Gov. M.

Cuenco Avenue, Nasipit, Talamban, Cebu City 6000

CHE 427N
Management in the Research and Process Industry

A BUSINESS PROPOSAL

Submitted to:

Dr. Angelo Cabije

Submitted by:

Malig-on, Alyssa Camille D.

Maningo, Aira Jean S.
Martin, Alvin Mar V.

March 14, 2018

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Contents
1.0. Executive Summary .......................................................................................................................... 4
1.1. Objectives ..................................................................................................................................... 4
1.2. Mission ......................................................................................................................................... 4
1.3. Vision ............................................................................................................................................ 4
1.4. Core Values .................................................................................................................................. 4
1.5. Rationale ...................................................................................................................................... 5
2.0. Company Summary .......................................................................................................................... 6
2.1. Start-up Plan ................................................................................................................................. 6
2.2. Company Locations and Facilities ................................................................................................ 8
3.0 Products and Services ..................................................................................................................... 10
3.1 Product and Service Description.................................................................................................. 10
3.2 Competitive Comparison ............................................................................................................. 13
3.3 Technology .................................................................................................................................. 14
3.4 Future Products ........................................................................................................................... 15
4.0 Market Analysis Summary ............................................................................................................... 15
4.1 Market Segmentation................................................................................................................... 15
4.2 Target Market Segment Strategy ................................................................................................. 17
4.2.1 Market Needs ....................................................................................................................... 18
4.2.2 Market Trends....................................................................................................................... 19
4.2.2 Market Growth ...................................................................................................................... 22
4.3 Industry Analysis.......................................................................................................................... 22
4.3.1 Main Competitors.................................................................................................................. 22
4.3.2 SWOT/PESTLE Analysis ...................................................................................................... 23
5.0 Strategy and Implementation Summary ................................................................................... 26
5.1 Marketing Strategy................................................................................................................... 26
5.1.1 Positioning Statements ......................................................................................................... 26
5.2 Sales Strategy ......................................................................................................................... 27
5.2.1 Sales Forecast ...................................................................................................................... 27
5.2.2 Sales Programs .................................................................................................................... 28
5.2.3 Strategic Alliances ................................................................................................................ 28
5.2.4 Milestones............................................................................................................................. 29
Gantt Char ..................................................................................................................................... 29

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6.0 Management Summary ........................................................................................................... 30

7.0 Financial Plan .......................................................................................................................... 37

7.1 Important Assumptions ............................................................................................................ 37
7.2 Source of funds........................................................................................................................ 37
7.4 Projected Profit and Loss ......................................................................................................... 37
7.5 Projected Cash Flows .............................................................................................................. 38
7.7 Business Ratios ....................................................................................................................... 39
7.8 Balance Sheet ......................................................................................................................... 40

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1.0. Executive Summary
1.1. Objectives
1. Total revenue at least Php 10 million in the first year.
2. Annual revenue growth rate of 16%.
3. Expand business transactions nationwide in 3 years.

1.2. Mission
Pal Wood Furniture Company aims to be in the forefront of the furniture industry. The company also aims to
reduce the massive cutting of trees for the production of furniture by utilizing coconut fronds and midribs as
wood.

1.3. Vision
The Pal Wood Furniture Company envisions a world that endeavors for sustainable development and a
society where citizens are socially and environmentally responsible by being attuned to the pursuit of
innovation, business and financial success in ways that leave only positive imprint on the environment for the
good of the present and the next generation to come.

1.4. Core Values

 Passion for People
We deal with all aspects of our business with the idea that sustainability is not only respecting the
planet Earth in the production of our furniture goods, but looking up to the people who create and avail
them. We develop relationships that make a positive difference in our customer’s lives.
 Passion for Excellence
We strive to be the best. We go above and beyond our commitments and actively seek opportunities
to excel at what we do. We provide quality products and outstanding service, that, together, deliver
premium values to our customers.
 Integrity
We strive to always be honest and transparent with each other and with our customers.
 Respect for People
We treat our customers, partners, and staff members with mutual respect, recognizing the
significance of diversity. We value all individuals in our company and honor their contributions.

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  Innovation
We continuously search for new ways to improve what we do. We embrace innovation in ideas,
technology and processes to make this a reality.
 Accountability
We are accountable for delivering our commitments
 Teamwork
We work together, hand in hand, to meet the needs of our customers and to help our company
progress.
 Environmental Commitment
Our service in creating and innovating quality furniture products is coordinated with our responsibility
to reduce harmful impacts to Mother Earth. Thus, in all aspects of our business, we implement
environmental sustainability mindset and practice.

1.5. Rationale

Trees are cut down at a rapid rate to meet the demand for products we all use. Some are products
that we often consume, such as toilet paper, diapers and tissues. Others are things we use regularly but only
buy once every few years: wood bed frames, kitchen tables, brooms that have wooden handles, and many
more.

Currently, the furniture industry has been largely excluded from broad-based environmental
awareness campaigns, and few projects have attempted to improve manufacturing process from an
ecological standpoint. Yet, the environmental impacts from production are self-evident. Moreover, continued
lumbering activities, with the removal of wood from forests risking extinction, is leading to fragmentation and
deterioration. The Palwood Furniture Company foresees “action for environmentally friendly products,
enhancing green demand through modification of raw materials and processing in the manufacture of
furniture products.”

