Business Policy and Decision Making

COMPANY STUDY: BIAO AGRARIAN REFORM COOPERATIVE (BARBCO)

Group Members:
Jireh E. Malinuca
Amy Rose Abalunan
Paolo Angelo S. De La Pena
Daisy Nayal

MR. DUNHILL Z. BILOG, DBA

Professor
I. INTRODUCTION
Strategic Management plays a vital role in the sustainability of the business. It can create a clear
and well define plans that can be the translated into action plans to achieve goals that is align with
the business activities. With this our group has engaged in a company analysis to assist the Biao
Agrarian Reform Cooperative to come up with a strategic plan focused on their Cacao Processing
Business. These will possibly result to increase in their productivity and quality of their products
thereby increasing the profitability of the company.

II. COMPANY PROFILE

This section discusses the company profile, history and background.

Name of Organization: BIAO AGRARIAN REFORM BENEFICIARIES COOPERATIVE

Mailing Address: PUROK MANGGA, TALANDANG, TUGBOK DISTRICT, DAVAO CITY

Email Address : bmc021992@gmail.com
Contact Person: Arnulfo Andoy, Jr., Manager
Contact No. : 0947 3535469 / 0956 1846189 (Coop. Manager)

Date Organized: FEBRUARY 11, 1992

Registering Agency: Cooperative Development Authority

- Date Registered: February 19, 1992 Reg. Cert. No.: RN-1591-DVO
- Re-registered: March 22, 2010 Reg. Cert. No.: 9520-11013926

Membership:

MALE FEMALE TOTAL

(a) Regular Member 30 11 41
(b) Associate Member 95 42 137
Total 125 53 178

Economic Business Activities

 Lending
 Consumer Store
 Cacao Nursery
 Nibs production
 CACAO TABLEA PROCESSING
  Chocolate Processing (under R & D)
 Others

Major Suppliers and Partners

a) Mythical Agro Parts supply (MAPS) - Davao City
b) MAF Tractor Parts Supply, Inc. – Davao City
c) Petron Calinan – Davao City
d) NCCC Calinan – Davao City

III. VISION AND MISSION STATEMENT

This section indicates BARBCO’s vision and mission.

Vision:

A leading ARB cooperative producing and processing quality cacao and other agricultural
products in Davao region for domestic and international market.

Mission:

BARBCO commits to create opportunities that will:

- Improve the economic condition and livelihood of members

- Contribute to the social, cultural, spiritual and economic development of the community
- Promote good agricultural and sustainable farming practices as stewards of the Earth
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IV. BARBCO STRUCTURE

The figure below shows the BARBCO’s organizational chart.

General Assembly

Board of Directors

Admin
General
Manager Finance

Program Marketing Operations

Manager Manager Manager

Fermentary Processing Nursery In-

HH Facilitator In-Charge Supervisor Charge

Cluster 1 Cluster 2 Cluster 3

Member Member Member Member Member Member Member Member

Member
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V. BUSINESS MODEL CANVAS

