A strategic management paper on

Universal Robina Corporation

Submitted to:

Prof. Ricardo Palo

Faculty, CAS

Submitted by:

Kristel Mae J. Bunagan

4-ALM

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TABLE OF CONTENTS

I. EXECUTIVE SUMMARY.. 3

1. INTRODUCTION . 4
2. RESEARCH DESIGN AND METHODOLOGY . 5
3. MACROENVIRONMENTAL ANALYSIS ... 9
3.1. Political Forces 9
3.2. Economic Forces 15
3.3. Social/Cultural Forces 23
3.4. Technological Forces 25
3.5. Environmental Forces 28
4. INDUSTRY, MARKET AND COMPETITOR ANALYSIS . 30
4.1. Porters 5 Forces Model .. 30
4.2. Market Analysis . 32
4.3. Competitive Profile Matrix (CPM . 35
4.4. External Factor Evaluation (EFE) Matrix 35
5. COMPANY ANALYSIS .. 38
5.1. Company Internal Audit . 38
5.2. Key Financial Ratio Analysis 43
5.3. Internal Factor Evaluation (IFE) Matrix ... 46
6. STRATEGY FORMULATION 47
6.1. Strengths, Weaknesses, Opportunities, Threats (SWOT) .. 47
6.2. Strategic Positioning & Action Evaluation (SPACE) . 49
6.3. Boston Consulting Group (BCG) Matrix 52
6.4. Internal-External Matrix.. 53
6.5. Grand Strategy Matrix. 54
7. Quantitative Strategic Planning Matrix. 54
8. Objectives and Strategy Recommendations.. 55
II. Strategy Evaluation, Monitoring and Control................ 57
III. List of Tables.. 59
IV. Appendix 60
V. Bibliography 65

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I. EXECUTIVE SUMMARY

Universal Robina Corporation is a leading company in terms of snack foods industry and is one of the largest food
manufacturing company in the Philippines. It is excellent in providing quality foods and services in the Philippines and
across the South East Asian Countries.

The food industry is a basic commodity that never experienced a significant down turn in terms of its demand from the
customers. It has always been the most patronized industry. Meanwhile, the players in the industry often experiences
down turn in terms of how demandable their products are. The key competition among them is how attractive your
products are and how likely you are going to be patronized and produce loyal. The Company URC has ventured in
different market segments and fortunately its snack food products generate most of its return of investments. Thus, URC
registered an EFE rating of 3.1 in terms of responsiveness to external environment.

The food industry is led by three major players each dominating in a specific income segment. In terms of global
expansion, URC is a market leader based on CSF rating and market share. This is evident on the international expansion
that the company recently had. URC however, has a total modest competitive position with a CSF rating of 2.9
considering that it has strong capitalization but poor accessibility to its product moderated by its price competitiveness.
Hence, an opportunity exists for URC to be the market leader in the industry.

Internally, most of the companys strengths are owed to its synergy with URCs diversified brand segments. The
operational synergy has allowed URC to obtain a sales growth by 14% compared to the sales growth of year 2014.
Despite this, the company still generated a total rating of 2.89 in terms of responsiveness to its internal environment.

Based on the URCs SPACE rating, URC falls within the Aggressive profile quadrant which states that it has an excellent
position to use its internal strengths to take advantage of external opportunities, overcome internal weaknesses and avoid
external threats. Feasible strategies under this quadrant are market penetration, market development, product
development, backward integration, forward integration, horizontal integration, diversification or a com

The company is very competitive in competing with other leading companies. This paper shows the recommended
strategies gathered through research by identifying the possible hindrance the company is currently facing in the market.
Ultimately, this paper is aimed at identifying the areas of concern that need improvement. This paper will also be tackling
what these strategies best do for the said company and what will be the most appropriate strategy for the company to
achieve its strategic objective to be a strong market leader. The is also a score care for URC which states how will the
firm is improving in the industry and how it is continually creating values through measures, it also states how it improved
upon its core competencies and competitive advantages and how satisfied the firms customers are.

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 1. Introduction
Business Overview
Founded in 1954 when Mr. John Gokongwei, Jr. established Universal Corn Products, Inc., a corn
manufacturing plant in Pasig, Universal Robina Corporation (URC) was founded. Mr. Gokongwie Jr. established
a vision for Universal Robina Corporation to become one of the leading pan Asian players in snack foods and
beverages. This vision is gradually being realized as URC has managed to transform itself from a Philippines
operation to a recognized Asian Multinational with full scale operation in eight countries outside the Philippines,
and soon in emerging markets such as Myanmar, Laos and Cambodia.
Universal Robina is involved in a wide range of food-related businesses, including the manufacture and
distribution of branded consumer foods, production of hogs and day-old chicks, manufacture of animal and fish
feeds, glucose and veterinary compounds, flour milling, and sugar milling and refining. It is one of the largest
branded consumer food and beverage product companies in the Philippines and as mentioned above it has a
significant growing presence in the ASEAN markets. URC is among the Philippines pioneers in the industry.
URC operates its business through operating divisions and wholly-owned or majority-owned
subsidiaries that are organized into three core business segments, namely, branded consumer foods, agro-
industrial products and commodity food products. Branded consumer foods (BCF) segment, including their
packaging division, is the Companys largest segment. Majority of URC's branded consumer foods business is
conducted in the Philippines, but the Company has expanded into other Asian markets through its subsidiary,
URC International, and subsidiaries in China, Malaysia, Thailand, Singapore, Indonesia, Vietnam, and Myanmar.

Business Operations and others

URCS financial position remains healthy with strong cash levels. The Company has a current ratio of
2.35:1 as of December 21, 2015, higher than 2.30:1 as of September 30, 2015. It has its total assets amounted
to P117.375 billion as of December 31, 2015. More particularly, its current assets is currently at P52, 040,781
while P65, 334,494 amounts to its non-current assets in the year ended December 31, 2015. With regards to its
total liabilities and equity, they amount to P48, 557,288 and P68, 817,987 respectively. The Companys financial
position can be seen in its financial statement for the first quarter of Fiscal Year 2016 as it was filed in the
Securities and Exchange Commission. On the other hand, the companys revenues for the first quarter ended
December 31, 2015 and 2014 by each of the principal business segments is as follows:

First quarter ended December 31

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 In millions 2015 2014
Branded Consumer Foods Group
Domestic P15,695 P14,840
International 8,985 7,535
24,680 22,375
Packaging 315 294
Total BCFG P24,995 P22,375
Agro-industrial group 2,287 2,250
Commodity Foods Group 2,2705 2,032
Total P29,987 P26,951

Aside from its market leadership in snack foods and beverages in the Philippines, URC is the first
Philippine Pan ASEAN Multinational and has proven itself to be a trailblazer in manufacturing with a strong and
loyal consumer base. It has built three strong regional brands over the years; Jack n Jill for snack foods, C2
for ready to drink tea, and Great Taste for coffee and these brands are becoming popular across the ASEAN
Region.

Just recently, in November 2014, the Company acquired 100% shares of NZ Snack Foods Holdings
Limited. It is the holding company of Griffin's Food Limited, a snack food company in New Zealand, from Pacific
Equity Partners. URC also entered into joint ventures with Calbee, Inc. to form Calbee-URC, Inc., which
manufactures and distributes food products under the "Calbee Jack 'n Jill" brand name; and with Danone Asia
Holdings Pte, Ltd. to form Danone Universal Robina Beverages Inc., which manufactures and distributes food
products under the "B'lue" brand name.

2. Research Design and Methodology

Collections of data and information as well as tables and figures endowed in this paper were all gathered
from various reliable resources from the internet either as official publication or the segment of an official
publication. Official publications would comprise, but not limited to, of the different official websites of the
government agencies and the segments of these agencies would comprise of the private and private institutions
duly accredited by the government to conduct projects and researches for general and specific resources.
As to the industry analysis of the subject company of this paper it will be limited to the food and beverage
industry which include branded consumer food groups and packaging industry. All other information sought
under this paper are taken from reliable resources in the internet those of refutable background in the conduct of
researches and outputs.
3. The Companys Vision and Mission Statement
A. MISSION
Universal Robina Corporation (URC) is one of the largest branded food product companies in the Philippines
and has a growing presence in other ASEAN markets.

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 Components Yes No Evaluation
1. Customers * They are into expansion to
ASEAN countries which
means that they want to
offer the same quality brand
to other nationalities.
2. Products/Sevices * It is stated in their mission
that they aim to be the
largest branded food
product companies in the
Philippines and across
South East Asian Countries.
3. Markets * The company plays a
dominant leadership in the
market or industry it
belongs through the quality
and convenience it can give
to the customers.
4. Technology * The mission does not
specifically states the
technological component of
the company.
5. Concern for survival, * The company is concerned
growth, profitability with its survival that they
aim to be the market leader
in the industry.
6. Philosophy * This element in the mission
of the company is not
present.
7. Self-concept * It is stated in their mission
that they aim to have a
presence in ASEAN
countries which is a
manifestation that they aim
for more trust from the
customers through

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 expansion.
8. Concern for public image * They aim for what is best
for the customers and
gaining the trust of every
individual.
9. Employees * They did not include the
livelihoods of the
employees.
10. Nation Building * They are constructing an
identity as an active
contributor to the economy
by providing high quality
product.

B. VISSION
URCs Vision is to be the best Philippine food and beverage company, with a powerful presence throughout the
ASEAN region, carrying a wide portfolio of delightful brands of exceptional quality and value, equipped with
efficient systems and motivated people. We are committed in making lives a truly fun experience.

Parameter Yes No Evaluation

1. Does it clearly answer * It has been indicated that
the question: What do we they want to be the best
want to become? food and beverage company
with a powerful presence in
the ASEAN
regions/countries.
2. Is it concise enough yet * The vision is straightforward
inspirational? on what the company really
want to achieve and what
they can offer to the
customers.
3. Is it inspirational? * The company is determined
to expand its market
internationally with a wide
portfolio of their brands,

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 efficient systems and
motivated people.
4. Does it give clear * There is no specific
indication as to when it indication as to time.
should be attained?

RECOMMENDED MISSION:

To be the customers first choice inn fun snacks, dominant market leader in the Philippine Food Industry and has a
growing presence in other ASEAN markets with ultimate passion and commitment in endowing quality, value and
convenience that the customers deserve and to hand over a great livelihood to every employee.

RECOMMENDED VISION:

URCs Vision is to be the best Philippine food and beverage company, with a powerful presence throughout the ASEAN
region, carrying a wide portfolio of delightful brands of exceptional quality and value, equipped with efficient systems and
motivated people. We are committed in making lives a truly fun experience.

4. External Analysis

With about seven thousand islands lying off south west coast of the Asian mainland, the Philippines is one of the
largest island groups in the world. It is strategically located as a gateway to the East and Southeast Asian market,
and well-poised to be a staging area for local food and beverage processors that seek to penetrate the lucrative
market. The Philippines food and beverage processing industry is comprised of the following major factors:
beverages, coffee and cacao, condiments and seasonings, dairy products, fats and oils, flour and bakery products,
fruits and vegetables, meat and poultry products, seafood products, snack foods, and sugar and confectionery. As
reported by Global Agricultural Information Network, the food processing industry contributes to the countrys total
manufacturing output. Roughly 90 percent of the Philippines food and processing industrys output is consumed
locally. Consumption growth in the coming years is underscored by the countrys robust economy and a fast-growing,
highly urbanized population with increasingly sophisticated tastes and ever-growing access to supermarkets.

3.1 Political forces

Existing laws and government regulations

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 The regulation of food and drugs in the Philippines is enshrined in the 1987 Philippine Constitution. Statutory
laws are also in place to provide legal basis for the creation of a regulatory agency such as Bureau of Food and
Drugs, Department of Health, Department of Agriculture, Department of Trade and Industry and other, all mandated
to ensure the safety, efficacy and good quality of all food and drug products being made available to the general
public. Among these statutes four of them are of relevance to the industry of Universal Robina Corporation namely:
Consumer Act of the Philippines (RA No. 7394), Food Safety Act of 2013, Food Fortification Act of 2000, and Food,
Drug and Cosmetic Act.