In China and in the Visayas region, bamboo is being used as raw materials for engineered lumber,
thus, we have lantay. On the other hand, local rattan furniture manufacturers use rattan wastes as raw
materials for engineered lumber and panels called "permacane". However, bamboo is not that locally
abundant, and supply cycle is long, and rattan is becoming an endangered species. Nonetheless, coconut

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fronds are abundant, renewable, and available all year round and common throughout the country. For
instance, the Philippines has three million hectares planted to no less than 300 million coconut trees.

Coconut production plays an important role in the national economy of the Philippines. The Philippines
is the world’s second largest producer of coconuts. Coconut cultivation plays an integral role in local diets of
the archipelago’s population. Of the Philippines’ approximately 12 million hectares of farmland, 3.56 million
hectares are dedicated to coconut production, 2011 statistics released by the Philippine Coconut Authority
(PCA) show.

Throughout the Philippines, the coconut is consumed and utilized in a variety of ways. Coconut leaves
are often used to wrap rice for cooking and used in its subsequent storage in packets known as “puso.”
Coconut milk, coconut jam and so-called coconut sport fruits, sweetened meat of the copra that is sliced and
severed in strings, are all popular forms of consuming coconuts.

Because of the abundance of coconut trees here in the Philippines, it is feasible to produce
environmental-friendly furniture by not cutting the coconut trees but by utilizing another part of it to ensure
environmental sustainability in the country.

2.0. Company Summary

With the Philippines waking up to the ecological threat posed by mass deforestation, Palwood
Furniture Company emerges as a new company that seeks to find a sustainable substitute material to
replace lumber from trees in furniture design. The company is set out to be a benchmark for socially-
responsible manufacturing company by recycling barren coconut palms, return old plantations to local
villages to replant with young fruit-bearing palms and other cash crops to begin the lifecycle of land
regeneration. The Palwood Furniture Company is owned by Engr. A. Maningo, Engr. A. Martin, and Engr. A.
Malig-on who intend to apply their extensive knowledge and skills to establish an effective and profitable
manufacturing business company and most especially to give back to community.

2.1. Start-up Plan

Total start-up expenses, including tools, software, stationery, and related expenses are shown
below. The three owners, Engr. A. Maningo, Engr. A. Martin, and Engr. A. Malig-on will provide the bulk of
the start-up financing. At the same time, the Palwood Furniture Company plans to receive a 3-year
commercial loan facility, which will help meet the cash flow requirements.

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his is the key areas where we will spend our start – up capital on;
Table 1. Start-up Requirements

Start-up

Requirements PHP

Start-up Expenses
 Business Registration Fee 40,000.00
 Legal Expenses
o Licenses and Permits 50,000.00
o Accounting Services (Softwares and 77,500.00
Point of Sale Machines)
 Marketing Expenses
o Grand Opening 150,000.00
o Flyers and Brochures 50,000.00
 Business Consultant 130,000.00
 Insurance Policy Covers (General Liability, 500,000.00
Workers’ Compensation and Property Casualty)
 Leasing of Standard Warehouse and Showroom 5,200,000.00
 Remodeling of the Warehouse and Showroom 1,020,000.00
 Stationary 30,000.00
 Phone and Utility Deposits 130,000.00
 Store Equipment (Cash Register, Security, 700,000.00
Ventilation and Signages)
 Purchase and Installation of CCTVs 510,000.00
 Office Furnitures and Technologies (Computers, 250,000
Printers, Telephone, TVs, Sound System, Tables
and Chairs
 Launching of Website 35,000
 Miscellaneous 500,000.00

Total Requirements 8,955,000.00

 Add the start-up expenses for the manufacturing process.
We would need an estimate of P 8,955,000.00 to successfully set up our manufacturing business.
Please note that this amount includes the salaries of all the staff for the first month of operation. These are
the areas we intend generating our start – up capital, (1) generate part of the start – up capital from personal
savings and (2) source for loans from banks. One of our major goals of starting Palwood Furniture Company
is to establish a manufacturing business that will survive off its own cash flow without the need for injecting
finance from external sources once the business is officially running. We know that one of the ways of gaining
approval and winning customers over is to manufacture durable and quality furniture and to retail our wide

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range of quality home furniture a little bit cheaper than what is obtainable in the market and we are well
prepared to survive on lower profit margin for a while. Palwood Furniture Company will make sure that the
right foundation, structures and processes are put in place to ensure that our staff welfare is well taken of.
Our company’s corporate culture is designed to drive our business to greater heights and training and re –
training of our workforce is at the top burner.

2.2. Company Locations and Facilities

The coconut industry in the Philippines plays a key role in shaping national development. It is among
the top ten export produce of the country as exhibited by the good export performance of both traditional and
non-traditional coconut products. About one third of the country’s arable agricultural land or 3.26 million
hectares is planted to coconut representing sixty four (68) out of total seventy nine (79) provinces, and 1,195
out of the 1,554 municipalities in the country. It provides a sustainable income source for Filipinos by way of
employment generation through its many programs. Shown in Figure 1 are the coconut growing zones in the
Philippines.

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 Figure 1. Coconut Growing Zones and Production

On this note, Palwood Furniture Company plans to establish its manufacturing plant and office in the
south of Cebu. We have chosen this region because of convenience and easy access to coconut plantations
where the raw materials for our manufacturing process are readily available.

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3.0 Products and Services

Palwood Furniture Company is a start-up for sustainable furniture, offering a wide range variety of
well-designed, functional, and eco-friendly products that are made with respect to the planet and its
people. We create, innovate, and provide products that inspire sustainable design and enhance the way
people connect with our planet.

