 2017). There are specific challenges that retailing market would face depending

on its size and there should be specific winning strategies to be used so that your business

will survive (Padma&Shanthi, 2016). Those retailers that adapt to changes in

demography, technology, consumer preferences, and legal changes are more likely to

survive for long and prosper (Environmental Theory). To avoid costly failures, retailers

need to be better prepared for the next generation of technologies that interact with

customers (Burke, 1999). According to Padma and Shanthi (2016), strategies like

understanding customer, appointing skilled manpower, having good relationship with

suppliers, effective supply chain, effective retail management system, increasing retail

space to international standards, restriction on FDI and government intervention are some

of the best strategies to cope with the challenges in the retailing industry. George Simon

Tanase (2007) added that flexible growth strategy must be implemented too. He said that

a very important element of a retail strategy is the retailers approach in building

sustainable competitive advantages by capitalizing the development opportunities.

Retailing industry must also have to actively promote their business and give it multiple

chances to succeed (Shewan, 2016). Create a deep connection with your core target

audience and design compelling offerings that entice customers were the strategies

suggested by Leslie Hamp (2017).

Retailers need to find compelling reasons to communicate with consumers

because they are so empowered with digital tools. Retailers need to continue to study and

understand their customer. They need to understand their customers’ needs, satisfactions,

12
and evolving shopping expectations. It goes beyond basic demographics (Morris, 2017).

Marketing managers need to anticipate and detect changes in customer behavior. It will

also assist in designing effective promotion campaigns and improve marketing strategies

(Morgan & Hunt, 1994). Beyond driving operational efficiency and cutting costs, a

strategic approach to sourcing can help even the best-performing grocers enhance vendor

relationships, increase product and ingredient quality, reduce spending and find new

sources of supply, which ultimately equips them to generate more value for their

organization and become more efficient and effective in their jobs (Miller, 2016).

Since competition was cited as the main challenge facing independent retailers,

they could identify strategies their competitors are using and better their position against

competitors. Independent retailers must improve their marketing effort. Since the costs of

keeping inventory and costs of buying were also cited as some of the major challenges,

independent retailers could reduce these challenges by joining cooperatives that serve

small independent retailers. These cooperatives could be useful for them since they buy

on behalf of their members which could lead to reduced costs of buying. Some of the

cooperatives keep stock on their warehouses which means that independent retailers

could keep enough for them to sustain their businesses, thus, leading to reduced inventory

costs (K.M. Makhitha,2016). There is also a need for independent retailers to attend

training programs available, especially those related to finance, marketing and business

management. There is a need for these retailers to acquire business related skills for them

to compete successfully in the market. Existing studies have reported that existing

training programs are also inaccessible to some of the businesses (Makhitha & Bresler,

2011).

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 In order to counter the challenges with regards to security in the study of Bowen,

Morrasa, and Mureithi (2009) retails adopted specific security measures like hiring

security firms or guards, close early to avoid thugs, carry their stocks home and sleep in

their place of business. To counter the challenges in debit/credit control the researchers

identify that retails adopt debt collection strategy like collection of debt at the end of the

month, down payment demand, allowing credits only to loyal customers, payment

through installments but sometimes they chose to avoid giving goods or services in

credits.

To stay competitive in the face of increasingly accelerated disruption, many

companies need to rethink and retool their offerings and operations. That kind of

transformation, however, requires a collaborative effort from all parts of the organization,

no matter how different their processes, systems, and cultures have been in the past

(Ribeiro, Giacoman, Trantham, 2016). It is important that independent retailers find ways

to deal with these challenges. It is also important for policy makers to find ways in which

these challenges may be reduced, if not eliminated, for independent retailers to perform

successfully (K.M. Makhitha, 2016).

Theoretical and Conceptual Framework

The retail industry is undoubtedly an important sector in the Philippine economy,

contributing about 11 percent of the total GDP in 1997 and absorbing 15 percent of the

total employment in the economy, which is approximately 4.2 million people. Rapid

expansion of large retailers is expected. Filipino consumers continue to improve their

purchasing power (Digal, 2001). Regardless of size, most businesses face many of the

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same challenges every day. It is clear that retailers face these challenges also. There are

specific challenges that retailing market would face depending on its size and there

should be specific winning strategies to be used so that your business will survive (Padma

& Shanthi, 2016). This study focuses on the challenges faced by the “Bul-anon” industry

in Sogod, Southern Leyte and it seeks to identify specific coping mechanisms adopted by

the sellers within the said industry.

Years ago, lots of sellers continue to operate in the said industry. As years passed,

it has been observed that some of the owners closed their businesses but despite of this,

there are still businesses that continue their operation within the fore mentioned industry.