There had been laws passed with regards to food safety control and regulatory system in the Philippines. The
National Food Safety Network is generally composed of agriculture and fisheries (Fresh produce), the food industry
(food manufacturing, distribution and retail outlets), the food service sector (restaurants, caterers, street vendors) and
the consumers (household consumption). Each components has a corresponding responsible regulatory
agencies/bureaus and services and regulatory laws. Alarmed of the emergence of food borne disease incidence, the
national government in 1998, created through an Executive Order the National Food Security Council Under this, a
National Food Safety Committee was organized to formulate National Food Safety Policy Program. Together with
partner agencies a consultative meeting was convened to discuss and formulate of a framework for a National Food
Safety initiative.

Several issues were raised in the consultative meetings and the committee came up with the following
recommendations namely:

Formulation and issuance of a national policy on Food Safety.

Review critical areas of the food chain which are unprotected by laws or regulations and standards.

Development of a comprehensive Food Disease Surveillance System

Develop detection methodologies and assessment in the emergence of GMOs.

The action plans however were only given a life span of 3 phases from a period of year 2002-2007 with three-
year coverage each phase because of certain adjustments such as changing of leadership in the local government
units and national leaders. Hence, the current laws governing government regulation with regards to the food industry
and the food service sector are elucidated in this portion.

A. Republic Act No. 7394, The Consumer Act of the Philippines

Under the statute, the provisions provided and the implementing rules and regulations shall be enforced by: The
Department of Health with respect to food, drugs, cosmetics and devices and substances; the department of
agriculture with respect to products related to agriculture; and the department of trade and industry with respect

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 to other consumer products not specified above. Article 7 of the said statute the concerned departments shall
establish consumer product quality and safety standards which shall consist of one or more of the following:

Requirements to performance, composition, contents, design, construction, finish, packaging of a consumer

product;
Requirements as to kind, class, grade, dimensions, weights, material;
Requirements as to the methods of sampling, tests and codes used to check the quality of the products;
Requirements as to precautions in storage, transporting and packaging;
Requirements that a consumer product be marked with or accompanied by clear and adequate safety warnings
or instructions, or requirements respecting the form of warnings or instructions.
Relevance: Under the statute, before entering the industry there are certain requirements that should be
complied first. The company would have to take into consider this because this might affect the companys over-
all expense and might occur barriers to entry.

B. Republic Act No. 10611, An Act to strengthen the food safety regulatory system in the country to
protect consumer health and facilitate market access of local foods and food products, and for other
purposes
Food security refers to the assurance that food will not cause harm, human health is protected and market
access of locally produced foods and food products is facilitated. Food, as one of the basic needs of man,
provides the health requirements of a person in order to live. The availability of food on the plate of every
Filipino is among the main concerns of the government in achieving food security. The supply to meet the
ever growing food demand. However, more than achieving availability and sufficiency and supply, food
security is also defined as access to safe and nutritious foods as defined by food and agricultural
organization of the United Nations (FAO 2014).
In August 23, 2013, President Benigno S. Aquino III signed into law Republic Act No. 10611 otherwise
known as the Food Safety Act of 2013. The law primarily adheres to the Philippine Constitutions
declaration to protect and promote the right of the people to health and keep its populace from the threat of
trade malpractice and substandard and hazardous products. With these as pronouncement, the country
shall support and advocate for a farm-to-fork food safety regulatory system which guarantees high level
safety, promotes fair trade and fosters the competitiveness of the countrys food and food products.
Republic Act no. 10611, also known as the Food safety act of 2013 defines food as any substance or
product whether processed, partially or unprocessed that is intended for human consumption. It includes
drinks, chewing gum, water and other substances, which are intentionally incorporated into the food during it
manufacture, preparation and treatment. On the other hand, food safety refers to the assurance that food
will not cause harm to the consumer when it is prepared or eaten according to its intended use.
The law primarily aims to strengthen the food safety regulatory system in the country. Food safety regulatory
system is the combination of regulations, food safety standards, inspection, testing, data collection,

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 monitoring and other activities carried out by food safety regulatory agencies composed of the Department
of Health, Department of Agriculture, the Department of Interior and Local Government and the Local
Government Units in the implementation of their responsibilities for the control of food safety risks in the
food supply chain. Specifically, it aims to: protect the public from food-borne and water-borne illnesses and
unsanitary unwholesome, misbranded or adulterated foods; enhance industry and consumer confidence in
the food regulatory system; and achieve economic growth and development by promoting fair trade and
sound regulatory foundation for domestic and international trade.
In general RA 10611 woks in the principle of achieving food safety to protect human life and health in the
production and consumption of food and protect consumer interests fair practices in the food trade. The
protection of consumer interests shall be geared toward the prevention of adulteration, misbranding,
fraudulent practices and other practices which mislead the consumer, and the prevention of
misrepresentation in the labelling and false advertising in the presentation of food. In order to support this
legislation, standards for food safety measures shall be developed. Food safety standards refer to the
formal documents containing the requirements that foods or food processors have to comply with to
safeguard human health. It should be noted that the food safety standards shall be based on risk
assessment which is anchored to sound scientific evidence.
Relevance: The Company produces manufacture and packaged foods and beverages. Hence it must make
sure that is had complied with all the necessary requirements needed to operate the business especially to
safety. With all the incidents happened in the past, one incident of safety issues from a company would
break it down and would be a cause to piles of lawsuits. Because after all, it must always be proven that the
company have done due diligence to avoid the happening of the incident.
C. Republic Act 8976, An Act Establishing the Philippine Food Fortification Program and for other
purposes
The Food Fortification Program is the Philippine governments response to the growing micronutrient
malnutrition, which has been prevalent in the country for the past several years. Republic Act 8976, An Act
Establishing the Philippine Food Fortification Program and for other purposes mandating fortification of
flour, oil and sugar with Vitamin A and flour and rice with iron by November 7, 2004 and promoting voluntary
fortification through the Sangkap Pinoy Seal Program, signed into law on November 7, 2000. And the
following are the sources of the mandates included in the statute:
There are 139 processed food products with Sangkap Pinoy Seal Program with 83% with vitamin A,
29% with iron and 14% with iodine (2008)
37% of the products are snack foods. Most of the products FDA analyzed are within the standard
Based on 2003 NNS Households awareness of SPS- and FF-products is 11% and 14%, respectively, in
2008 awareness is 11.6%
Although awareness is low, usage of SPS-products is 99.2%
Food fortification is the addition of Sangkap Pinoy or Micronutrient such as vitamin A, iron and iodine to
food, whether or not they are normally contained in the food, for the purposes of preventing or correcting

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 demonstrated deficiency with one or more nutrients in the population or specific population groups. Sangkap
Pinoy nutrients or micronutrients are vitamins and minerals required by the body in very small quantities.
These are essential in maintaining a strong, healthy, and active body and a sharp mind; and, for women, to
bear healthy children.
The following are the objectives of the Food Fortification Program:
To provide the basis for the need for a food fortification program in the Philippines: The Micronutrient Malnutrition
Problem
To discuss various types of food fortification strategies
To provide an update on the current situation of food fortification in the Philippines

Relevance: One of the problems that besets the packaged foods and beverage industry is the problem of food
nutrition. The company must take this into consideration this requirement because it might be the only factor to switch
to other brands by loyal customers.

D. Republic Act 3720, Food, drug and cosmetic act

The above statute prescribes rules for the packaging and labelling foods and distributed in the Philippines.
Also in the Bureau of food and drug interpreting regulations and details of Act no. 3720 provides lists of
substances permitted for use in food and food packaging materials. Labelling as defined in the Act, means
the provision of adequate information and accurate identification of the pre-packaged foods on the
packaged; means by which product communicates with the consumers, traders, regulatory agency; it must
be correct, misleading, accurate and legible. Every label of a packaged food has a principal display panel or
alternate principal display panel. It must include product identity name and net content declaration. Every
company must take note of the area designated for the Principal Display Panel (PDP). For rectangular
package, it is the height times the width. For cylindrical or nearly cylindrical container, it is 40% of the value
of the height of the container times the circumference. For other shaped container, it is 40% of the total
surface area excluding tops, bottoms, flanges of cans and shoulders and necks of bottles and jars.
However, if the container has an obvious PDP, e.g. the top of the triangular or rectangular package, the area
shall consist of the entire top surface. The information panel is the label panel immediately to the right of the
PDP, as seen by the consumer facing the product with the following exceptions:
If the panel is too small to accommodate the necessary information or is not usable e.g. folded flaps, then
the information panel is the next label panel immediately to the right of this part of the label
If the package has one or more alternate PDP, the information panel is immediately contiguous and to the
right of any PDP
If the top of the container is the PDP and the package has no alternate PDP, the information panel is any
panel adjacent to the PDP

Relevance: This might affect the companys product marketing and advertising because some necessary components
used in the production of the product are compromised. Although the company is a leader in packaging products this

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portion is still of great importance since the government is the foremost regulation authority hence all mandatory acts
must be complied with.

Potential Charter Change

E. House Bill No. 743, An act promoting urban farming and providing funds and incentives therefore
Driven by the policy of the state to protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature and towards this end, the state shall endeavour to
promote activities that will ensure that its people will continue to live in a sustainable environment. Therefore
under the proposed law, the state will support any act of farming in a city using land or space of a building,
including but not limited to a roof of a building that is partially or completely covered with vegetation through
the use of any growing medium such as but is not limited to pots, plots and/or membranes.
Relevance: The Company manufactures products and distributes them to their customers in a processed
food or beverage. Support for urban farming will pose a threat to the company because it will teach people
produce foods on their own. Producing foods on their own would mean people would be able to produce
foods, especially for commodities that are similar to what the company can offer, on their own and it will
lessen customer patronization to the companys products.
F. House Bill No. 206, An Act providing for a system of determining the minimum food requirement of
Filipinos, reorganizing the National Food Security, establishing the National Strategic Food Supply
and reserve corporation for other purposes
Driven by the policy of the state to promote just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate social
services, promote full employment, a rising standard of living and an improved quality of life for all hence the
statute is proposed.
The bill requires that the Department of Agriculture to define and put together a Food Requirement Plan for
Filipinos ensuring that all Filipinos are able to eat from what is locally produced first before exporting our
produce to the international market. As such, if there is a shortage in the supply of rice, fish, livestock and
poultry, vegetables and fruits needed to feed the total number of Filipinos, the Department of Trade and
Industry shall be able to roll out a trade plan to source out the same from our trading partners.
Consequently, the nations import and export policies as a nation shall be adjusted to what is needed by the
people first before sending raw material and produce to other nations. With the food requirement plan, the
Department of Agriculture is able to plan which province should produce what, enhance its competitiveness
through infrastructure support, monitor, distribute and market the produce, ensuring supply chain
management is enforced to identify gaps in terms of the food requirement per province.
Relevance: As reported by Global Agricultural Information Network, the food processing industry contributes
to the countrys total manufacturing output. Roughly 90 percent of the Philippines food and processing
industrys output is consumed locally. In relation to the proposed bill, it has a duo-effect to the company. It

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 can either be a good news or a bad news. The business has wholly-owned conglomerates and subsidiaries
operating outside the country, hence if the government stops exportation it would affect the schedule
production and manufacturing of the products. If it is not delivered on time, it would affect target sales and
production and it may led to a breakdown. However, the act encourages locally produced products and
enhances competitiveness through programs provided by the state. The company would have to invest
more on its local production especially in its agro-industrial group.
G. House Bill No. 467, An act promoting corporate farming and providing incentives therefore
Corporate farming programs aim to attract more private sector engagement in the agricultural sector.
Corporate farmings unique advantage is its ability to vertically integrate the entire process of food
production and offers more efficient and effective management not only of the farm itself, but also to the
entire chain of agricultural related business including feed supply, agrochemicals, food processing,
machinery, storage, transport, distribution, marketing, advertising, and retail sales. Participation to the
corporate farming program shall be on a voluntary basis. Hence the act provided schemes that corporations
may engage in:
~ Corporation with landholdings suitable for rice or corn production may manage the same and produce
such corn or rice or may enter into a management or contractual arrangement with farmers groups
~ Corporations may purchase or lease on a long term basis, public or private agricultural land suitable for
rice or corn production, whereby the corporation are given full management and production control over the
purchased or leased lands or may enter into joint ventures with farmers. However, leased or purchased
lands cannot be converted for other uses.
~Corporation may enter into contractual arrangements with farmers organizations whereby the corporation
will provide the production inputs and technical and related services, then buy back the produce.
Relevance: This enables the companys farm produced products open to wider horizon such stronger
partnership with farmers. This is because the farmers are the best gateway to the government. The
government provides subsidies to the farmers and tax incentives especially to the marginalized. Hence
when the company partners with these farmers it would be lesser cost during the process of producing the
companys farm produce. Lower cost would result to greater mass number of produce hence higher profit.
3.2 Economic forces
A. Worlds economic condition
Global growth as forecasted by the International Monetary Fund, is projected at 3.4 percent this year
(2016) and 3.6 percent in 2017. In the advanced economies, growth is projected to rise by 0.2
percentage point in 2016 to 2.1 percent and hold steady in 2017. In the United States, overall activity
remains resilient because of the still-easy financial conditions and strengthening housing and labor
market but with weighing of dollar strength on its manufacturing activities and also the limiting of
investment in mining structures and equipment by low oil prices. In European Countries with the
stronger private consumption supported by low oil prices and stronger financial conditions are able to
outweigh the weakening of its net exports.