3.1 Product and Service Description

1. Our collection includes Dining tables, Beds and bedside, Storage and casegoods, and Accessories.
The main line is the Palwood dining tables in several different designs. These are elegant pieces of
wooden furniture designed to be sustainable and look good.
2. Most of our furniture are (a) supported or reinforced with either steel or midrib wooden frame, (b)
with leather bindings, and are (c) decorated with traditional grass weaving.

Shown below are some of our furniture products.

Table 2. Some of Palwood Manufacturing Company’s Proposed Furniture Collection

Category Product Description

Palwood and bronze

table with leather
bindings. Can be used
as a dining table or
desk.

Verite Dining Table

Dining Tables
Palwood is
manufactured into a
50mm/2” slab,
providing a dense and
unique top for dining.
Optional gloss finish.

The solid top is

50mm Palwood Table contracted with

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 powder-coated steel
legs.

A re-imagining of the
dining table, with
individual settings for
your dinner guests.

Palwood and bronze

table with leather
bindings. The central
plate rotates.

Verite Clover Leaf Tea Table

The elegant bed is

made from
Hawaiian Bed midrib/frond spines,
beautifully sanded and
Beds and
polished to give them
Bedsides
a rich glossy
aesthetic.

Reinforced with a
steel frame.

Luxor Bed

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 Palwood unit with
leather bindings.
Supported by a
wooden frame.
Decorated with
traditional grass
weaving.

Yawasa Bedside Table

Table 3. The Palwood Manufacturing Company’s Proposed Furniture Collection

Category Products Description
Palwood and bronze table with leather bindings.
Verite Dining Table
Can be used as a dining table or desk.
Palwood is manufactured into a 50mm/2” slab,
50 mm Palwood Table providing a dense and unique top for dining.
Optional gloss finish.
Messina Rectangular Palwood table supported by a steel frame.
Dining Table Decorated with leather. Legs are coconut trunks.
Mendi Rectangular Palwood table supported by a steel frame.
Dining Tables Dining Table Decorated with leather.
The wood tabletop spreads out like a lily pad. It is
Cactus Dining Table
embellished with a carved dotted pattern.
Verite Clover Leaf Tea Palwood and bronze table with leather bindings.
Table The central plate rotates.
Navajo Circular Dining Palwood table supported by a steel frame.
Table
Isle D'Palm Circular Palwood table. The leg is solid coconut trunk on
Dining Table the inside.
The elegant bed is made from Palwood spines,
Hawaiian Bed beautifully sanded and polished to give them a rich
Beds and bedside glossy aesthetic.
The elegant bed is made from Palwood and Palm
Luxor Bed
spines reinforced with a steel frame.

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 Palwood unit with leather bindings. Supported by a
Yasawa Bedside Table
wooden frame.
3 Drawer buffet Palwood unit with leather bindings.
Millenium Entertainment Supported with a wooden frame. Decorated with
Unit traditional grass weaving.
Entertainment Unit with
Shelf Palwood unit with leather bindings supported with
Storage and a wooden frame.
Six Drawer Universal
casegoods
Unit
Palwood unit with leather bindings, decorated with
Mendi Desk
traditional grass weaving.
Supported with a midrib wooden frame. Decorated
Palwood Bookcase Unit
with traditional grass weaving.
Portable room divider to provide screening and
Palwood folding Screen
backdrop.
Palwood Traditional Intricately carved traditional Palwood door.
Accessories
Door
The shape of the legs highlights the natural curve
Palwood Planter Box
of the coconut palm trunk.

3.2 Competitive Comparison

Within our niche we have significant competitors such as,

Local
1. Giardini Del Sole Wooden Furniture in Mandaue City
2. Coast Pacific Manufacturing Corporation in Kasambagan, Mandaue City
3. Cebu Home and Builders Centre in Mactan
4. Axent Wood

National
5. Philippine Furniture

International
6. Palmwood® of Pacific Green in the South Pacific

Our biggest local competitor for wooden furniture is Giardini del Sole. It is an established furniture
manufacturing company.

In general, however, our competition is not in our niche. We compete against generalised furniture
manufacturers, and the mainstream merchandise in the major furniture channels. It isn't that people

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 choose our competitors instead of our product, it is that they choose lesser quality, mainstream materials
instead of the higher quality furniture we offer.

3.3 Technology

We depend on our advocacy that we are manufacturing a sustainable furniture that is not made from
cutting down of trees, combined with classic design elements of fine furniture.

Our lumber that does not come from the cutting down of trees is an important competitive edge. Our
customer surveys confirm that customers take the interlocking assembly system as an enhancement to
the sense of quality.

Before we can manufacture our furniture, the transformation process starts at the making of raw materials,
that is, the palwood. The coconut fronds and midribs are gathered, and the coconut leaves are then removed
from the midrib. The conventional method of midrib
separation is through the means of our own hands with the only help of knives as shown in the figure below.

Figure 2. Conventional method to remove midrib from

coconut leaf
Due to this unsafe existing method, we came out with an idea of removing the midrib with the usage of the
midrib separating machine such that the output will be more perfect and also doesn’t need any manual work
from the humans. Fronds and midribs are screened to ensure they are the right or possess high quality and
are mature enough. The fronds and midribs are then cleaned.

Stripping
Making a Continuous Ribbon of Wood
Cutting and Stacking
Gluing
Pressing
Drying
Coating
Sanding
Assembling

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 Finishing & Shipping

3.4 Future Products

In three years, we will establish an official furniture store where we can display and showcase our
collections as in a furniture expo., where people can go and buy our products directly from the store.
We will also introduce the new line on Coffee and Side Tables, Chairs, and Lighting.

