CHAPTER 4

EXTERNAL ANALYSIS

A. General Environment

A.1. Economic Forces

Economic forces refer to the nature and direction of the economy in which business operates.
Economic factors have a tremendous impact on business firms. The general state of the
economy (e.g., depression, recession, recovery, or prosperity), interest rate, stage of the
economic cycle, balance of payments, monetary policy, fiscal policy, are key variables in
corporate investment, employment, and pricing decisions.

Key economic findings Source

http://www.tradingeconomics.com/ph
1. Gross Domestic Product rate
ilippines/gdp-growth-annual
http://www.tradingeconomics.com/ph
2. Unemployment rate
ilippines/unemployment-rate#7
https://books.google.com.ph/books/a
bout/The_Economics_and_Financing_
3. Competition
of_Media_Com.html?id=Mch-
BprJej0C&redir_esc=y
https://books.google.com.ph/books/a
bout/The_Economics_and_Financing_
4. Audience demand
of_Media_Com.html?id=Mch-
BprJej0C&redir_esc=y

23
A.1.1. Gross Domestic Product (GDP) rate:

The Philippines economy grew an annual 6.3 percent in the December quarter of 2015,
accelerating from an upwardly revised 6.1 percent expansion in the previous three months and
above market consensus. It is the highest growth since the fourth quarter of last year, as all
sectors of the economy showed an expansion: household spending, investment and exports
expanded at a faster rate while government expenditure remained robust. For full year of 2015,
the GDP Growth came in at 5.8 percent, slowing from a 6.1 percent expansion in 2014.

Figure 4.1 GDP rate

A.1.2. Unemployment rate

Philippines unemployment rate fell to 5.7 percent in October of 2015, the lowest in the record,
and beating market forecasts of 6.5 percent. There were around 39.8 million employed, slightly
higher compared with 39.2 million in July this year. Unemployment Rate in Philippines is
reported by the National Statistics Office of Philippines.

24
 Figure 4.2 Unemployment rate

A.1.3. Competition

Situations in which there are multiple media units help to produce benefits for audiences &
advertisers. The competition process is one in which one competitor takes an action, & then
other competitors in the market respond, inducing a reaction by the initial competitor, which
results in responses by other competitors. It is this process that produces lower prices,
innovations, new features, & other changes in products & services that benefit consumers.

Figure 4.3 Competition process

25
A.1.4. Audience demand
Demand is affected by the amount of media already available. Each additional unit of a medium
& each additional medium available reduce demand for individual units of a medium. As the
number of channels of communications increase the number of choices rise & individuals
behaviors diverge, thus reducing demand for specific media units.
Figure 4.4 Demand from audience share

Table 4.5 Analysis of Economic forces

Analysis of the Economic Forces

There is a continuing trend among the stated economic forces that
undeniably affecting the chosen industry. Rival broadcasting firms
Monitoring will take advantage of the growth in GDP in giving their viewers
quality services.

The economic forces, under the GDP & unemployment rates, firms
Forecasting in the chosen industry may lead to shift in different policies
evolving in the firm. The competition & audience demand may lead

26
 to an intense rivalry w/ extra-necessary expenses. These forces are
projected to materialize in no less than a year.

Opportunities:
O1. Continuing rise in the GDP rate under the present
administration.
- The seemingly unstoppable sustained growth in the
Philippine economy since 2010 attracts further expenses
that could maximize the industrys reach towards the
audience & therefore increase their assets. Moreover, this
may attract local investments as the rising GDP rate may
translate to increase in a firms earnings.

O2. Audience demand

- This opportunity means the growing number of viewers
that is now spending more time observing & looking into
Assessment
the services offered by the media sector. This could in turn
increase the ratings of a certain firm in share of viewership.

Threats:
T1. Unemployment rate
- Unemployment rate means no source of income
substantially. Without the earnings, it is expected to negate
household expenses that may prejudice the use of
televisions as one of primary sources of entertainment &
leisure among Filipino families.

T2. Competition
- Rivalries among media firms would mean chunk of shares

27
 together w/ competing companies as regards viewership.
This may slow down the forecast growth in the firms
projected earnings or worse, will lead to a decline or loss.

A.2. Social, natural, demographic, & natural environment forces.

Social forces include traditions, values, societal trends, consumer psychology, and a society's
expectations of business. Social forces are often most important because of their effect on
people's behaviour. For an organization to survive, the product or service must be wanted, thus
consumer behaviour is considered as a separate environmental behaviour. Behaviour factors
also affect organisations internally, that is, the employees and management.

Key socio-demographic findings Source

http://lirne.net/resources/netknowledge/tre
1. Cultural diversity
mblay.pdf
http://papers.ssrn.com/sol3/papers.cfm?abstr
2. Social responsibility
act_id=2712239
http://www.academia.edu/741968/MEDIA_TI
ME_VS_ACTIVE_TIME_LEISURE_TIME_AMON
3. Leisure
G_THE_YOUTH_IN_DISADVANTAGED_COMM
UNITY
http://www.accountingweb.com/technology/t
4. Urbanization rends/top-20-lifestyle-trends-affecting-global-
business

A.2.1. Cultural diversity

Culture is vital to democratic life where the major arena remains the nation state. Democracy is
government for the people by the people, as represented in popular texts. It is a one man,

28
one vote formula. But true democracy must also include one person, one voice. And to
achieve that, a society must care about its cultural and communication system in order to
guarantee equality in access to information and the possibility of expression. This is true for
news and for norms and values, and opinions and ideas.