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 In the emerging market and developing economies on the other hand are projected to increase from 4
percent in 2015 which is the lowest since the financial crisis last 2008 and 2009 to 4.3 percent and 2.7
percent in 2016 and 2017 respectively. Chinas growth is expected to slow to 6.3 percent in 2016 and
6.0 percent in 2017, primarily because of the weakening of the investment growth as the economy
continues to rebalance. The rest of the emerging Asian countries are generally projected to continue
growing at a robust pace, although with some countries facing strong headwinds from Chinas
economic rebalancing and global manufacturing weakness.
Relevance: The Company operates across the country hence it must be updated with the worlds
economic condition. The world economic condition can either make or unmake the condition of the
company with regards to its growth plan to expand across the globe. One factor of this is the forecasted
downsizing of the consumer prices in the emerging and developing market from 0.5 percent to 0.1
percent only in the year 2016 and 2017 respectively as can be seen in the table below. Above all, this
can be a strong indication that around the world, growth patterns and sources of competitiveness are
changing dramatically with emerging economies becoming key players as the US, EU, Japan continue
to face slow growth. This is a wakeup call for the company to compete intensively as greater
opportunities are coming through for emerging and developing countries such as Philippines.

Table 1.

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 B. Filipino Family Income and Expenditure

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 From the results of the survey conducted by the National Statistics last 2012 in the Filipino family
income and expenditure in NCR, the final results show that 55.2 percent of the families in NCR sourced
their income from salaries and wages while 46.7 percent for the entire country. In terms of income
class, nearly 60 percent of families in NCR with average annual income of over 100 thousand pesos
obtained their income from salaries and wages. A big proportion of families whose income class as
below 60 thousand pesos source their income form entrepreneurial activities and other sources.
On the other hand, the results also show that families in NCR spend more on food which consisted of
36.5 percent of their total expenditure. This was followed by payment on housing, water, electricity, gas
and other fuels which were 26.5 percent and transportation expenditure with 7.5 percent of the total
expenditure. Families whose average annual income ranged under 60 thousand pesos incurred food
expenditures at 50.0 percent of total expenditures. Families with average annual income of over 250
thousand pesos had the lowest proportion of food expenditure at 33.2 percent.
Relevance: This may help the company modify its target market especially that it is involved in many
business segments as proven by the business ventures and partnerships it had. In the results above
the company may have to focus on those families whose income class is below 60 thousand pesos who
source their income from entrepreneurial activities and other sources as this may pose an opportunity
for the company because these are the target markets that the companys products are found stressing
the entrepreneurial activities. However it bears stressing that under this income class, families only
incurred 50% of the total expenditure which is not desirable as a strong market

Table 2.

Table 3.

17 | P a g e
 C. Consumption Patterns
According to 2014 Nielsen survey, an increasing number of Filipinos prefer to consume ready-to-eat
meals because of their fast-paced and time-strapped lifestyles. Also, the 2014 Nielsen Shopper Trends
Report, Filipino shoppers only spend an average of P4,700 on food items from groceries. This
represented a 13% decline from 2012's P5,400. From only 14% in 2012, the number of respondents
who frequently eat out of their houses rose to 25% in 2014. Lou-Ann Navalta, Nielsen's Shopper
Insights leader in the Philippines said restaurants are appealing because they cater to their needs for
convenience, quick preparation, and ready-to-eat meal options. "Shoppers are leading fast-paced
lifestyles and are constantly on the go," Navalta explained. "These time-strapped Filipinos are spending
more time away from home or in transit and are now more serious about convenient.

Table 4.

Relevance: Ready-to-eat meal are also known as processed foods in a standpoint where the company
is primarily operating. The main product of the company composed of processed foods and beverages
hence with the results of the survey above it is an opportunity for the company since it is one of the
major players in the said industry. Processed products are now prominent among various markets
hence it is an opportunity for the company to widen its reach of major market to serve as in these
markets processed foods are patronized.
D. Philippine Economic Growth by 2016
The economy will grow at a healthy pace in 2016. Positive factors include a modest rebound in exports,
steady gains in consumer spending and an increase in public spending. A prolonged slowdown in
Japan and China the Philippines biggest trade partners represents the greatest risk. Growth in
employment and pre-election spending support private consumption. Real GDP will grow by about 6.5%
per year in the medium term.

18 | P a g e
 Relevance: Economic movement in the country affects the company as it is one of the players that
contributes to its growth. Hence, this year the company might want to consider the positive factors
contributing to the economic activity namely exports, consumer spending and public spending. These
are areas where the companys activities pass through so these areas must be taken into consideration
when formulating the development plan for the year 2016.
E. Philippines strong performance in the year 2015
The Philippines is among the strongest performers in the region, bucking the trend, because of strong
fundamentals. In the first half of 2015, among the major economies in the region, the only countries to
accelerate their quarterly growth rates were the Philippines, from 5 to 5.6 percent, and Vietnam. In spite
of this acceleration, for the two quarters combined, Philippine growth rate came out at 5.3 percentits
lowest half year growth rate since 2011. On the demand side, the strong performance of private
domestic demand at 8.1 percent, supported by record low inflation and robust remittances, drove
growth. However, the slow pace of public spending and the contraction in net exports pulled down
overall growth. On the supply side, the onset of El Nio slowed agriculture growth to only 0.3 percent.
Meanwhile, growth in industry and services was respectable, with both sectors growing by around 5.8
percent.
Relevance: Gross domestic product affects almost all areas in the business industry. With this the
company would be able to look out for the certain factors that affect the growth and slow pace growth of
the GDP. Once determined, the company may have the basis on what industries it must invest more
and where to invest less or suffice to say, to avoid those areas which might not be desirable for the
company.

Table 5.

F.

Respectable growth in services and

industry although in manufacturing the growth decelerated significantly

19 | P a g e
 The industry sector grew slower at 5.8 percent compared to 7.3 percent in the same period in 2014,
brought down by the deceleration in manufacturing growth from 9 to 5.3 percent. Slower manufacturing
growth, in turn, was driven by food manufacturing which grew by 2.1 percent reflecting lower
agricultural production and contraction in food exports. Several other manufacturing sub-sectors are
underperformed as exports to Japan (-7.5%) and china (-32%) fell. On the other hand, the services
sector grew at a slightly slower pace of 5.8 percent relative to a year ago, but continued to be the main
driver of growth, accounting for 3.3 percentage point, given its dominant size.
Relevance: The Companys products are manufactured and/or processed foods. In addition to this, the
slow paced growth of the manufacturing industry was driven by food manufacturing industries due to
the lower agricultural production and contraction in food exports. This can be taken into consideration
by the company because this might affect the companys growth especially to its sectors abroad.

Table 6.

G.

Packaged food records slight improvement in value growth terms in 2015

The favorable performance recorded by packaged food over the entire review period was sustained in
2015 as slight improvements were noted in current value terms. This is being partly driven by the
growing middle class, who are upgrading their brand choices as their purchasing power improves. This,
in turn, is encouraging companies to introduce foreign brands, which is helping to push value growth as
imported products are invariably pricier than local options. Foreign food specialist retailers which drive
sales of unique and high-quality products are also increasing in number.
Relevance: According to the Euromonitor, URC is the leader in packaged food in 2015 derived from its
wide product portfolio, which targets mainly mass consumers. The company has also positioned itself
so as to take advantage of the Philippines growing middle class as it expands its product portfolio to
include more premium brands. Its launch of Jack n Jill Calbee in 2015 is expected to be followed by
similar launches following its recent acquisition of New Zealand Snack Food Holdings Ltd. Other
established players are also facilitating their expansion through the acquisition of existing local players
and/or foreign brands.
H. Consumer desire for convenience influences product development and promotion

20 | P a g e
 In addition to rising health consciousness, another trend which is positively influencing sales of
packaged food is the desire for convenience among consumers. Categories featuring mainly products
which can be used as ingredients in home cooking such as sauces, dressings and condiments have
been among the most adversely affected as consumers prefer dining out for convenience. Packaged
food companies have responded by encouraging home cooking in their promotions, utilising technology
for the easy downloading of online recipes and developing products which reduce meal preparation
times. Major convenience store brands have also introduced healthy ready meals.
Relevance: since the companys market leadership is in packaged foods, consumers growing desire
for convenience would mean wider market profile for its consumers. This means that there is an
additional market for the companys products since packaged foods offer the best possible convenience
that consumers can get.
I. Modern grocery retailers remain the key distribution channel for packaged food
Modern grocery retailers, particularly supermarkets, remained the key distribution channel for packaged
food in 2015. The continuous expansion of the outlet networks of key chained grocery retailers has
assisted in the steady growth of supermarkets at the expense of traditional grocery retailers, the value
share of which is gradually decreasing. New retail brands and formats are also being introduced.
Similarly, small outlet formats are growing in number with the introduction of new convenience stores
brands and the creation of mini-supermarkets by some major grocery retailers. Furthermore,
supermarkets and hypermarkets, dominate the distribution of the US$9.1 billion packaged food market
in 2011, followed by other grocery retailers and small grocery retailers. Grocery retail sales totalled
US$32 billion in 2010, 67 per cent of the market dominated by other grocery retailers. Sari-sari stores,
small independent stores, remain the largest grocery channel in terms of total sales. Spending on
grocery products rose among middle and high income consumers in urban locations and while grocery
retail sales grew by 24 percent during the period 2005-2010, hypermarket experienced the most rapid
growth, 33 percent in 2010.
Relevance: The movement and growth of these key distribution channels helps the companys target
market area of focus. This is an opportunity for the company to expand and strengthen its relationships
with its distribution channel.
3.3 Socio-cultural and demographic, trends and lifestyle changes
A. The Philippines Population is growing 2 percent annually
According to Euromonitor, the Philippines is the 18th-most populous country in the world with an
estimated 98.4 million people in 2013. The population is expected to grow to 105.2 million by 2017, and
then to 110.4 million by 2020. With an increasing number of population there is also an increased
demand for food and beverages products.
Additionally, the Philippines has one of the worlds youngest population with a median age of 23 years
in 2013, Euromonitor predicts that by the year 2030, the fastest growing age group will be 60+, but the

21 | P a g e
 Philippines will still remain one of the youngest countries with 71.4% of the population under the age of
40.
Relevance: The updates on the number of population including age brackets come every year provided
by the National Statistics Office. The Filipinos are the market of the company hence with the yearly
report on the growing number of population connotes that the company should produce more of its
products. With an increase in the population and increase in the production of products would result to
growth sales annually for the company. Also, the age profile would affect the introduction of the
companys new products including those coming from its joint ventures outside the country as a hint
towards the market targeting and focusing of the company. Moreover, with these given data the
company would be able to monitor the growth of these market segments and be able to abide with the
growth factors through its products.
B. Attitudes toward saving
Filipinos were more cautious in spending their moneyand more keen on saving itin the first quarter
of 2013, according to a survey conducted by Neilsen on March 2013. The survey results are the
following:
The Nielsen consumer confidence index measures perceptions of local job prospects, personal
finances and immediate spending intentions. Consumer confidence levels above and below a baseline
of 100 indicate degrees of optimism and pessimism, respectively. The Nielsen Global Survey of
Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence,
major concerns and spending intentions among more than 30,000 respondents with Internet access in
60 countries.
In Nielsen's Global Survey on Consumer Confidence and Spending Intentions, the Philippines dropped
one point to 118 on the consumer confidence index from 119 in the last quarter of 2012. The new total
dropped the Philippines from second place to third, after Indonesia (122 points) and last quarter's
leader India (120 points). The study also revealed that although Filipinos remain optimistic, the
optimism does not necessarily equate to more spending.
Aside from the slight decrease in consumer index, we are seeing a more conservative attitude towards
spending and an increase is willingness to save, Nielsen Philippines managing director Stuart
Jamieson said in a statement.
Relevance: This may affect the pricing patterns and standards of the company as Filipinos are become
more conscious of their spending. However, it is not of great importance to the companys welfare or in
any way may affect since its products are composed mainly of processed foods and beverages. The
effect on the prices may have to stem out from certain factors that are directly affecting the business
operation such as fuel price.