In five years, after extensive research on palwood, and design and development of our collections,
we are also going to accept making custom designs to fit exact measurements to perfectly fit the
customers’ wants and preference and is particularly in demand in the high-end market. As we continually
pursue research and development on improving palwood, and making it to furniture, we will also be
watching for the new technology that are needed or can really aid in achieving our goals.

4.0 Market Analysis Summary

4.1 Market Segmentation
As an innovative woodworking company selling high-end furniture, it is a must to know who the target
audiences are. Market segments are typically defined as all current and potential buyers of a product or
service classified into different segments.

The target markets that the Palwood company identified are classified into four segments; "Country Club
Women," "Boomers in Transition," "Professional Youngsters" and "Builders."

 Builders – The most dominant segment of the four is comprised of the “builders”. They are the
people who take part in the business industry. These people include architects, owners, and
contractors who are involved in high-end residential, resorts, hotels, condominium units, cafés,
restaurants, offices, schools/universities and other commercial development segments

 Country Club Women -- The “country club women” is comprised of women in the age range of 35
to 50. They are married, have a combined income of greater than $80,000, own at least one home
or condominium, and are socially active at and away from home. Their home and how it looks is a
priority. The appearance of where they live communicates who they are and what is important to
them.

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 Boomers in Transition -- This group, typically ranging in age from 50 to 65, is going through a
positive and planned life transition. They are changing homes (either building or moving) or
remodeling. Their surprisingly high level of discretionary income is first spent on travel, with
decorating their home a close second. The woman of the couple is the decision maker, and often
does not always include the husband in the selection or purchase process.

 Professional Youngsters -- Couples between the ages of 25 and 35 establishing their first "adult"
household fall into this group. They both work, earn in excess of $50,000 annually, and now want to
invest in their home. They seek to enjoy their home and communicate a "successful" image and
message to their contemporaries. They buy big when they have received a promotion, a bonus, or
an inheritance.

Market Analysis

5%
10%

15%

70%

Builders Country Club Women Professional Youngsters Boomers in Transition

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4.2 Target Market Segment Strategy

Since majority of our sales are from the builders segment, we give utmost importance in maintaining good
relationships with our partners in business. As the supplier, we give emphasis to the quality of furniture
workmanship and the excellence of design with an understanding of technology and ergonomics built in.
Whereas for the remaining segments, we are out to address the needs of high-end buyers who are willing to
pay more for quality. With this, it is very important that we identify who our target/potential business partners
are.

 Resorts and/or Hotels

● Sarrosa International Hotel and Residential Suites
● JPark Island Resort and Waterpark, Cebu
● Bai Hotel Cebu
● Solea Mactan Cebu Resort
● Movenpick Hotel Mactan Island Cebu
● Plantation Bay Resort and Spa

 Condominium Units

● Avida Towers Cebu

● Avalon Condo Cebu
● Marco Polo Residences
● Crown Regency Cebu
● Cebu IT Park real estates

 Cafés
 A plus Coffee
 Coffee Prince Cebu
 Starbucks
 Coffee Bean Tea Leaf (CBTL)
 Bo’s Coffee
 Degree 9
 Coffee Bean Scent

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  Restaurants
 Hukad
 Lantaw
 Gerry’s Grill
 Bananaleaf
 Café Laguna
 Casa Verde
 Moon Café
 Chikaan
 Kuya J Restaurant

4.2.1 Market Needs

Palwood Furniture Company plans to establish a brand first in Cebu and plans to expand business
in the entire Philippines and hopefully further expand to the global market. The total available market (TAM)
is the entire world. The servable addressable market (SAM) is focused on the Philippines and the Share of
Market (SOM) would be those Cebu and other provinces near Cebu.

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4.2.2 Market Trends
In the recent years, the Philippine furniture industry has played a significant contribution to the
Philippine economy. By 2019, the global market for furniture is forecast to reach Php 695 billion. The first
trend discussed is the increased demand for home office furniture. Consumers have set up more home offices
as telecommuting and working from home has increased. As a whole, the market for global home office
furniture is forecast to grow at a compound annual growth rate of 5.58% between 2014-2019.
Expansion and developments in real estate industry, have supplemented the growth of the Palwood Furniture
Company. Moreover, growing consumer preference towards adoption and usage of eco-friendly products,
known for their minimal impact on the environment, has also boosted the growth of the market.
Nowadays, consumers prefer online retail platforms for sbuying furniture, owing to availability of a wide array
of home decor products at discounted/affordable price. Increasing cost of raw materials, such as leather and
superior quality wood, is limiting the market growth. Improving lifestyle and increasing disposable income of
individuals would offer several growth opportunities to the players operating in the market.

- Growing consumer interest towards home décor

Number of homeowners has increased significantly in the recent years, especially in emerging
economies, thereby spurring a growing interest, among these owners. Additionally, Palwood
Furniture Company products have gained a high acceptance among homeowners who want to
renovate the home interior and exteriors.
- Growth in real estate industry
Real estate industry has experienced growth in the last few decades in residential as well as
commercial sector. Booming real estate industry is driving the growth of the Palwood furniture
market. Increasing growth rate of new constructions, especially in developing Asian countries would
influence the market by 2020

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- Increasing rate of urbanization
Increasing urban population is one of the strong impacting factors affecting the home decor market.
Urban culture influences an individuals’ living style. Presently, most of the world population lives in
rural areas. According to the data released by United Nations, near about 54% of the world’s
population were living in urban areas in 2014, and more of rural population is expected to shift to
urban areas during the forecast period. The impact of this factor would increase during the forecast
period, thereby consequentially fostering the demand of Palwood furniture products in the near
future. The figures below show recent price movement of the furniture market.

