Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

COLLEGE OF ENGINEERING
Department of Industrial Engineering

CE VISION
The College of Engineering envisions itself to
be center of excellence in engineering
education.

ENGINEERING VALUES AND ETHICS

CE MISSION
The College of Engineering is committed to
produce competitive engineers who will serve as
catalyst for sustainable growth and development
in national and international levels.

CE GOALS
1.
Provide Quality education through
instruction, advance research and extension
services:
2 Produce world-class professionals as potential
industry leaders and job providers

CASE STUDY:
Generoso Pharmaceuticals
and Chemicals Inc.

3. Develop and improve facilities through the

use of adapted technology and indigenous
materials and:
4. Maintain, upgrade and improve facilities
through the adaptation of engineering
techniques.
OBJECTIVES
1. Strengthen the BSIE program consistent with
global trends;
2. Develop faculty as competent mentors and
quality researchers, through advanced studies,
and other facets of continuing professional
education;
3. Develop the critical thinking and
communication skills of students, giving
emphasis to research and extension services;
4. Equip graduates with appropriate knowledge
and technical skills imbued with desirable work
attitudes and moral values, through enhanced
teaching/learning process by using multimedia
facilities on top of traditional methods;
5. Create a conducive teaching and learning
atmosphere with emphasis to faculty and
students growth and academic freedom;
6. Establish network with educational
institutions, Industries, GOs and NGOs, local
and international, which could serve as:
a. Funding sources and/or partners of
researches,
b. Sources of new technology,
c. Centers for faculty and students
exchange programs and on-the-job trainings,
and
d. Grantees of scholarships/ additional
facilities and;
7.
Continuously
conduct
action
researches on the needs of laboratory and other
facilities that could be locally produced or
innovated using local materials and adapted
technology.

Prepared by:
Mangampo, Ian C.

Submitted to:
Dr. Jerilyn Landicho-Pilar

AUGUST 10, 2015

BSIE V-2
A. Y. 2015 - 2016

I.

Viewpoint
This aspect covers the people involved in the case study. The following
people mentioned has contributed significantly on the said corporation.
1. David Generoso A philosophy graduate of a sectarian university that began
his career as a salesman in Central Luzon for a wide number of multinational
corporations. Later on, he established his own corporation, Generoso
Pharmaceuticals & Chemicals. He apparently assumed as the president of
the company. His hobbies of formulation medicines and other researches in
other countries lead the corporation to expand the GPCs production line.
2. Elizabeth Reyes She is the wife of David Generoso. A licensed nurse and
certified public accountant, she handles all the controllership and treasury
functions of GPC. Her conservative cash management policies ensured the
companys continued healthy financial state through strict financial controls
and sound founds management.
3. Rafael Buenaventura He is a fellow salesman like David. The two of them
are business associates and later on they established the company together.
He assumed the position as the general manager of GPC.
4. German technicians A team that responsible for technical feature for the
proposed project.
5. An American Principal An American from prestigious American club came
into GPC as a supplier of raw materials. He later on proposed that GPC
engaged in the contract manufacturing of pharmaceutical products from both
the domestic and export markets that leads to technology transfer and
Generics Act.

II.

Timeframe
1978 GPC was established in Tarlac.
1979 Total number of sale representatives is five.
1980 Total number of sale representatives is twelve.

1981 Total number of sale representatives is twenty-five.

1982 GPC was incorporated.
Total number of sale representatives is fifty-three.
1983 GPC had total assets of P12 million.
GPC had a sales manager.
GPC started its own line of pharmaceuticals
David went to US and other European countries to learn more about
pharmaceuticals where he invented a raw material.
Total number of sale representatives is seventy-five.
1984 An American principal came into GPC as supplier of raw materials.
The management of company was temporarily handed over to Rafael.
1988 Elizabeth had initiated the reorganization of GPC.
The American principal proposed a project to David.
Motion of Generics Bill.
III.

Background of the Case

GPC was founded on 1978 by David Generoso, Rafael Buenaventura and
with assistance of Elizabeth Reyes with initial capital of 300 pesos with dozen of
bottles. Their initial market includes personal contacts such as doctors,
pharmacists, and hospital administrators. By pushing through the competition of
other salesmen, they managed to expand their target market beyond Central
Luzon through their methodical means in planning their sales force. They were
soon incorporated as the increased volume of operation needed a broader-based
management. In 1983, their total assets increased to P12 million. David later on
was spared in the front line of the sales force and immersed himself studying
about pharmaceuticals which resulted him of manufacturing veterinary
medicines. This encouraged him to start the GPC an own line of
pharmaceuticals, including the venture in cosmetics manufacturing. Wanting to
start something new, he went to US and other European countries to study more
about pharmaceuticals. He established several contacts who could supply raw

materials for him to sell to the leading pharmaceutical firms in the Philippines and
invented a raw material. Becoming the leading indentor of raw materials in the
Philippines. In 1984, an American principal came into GPC as a supplier of raw
materials. With GPCs wide supply base for raw materials, it became competitive
in the market because of the affordability of low price for quality goods. In the
meantime, while David was establishing GPCs source network for raw materials,
the management was handed over by Rafael which made the GPCs
performance poor due to his being too client oriented. David commented that
everything counts in large amounts and believes in improving all the aspects first
before compromising the on price. GPC had grown through internally generated
funds and has no substantial financial obligations with conservative cash
management system which evolved around Elizabeth and Davids antispeculative management. GPC handles quality carefully and they will never cut
down the production cost. Elizabeth had the foresight to segregate control over
GPCs different production lines, initiating the reorganization of GPC which
composed

by

different

divisions;