Table 7.

22 | P a g e
 C. Attitudes toward product quality
Research shows that Filipinos associate product quality with the product brand hence making foreign
brands more patronized by Filipinos than local brands. One concrete example is the market trend of
Mandaue Foam. Although the local furniture manufacturing industry still thrives amid the entry of similar
imported products that are pegged at much competitive prices, Filipinos are encouraged to adopt the
Buy Filipino attitude to help keep the industry afloat. Jonathan Ho of Mandaue Foam, one of the
countrys largest foam and furniture makers, said that the increasing number of Filipinos who are
upholding their values in supporting the local industry, is whats keeping the local furniture
manufacturing alive. However, he admitted that the growing entry of more furniture and other home
furnishing products from other countries have continued to eat up on the local manufacturers market
share. Mandaue Foam managing director Ryan Uy said that despite the bottleneck competition against
the imported and cheaper furniture products that entered the Philippine market, Filipino manufacturers
like Mandaue Foam is confident that they will be able to fight the competition in terms of quality, design,
and workmanship.
Meanwhile, the furniture export sector is also intensifying its move to attract the domestic market,
specifically the institutional customers, such as hotels, condominiums, and residential buyers in order to
sustain the business, while the global market is still under-pressure. Department of Trade and Industry
(DTI-7) regional director Asteria Caberte said that the establishment of the Tindahang Pinoy in Cebu

23 | P a g e
 will help exporters mainly in the furniture and home furnishing, including fashion accessories and gifts,
toys, and houseware to stay afloat, Likewise, Caberte said that there are now a growing number of
Filipinos, whose buying attitude is geared towards supporting the local economy, by buying only
Philippine-made products.
Relevance: This might require adjustment of the companys over-all marketing strategies towards
product branding including introduction of new products and the strengthening of established products.
Encouragement of consumers to buy local has long been practiced by the government. This has
helped long-established companies be promoted. However, under certain studies, (Journal of
International Marketng Vol.2, No. 2, 1994, pp. 49-62 ISSN 1069-031X Submitted August 1992, Revised
July 1993) this move by the government stems out from the products manufactured from another
country. Hence, the company must keep an eye on this matter if it want to strengthen its long-
established products in the Philippines.
3.4 Technological forces
A. Food and beverage industry executives see technology as the greatest driver of future growth
Found in the KMPG LLPs 2013 food and beverage industry outlook survey, respondents, which include
100 US-based senior executives from companies with annual revenues over $1 billion, say that social
media, mobile and online marketing and cloud computing are creating new opportunities to engage with
consumers and explore new business opportunities. KMPG LLP is professional service being one of the
BIG Four auditors along with Deliotte, EY and PwC.
Nearly two-thirds of executives say they have adopted or plan to adopt cloud technologies, with 44
percent saying it will dramatically shift their business model and 78 percent believing it will increase
transparency. Interestingly, while cost reduction is a goal with cloud computing, the survey indicates that
executives are equally, if not more, interested in technology adoption for strategic, transformation
purposes.
Relevance: it is established that company executives are increasingly recognizing the value of using
data and analytics to improve decision making related to consumer insight, brand and product
management and pricing. Despite this growing interest, however, 46 percent rate their data and
analytics capabilities as average or below. Hence, the introduction of new technologies to conduct
surveys and reaching out customers has never been this accessible today. Hence, the company looks
out through the technological developments as a tool not only for data gathering purposes but also in
reaching its customers here in the Philippines and abroad.

Table 8.

24 | P a g e
 B. Emerging market for online food shoppers

As consumers look

to reduce time, effort and energy, online food shopping will also

continue
to grow in the next
two
decades.
New Technologies inside stores enabling retailers an augmented
shopping experience will help companies engage with customers through personalized offers and
product suggestions to fit with diet and lifestyle. Hand-held scanners allowing users to get the nutritional
values of food looks set to rise in popularity.
Relevance: This might lead to URC as a food company to be challenged to be more consistent in
delivering quality food products. The company may bring convenience to its customers because of its
packed food as well-established in the market
C. Food technologys top 10 predictions for 2016
As published by the Institute of Food Technologies, the editors at Food Technology magazine
(Newswise-Chicago) announced their predictions on food trends for 2016. Among the listed trends are
the following that relates to the company:
The intersection of health and convenience
Food and beverages that deliver on both health and convenience will proliferate and gain
wider distribution as consumers look for easy ways to incorporate more healthy products into
their lives. The market will be blasted with portion-controlled snacks and ready-to-eat salad kits
complete with slightly exotic ingredients to gain more curiosity for the customers and be able
to provide nutritional information for them. These kind of products are expected to be seen on
retail shelves as entrepreneurs continue to get creative and major food companies acquire or
partner with innovative niche marketers.
Less is more
Food manufacturers will have to continue to make food products that are less processed as
consumers demand more transparency and foods that are closer to their natural state.
The packaging connection
Consumers have long been interested in the backstory behind the foods they choose, but
recent technologies have made it more possible than ever to bring this kind of information to
the everyday consumer. This year, this trend will continue to grow, with packaging innovations
allowing consumers to interact with products on the shelf and when they get them home.

25 | P a g e
 Packaging technologies will also make it easier than ever for consumers to reorder their
favorite items at the touch of a button.
Generational nutrition
Baby Boomers, Gen X-ers, and Millennial will continue to play a role in popular nutritional
trends as well as product labelling. Baby Boomers want to lead lives full of energy and strong
mental focus. Generation X-ers are concerned not only with their own health, but with the
health of their children. Immune health will continue to be a trend as this generation
understands the link between immunity and overall wellness. Millennial tend to be more
focused on labels and natural foods, so being transparentnot only in terms of healthful
ingredients but also in terms of how the foods and beverages are madewill be important.
Information is key to all generations, so communicating science-based information in an
understandable way will be critical in upholding the credibility of products focused on health
and wellness.

Relevance: Aside from packaging as the companys one of the largest line of business, these
are factors that the company will have to consider when introducing new product line or
brands. The companys products must always conform to the technological trends from time to
time because these are the factors that people associates in their standard of choosing their
best quality brands. This would also help the company in updating its customer profile when
conducting marketing strategies for the companys annual development plan.
3.5 Environmental forces
A. Consumers incorporate social issues into their purchase decisions by evaluating the
consequences of their consumption upon society such as environmental consequences
A socially conscious consumer takes into account the public consequences of his or her private
consumption or who attempts to use his or her purchasing power to bring about social change.
Consumers who consider the environment to be important will therefore evaluate the environmental
consequences associated with the purchase of a product. According to the study made by the
international journals research journal of commerce and behavioural science, consumers with strong
environmental beliefs have knowledge on environmental issues, have concern for the environment,
have environment friendly habits and have no environment attitude but are not reflected in the
consumers buying behaviour. Hence there is a gap between articulated positive attitudes toward
sustainability and peoples actual consumption behaviour wherein the former is mostly unsustainable.
Although consumers say they are willing to buy green products, only a few do so (Ehrich and Irwin,
2005). If left unaddressed, this gap will continue to frustrate producers of sustainable alternatives who
rely on traditional, attitudinal market research methods, only to find that actual demand often falls far
short of their initial projections. This limits the availability of sustainable product alternatives and thus
limits movement toward more sustainable consumption.

26 | P a g e
 Relevance: The Companys ecological contributions and actions in implementing have been healthy
since then. Thus, it would have no great effect on the company since it is doing efforts to support such.
With respect to its consumers there had not yet ecological issues raised by its customers through the
years of its operations.
B. Environmental challenges remains a low priority for food and beverage industry
Environmental risk remains a low priority for the global food and beverage industry, while food safety,
financial risks are the most vulnerable areas according to a survey conducted by certain certification
firms. As carried out by certification firms namely DNV Business Assurance and GFK Eurisko, the
survey asked 500 food and beverage professionals from companies in Europe, America and Asia to
prioritize the main risk areas to their supply chains. According to the survey, food safety (63%) and
quality (54%) are the areas of supply chain management that companies consider particularly
vulnerable. Financial risks (38%) are deemed less threatening, together with legal and regulatory
ompliance (35%), while environmental challenges (29%) are deemed a lower concern. Last on the list
as community relations (10% and ethics (8%).
The results of the survey have sparked concern, as food and drink manufacturers account for 5.3% of
industrial final energy use globally, according to figures by industry association for the European food
and drink industry, FoodDrink Europe. The industry also accounts for 1.8% of total water use in Europe.
Relevance: Although this is not a good outlook on the industry because manufacturers source out their
raw materials from agriculture and it is an established dogma that all things has its consequences. This
could be an opportunity for the company to introduce itself as an advocate of ecological change so that
when time comes that the consumers will shift to being ecologically conscious the company would not
be left behind.
C. Industry analysis
Food manufacturing, which includes food and beverage processing, remains the Philippines most
dominant primary industry. Food and beverage (f&b) processing is a booming industry in the
Philippines. Quadrupling to $27.1billion in five years (2009-2013), the food processing industry
contributes 50 percent to the countrys total manufacturing output. While most of the roughly 500 f&b
processors registered under the Philippine Food and Drug Administration are micro or medium-sized
businesses, food processors are also among the largest corporations in the country.
The food processing industry is comprised of the following major sectors: fruits and vegetables, fish and
marine products, meat and poultry products, flour and bakery products, beverage and confectionery,
dairy foods, food condiments and seasonings, food supplements, bottled water; snack foods, and fats
and oils.
The company under stud, ranks fourth among the players in food and beverage manufacturing industry
in the Philippines. Big ideas from Porters five forces were used to analyse five connecting factors
critical for an industry to become and remain competitive. The five forces analysis is used to understand
the dynamics of competition within the industry to which the company under study belongs.