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4.2.2 Market Growth

 The number of households in Philippines is projected to rise from 23.5 million in 2016 to 26.5 million
by 2021, representing growth at a CAGR of 2.5% during the period 2016-2021. The residential sector
generated most of the demand for furniture products in the country.
 The government of Philippines aims to be the global design hub for furniture products using
sustainable materials by 2030. Through the efforts of the Palwood Furniture Company, the industry
expects to make a global mark through the sustainable production of sophisticated, sturdy and
environmentally friendly products.
 Middle class households in the country accounted for approximately 45.0% of overall population of
the country and accounted for approximately 66.0% of the country's household income in 2016. The
construction of more condominiums and residential houses in the country is expected to drive the
growth of the industry in the coming years. The property sector's strong growth and families' easier
access to housing credit will also increase demand for household items and furniture products in the
near future. The diversification of furniture is also marked by the shift from the production of low-end
furniture to the medium and high-end lines. This means emphasis on quality, design and material
rather than on mass production of pieces. This is attributed primarily to growing competition globally.

4.3 Industry Analysis

4.3.1 Main Competitors
In the Philippine Market, the known manufacturers are:

1. Avanti Philippine Furniture Inc.

2. Pacific Traders and Manufacturing Corporation
3. Office busters Philippines
4. Woven Furniture Designs, Inc.
5. Mandaue Foam
6. Home Décor

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4.3.2 SWOT/PESTLE Analysis
S.C.O.T / P.E.S.T.L.E. Analysis
(Strengths | Challenges (Weaknesses) | Opportunities | Threats)

Internal External

Strengths Challenges (Weaknesses) Opportunities Threats

Since the company is into

big innovations, there
Shortage of consultants
would be research
at operating level rather
funding that could come
than partner level Potential budget cuts that
from foundations, donors,
The company is not only could cause compromise
or grants
recognized in the The staff within the work or hinder our
Political Philippines but is also in company at the middle expansion due to political
Partnerships with other
global influences management level are conflicts/reasons
innovative research in the
long-tenured and they
field of furniture
may be too set in their
manufacturing and the
ways
production of the raw
material, “Palwood”

Labor and energy costs

Despite the state of the Well established position Economic downturn that
during production
nation’s economy, the with a well-defined market could harm the nonprofit
Economical
company is thriving and niche
Inflation and interest rates
continuously growing
that are fluctuating

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 Strengths
The company has good
reputation in the
marketplace
The production workers
within the company may
come from different
Social
places in the Philippines
and this can be a
strength of the company
since they could work
hand in hand, learning
from each other.
The company is
Technological excellent in its research
and development
Challenges (Weaknesses)
Some production workers
may not be able to deal
with multidisciplinary
assignments because
lack of ability to socialize
with co-workers; or not
being able to adapt
cultural norms (since the
company is aiming to hire
workers from different
regions in the country)
Advances in equipment or
machinery for production
and adapting new trends
in technology
Opportunities Threats
The production workers
within the company, as
stated, may come from
different places in the
Other small consultancies
Philippines and this can
looking to invade the
be an opportunity of “unity
marketplace
in diversity”
Future trends in your field
or the culture
Competition – this is an
opportunity for the
company to continuously
Elimination of funding for
search for new ways to
research and innovation
improve what it does
of technology.
The company embraces
change, and innovation of
ideas, technology, and
processes
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 Strength Challenges (Weaknesses) Opportunities Threats

Strict labor laws hinder

hiring process and is a Policy changes
Legal challenge for the
company

Pollution and generation

of wastes

In the case of the

Search for locations In the case of the company’s plantations,
The company is pro- replacing native plants
appropriate for large company’s plantations,
environment, especially and biodiversity to meet
Coconut tree plantations as coconut trees age, it
its major source of raw the demand for coconut
Environmental in a way that would not becomes less productive
material - lumber from trees (source of raw
harm the environment and this could be an
Palwood - instead from material), can take a
especially that location’s opportunity for research
cutting down trees major toll on the soil,
ecosystem and biotechnology
leading farmers to turn to
chemical fertilizers to
boost their productivity
and is a big NO

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5.0 Strategy and Implementation Summary

5.1 Marketing Strategy

Palwood Furniture Company will give emphasis on producing high value and high quality products.
Our initial marketing strategy will be to secure contracts and partnership on the different market segments
earlier described. We will focus on continually innovating our product in an effort to grow and reach the
forefront of the furniture market arena.

5.1.1 Positioning Statements

Palwood Furniture Company is a leading brand of well-designed, functional, and eco-friendly furniture. We
create and innovate furniture that inspire sustainable design through the use of palwoods. “Palwood”,
means palwa wood. Palwa is the native word for coconut frond or midrib, from which palwood is made by
binding palwa together using synthetic resin.

5.1.2 Pricing Strategy

Pricing of the company products are generally expensive since we are out to address the needs of high-end
buyers who are willing to pay more for quality. The strategy that we have incorporated in our pricing is that
for bulk purchases, discount will be given accordingly, depending on the total cost. Furthermore, for more
than Рhp 15, 000 worth of purchase, the costumer will be given freebie items to serve as a warm welcome.

5.1.3 Promotion Strategy

General advertising will be done to spread awareness of the Palwood company throughout the nation and
all through out the world. This advertising will be done through brochures, magazines and newspaper articles.
Advertisements will change depending on what time of year it is and what is going on in the community, (i.e.
christmas, summer, etc.).