Darwin’s Theory of survival stated that, “the fittest would survive the longest.” Relating

the “Bul-anon” industry, this means that the remaining seller are the fittest but the

question is, “How long?” Surviving doesn’t mean thriving. This industry is not exempted

on the challenges faced by most businesses and it also has specific coping strategies to

deal with the challenges. A number of studies concluded that competition is the main

challenge that was faced by retailing markets. This competition arouses from the

establishment of large retail markets such as department store and discount store. Porter’s

Five Forces Model presents the five fundamental forces of competition in the retail

industry (Tutorials Point). The forces are threat of new competitors, threat of substitutes,

bargaining power of buyers, bargaining power of suppliers and intensity of rivalry among

existing competitors. The above mentioned threats are the elements that add to the

challenges faced by the industry. Competition, employee management, marketing

management, financial management, environmental changes, business infrastructure and

logistics, security, debt and credit control and customer’s perception are the identified

15
challenges faced by retailers from literature while identifying strategies use of

competitors, appointing skilled manpower, improving marketing efforts, attending

training programs for financing, adapting changes in the environment, acquiring specific

security measures and debt collection strategy are some of the coping mechanisms they

adopted. The researcher will use these challenges from related literature on the

questionnaire and will let the respondents identify the challenges they faced and the

coping mechanisms they adopted. The socio-demographic profile of the business will

also be recognized because the researchers hypothesize that the challenges they faced and

their coping strategies may also vary from this factor. The desired result of the study is to

device specific guidelines to cope with the challenges in the “Bul-anon” industry.

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 Conceptual Framework of the Study

Darwin’s
Theory of
Survival Porter’s Five
Forces Model

Coping “Bul-anon in Sogod, Challenges

Mechanisms Southern Leyte

 Identify Strategies their Competitor

Use (Makhitha, 2016)  Competition (Makhitha, 2016))
 Appointing Skilled Socio-Demographic  Employee Management (Padma &
Manpower(Padma & Shanthi, 2016) Shanthi, 2016)
 Improve Marketing Efforts (Makitha,
Profile
 Marketing Management
2016)
(Lekhanya, 2010)
 Attend Training
Programs(Makhitha&Bresler, 2011)
 Financial management
 Adapt Changes (Environmental (chun,2001)
Theory)  Environmental Changes (Omar,
 Right positioning (Pandey,2015) Kiasamy, Ismael, 2009)
 Specific Security Measures  Business Infrastructure and
(Mureithi, 2009) Logistics (Pandey, 2015)
 Debt Collection Strategy (Bowen,  Security (Bowen,2009)
Morrasa, Mureithi, 2009)  Debt/Credit Control (Wade, 2012)
 Understand Customer’s Needs
 Customer’s perception and
(Morris, 2017)
Loyalty (Amyx, 2005)

Guidelines in
Coping with the
Challenges in the
Bul-anon Industry

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18
 Chapter III

METHODOLOGY

Research Design

The study uses convenience sampling method. Convenience sampling is a

sampling method that allows a researcher to choose whoever is available at a lower cost

and is also purposive in data collection to reveal as much information on the topic being

studied. It also utilized the descriptive survey method and questionnaire

design. Descriptive research refers to the type of research question, design, and data

analysis that will be applied to a given topic. The type of question asked by the researcher

will ultimately determine the type of approach necessary to complete an accurate

assessment of the topic at hand. It is then conducted through self-reports collected

through questionnaires or interviews (person or phone), or through observations. The

researcher’s will also conduct an unstructured interview for follow up questions.

Research Locale

The study will be conducted in Sogod, Southern Leyte where the “bul-anon”

business is located. The location of this municipality can be seen in the map provided on

the next page (Figure 1). Sogod officially the municipality of Sogod, is a 2nd class

municipality in the province of Southern Leyte, Philippines. According to the 2015

census, it has a population of 44,986 people. Sogod is located along the Southern Leyte

section of the Pan-Philippine Highway, 126 kilometers (78 miles) south of Tacloban City,

the regional center of Eastern Visayas. The municipality is home to Southern Leyte State

University (SLSU) Main Campus and Saint Thomas Aquinas College (STAC), one of the

19
oldest parochial schools in the province, established in 1946. The research will focus in

Bul-anon in Sogod particularly near the JYSMI Supermart and in other areas within

Sogod proper vicinity.

Figure 1: Map of the Locale of the Study

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Research Respondents

In this study, owner’s in the “bul-anon” or long time employees (if owners are not

available) will be chosen as our respondents. They owned retail market in the “bul-anon”

in Sogod, Southern Leyte.

Research Instrument

The researchers will use researcher made questionnaire and an unstructured

interview. The questionnaire was designed using information collected from literature. It

is divided into two parts. The first part of the questionnaire dealt with the socio-

demographic profile of the respondent’s businesses. This includes duration of the

business existence, source of start-up capital, monthly net revenue from the business,

credits/loans, business status (gaining, losing), size of the business, main business’

products, source of merchandise and the form of ownership. The second part will contain

a provided table with the corresponding challenges faced by the respondent’s businesses

and coping mechanisms identified from related researches wherein the respondents will

simply put a check mark in the box in the column named “YES” if they encounter those

challenges and adopt the coping mechanisms provided and on the “NO” if not.

Respondents were given an opportunity to add more challenges by adding the item

‘other- please specify’ on the questionnaire. Unstructured interview was adapted too for

the follow-up questions in which the researcher’s thinks will have an impact to the study.

These two are relevant in order to come up with the desired result of the study which is

listing the challenges faced by the “Bul-anon” industry and pairing it with the specific

coping strategies to be adopted.

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Data Collection/Procedure

Giving questionnaires to the respondents and the unstructured interview were the

ways used on this study. The unstructured interview is used for follow up questions. The

researches will directly visit the place of business of the respondent and tell them about

our intent.

Data Analysis Procedure

The data collected was analyzed through the use of statistical techniques such as

frequency counts, percentages, charts and tabulation to show differences in frequencies.

Qualitative data was analyzed descriptively through the use of the result of the interview.

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