27 | P a g e
 Table 9

Industry, Market and Competitor analysis

4.1 Porters 5 Forces Model
A. Rivalry among competing firms STRONG
Food manufacturing including food and beverage processing remains the Philippines most
dominant primary industry with over top 20 major players each contributing to the total 40.1 percent
total output in manufacturing. Competition in the food and beverage industry is intense and
primarily based on product quality, brand recognition, brand loyalty, service, marketing, advertising,
price, availability of products and the ability to get its product widely distributed. Competition among
these rival firms varies by country and product category. However, for purposes of this paper it will
only focus on the rivalry of the firms producing locally and encroached only with respect to their
competition in food and beverage Substantial advertising and promotional expenditures are
required to maintain or improve a brands market position or to introduce a new product as can be
viewed in the above list of competitors. With many number of key players in the industry the target
market is one important to consider significant fluctuation that includes their movements,
preferences, ad developments such recent or current trends from time to time. As evidently shown
in the economic developments section of this paper, consumers nowadays desire convenience
which primarily influences product development and promotion. With the rival firms brand
positioning it is imperative that they develop and introduce brands from time to time. However this
would also depend on the marketing and advertising of these firms. Most firms spend marketing

28 | P a g e
 strategies widening their distribution channels such as retailers and wholesalers. Nowadays, there
is a growing developments among these distribution channels hence the firms are also watchful of
their competitive channels of distribution as there is an adverse effect on both ends. Above all, the
competition in the industry is strong mainly because of the growing trends of consumer preferences
and the introduction together with position of the products in the market all roots back that food and
beverage industry is one of the most essential industry in the country.
B. Threat of substitute products MODERATE
Players in the industry have almost the same products and line of segments and business hence
products could be substituted based on consumer preferences and trends and other variables. The
high performance among the substitutes alarms certain producers to introduce more products in
the market. Dominants in the market are being imitated either in their packaging or recipe.
However, it is a determinant when it comes to consumers substitution decisions. Significantly,
player in the industry compete based on product packaging, recipe and quality. Filipino families
spend almost 5,000 pesos of their monthly income from purchasing grocery items hence a
potential market for the key players. Products from companies already established in the market
makes switching cost low because of brand loyalty dominating the consumers buying decisions.
Since most manufacturers makes their products available among the distribution channels hence
makes substitutes highly available. Producers diversify their channels of distribution to make their
products readily available to the consumers. They widen their networks and grab the latest
technological breakthroughs in order to make products readily available.
C. Bargaining power of consumers WEAK
Consumers are among the top priorities of food and beverage producers. Bargaining power of
consumers are determined based on the packaging, location and recipe of the product. These
factors establish product loyalty and strong buyer preference. In the industry, the products are
almost the same and switching costs nothing for the consumers. In addition to this is the high
accessibility of product information from the internet, websites and in most cases stems from the
high availability of the products. Almost everywhere in the distribution channels of the key players
substitutes are available also. It depends upon the consumer preference. However, more than
these are the core essentials of determining bargaining powers namely: packaging, location and
recipe. There is a weak bargaining power among the consumers because despite same product
segments and lines, are diversified and unique packaging and ingredients of the products. The
industry key players compete in product innovations and developments because there is a high
tendency of product loyalty. However, this may vary when consumers preference trends affect their
actual purchasing power.
D. Bargaining power of suppliers WEAK

29 | P a g e
 Almost all resources in manufacturing the products in the industry come from agriculture. However,
these companies acquire their own plants in order to have their own sources of raw materials.
Several producers have high overall supply from their own plants and producers of agricultural
segments hence do not affect production and manufacture of their products. This also increases
producers options in acquiring raw material thereby reducing the bargaining power of supplier. This
power is also weakened because of the low forward integration which limits suppliers control of the
producers supply chain. These external factors weaken suppliers influence on the company even
though some of them are moderately sized or large forms.
E. Barriers to entry MODERATE
There are factors which determines the moderate threat of new entry in the industry. These are low
switching cost, customer loyalty and high cost of brand development. New firms may threaten the
already established producers because consumers can easily shift from one company to another.
However, there is a moderate customer loyalty hence producers in the industry have a
corresponding level of protection form new entrants. Also, the cost of brand development is high
hence making it difficult for new entrants to directly compete against the players in the industry
especially those of strongest brands. With respect to product differentiation, there is a moderate
indication because products in the industry are diversified and there are corresponding consumer
level of loyalty. In addition to this is the consumer preferences and developments including
innovations that varies and changes from time to time. Government and legal requirements in
entering the business have long been highly indicated because of the many requirements to
establish a business.
4.2 Market Analysis
A. Market Segmentation

Table 11.

One of the ways to segment the market for processors and manufacturers, whose target market
are local wholesalers and
distributors especially groceries, is to
break down the establishment
population based on its size in terms of

distributor and wholesalers sector

then further break to its industry

30 | P a g e
 group by its geographic location. As provided in the data provided by the NSO, micro enterprises
comprise 91% of the total establishments while the rest are shared by small, medium and large
enterprises (SMLEs). Of the 77 thousand SMLEs, 28% is from Wholesale and Retail Trade
including Repair of Motorcycles and Motor Vehicles, 16% is form manufacturing, 15% from
Accommodation and Food Services and the rest are less than 10% each. In terms of geography,
43% of the SMLEs are in NCR, 12% in Region 4-A, 9% in Region VII and 30% in the rest of the
regions.
4.3 Competitor Analysis
Universal Robina Corporation operates both locally and in the international markets. It is highly
competitive and competition varies by country and product category. With respect to this papers it
will only conduct study in the operation of the business in the Philippines and only with its branded
consumer segments in relation to its competitors. Hence the matrix below summarizes the
competitor analysis of URC and its competitors.
Universal Robina Corporations critical success factors
A. Global Expansion
In 2000, the company began to expand its branded consumer foods business more aggressively into
other Asian Markets primarily its subsidiary, URC International and its subsidiaries in China: Shanghai
Peggy Foods Co. Ltd., Guangzhou Peggy Foods Co., Ltd., and URC Hongkong Co. Ltd.; in Malaysia:
URC Snack Foods (Malaysia) Sdn. Bhd. and Ricellent Sdn. Bhd.; in Thailand: URC (Thailand) Co.
Ltd.; in Singapore: URC Foods (Singapore) Pte. Ltd.: Acesfood Network Pte, Ltd. in 2007 and
Advanson International Pte, Ltd. in 2008; in Indonesia: PT URC Indonesia; in Vietnam: URC Vietnam
Company Ltd. in 2006, URC Hanoi Company, Ltd. in 2009 and URC Central Co. Ltd. in 2013; and in
Myanmar: URC (Myanmar) Co. Ltd in 2013. The Asian operations contributed about 23.3% of the
Companys revenues for the fiscal year ended September 30, 2015.
B. Product innovation and quality
This fiscal year alone, the companys Philippines branded consumer foods has introduced 79 new
products which contributed to sales growth. In particular, URC launched Jack n Jill as a master
umbrella brand for all its snack food products in order to enhance customer recognition. Also, according
to the Euromonitor, URC is the leader in packaged food in 2015 derived from its wide product portfolio,
which targets mainly mass consumers.

C. Distribution, sales and marketing

The companys BCFP are distributed to approximately 120,000 outlets in the Philippines and sold out
through its direct sales force and regional distributors. 15 to 30 day credit terms are extended to
wholesalers, supermarkets and regional distributors.
D. Price competitiveness

31 | P a g e
 Being one of the market leader in the industry, it is undoubtedly competitive in its price competition to
others. Also, the company own plants for the production of its products hence coming up with a price for
its products moderately acceptable to the other competitors.

Table 10.

E. Financial position
URCs financial position remains healthy with strong cash levels. The company is in net debt position of
8.595 billion pesos this year against net cash position of 1.834 billion pesos last year 2015 due to
availment of long-term debt for Griffin acquisition. The following are some of its material changes in the
2015 financial statements: 18.1 percent increase in sales of goods and services, 15.3 percent in cost of
sales and other.
F. Customer loyalty
None of the Companys businesses is dependent upon a single customer or a few customers that a
loss of anyone of them would have a material adverse effect on the Company. The Company
has no single customer that, based upon existing orders, will account for 20.0% or more of the
Companys total sale of goods and services.
G. Market share
The principal market for URCs common equity is the Philippine Stock Exchange. As of March 17, 2016
at 3:20 PM the traded price is at 203.27 pesos, with outstanding shares of 2,181,501,933 pesos. The
listed and issued shares is 2,227,638,933 billion. The number of shareholders as of this date is
approximately 1,042.

32 | P a g e
 Universal Robina Nestle Philippines Inc. Del Monte Philippines
Corp.
FACTORS WEIGHT RATING SCORE RATING SCORE RATING SCORE
Global expansion 0.15 4 0.60 4 0.60 2 0.30
Product innovation 0.25 3 0.75 4 1.0 3 0.75
and quality
Distribution, sales 0.05 3 0.15 4 0.20 3 0.15
and marketing
Price 0.10 3 0.30 3 0.30 2 0.10
competitiveness
Financial position 0.10 2 0.20 4 0.40 3 0.30
Customer loyalty 0.20 3 0.60 3 0.60 4 0.80
Market share 0.15 2 0.30 4 0.60 2 0.30
Total 1.0 2.9 3.7 2.7
Note: the ratings values are as follows: 1=major weakness, 2=minor weakness, 3=minor weakness, 4=major strength

Based on the Critical Success Factors Ratings, Nestle has the competitive advantage over Del Monte and URC and other
key competitors. Its competitive advantage has allowed Nestle to be the leader in market share in the income segment.
Nestls strength over the rest of the companies is the area of Global Expansion, Product Innovation and quality,
Distribution, Sales and Marketing and Price Competitiveness. It has the modest ratings in customer loyalty and price
competitiveness.

4.4 External Factors Evaluation

A. Opportunities and Importance Weight
O1. Forecasted downsizing of the consumer prices in the emerging and developing market
from 0.5 percent to 0.1 percent only in the year 2016 and 2017 respectively. (Macro
Economic); Weight 20%
Over the years the consumer prices in the Philippines hurdled so long that the demand for
rescaling is highly needed. If consumer prices would go down then the industry would have to
increase product differentiation and development because by then there would be stronger rivalry
among firms. For URC, a 0.1 growth would mean greater propensity of consumer population and
amounts to bigger cost of sales. However, it must still look to the adverse effect if all kinds of
commodities would price down then would create a stronger market rivalries.
O2. Families in NCR spend more on food which consisted of 36.5 percent of their total
expenditure (Macro-economic); weight 10%
Although it is already given that Filipino families would prioritize food in their monthly expenditure
especially in their daily affairs. If among these foods there is a 10% consumption on the packaged
food and beverage products such as URCs, it would generate an income for the company
especially so if it maintains brand loyalty.

33 | P a g e
 O3. Filipino shoppers spending on food items from groceries grew by 13% (Macro-
economic); Weight 15%
Nowadays, Filipino families would spend a lot of money to dine outside hence it would be an
opportunity also to spend money on processed foods. As for the URC, if 5% of the food items
comprised of processed foods produced by the company t would be favourable to its revenue
especially when influenced by brand loyalty.
O4. Real GDP will grow by about 6.5% per year (Macro-economic); Weight 10%
Historically, GDP growth shows a corresponding market growth. It is very conservative already to
target at least growth equal to GDP. Hence when the GDP grows that would translate also to
industry growth. When the market grows the companies revolving around it also grown hence this
must be a concern of URC.
O5. In the first half of 2015, among the major economies in the region, the only countries to
accelerate their quarterly growth rates were the Philippines, from 5 to 5.6 percent, and
Vietnam (Macro-economic); Weight 10%
This would mean that as for the industrys market share in the economic growth there is an
improvement and would mean more investments. Although this happened in 2015, nowhere in the
market that one could not see the potential growth in the future. As for the URC, although the
international segments of the company are not of primary concern, its international operations
might attract investors from other countries to come invest in the Philippines. This would greatly
affect market leadership of the company more aggressive than usual.
O6. Modern grocery retailers remain the key distribution channel for packaged food (Macro-
Economic); Weight 15%
With the 13% increase in consumer spending in grocery items, do doubt that grocery retailers are
the key distribution channel for packaged food. As for the URC, this would mean maintaining
relationship with its distribution channels.

B. Threats and Importance weight

T1. Consistent government intervention and dominance (Macro-Political, Legal and
Governmental); Weight 5%
Over the years one of the problems that challenges investors form other countries to invest in the
Philippines is the 60%-40% agreement enshrined in the Philippines constitution. Hence as to the
company even if it expands its line of production abroad government would still intervene even to
the smallest kind of operation. More than this are the regulations that the government imposes
because it is imperative for the countrys nation building however adverse to its true purpose when
politics tramples in.
T2. Filipinos were more cautious in spending their moneyand more keen on saving it
(Macro-Demographics); Weight 10%

34 | P a g e
 When the behaviour of Filipinos towards buying would affect the industry especially when buyer
propensity is required. As for the URC it would affect the companys operation in all factors since
buyer preferences towards saving is unstoppable unless prevented. The company may have to
take cognizance of the changing trends of the consumer preferences.
T3. Food and beverage industry executives see technology as the greatest driver of future
growth (Macro-technology); Weight 5%
Technology affects almost all kinds of operations nowadays. It connotes better delivery of goods
and services and easier access to anything. Future growth of URC would require technological
aspect hence greater demand for investment on technology in order to compete consistently with
key players in the market. Unless technology would not essentially affect the company then it
would not be of great importance to the company.