The company will also host expos on malls and universities to showcase products and share innovations of
the. While doing this, brochures will be handed out to participants.

The Palwood company will also establish an official Facebook, Instagram and Twitter page where pictures of
products are displayed. Details of the company will also be posted such as company description, mission
and vision, and its current status in the national business arena. Furthermore, contact details will also be
posted should there be any inquiries from costumers.

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5.2 Sales Strategy
Palwood Furniture Company sales strategy is to the word out and educate to potential customers
and potential company partners to the value of our products. We would spread our advocacy to these
potential clients very clearly, which is to create quality furniture without cutting precious trees.

In the first year of business operations, our sales team will focus its efforts on finding costumers and
company partners such as real estate companies, hotels, restaurants, cafés. etc. The team will promote the
products based on their environmental strengths.

If the company grows faster, Palwood Furniture Company will hire sales agents or brokers to expand
business transactions nationwide. Online selling is also a strategy of the selling plan.

5.2.1 Sales Forecast

The Palwood Furniture Company expects a strong rate growth at the start of operations. Below are the
expected financials over the next three years.

Proforma Profit and Loss (Yearly)

Year 1 2 3
Sales ₱ 11,139,930.00 ₱ 12,142,522.00 ₱ 13,235,350.00
Operating Costs ₱ 6,417,925.00 ₱ 6,658,322.00 ₱ 7,221,056.00
EBITDA ₱ 3,607,995.00 ₱ 4,269,941.00 ₱ 4,690,759.00
Taxes, Interest, and
Depreciation ₱ 1,694,033.00 ₱ 1,851,317.00 ₱ 2,000,747.00
Net Profit ₱ 1,913,962.00 ₱ 2,518,805.00 ₱ 2,790,193.00

27
 Sales, Operating Costs, and Profit Forecast

₱14,000,000.00
₱12,000,000.00
₱10,000,000.00
₱8,000,000.00 Sales
₱6,000,000.00 EBITDA
₱4,000,000.00 Net Profit
₱2,000,000.00
₱-
1 2 3
Year

5.2.2 Sales Programs

 Direct Sales – We will engage in direct contact with our customers to sell our products and services.
 Indirect Sales– We will engage with costumers through our official pages such as via private
messages in facebook/instagram/twitter for more efficient transactions. The social media page will
be posted with up-to-date pictures of products, newsletters and postcards to keep current and
potential costumers informed of our latest products. This will keep news of our company well-
circulated in the community.
 Business-to-Business Sales – We will also be partnering with key investors, organizations and
businesses for mutual benefits and wider reach of customers. Terms and agreements will be made
to maintain amicable relationships with fellow businesses.
5.2.3 Strategic Alliances
Palwood Furniture Company will team up with key investors, organizations and businesses. Our strategy is
to maintain good relationship with these investor and/or businessmen to promote long-term partnership in
business. Listed below are the partner companies of the Palwood Furniture Company:

Bai Hotel Cebu Gerry’s Grill

Starbucks
Solea Mactan Cebu Resort Coffee Bean Tea Leaf (CBTL)
Café Laguna
Avida Towers Cebu Bo’s Coffee
Moon Café
Crown Regency Cebu Hukad

Crown Regency Cebu

Lantaw

28
5.2.4 Milestones

Gantt Char

29
6.0 Management Summary
The Palwood Furniture Company is owned and operated by Engr. Aira Maningo, Engr. Alvin Martin,
and Engr. Alyssa Malig-on as a corporation or a limited liability company (LLC). The three founders form
the senior management group. Several qualified candidates have been identified for the position of plant
manager. Some of the employees will be hired and trained starting the equipment fabrication and
installation phase, while the rest, during the furniture development phase.
Engr. Maningo, the brainchild of Palwood to furniture manufacturing, manages the whole company as
chairman. Engr. Martin designs and implements business operations as the Chief Operating Officer.
Engr. Malig-on, the developer and designer of the furniture products, drives the company’s financial
planning.
As owners, Aira, Alvin, and Camille jointly develop business strategy and long-term plans. Aira is
strong on the organization and management as well as the development of raw material that is Palwood,
Alvin is strong on business know-how, and Camille is strong on furniture know-how and technology.
Management style reflects the participation of the owners. The company respects its community of
co-workers and treats all workers well. We attempt to develop and nurture the company as an
organization and a community.

30
6.1 Organizational Structure
Every day, the Palwood Furniture Company constantly search for new approaches to the fast-changing demands of the global community through the cooperation
of departments and organization within the company. Furthermore, we continuously create and innovate furniture products and services to provide the desires of
our customer through the effectively division of department.

Chairman

COO CFO

Operation & Quality

Finance Technical Administrative Marketing Logistics
Production Assurance

Furniture Human Quality

Accounting Sales Warehouse
Development Resources Control
& Design

Treasury Market Distribution

Equipment Labor Relations Research
Fabrication
Audit Customer Collection
Engineering Legal Service
& Design

Plant Security Advertising

Palwood
Research &
Development

Maintenance
& Services

Figure 3. The Organizational Structure of Palwood Manufacturing Company

31
6.2 Management Team
Aira Jean S. Maningo, Chairman and Chief Executive Officer (CEO). She had a successful career in retail before becoming the brainchild of
Palwood to furniture manufacturing before she became one of the owners of Palwood Manufacturing Company. She used to work as a researcher
in the Philippine Coconut Authority for 5 years and a manager in a Zamboanga del Norte-based company that works with coconut fronds and
palwood. She is also excellent at developing high quality business strategies and plans ensuring their alignment with short-term and long-term
objectives.

