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Nielbert de Leon Jedrek Estanislao Ariel Gumabon Erle Lope Rod Rojas Rachel Ronquillo BA 291.1 Strategic Management I Professor Art Ilano August 4, 2011 Case Study: Greatwall Promotionals Co Ltd and Robin Co. Ltd
I.
Introduction
Greatwall Promotionals Co. Ltd (GPCL), Robin Co. Ltds Philippine packaging arm and leading the food packaging supplier in the country with customers such as Jollibee Foods Corporation, Yum! Brands Inc. (KFC), Dunkin Donuts, Starbucks (Philippines), Wendys International and San Miguel Corporation, is having difficulty in meeting delivery commitments for both their existing and new accounts due to various backlogs and delays in their operations. Taking matters in his own hands, the company president, Mr. Robin Co, personally gave the management team his marching orders, We have to catch up and keep up with the agreed schedules whatever happens. Our clients are our top priority and we cannot afford to lose anyone of them at this point and during this coming peak period with the holiday season fast approaching. We were fortunate that we have good relations with our clients for some years now so theyve been very understanding and forgiving regarding our backlogs but we need to address this ASAP as I cannot keep giving promises and excuses for our delays. The Lucky Me account has been a fortunate opportunity for us but we also need to deliver to the others because a client is still a client, whether big or small. They all give us business that keeps us running until now. II. Problem Statement
What are the possible issues that led to the delays and backlogs GPCL experienced? What solution can management provide to fulfill their commitment to their clients? What strategies can they put in place to prevent the problem from occurring again, such as in terms of structure and internal control, as well as between the sales and marketing, and the manufacturing functions?
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SWOT Analysis
S-O Strategies Probably, the most significant limitation of expansion is the ability to sell. In GPCLs case, sales volume has increased exceptionally, to an extent that production is already having difficulty catching up. One strategy is to use available resources to increase production capacity. If possible, they can temporarily outsource some services to address the current situation. Another option is to have a schedule allowance that could give way to special orders; however, this might not be very cost effective. For further growth, the company should capitalize both on network and R&D strengths to maximize potential market share both locally and abroad.
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Porters Five Analysis for Food Packaging Industry in the Philippines Packaging has served the Philippine economy by helping preservation of the quality and lengthening the shelf life of innumerable products - ranging from milk and biscuits, to drugs and medicines, processed and semi-processed foods, fruits and vegetables, edible oils, electronic goods etc., besides domestic appliances and industrial machinery and other hardware needing transportation. To the extent that any consumer product is packaged in a manner that meets the criteria of safety, convenience and attractiveness, it gains market share. In the aggregate, packaging as a sectoral activity boosts consumption and economic growth.
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Threat of New Entrants Low Barriers to new entrants include high capital investment due to industrial machineries and equipments needed for production. Customers are more sensitive to pricing; it is necessary for this business to generate more sales for faster ROI. Also, huge value addition and employment is needed to these activities in order to meet the requirements of the clients and to carry out its operations. Bargaining Power of Buyers High Buyers are concentrated - there are a few buyers with significant market share. Buyers purchase a significant proportion of output - distribution of purchases or if the product is standardized. Buyers possess a credible backward integration threat - can threaten to buy producing firm or rival. In the case of Robin Co., once you supply a client, business with that client becomes regular unless there are concerns on quality, price and product availability. Its major customers include Jollibee Foods Corporation, KFC and Lucky Me - these clients have major influence on the price of the products and services the company is offering. Threat of Substitutes High There is a high threat of substitute products especially for the packaging industry like Robin Co. Given the growing trend of being Eco-Friendly, the company was able to convince a lot of clients to shift to using paper cups, bowls and buckets. The packaging industrys growth has led to greater specialization and sophistication from the point of view of health (in the case of packaged foods and medicines) and environment friendliness of packing materials used. So the trend and price of the products impact the threat of substitutes. Bargaining Power of Suppliers Low Most of the paper stock and other raw materials used for packaging are directly imported. Materials like these do not really require uniqueness or differentiation. Hence, the cost of switching is low. Moreover, suppliers cannot easily drive up prices because of competition. Like with what happened to their account KFC China, they can easily dismiss RCL with the reason that there is no full-time sales person to handle the account despite their long time partnership. Determinants of Rivalry among Existing Competitors High Customers here can freely switch their brand preference without incurring any costs, which is an unfavorable factor for the industry. Though entrance barrier may seem low, this industry could have many competitors, which are sometimes of different sizes. Sometimes they could be foreign competitors, too, and they can offer equally attractive products and services. Hence, buyers will go elsewhere if they don't get a good deal. Exit barriers are also high in the industry due to the high overhead cost mostly due to investment in technology.
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Major points in our recommendation reflect changes in the management control structure of the business. The group believes that RCL must be structured to take full advantage of its 2 businesses not only for the short-term but also for the long-term as well. Central to this is to treat the packaging and premium/promotions businesses as separate responsibility centers with their own managers that are ultimately responsible for performance. Next the group recommends that the organization be re-aligned to maximize the potential of each business unit. And finally, the performance measurement systems for these business units must be developed specifically reflect the nature and objectives of the businesses. Proposed Organization Chart
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Premiums Business
The premiums business has experience rapid growth in the last few years. There is much more market share to be grabbed out there. Highly dependent on outsourcing the production of its offerings. This business has more of a design and marketing thrust than manufacturing. On the BCG matrix, our analysis shows that the premiums business falls more within the Question Mark category than in the Star category.
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Recommendations: A Question Mark business needs to develop a Build strategy. This implies a strategy of increasing its market share, even if this comes at the expense of short-term earnings. The group recommends that the premiums business be assigned as a Profit Center. Net Profit is therefore the primary criteria for performance measurement. By focusing on profit, the business is free to make quick decisions that can further increase its market share in a short span of time.
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