EFE MATRIX

Opportunities Weight Rating Weighted Score

1. Downsizing of the consumer prices 20% 3 0.60
2. Families in NCR spend more on food 10% 3 0.30
3. Growth of Filipino shoppers spending on grocery 15% 4 0.60
food items
4. Real GDP will grow by about 6.5% per year 10% 3 0.30
5. Economic growth of the Philippines in 2013 10% 3 0.30
6. Modern grocery retailers remain the key distribution 15% 4 0.60
channel for packaged food
Threats
1. Consistent government intervention and dominance 5% 2 0.10
2. Filipino attitudes toward spending 10% 2 0.20
3. Technology as the greatest driver of future growth 5% 3 0.10
TOTAL 100% 3.1
Note: the ratings values are as follows: 1=response is poor, 2=response is average, 3=response is above average,
4=response is superior
URC registered an EFE rating of 3.1 in terms of responsiveness to external environment. In terms of responsiveness to
the external threat, URC gathered a rating of 0.4 being the highest level of responsiveness to the threat. It means that
URC can respond to the threat of existing several substitutes and in the key factors in maintain position in the industry. In
terms of its responsiveness to the external opportunities, it earned a rating of 2.4 being the highest level of
responsiveness to the opportunity as well. In is indicative that URC effectively responds to the external opportunities.

5. Company Analysis
5.1 Company Internal Audit
The mission of Corporate Internal Audit of the Company is to provide independent and objective assurance
within the Corporation, designed to add value and improve the Corporations operations. It helps the Corporation
accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the

35 | P a g e
 effectiveness of risk management, control and governance processes. The Corporate Internal Audit shall be
solely responsible for the planning, implementation, and reporting of the internal audits.
Resource based view
A. Physical Resources
Universal Robina Corporation is financially healthy to support the business. With its financial capability, the
company can invest in different areas that it could to gain profit. It has its own plant and equipment where money
is not a problem for the company to sustain. URC choose to invest in equipment and machines as its own to
incur less cost on its part. It is strategically located all over the Philippines. This is considered as one of the
strengths of URC. It extends to different cities in the country and in abroad.
A wide variety of raw materials are required in the manufacture of the Companys food products, including corn,
wheat, flour, sugar, robust coffee beans, palm oil and cocoa powder. Some of which are purchased domestically
and some of which the Company imports. The Company also obtains a major portion of its raw materials from its
agro-industrial and commodity food products segments, such as flour and sugar, and flexible packaging
materials from wholly owned subsidiary, CFC Clubhouse Property, Inc. A portion of flexible packaging material
requirements is also purchased both locally and from abroad (Vietnam and Indonesia), while Tetra-pak
packaging is purchased entirely from Singapore.
The Companys policy is to maintain a number of suppliers for its raw and packaging materials to ensure a
steady supply of quality materials at competitive prices. However, the prices paid for raw materials generally
reflect external factors such as weather conditions, commodity market fluctuations, currency fluctuations and the
effects of government agricultural programs. The Company believes that alternative sources of supply of the raw
materials that it uses are readily available. The Companys policy is to maintain approximately 30 to 90 days of
inventory.
B. Human Resources
As of September 30, 2015, the number of permanent full employees engaged in the Companys respective
businesses is 12,260 and are deployed as follows:

Business Company or Division Number

Branded consumer foods BCF, Packaging Division, CCPI, URCI, 9,778
URCCCI, NURC, HURC, CURC and
DURBI
Agro-industrial products:
Agribusiness Robina Farms 541
Products and veterinary compounds UCP and Robichem 337
Company food products:
URSUMCO, SONEDCO, CARSUMCO,
PASSI and Tolong
Sugar 1,140
Flour and pasta Flour 311
Bio-ethanol and renewable energy Distillery and cogeneration 153
12,260

36 | P a g e
At the same date, approximately 15,800 contractual and agency employees are engaged in the Companys businesses.
The Company does not anticipate any substantial increase in the number of its employees in fiscal 2016.

C. Organizational Culture and Resources

The Governance, Nomination and Election Committee shall be responsible for overseeing the development and
implementation of corporate governance principles and policies and ensuring that the nomination and election of
new members of the Board is transparent with the end objective of having the Board increase shareholder value
and aligned with the Corporations strategic direction.
D. Management
The Board of Directors (the Board) represents the shareholders interests in its objective to continuously
improve the value of the Corporation and to achieve a successful and long-term business. The Board believes
that it has to be actively responsible to ensure that the Corporation is properly managed to attain this result. In
addition to fulfilling its obligations for increased shareholder value, the Board has responsibility to other
stakeholders as well customers, employees, suppliers, financiers, government, business partners, and to the
communities and environment it operates in, all of whom are important to a successful business. The Board of
Directors is primarily responsible for the governance of the Corporation. Corollary to setting the policies for the
accomplishment of the corporate objectives, it shall provide an independent check on Management.
The Board and Management of the Corporation commit themselves to the principles and best practices as
contained in their Corporate Governance Manual. The Board and Management, employees, and shareholders
believe that corporate governance is a necessary component of what constitutes sound business management
and will therefore undertake every effort necessary to create and strengthen awareness within the organization.
The rules embodied in the manual shall be used as reference by the member of the Board and Management.
This Manual shall be made available for inspection by any shareholder at reasonable hours on business days.
Management Officers shall receive appropriate orientation on his duties as a management executive and how to
discharge these duties when he is first appointed to the Corporation. This would ensure that incoming Senior
Management Officers are familiar with the Corporations business and governance processes. Each director or
key officer shall be required to attend a yearly corporate governance training another continuous professional
education programmes in accordance with the rules and regulations of the Commission. A director or key officer
who was exempted from attending the yearly corporate governance training shall present proof of such
exemption.
E. Marketing
E.1 Customer
None of the Companys businesses is dependent upon a single customer or a few customers that a loss of
anyone of them would have a material adverse effect on the Company. The Company has no single
customer that, based upon existing orders, will account for 20.0% or more of the Companys total sale of goods
and services.

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 E.2 Distribution and sales
The Company has developed an effective nationwide distribution chain and sales network that it believes provide
its competitive advantage. The Company sells its branded food products primarily to supermarkets, as
well as directly to top wholesalers, large convenience stores, large scale trading companies and regional
distributors, which in turn sell its products to other small retailers and down line markets. The Companys
branded consumer food products are distributed to approximately 120,000 outlets in the Philippines and
sold through its direct sales force and regional distributors. URC intends to enlarge its distribution network
coverage in the Philippines by increasing the number of retail outlets that its sales force and distributors directly
service.
The branded consumer food products are generally sold by the Company from salesmen to wholesalers or
supermarkets, and regional distributors to small retail outlets. 15 to 30 day credit terms are extended to
wholesalers, supermarkets and regional distributors. The Company believes that its emphasis on marketing,
product innovation and quality, and strong brand equity has played a key role in its success in achieving leading
market shares in the different categories where it competes. In particular, URC launched Jack n Jill as a
master umbrella brand for all its snack food products in order to enhance customer recognition. URC devotes
significant expenditures to support advertising and branding to differentiate its products and further expand
market share both in the Philippines and in its overseas markets, including funding for advertising campaigns
such as television commercials and radio and print advertisements, as well as promotions for new product
launches.

E.3 Enhancement and Development of New Products

The Company intends to continuously introduce innovative new products, product variants and line extensions in
the snack foods (snacks, biscuits, candies, chocolates and bakery), beverage and grocery (instant noodles and
tomato-based) products. This fiscal year alone, the Companys Philippines Branded Consumer Foods has
introduced 41 new products, which contributed to sales growth. The Company supports the rapid growth of the
business through line expansion, construction and acquisition of plants. In 2013, the Company acquired a plant
facility in San Pedro, Laguna to further enhance its production and warehouse capacities.
F. Production
A wide variety of raw materials are required in the manufacture of the Companys food products, including corn,
wheat, flour, sugar, robust coffee beans, palm oil and cocoa powder. Some of which are purchased domestically
and some of which the Company imports. The Company also obtains a major portion of its raw materials from
its agro-industrial and commodity food products segments, such as flour and sugar, and flexible packaging
materials from wholly owned subsidiary, CFC Clubhouse Property, Inc. A portion of flexible packaging material
requirements is also purchased both locally and from abroad (Vietnam and Indonesia), while Tetra-pak
packaging is purchased entirely from Singapore. For its feeds segment, the Company requires a variety of raw
materials, including corn grains, soya beans and meals, feed-wheat grains, wheat bran, wheat pollard, soya

38 | P a g e
 seeds, rice bran, copra meal and fish meal. The Company purchases corn locally from corn traders and imports
feed-wheat from suppliers in China, North America, and Europe. Likewise, soya seeds are imported by the
Company from the USA. For its animal health products, the Company requires a variety of antibiotics and
vitamins, which it acquires from suppliers in Europe and Asia. The Company maintains approximately two
months physical inventory and one month in-transit inventory for its imported raw materials.
For its hog business, the Company requires a variety of raw materials, primarily imported breeding stocks or
semen. For its poultry business, the Company purchases the parent stock for its layer chicks from Hendrix
Genetics of France and Hyline from USA. The Company purchases vaccines from various suppliers, including
Merial, Intervet Philippines, Inc. (through authorized local distributor Castle Marketing and Vetaide Inc.) and
Boehringer Ingelheim GmbH and Ceva. Robina Farms obtainall of the feeds it requires from its UCP division
and substantially all of the minerals and antibiotics from its Robichem division as part of the vertical integration.
The Company purchases vaccines, medications and nutritional products from a variety of suppliers based on the
values of their products. The Company obtains sugar cane from local farmers. Competition for sugar cane
supply is very intense and is a critical success factor for its sugar business. Additional material requirements for
the sugar cane milling process are either purchased locally or imported. The Company generally purchases
wheat, the principal raw material for its flour milling and pasta business, from suppliers in the United States,
Canada and Australia. The Companys policy is to maintain a number of suppliers for its raw and packaging
materials to ensure a steady supply of quality materials at competitive prices. However, the prices paid for raw
materials generally reflect external factors such as weather conditions, commodity market fluctuations, currency
fluctuations and the effects of government agricultural programs. The Company believes that alternative sources
of supply of the raw materials that it uses are readily available. The Companys policy is to maintain
approximately 30 to 90 days of inventory.
G. Research and Development
The Company develops new products and variants of existing product lines, researches new processes and
tests new equipment on a regular basis in order to maintain and improve the quality of the Companys food
products. In Philippine operations alone, about P =43 million was spent for research and development activities
for fiscal 2014 and approximately P =37 million and P =43 million for fiscals 2013 and 2012, respectively.
The Company has research and development staff for its branded consumer foods and packaging divisions of
approximately 103 people located in its research and development facility in Metro Manila. The Company also
has research and development staff in each of its manufacturing facilities.
In addition, the Company hires experts from all over the world to assist its research and development staff. The
Company conducts extensive research and development for new products, line extensions for existing products
and for improved production, quality control and packaging as well as customising products to meet the local
needs and tastes in the international markets. The Companys commodity foods segment also utilises this
research and development facility to improve their production and quality control. The Company also strives to
capitalize on its existing joint ventures to effect technology transfers.

39 | P a g e
 The Company has a dedicated research and development team for its agro-industrial business that continually
explores advancements in feeds, breeding and farming technology. The Company regularly conducts market
research and farm-test for all of its products. As a policy, no commercial product is released if it was not tested
and used in Robina Farms.
H. Management Information System
URC established an Internal Audit System that can reasonably assure the board, management, and
stockholders that its key organizational and operational controls are faithfully complied with. URC has a
mechanism in place, allowing employees, suppliers, and other stakeholders to raise valid issues. The Chief
Executive Officer and Chief Audit Executive executes annually a written attestation that a sound internal audit,
control and compliance system is in place and working effectively. The attestation is presented by the Chief Audit
Executive during the Audit Committee meeting.
The Audit Committee provides an independent and objective assurance to the Corporations stakeholders for the
continuous improvement of risk management systems, internal control systems, governance processes,
business operations, and proper safeguarding and use of the Corporations resources and assets.
URC has a formal risk management policy that guides URCs risk management and compliance processes and
procedures. The company will seek external technical support in risk management when such competence is not
available internally. URC has a formal risk management policy that guides URCs risk management and
compliance processes and procedures.
The Companys Audit Committee evaluates and determines the non-audit work, review periodically the non-audit
fees paid to the External Auditor in relation to their significance to the companys overall consultancy expenses.