Alvin Mar V. Martin, Vice-Chairman and Chief Operating Officer (COO), is a graduate engineer with over five years’ experience in securing the
functionality of business to drive extensive and sustainable growth. He also worked as a marketing manager. Alvin joined Palwood Manufacturing
Company from the marketing department of the Markleville Furniture chain, having been in charge of national catalogue production and catalogue
advertising. He also managed direct sales at one of the furniture distributors that has since died to industry consolidation.

Alyssa Camille D. Malig-on, Chief Financial Officer (CFO), worked as a workshop manager for 2 years, designed furniture for Haines
Manufacturing before becoming one of the owners of Palwood Manufacturing Company. She was responsible for one of the first executive desks
designed to include customized fittings for personal computers and was one of the first to design the monitor inside the desk under glass.

The three owners graduated BS in Chemical Engineering from the University of San Carlos.

Table 4. Company Organization and its Goals and Objectives

Level of Department Goals and Objectives
Management
Top Executive  To increase revenue by 10% annually.
(Chairman, Board of  To expand sales to the global marketplace.
Directors, COO, CFO)  Achieve and maintain excellent customer
service.
 To develop the leadership abilities and
potential of our people in the company.
Middle Finance  To come up with corporate financial plans and
investment managements.

32
  To ensure execution of accounting and taxes
system
Technical  To conduct investigative activities to improve
existing products and procedures or to lead to
the development of new products and
procedures.
Administrative  To increase the number of wholly efficient and
effective employees in the company.
 To provide activities and trainings for
employees to increase their effectiveness and
efficiency quarterly.
 Manage matters regarding legal laws, labor
relations, and employment.
 Give the proper clerical and administrative
backup while business consultants and
operations managers will ensure procedures
are well organized and efficient
Audit  Inspecting financial statements to catch
errors, misstatements and fraud
 Performing audits on systems, operations
and accounts
 Reporting audit findings and recommending
improvements
Marketing  To build brand awareness by application of
social media marketing strategies
Operation and  To increase the number of engineered
Production products of the company
Quality Assurance  In charge of the systematic process of
determining whether the furniture
manufactured meet specified requirements.

33
  Establishes and maintains set requirements
for developing or manufacturing reliable
products.
Logistics  In charge with the management of the flow of
products between one point of origin (i.e. such
as from warehouse of from the factory) and
the point of consumption in order to meet
requirements of customers or clients.

6.3 Management Team Gaps

As we grow we will need to develop more manufacturing technique, more mass production, and in the development of the raw material,
palwood.

6.4 Personnel Plan

The personnel table assumes slow growth in employees, and 2% per annum pay raises. We already have a strong benefits policy with profit sharing
and additional health care benefits and very low turnover. Some of the employees will be hired and trained starting the equipment fabrication and
installation phase, while the rest, during the furniture development phase.

Salaries are generally in line with market pay for the Cebu area in our industry, although our benefits are above standard market level, so we
ultimately pay a bit more for our people than what might be considered standard in our market. London, however, is on average a bit higher than
minimum wage location than most of the more developed industry areas.

As we grow, we expect to see steady increases in our personnel to match the increases in sales. The Palwood Manufacturing Company will
have the following staff members:

34
 Table 5. List of Needed Employees
Personnel Year 1 [PhP]
Financial Department Officers 378, 000.00
Financial Controller
Treasurer
Corporate Accountant
Technical Department Officers 530, 000.00
Palwood Researcher
Furniture Developer
Fabrication Manager
Design Engineer
Maintenance and Services Manager
Quality Assurance Manager 120, 000.00
Administrative 480, 000.00
Human Resource Manager
Labor Relations Manager
Legal Officer
Plant Security Officer
Marketing Department 505, 000.00
Sales Manager
Advertising and Promotion Director
Market Research Director
Public Relations Manager
Customer Service Supervisor
Operation and Production Department 490, 000.00
Machine Operators (5)
Plant Manager
Warehouse Manager

35
Furniture Design Carpenters (3)
Other Personnel 460, 000.00
Timekeeper
Assistant Carpenters (10)
Delivery Drivers (2)
Total People 38
Total Payroll Php 2, 963, 000.00

36
7.0 Financial Plan
7.1 Important Assumptions

 Palwood Furniture Company will have an annual revenue growth rate of 16% per year.
 The Palwood Furniture Company will acquire ₱ 10,000,000 of debt funds to develop the business.
 The loan will have a 10-year term with a 9% interest rate.

7.2 Source of funds

Equity Contributions
Engr. Aira Jean Maningo ₱ 2,000,000.00
Engr. Alyssa Camille Malig-on ₱ 2,000,000.00
Engr. Alvin Mar Martin ₱ 2,000,000.00
Total Equity Financing ₱ 6,000,000.00
Banks and Lenders
Bank of the Philippine Islands (BPI) ₱ 4,000,000.00
Total Debt Financing ₱ 4,000,000.00
Total Financing ₱ 10,000,000.00