Pharmaceutical

Distribution,

Agrovet,

Cosmetics, Contract Manufacturing, and Raw Materials Indenting Division which

proved to be difficult on an personal relationship-anchored corporation. David
found the expansion difficult due to the fast turnover of participants in the
industry. The advantage of remaining small is that while your niche and your
sales turnover are small, your cash flow. However, small companies always have
to put up the stigma of being a local company of inferior quality among the buyer.
Another force to deal with in the said industry are the suppliers who requires
volume orders which put them at disadvantage. Importation and distribution of
imported pharmaceuticals has a large number in the Philippines, let alone local
manufacturing of licensed foreign brands through the use of contract
manufacturers. With the growing demand, the major local manufacturers will be
clogged with huge backlog of orders. No one is engaged in the extraction of
active ingredients from locally available raw materials nor in formulation of new
products. Thus, David faced another challenge: the American principal in GPC
proposed

that

they should

engage

in

the

contract

manufacturing

of

pharmaceutical products from both the domestic and export markets. The
proposed project was to compound locally all products that will manufacture and
sell, importing only the active ingredients and bulk materials that are unable to
locally produce. The products will be manufactured using highly-mechanized
process which a technology would need transfer from US. This project would
make the corporation a leading manufacturer and would even take the Asian
market. However, it came in time with the Generics Bill which David was in full
support. It spurred an overall feeling of uncertainty in the drugs industry. David
had the foresight to register the pharmaceutical products, thus paying off when
the Bill came along. Though, GPC will have to hire a German expatriate to
oversee the project due to the lack of qualified chemists. The committee explored
and evaluated the opportunities provided by the latest development. The
company was now a going concern valued at P40 million the project would cost
approximately P135 million.
IV.

Statement of the Problem

The identification of possible manner or method of performing the proposed
development project.

V.

Areas of Consideration
The areas to be considered are analyzed by utilizing SWOT Analysis.

Strength

Opportunities

Companys liquidity.

Leading indentor of raw

materials in the Phils.

Wide supply base for raw

matls

Offers lower prices for

quality goods.
Ultra conservative cash
management system.

Proposed project.
Technological superiority
upon implementation of
proposed project.
Wider market.
Own laboratory.

Threats

Weakness

Proposed project costs P135

million.

Lack of qualified chemists.

Suppliers volume
requirement

Management may play it

safe.

Generics Bill
Risks upon implementation
of proposed project.
Lack of knowledge about
the project.

VI.
Alterative Courses of Action
1. Expand Production Area.
Advantages:

Larger space for installation of new equipment and future

improvements.

Increased production.

Disadvantages:

Expansion and additional equipment costs.

Interruption with the actual production..

2. Undergo training for both management and workers.

Advantages:

Increased knowledge and skills.

Better management.

Disadvantages:

Training could be timely.

Training costs.

3. Loan money from bank or other financial intermediary.

Advantages:

Faster implementation of project

Long term payments

Disadvantages:

Generating interests

4. Find investors.
Advantages:

Other costs wil be funded by the investments

Opportunities for expansion

Disadvantages:

VII.

Decreased profit for GPC alone

Conclusion and Recommendation

The project that the American principal had proposed is promising. It will
indeed make the company broaden its target market, boosting its profit and
reputation. However, it will apparently cost heavily. Though it is a high
amount, this project will provide opportunities in dominating of pharmaceutical
products for both the domestic and export markets. Furthermore, it will
position itself as a specialty pharmaceutical manufacturer and technical
superiority, having an added advantage of lower prices and faster turnaround
time. Compared to other manufacturers, it will be less dependent on costly
and time-consuming import for it raw material requisites. Risk will be a great
factor here and it should be managed and monitored thoroughly.

It will be recommendable to implement the project since it will realize Davids

dreams to have a laboratory in his research and development section,
widening its production line. Also, it will make the corporation expand,
becoming more competitive and dominative in the market. Considering
Davids principle, sigurista, it would be better to look for investors since it is
less risky than loaning cash. Moreover, it will safely acquire the capital
needed for the project. Though the ownership might be collective, David
should ensure that the decisions mutually made must not affect negatively in
the corporation. David may also have a mix of loan and selling stocks. Also,
David should send representatives to train for qualifications.
VIII.

Action Plan

Activities

Create a Feasibility Study

Look for Investors

Person/Group
Responsible
Executive Committee
c/o American Principal
Executive Committee

Time Frame

Remarks

4-5 months
1-2 months

German expatriate and

Initiate the Project

American principal c/o

6-12 months

Executive committee
Monitor Sales

Elizabeth Reyes

6 -12 months
Rooms for

Assess the outcome of

Project

Executive Committee

1 day

improvement
and revisions