A business model is the conceptual structure supporting the viability of a business, including its purpose, its goals and its ongoing plans for achieving
them (Rouse, 2013). BARBCO adopts the business model canvass of Alexander Osterwalder which describes nine essential components: Customer segments,
value propositions, channels, customer relationships (such as self-service or personal assistance), revenue streams, resources, activities, partnerships, and
costs. Below is an illustration of BARBCO's business model canva
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VI. SWOT ANALYSIS
This section illustrates the SWOT analysis (strengths, weaknesses, opportunities and threats
analysis) that identify and analyze BARBCO’s internal and external factors that can an impact on the viability
of BARBCO’s Cacao Tablea Processing business.
OPPORTUNITIES
1. Cacao is considered one of
the national priority industry
cluster
2. Availability of new, modern
technology, and machineries
in cacao processing
3. Increasing popularity of local
cacao products
4. Increasing demand
5. Increasing government and
private support and
interventions
THREATS
1. Some of the major officers
have several commitments
outside the cooperative
2. Presence of competitors
3. Climate change (El Nino)
STRENGTHS
1. Presence of technical
expertise
2. Passion for the industry
3. Assistance from
COCOAPHIL and other
industry partners
4. Market Linkage with CIDAMI
and other industry players
5. Availability of in-house
machineries
6. Competence of Officers and
Management Executives
7. Exposure / experience of
manager in sales and
marketing
S.O. STRATEGIES
 Benchmark and eventually
adopt modern technology
and best practices
 Establish linkages and
partnership from both public
and private sector
S. T. STRATEGIES
 Develop Business Continuity
Plan / climate change
mitigating strategy
 Maintain existing incentive
policy
7
WEAKNESSES
1. Absence of own cacao
production farm
2. Labor intensive production
process (semi-mechanized)
3. Disorganized storage area
4. Absence of flowchart and
other pertinent signage’s
5. Absence of dressing room –
lockers, etc.
W.O. STRATEGY
 Invest and/or seek for
financial assistance from
both public and private
sector (for building
improvement and additional
machinery)
W. T. STRATEGY
 Invest and/or seek for
financial assistance from
both public and private
sector (for building
improvement and additional
machinery)
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VII. TABLEA PROCESSING FLOW CHART

The figure below depicts the Cacao Tablea Processing flow chart.

Gathering/Consolidating
of Raw Materials (Beans)

Sorting of Raw
Roasting Winnowing
Materials (Beans)

Chilling Freezing Grinding

Packaging/Vacuum
Moisturizing Curing/Hardening
Sealing/Labelling

Delivery
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VIII. ASSESSMENT OF THE CURRENT PRODUCTION SYSTEM

This section focuses on the result of diagnosis of the operation aspect of the tablea processing,
classified into its strengths, deficiencies, and opportunity for improvement (OFI).

# Details of Strengths Photo

Use of working clothes such as hairnet, apron, face mask,

1
gloves, working shoes

Skilled workers – ability to deliver expected output despite

2
absence of highly modernized machinery

Raw materials were properly labeled (batch number,

3 packing date, and weight) to ensure identification and
traceability.

4 Stable source of raw materials – the cooperative is able to

identify various sources / areas of cacao producers

5 Production area is properly lighted and ventilated

6 Presence of quality assurance personnel

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# Details of Deficiencies Photo

1 Absence of own cacao production farm
2 Labor intensive production process – roasting, grinding,
winnowing

3 Disorganized storage area(Non implementation of 5S)

4 Absence of dressing room – lockers, etc.

5 Use of unprescibed utensils – plastic wares

6 Not properly compacted Finished Product

# Opportunities for Improvement Photo

1 Purchase of tempering machine to avoid deformities of
tablea
2 Value engineering – fabricate low cost motorized roasting
machine
3 Implementation of 5S to maximize building space
4 Improve labeling of finished products in accordance to FDA
requirements
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5 Repair and maintenance of basic facility in compliance to

GMP (washing area and sanitation area)

IX. PROBLEM SELECTION AND DEFINITION

This section discusses the production operation problems identified using Decision Matrix
Technique and 5Ws.

DECISION MATRIX
Criteria 1 Criteria 2 Criteria 3
Easy to Solve Cost Implications Productivity
Problems Total
(30%) Improvement
(20%) (50%)
Labor intensive
production process – 2 3 6 4.3%
roasting and grinding
Disorganized storage
area (Non 4 1 3 2.6%
implementation of 5S)
Absence of dressing
5 4 2 3.2%
room – lockers, etc.
Use of un prescribed
6 2 4 3.8%
utensils – plastic wares
Not properly
compacted finished 3 5 5 4.6%
product
Absence of own cacao
1 6 1 2.5%
production farm

Scoring System: 1-6, six being the highest

X. PROBLEM DEFINITION

What: 2-3% shipped tablea have deformities

When: 1st quarter of 2018
Where: Molding Process
Why: Resulted to returned shipment
Additional labor cost for rework
Additional Freight cost
Additional overhead cost
Who: Major customers, BARBCO, and production staff
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XI. ROOT CAUSE ANALYSIS USING DISGNOSTIC TOOLS

This section identifies the causal factors that underlie variation on the tablea production using the
Why-Why technique. Factors identified with this technique were validated as shown in the Validation Table
and Cost-Benefit Analysis.