7.4 Projected Profit and Loss

PROFITS AND LOSSES

Year 1 2 3
Sales ₱ 11,139,930.00 ₱ 12,142,522.00 ₱ 13,235,350.00
Cost of Goods Sold ₱ 1,113,993.00 ₱ 1,214,208.00 ₱ 1,323,535.00
Operating Income ₱ 10,178,937.00 ₱ 10,928,263.00 ₱ 11,911,815.00
Payroll ₱ 4,131,000.00 ₱ 4,254,930.00 ₱ 4,653,104.00
Marketing Expenses ₱ 233,937.00 ₱ 255,000.00 ₱ 277,950.00
Legal Costs ₱ 127,500.00 ₱ 133,875.00 ₱ 140,471.00
Shipping Costs ₱ 255,000.00 ₱ 280,500.00 ₱ 308,550.00
Rent and Utilities ₱ 297,500.00 ₱ 312,375.00 ₱ 327,998.00
Miscellaneous ₱ 83,555.00 ₱ 91,069.00 ₱ 99,263.00
Total Operating Costs ₱ 5,128,492.00 ₱ 5,327,749.00 ₱ 5,807,336.00
EBITDA ₱ 5,050,445.00 ₱ 5,600,514.00 ₱ 6,104,479.00
Income Tax ₱ 1,190,646.00 ₱ 1,340,654.00 ₱ 1,485,103.00
Interest Expense ₱ 222,819.00 ₱ 207,349.00 ₱ 190,434.00
Depreciation Expenses ₱ 100,181.00 ₱ 100,181.00 ₱ 49,181.00
Total ₱ 1,513,646.00 ₱ 1,648,184.00 ₱ 1,724,718.00
Net Profit ₱ 3,614,846.00 ₱ 3,679,565.00 ₱ 4,082,618.00

37
 ₱14,000,000.00

₱12,000,000.00

₱10,000,000.00

₱8,000,000.00 Sales
EBITDA
₱6,000,000.00 Net Profit

₱4,000,000.00

₱2,000,000.00

₱-
1 2 3

7.5 Projected Cash Flows

Cash Flow Analysis

Year 1 2 3
Cash From Operations ₱ 2,587,825.00 ₱ 3,777,689.00 ₱ 4,917,454.00
Cash From Receivables ₱ - ₱ - ₱ -
Operating Cash Inflow ₱ 2,587,825.00 ₱ 3,777,689.00 ₱ 4,917,454.00
Other Cash Inflows
Equity Investment ₱ 425,000.00 ₱ - ₱ -
Increased Borrowings ₱ 2,125,000.00 ₱ - ₱ -
Sales of Business Assets ₱ - ₱ -
A/P Increases ₱ 644,334.00 ₱ 740,979.00 ₱ 852,125.00
Total Other Cash Inflows ₱ 3,194,334.00 ₱ 740,979.00 ₱ 852,125.00
Total Cash Inflow ₱ 5,782,159.00 ₱ 4,518,668.00 ₱ 5,769,579.00
Cash Outflow
Repayment of Principal ₱ 137,343.00 ₱ 150,229.00 ₱ 164,322.00
A/P Decreases ₱ 423,249.00 ₱ 507,892.00 ₱ 609,484.00
A/R Increases ₱ - ₱ - ₱ -
Asset Purchases ₱ 1,912,500.00 ₱ 944,418.00 ₱ 1,229,372.00
Dividends ₱ 1,811,486.00 ₱ 2,644,384.00 ₱ 3,442,228.00
Total Cash Outflows ₱ 4,284,578.00 ₱ 4,246,940.00 ₱ 5,445,389.00
Net Cash Flow ₱ 1,497,581.00 ₱ 271,745.00 ₱ 324,207.00
Cash Balance ₱ 1,497,581.00 ₱ 1,769,326.00 ₱ 2,093,533.00

38
 ₱6,000,000.00

₱5,000,000.00

₱4,000,000.00

Total Cash Inflow

₱3,000,000.00 Total Cash Outflows
Cash Balance

₱2,000,000.00

₱1,000,000.00

₱-
1 2 3

7.7 Business Ratios

Year 1 2 3
Sales
Sales Growth 0% 20% 17%
Gross Margin 70% 70% 70%

Financials
Profit Margin 17% 21% 23%
Assets to Liabilities 1.48 1.9 2.42
Equity to Liabilities 0.48 0.9 1.42

39
7.8 Balance Sheet

Year 1 2 3
Assets
Cash ₱ 1,497,581.00 ₱ 1,769,326.00 ₱ 2,093,533.00
Amotized
₱ 892,500.00 ₱ 986,935.00 ₱ 1,109,879.00
Development/Expansion Costs
Inventory ₱ 595,000.00 ₱ 1,067,209.00 ₱ 1,681,895.00
FF&E ₱ 425,000.00 ₱ 802,774.00 ₱ 1,294,516.00
Accumulated Depreciation ₱ 136,612.00 ₱ 273,207.00 ₱ 409,819.00
Total Assets ₱ 3,273,486.00 ₱ 4,353,037.00 ₱ 5,769,987.00
Liabilities and Equity
Accounts Payable ₱ 221,085.00 ₱ 454,172.00 ₱ 696,830.00
Long Term Liabilities ₱ 1,987,657.00 ₱ 1,837,428.00 ₱ 1,687,199.00
Other Liabilities ₱ - ₱ - ₱ -
Total Liabilities ₱ 2,208,742.00 ₱ 2,291,600.00 ₱ 2,384,012.00
Net Worth ₱ 1,064,744.00 ₱ 2,061,437.00 ₱ 3,385,975.00
Total Liabilities and Equity ₱ 332,486.00 ₱ 4,353,037.00 ₱ 5,769,987.00

6000000

5000000

4000000

3000000

2000000

1000000

0
1 2 3
Year

Total Assets Total Liabilities Net Worth

40
41
42