5.2 Key Financial Ratio Analysis

Financial and accounting analysis is used to know the firms competitive position and overall
attractiveness to investors. It determines an organizations financial strengths and weaknesses. The
functions of finance or accounting comprise three decisions: the investment decision, the
financing decision and the dividend decision. Hence from the financial statement of the company as
filed in the Securities and Exchange Commission the following are the financial ratios of the company.

A. Liquidity Ratio

Current Ratio

The current ratio measures the firms ability to meet its short-term obligations with its short-term assets. With a
high current ratio, there is a higher ability of a firm to meet its short-term obligations. This ratio is
obtained by dividing the "Total Current Assets" of URC by its "Total Current Liabilities". The ratio is regarded
as a test of liquidity for the company. It expresses the working capital relationship of the current assets
available to meet the company's current obligations. Liquidity is an essential character of any organization, and
the Company, including the Group as a whole, should indicate acceptable levels of liquidity. The initial test of
liquidity is the current ratio, which will display a companys ability to satisfy current obligations with current

40 | P a g e
 resources. Current ratio is arrived by dividing the current assets over the current liabilities. The Company uses
this test and compares it with industry balances to determine its ability to satisfy current obligations with
respect to its competitors.
This means that in 2015, URC had a strong financial position in the market and that it has sufficient liquid assets
to maintain its operations. This indicates the company is financially stable and health with an increase of 0.05
from the previous year.

2015 2014
Current Assets P21,905,667 P19,298,379
Current Liabilities P13,867,351 P13,166,619
2.35:1 2.30:1
B. Solvency Ratio

Leverage ratios measure the extent to which a firm has been financed by debt. It is used to compute
the financial leverage of the firm to get an idea of the companys ways to finance and meet its financial
obligations. Leverage ratios are used to measure a companys operating costs and how will it affect the
operating costs from the company and the industry. The leverage ratios are debt to total assets
and debt to equity ratios.

Gearing Ratio

The gearing ratio is a general term describing a financial ratio that compares some form of owner's equity (or capital) to
borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are
funded by owner's funds versus creditor's funds. By getting this, total financial deb which includes short-term debt, trust
2015 2014
Total financial debt P28,812,870 P28,569,687
Total equity P68,671,336 P65,264,937
0.42:1 0.42:1
receipts and acceptances payable and long-term debt including current portion) divided to total equity which includes
equity holders and non-controlling assets).

This means that the financial debt of the company remains at its stable position. Hence no great effect on the companys
financial stability.

Debt to equity ratio

The company tests its financial position through the debtto equity ratio. This test indicates the companys ownership of
creditors vs. Owners/investors. In addition, debt to equity ratio maintenance is a requirement set by creditors as a
standard for extending credit. Debt to equity ratio is computed by dividing the total liabilities over total equity.The ratio

41 | P a g e
measures how the company is leveraging its debt against the capital employed by its owners. If the liabilities exceed the
net worth, the creditors have more stake than the shareowners.

2015 2014
Total debts P45,722,529 P42,581,581
Total Stockholders Equity P68,671,336 P65,264,937
0.71:1 0.69:1

Asset to equity ratio

The asset/equity ratio shows the relationship of the total assets of the firm to the portion owned by shareholders. This
ratio is an indicator of the companys leverage (debt) used to finance the firm. This is from dividing total assets over total
equity.

2015 2014
Total assets P117,375,275 P110,747,081
Total Equity P68,817,987 P65,359,628
1.71:1 1.69:1

C. Profitability

Profitability Ratios show how successful a company is in terms of generating returns or profits on the Investment
that it has made in the business. If a business is liquid and efficient it should also be profitable.

Operating Margin

The operating profit margin measures the profitability of the firm without concern for taxes and interest. It shows how
much cash is thrown off after most of the expenses are met. It identifies whether the company has good cost control or
that sales are increasing faster than the costs.

2015 2014
Operating income P5,142,035 P4,427,168
Sale of goods and services P29,986,881 P26,951,161
17.2% 16.4 %

According to URC financial statements, its operating profit margin ratio states that the company is profitable from 16.4%
in the year 2014 until it increased to 17.2% in the year 2015. URC has high operating profit margin in 2015, with 17.2%
which means that it has good cost control and that its sales are increasing faster than it occur costs.

Earnings per share

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In getting this, net income attributable to equity holders of the parent over weighted number of common shares. Earnings
per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per
share serves as an indicator of a company's profitability. When calculating, it is more accurate to use a weighted average
number of shares outstanding over the reporting term, because the number of shares outstanding can change over time.
However, data sources sometimes simplify the calculation by using the number of shares outstanding at the end of the
period

The earnings per share in 2014 is 1.24 pesos lower than 2.17 pesos in the year 2015 hence a good indication that the
company generates income from its subsidiaries abroad.

D. Leverage

Interest rate coverage ratio

The interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a company can pay interest
on outstanding debt. The interest coverage ratio may be calculated by dividing a company's earnings before interest and
taxes (EBIT) during a given period by the amount a company must pay in interest on its debts during the same period.

Interest rate coverage ratio of 2014 is 24.74 while only 21.05 in 2015 hence a good implication also that while there debts
due to the creditors the company is not negligent in paying its interests.

5.3 Internal Factor Evaluation Matrix

Key internal factors Weight Rating Weighted score

Strengths
1. URC generated sales growth by 14% 0.50 3 1.5
2. Branded consumer foods segment (BCFG) international sales 0.05 3 0.15
increased by 7.8%
3. URC has Audit and Nomination Committees 0.10 4 0.40
4. Strong financial position in the market 0.06 3 0.18
5. The company has funded non-contributory defined benefit 0.05 4 0.20
retirement plan for up to P147million in 2014
6. The companys operation in the Philippines, 43 million pesos 0.06 4 0.24
were spent on R&D activities
Weaknesses
1. The Company has invested about P218 million in wastewater 0.04 2 0.08
treatment in its
facilities in the Philippines
2. Majority of the Companys debt is denominated in foreign 0.08 1 0.08
currencies
3. Small capitalization in its developments 0.06 1 0.06
Total 1.0 2.89

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URC registered an IFE rating of 2.89 in terms of responsiveness to its internal environment. In terms of responsiveness to
strengths, URC gathered a rating of 2.67 with 4 being the highest level of responsiveness to the strength. In terms of
responsiveness to weaknesses, it earned a rating of 0.22 with 2 being the highest level of response to the weaknesses.

6. Strategy Formulation
To come up with strategies for the company, it is important to take a look first at the different matrixes. Here are
the following matrixes.
6.1 Strengths, Weaknesses, Opportunities and Threats (SWOT)

STRENGTHS
SO STRATEGIES OPPORTUNITIES
WO STRATEGIES
S1. URC generated sales growth by
SO1= S1 + O2 + O4 WO1= W2 +O1.
O5 Downsizing of the consumer
14%
Utilize the presence of adequate financial prices in thein market
emerging andtry to be a key
S2. Branded consumer foods resources
segment to take Maintain position industry and
an aggressive
(BCFG)position
increasedin inexpanding through
international sales vertical player in thedeveloping
industry countries
Market Development
integration S3. URC has
Integration Audit and Nomination
Strategy O2. Families in NCR spend more
SO2= S2 +Committees
O5 on food
S4. Strong financial position in the
Expansion to US industries or joint ventures to take O3. Growth of Filipino shoppers
market
advantage S5.
in introducing products spending on grocery food items
The company has into newnon-
funded geographic
areas Market Developments O4. Real GDP will grow by about
contributory defined benefit retirement
SO3= S3 +plan
O3 +forO6up to P147million in 2014 6.5% per year
S6. The
Gain monopoly in thecompanys
market withoperation
increasedineconomies
the SWOTof O5. Economic growth of the
scale andPhilippines,
provide 43 million
major pesos
competitive ANALYSIS
advantage. Philippines in 2013
Horizontal Inntegration O6. Modern grocery retailers
remain the key distribution
channel for packaged food
WEAKNESSESS
ST STRATEGIES THREATS
WT STRATEGIES
ST1= S5 + W1.
T1 The Company has invested about WT1= W2 +T1.
T2 Consistent government
P218 million
Increase employee in wastewater
population to gain treatment in
tax exemptions and intervention
Closing obsolete and dominance
factories, pruning product line, and
its the government Market Penetration
incentives from instituting T2. Filipino
expense attitudes
control toward
systems and profits
ST2= S4 + facilities
T3 in the Philippines spending
Retrenchment
W2. Majority breakthroughs
Invest on technological of the Companys debt isincrease
to further WT2= W3 +T3.
T2 +Technology
T3 as the greatest
denominated
market advantage in foreign
Product currencies
development driver ofproducts
Diverse unrelated future growth
that would not conform with
W3. Small capitalization in its buyer preferences - Diversification
developments

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 6.2 Strategic Position and Action Evaluation (SPACE) Matix

Internal analysis Rating External analysis Ratings

s
Financial position (FP) Rating: (worst) +1
to +6 (best) 1. 6
1. ROE: URC has ROE of 14.1% for 2015 2. 6
over 2014s 13.6% while competitors only
have only 8% average in 2014 and 9.2%
percent in 2015
2. Ease of Exit: URC has its own subsidiaries
and joint ventures abroad. It has even owned
shares of some companies abroad. The
customers, process, tools and systems for
these products are already in place. This
makes it attractive to potential acquirers who
want to enter these areas. Purchasing URC is
a quick way to enter that space.
Stability Position (SP) Rating: -1 (best) to
-7 (worst)
1. GDP growth and economic stability: -2
future market growth would be rapid as
more business are set up due to economic
activities. Real GDP will grow by about 6.5%
per year in the medium term.
2. Large number of establishments in the -2
Philippines: in 2011 alone there are more
than 820 thousand establishment all over
the Philippines. Among these
establishments are wholesalers, retailers
and contributors. Some of these
establishments are of big market share.
3. Global integration of procurement: There -1
is growing trend for an integrated global
procurement decision which makes global
positioning strategic in terms of capturing
global clients which also includes Filipino
companies going

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Total: 12 Total: -5
Average: 6 Average: -1.67

Competitive position (CP) Rating: -1 (best) Industry position (IP) Rating: +1 (worst)
to -6 (worst) to +6 (best)
1. Strength and sustainability of network -3 1. Profit potential- food and beverage 5
(global, institutional, personal): over the year, industry does not require huge capital
URCs marketing strategies have been investment in terms of fixed assets for the
dedicated to sustainability and thus inclined capital requirements imposed by the
with customer needs through times. This is a government. As such, profit potential is high.
testimony of the strength of its personal Based on 2011 experience and companies
relationship. However, this needs to be comprising 40% market share, net profit
backed up by more marketing activities to gain margin is averaging more than 15%.
more sustainability. -2
2. Range of product/market segments- the 2. Growth potential- as the food and 6
company has reached its network abroad beverage company grows driven by more
thereby causing the widening of its variety of economic activities, there is always
products. URCs brand consumer food opportunities for the investors to widen their
segments including their packaging division is product segments into those market
the largest segment contributing about 84.2% segments to which the investor could
of the revenues for the fiscal year 2015. operate.
3. Strategic location and market/sales reach: -3
URC has developed an effective nationwide
distribution chain and sales networks that it
believes to provide competitive advantage. It
sells its food products primarily to
supermarkets as well as directly to top
wholesalers, large convenience stores, large

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scale trading companies and regional
distributors which in turn sell their products to
small retailers and down line markets.