WHY-WHY TECHNIQUE

# Details of Deficiencies (With Evidence) Root Cause

1 Actual rejection of 2-3% shipped tablea last June
2018 due to deformities
Source: Interview with Arnulfo Andoy, Jr.,
Manager
Why 1: Conventional way of tempering
2: Absence of tempering machine
3: Lack of awareness on
modernized technology
4: Lack of benchmarking activities
5: No established cost and benefit
analysis

A countertop electronic mixing

and heating pan or appliance
that is designed to take all the
guesswork and manual labor
out of tempering chocolate
tablet; choco tablet must be
tempered to be crisp and
smooth.

Source:google image

VALIDATION TABLE

Possible Root Causes Validation Activity Result of Validation

Why 1: Conventional way of
tempering
2: Absence of tempering
machine
3: Lack of awareness on
modernized technology
4: Lack of benchmarking
activities
5: No established cost and
Benefit analysis
 Actual plant visit
 Interview with the manager
True cause. As per interview
with the manager, it was DOST
who introduced and
recommended to them the use of
tempering machine in order to
produce more compacted tablea
and therefore reduced rejection
rate due to deformities.
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COST-BENEFIT ANALYSIS

Cost and Return Analysis

Amount
BENEFITS
Eliminate Cost
Freight and Handling 24,600.00
Labor on Rework 5,062.00
Packaging and Labeling 7,992.00
Overhead Cost 4,800.00
Expected Increase in Sales by 25% 205,902.00
Total 248,356.00
COST OF IMPLEMENTATION
Benchmarking and Training 10,000.00
Purchase of Tempering Machine 150,000.00
Cost of Result of increase in sales 100,951.00
Total 262,951.00

PAYBACK PERIOD = 1.058 years

XII. RECOMMENDATIONS

This section discusses the proposed solution/ countermeasures to the identified root causes in the
Why-Why Technique.

True Root Cause Recommendation

1. Conventional way of tempering  Conduct benchmarking activities in partnership with
2. Lack of awareness on modernized DOST and other line agencies
technology  Consider the purchase of tempering machine
3. Lack of benchmarking activities  Establish cost benefit analysis pertaining to upgrading
4. Absence of tempering machine of machineries
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ACTION PLANS

This section summarizes the laid specific activities in actualizing recommendation.

Activities Person In Charge Timeline Budget

SHORT TERM PLANS
1.0 Coordinate with appropriate agencies
that could assist in the conduct of
benchmarking activities Manager 3rd Qtr 2019 P5,000.00 (coop
1.1 Create a project proposal counterpart)
1.2 Submit letter request and
project proposal
2.0 Inquire proper specifications of
tempering machine
2.1 Seek for government programs Manager /
(DTI SSF and DOST Set-Up) Technical Expert / 4th Qtr 2019 P160,000.00
2.2 Propose to the coop top Coop Top
management with regard to the management
purchase of the machine
3.0 Seek assistance from government
agencies for mentoring on the
preparation of cost benefit analysis Top Management 4th Qtr 2019 P10,000.00
4.0 Hire a consultant to establish cost
benefit analysis

MEDIUM - LONG TERM PLANS

Invest in High End Chocolate Processing Top Management 2019-2024 30,000,000
Facility
Branding Strategies & Intensive Promotions Top Management 2019-2024 2,000,000
– Marketing
Explore Export Opportunities Top Management 2019-2024 3,000,000
Certification such as: HALAL, HACCP & Top Management 2019-2024 500,000
ISO 9001: 2015