Total: -8 Total: 11
Average: -2.67 Average: 5.5

X- 4.33
Y-2.83

Conservative Aggressive

Defensive Competitive

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 X-

Y-

Based on the analysis, URC falls within the Aggressive profile quadrant. URC is in an excellent position to use its internal
strengths to take advantage of external opportunities, overcome internal weaknesses and avoid external threats. Feasible
strategies are market penetration, market strategies, product development, backward integration, forward integration,
horizontal integration, diversification, or a combination strategy. (David, 2009)

6.3 Boston Consulting Group (BCG) matrix

As mentioned earlier, the focus of this paper is the food and beverage industry which include branded consumer food
groups and packaging industry more specifically the snack foods of Universal Robina Corporation. Hence, the
following data and matrix show that market share and growth rate of Universal Robina Products.

DIVISION Sales % Sales Profits % Profits Relative Industry

(in millions) (in millions) Market Growth
Share Rate (%)
BCFG P24.680 83.95 P7.809 76.54 .80 +15
Packaging P0.315 1.05 P0.130 1.27 .10 +1
Agro- P2.287 7.63 P1.330 13.04 .60 +10
industrial
group
Commodity P2.270 7.57 P0.933 9.16 .40 -20
Foods
Group
TOTAL P29.987 100 P10.202 100 - -

HIG HIGH
MEDIUM

LOW

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 MEDIU

LOW

The matrix above shows that URC is on the Quadrant 2 which indicates that there is a high relative market share of URC
in a high growth industry considering that brand segments that it has and the market shares URC invest from it. This
suggests that it needs stable improvements and further innovations to remain its position in the market. Specifically, the
preferred strategies under this Quadrant are: Forward, Backward and Horizontal Integration, Market Penetration, Market
Development and Product Development.

6.4 Internal-External Matrix

From the table mentioned in the previous number as basis for the formulation of BCG matrix, said table will also be
used to determine the Internal-External Matrix.

DIVISION Sales % Profits % Relative Industry EFE IFE

(in Sales (in Profits Market Growth SCORE SCORES
millions) millions) Share Rate (%) S
BCFG P24.680 83.95 P7.809 76.54 .80 +15 4 3.8
Packaging P0.315 1.05 P0.130 1.27 .10 +1 3.3 2.9
Agro- P2.287 7.63 P1.330 13.04 .60 +10 3.8 3.5
industrial
group
Commodity P2.270 7.57 P0.933 9.16 .40 -20 3.7 3.2
Foods
Group
TOTAL P29.987 100 P10.202 100 - - - -

TOTAL IFE RATING 3.35

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 Strong (3.0-4.0) Average (2.0-2.99) Weak (1.0-1.99)

High (3.0-4.0)
I II QUADRANT I
III
Market development
QUADRANT II Market penetration TOTAL
Product development EFE
Medium (2.0-2.99)
IV V VI RATING
- 3.7

Low (1.0-1.99)
VII VIII IX STRONG
COMPETITVE
POSITION

From the QUADRANT III QUADRANT IV above

matrix, URC is in the first
cell. This indicates
that the internal and
external SLOW MARKET GROWTH factors that
affect the divisions are strong hence the strategies recommended for URC are Forward, Backward and Horizontal
Integration, Market Penetration, Market Development and Product Development. Those who are in the cell 1, 2 and 4 are
recommended to use thee Grow and Built Strategies. For cell number 3, 5 and 7 are recommended to use Hold and
Maintain Strategy while those in the cell number 6, 8 and 9 are recommended to use Harvest or Divest.

6.5 Grand Strategy Matrix

On this matrix there are two dimensions to look at, namely: competitive position and market growth. Since URC as
stated from the previous matrixes has a high competitive position in the market as it is the 4 th player among the top
20 Manufacturing Companies in the Food and Beverage Industry. Along with this is the annual growth rate of the
company that exceed 5% compared from the 2014 market growth.

RAPID MARKET GROWTH

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 WEAK
COMPETITVE
POSITION

Is evident that the above matrix shows that URC is in Quadrant I which means that it has excellent strategic position that
it should concentrate then on current markets or products most especially with its plan of expansion internationally. It also
suggests that URC should take risks aggressively when necessary.

7. Quantitative Strategic Planning Matrix

KEY EXTERNAL FACTORS WEIGHT MARKET MARKET PRODUCT
PENETRA- DEVELOP- DEVELOP-
TION MENT MENT
External Opportunities AS TAS AS TAS AS TAS
Downsizing of the consumer prices 0.20 4 0.80 3 0.60 1 0.20
Families in NCR spend more on food 0.10 4 0.40 4 0.40 4 0.40
Growth of Filipino shoppers spending on grocery food 0.15 3 0.45 4 0.60 4 0.60
items
Philippines Real GDP will grow by about 6.5% per 0.10 4 0.40 4 0.40 3 0.30
year
Economic Growth of the Philippines in 2013 0.10 1 0.10 3 0.30 2 0.20
Modern grocery retailers remain the key distribution 0.15 4 0.60 4 0.60 4 0.60
channel for packaged food

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 Threats
Consistent government intervention and dominance 0.05 2 0.10 2 0.20 3 0.15
Filipino attitudes toward spending 0.10 4 0.40 3 0.30 4 0.40
Technology as the greatest driver for future growth 0.05 4 0.60 4 0.20 4 0.20
KEY INTERNAL FACTORS
Internal Strengths
URC generated sales growth by 14% 0.50 4 0.20 4 2.0 4 2.0
Branded Consumer Food Segments (BCFG) of the 0.05 4 0.20 4 0.20 4 0.20
company in its international sales increased by 7.8%
URC has audit and nomination committees 0.10 - - 2 0.20 - -
Strong financial position in the market 0.06 4 0.24 4 0.24 3 0.18
The company has funded non-contributory defined 0.05 2 0.10 2 0.10 2 0.10
benefit retirement plan for up to P147million pesos in
2014
The companys operation in the Philippines, 43 million 0.06 4 0.24 3 0.18 4 0.24
pesos were spent on R&D activities
Internal Weaknesses
The company has invested to about 218 million pesos 0.04 4 0.16 3 0.12 3 0.12
in wastewater treatment facilities in the Philippines
Majority of the companys debts are denominated in 0.08 3 0.24 2 0.16 2 0.16
foreign currencies
Small capitalization in its developments 0.06 4 0.24 2 0.12 3 0.18
Total Attractiveness Score 2 5.47 6.89 6.23
Rating score: 4=highly attractive, 3=reasonable attractive, 2=somewhat attractive, 1=not attractive, 0=no relation

The three strategies listed in the matrix are Market Penetration, Market Development and Product Development. These
are the strategies accumulated from SWOT analysis and have been recommended by other strategies formulated from
other matrixes mentioned earlier. Based on the QSPM, it is evident that Market Development got the highest among
them.

8. Objectives and strategy recommendations

A. Strategy Objectives
From the abovementioned recommended Mission and Vision of the company, it is clear that it wants to become
the leading company in the snack foods industry. From the market analysis, it is on the fourth place among the
leading companies. The leading companies compete in different segments of the market. Hence the following
are the suggested strategies recommended for the company:

1. Invest in diverse markets using the existing products lines

This strategy enables the company to use their products in coping up with diverse markets. Being on the fourth
place in the market, the market opportunities for the company is limited as the big three or the leaders in the

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 market have popularity than URC. With its divers product segments it should try to reach out new markets for the
products of the company to be known.

2. Build bigger networks through reaching out to the grassroots

This enables the company to invest their products not only to the existing groceries but ultimately to the stores
built through self-proprietorship. These stores are indirectly the biggest market of the company. Expanding
abroad is a good move for the company but it should first build strong relationships to the grassroots of the
market which is the small enterprise.

3. Create a brand segment that caters natural food products

Nowadays, people are health conscious as stated from the PEST analysis of this paper. People not just buys
food products having the most convenience but most especially those foods that are healthiest. This should be a
move that the company should take into consideration. Food preferences of the people may vary in terms to
snack foods which the company offers that is why the company is advised to invest also in natural food products.
Building a reputation in food and beverage industry not only entails the convenience that one company can offer
but also building the trust and confidence of the customers.

B. Recommended Strategies

Market Penetration

In this strategy it suggests that the company should introduce new marketing and sales promotion and make
them engage in the products that the company offers. Through this strategy the firm can have an increased
market share and can be defensible against other competitors in the industry.

Product development

In developing product this strategy enable the company to increase the sales and entice the people to purchase
their products and services offered. It can also diversify and offer new set of products that could help the
prevention of substitute products entering the market.

Market Development

The firm needs to expand and introduce new products and services for people to engage and patronize their
products. They need to develop strategies to combat the hindrance that the market have and come up with a
good possible idea that could help the company reach the leadership in the industry.
9. Strategy Evaluation, Monitoring and Control

BALANCED SCORE CARD

Area of Objectives Measure or target Time expectation Primary responsibility
CUSTOMERS:
MARKET SHARE Increase the number of ALWAYS Marketing Manager, Sales

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 units sold by the end of the Manager, Finance and
year Accounting
CUSTOMER Increase the number of MONTHLY Marketing Manager, Sales
SATISFACTION returns by the end of the Manager, General Manager
year
CUSTOMER Reduce issues regarding MONTHLY Marketing Manager, Sales
SATISFACTION the products Manager, General Manager
MARKET SHARE Increase market share in ALWAYS Marketing Manager, Sales
the target market Manager, Finance and
Accounting
CUSTOMER Increase customer ALWAYS Marketing Manager, Sales
SATISFACTION satisfaction to the products Manager, General Manager
and services
FINANCIAL:
ASSET UTILIZATION Increase working capital by ALWAYS Finance, General Manager,
the end of the year Operating Manager
REVENUE GROWTH Increase profitability in the ALWAYS Finance, Marketing,
new customers by the end Operation
of the year
REVENUE GROWTH Quarterly growth of sales ALWAYS Finance, Sales Manager,
Operations, General
Manager
PROCESSES:
INNOVATION New development of ALWAYS Operations, Sales
products will be introduced Manager, Finance
in the grassroots market
OPERATION Purchase price on raw ALWAYS Sales Manager, Marketing
materials will be reduced Manager, Finance, and
Operations
EMPLOYEES:
EMPLOYEE Recognition of the top ALWAYS General Manager, Human
SATISFACTION employees for their Resource and Finance
achievement
EMPLOYEE Give incentives to ALWAYS General Manager, Human
SATISFACTION employees who is well Resource and Finance
dedicated in their jobs

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 List of Tables
TABLE 1. Global growth forecast by the International Monetary Fund
TABLE 2. Percentage Distribution of Families by Main Source of Income, Philippines and NCR: 2012
TABLE 3. Percentage Distribution of Families by Income Class, Philippines and NCR: 2012
TABLE 4. The Spending Habit of Filipinos
TABLE 5. Regional GDP Growth and Supply Side: Distribution to GDP Growth
TABLE 6. Industry Sector Growth: Supply and Demand Side
TABLE 7. Q1-2015 Nielsen Consumer Confidence Index
TABLE 8. Food and Beverage Industry Outlook Survey
TABLE 9. Top 20 Food and Beverage Manufacturers in the Philippines based on Gross Revenues
TABLE 10. Small, Medium and Large Enterprises by Sector and Region
TABLE 11. Historical URC Price Data

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 10. Appendix

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 11. Bibliography
A. www2.urc.com.ph

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 B. www.unversalrobina.com
C. Ehrich, Kristine R. and Julie R. Irwin (2005), Willful Ignorance in the Request for Product Attribute Information,
Journal of Marketing Research, 42 (August), 266-277.
D. Arcury, T. A. & Johnson, T. P. (1987). Public environmental knowledge: A statewide survey. Journal of
Environmental Education, 18(4), 31-37
E. Regulation of food and drugs in the Philippines.
F. Kintanar QL, Santero EC.
G. Kaohsiung J Med Sci. 1999;15 Suppl:S79-85.
H. http://www.lawphil.net/statutes/repacts/ra1992/ra_7394_1992.html
I. http://www.gov.ph/2013/08/23/republic-act-no-10611/
J. http://www.lawphil.net/statutes/repacts/ra2000/ra_8976_2000.html
K. http://www.lawphil.net/statutes/repacts/ra1963/ra_3720_1963.html
L. http://www.congress.gov.ph/download/basic_16/HB00743.pdf
M. http://www.congress.gov.ph/download/basic_16/HB00206.pdf
N. IMF, World Economic Outlook Update, January 2016

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