A.2.2. Social Responsibility

Prior research suggests that the media plays an important information intermediary role in
capital markets. We investigate the role of the media in influencing firms engagement in
Corporate Social Responsibility (CSR) activities. We find strong evidence that firms engage in
more CSR activities if located in countries where the media has more freedom. This relation is
robust to using various proxies for media freedom and an alternative source of CSR data. In
additional analyses, we find that the positive relation between media freedom and CSR
engagement is stronger for better governed firms and for larger firms. Since the media have the
ability to impact reputational capital, we conclude that media freedom affects firms incentives
to engage in costly CSR activities.

A.2.3. Leisure

The time spent with different media had become their

main preoccupation as compared to the time they spent in physical activities. While television
and radio remained their favourite past time, surfing the internet is catching up as the second
most favourite media-time leisure hour activity. Disproving
the prevailing perception, this study reveals that spending moretime with the media is a good
deterrent to wean away the youth from antisocial behaviours.

A.2.4. Urbanization
The number of people living in urban areas has risen sharply in recent decades, from roughly 1
billion in 1960, to 3 billion now. Peoples lives change when they move from rural areas to

29
cities. They can do different work, increase their income, and encounter new social rules, ideas
and lifestyles. The fastest urban growth will occur in emerging and developing markets, driving
the creation of vast numbers of new customers.
Figure 4.6 Population growth in Urban areas

Source: UNICEF, NSO Census Data, and Human Settlement 2004-Philippines

Table 4.7 Analysis of Socio demographic forces

Analysis of the Socio - demographic Forces

In the above forces, ABS-CBN, GMA7, & TV5 are seemingly
currently adapting all the provided forces. With their main offices
Monitoring located in the metropolis, it addressed the urbanization. Similarly,
the three media firms are adopting social programs to further the
social responsibility they are carrying out for the public.
The three giant broadcasting firms are expected to intensify their
social programs in order for them to further increase viewership
Forecasting
shares that could lead in statistical tie as regards their ratings. This
may happen now or for at least a year.
Opportunities:
Assessment
O1. Implementing social programs may attract new audiences

30
 O2. More audience participation because of TV as preferred leisure
activities among many media platforms.
O3. With people migrating from rural to urban areas, these people
will become more aware of the services offered by the chosen firm.
Threats:
T1. Established broadcasting firms (ABS-CBN & GMA7) are offering
more appealing programs to the interests of the viewers.
T2. Cultural diversity may prefer different broadcasting medium by
which they feel more comfortable with.

A.3. Political, Governmental, & legal forces

Political-legal forces include the outcomes of elections, legislation, and court judgments, as well
as the decisions rendered by various commissions and agencies. The political sector of the
environment presents actual and potential restriction on the way an organization operates.
Among the most important government actions are: regulation, taxation, expenditure, takeover
(creating a crown corporation, and privatization). The differences among local, national, and
international subsectors of the political environment are often quite dramatic. Political
instability in some areas makes the very form of government subject to revolutionary changes.

Key political findings Source

http://www.kas.de/upload/Publikationen/200
1. Free Media coverage
8/dr_phillippines.pdf
https://www.researchgate.net/publication/22
8242228_Restriction_and_Rhetoric_A_Critiqu
2. Foreign ownership restriction e_of_the_Constitutional_Prohibition_Against_
Foreign_Ownership_in_Philippine_Mass_Medi
a
http://www.nscb.gov.ph/ncs/11thNCS/papers
3. Election season
/invited%20papers/ips-

31

4. Movie & Television Ratings &
Classification Board (MTRCB)
03/03_A%20Study%20on%20the%20Impact%
20of%20Election%20Spending%20on%20the%
20Philippine%20Economy.pdf
http://www.kas.de/upload/Publikationen/200
8/dr_phillippines.pdf

A.3.1 Free Media coverage

Freedom of the press and free media coverage are guaranteed under the 1987 constitution of
the Philippines. Section 4 of the Bill of Rights says, No law shall be passed abridging the
freedom of speech, of expression, or of the press, or the right of the people peaceably to
assemble and petition the government for redress of grievances. Section 7 provides people
with the right to information on matters of public concern, ensuring access to official records,
and to documents and papers pertaining to official acts, transactions, or decisions, as well as to
government research data used as basis for policy development... subject to such limitations as
may be provided by law.

A.3.2. Foreign ownership restriction

The reason behind the provision is obvious. Mass media are clothed with public interest.
They play a vital role in the national life, directly influencing the way people think and act. The
Constitution seeks to ensure that these institutions are free from foreign influence. Press
freedom would indeed be meaningless to Filipinos if those who exercise it are aliens, owing
loyalty to a foreign government.

A.3.3. Election season

The positive impact of elections appears to be not broad-based and has inherent bias for the
services sector. For the industry sector, the impacts are complementary in nature, where
impact to the manufacturing subsector appears to be limited but could have been higher, given
its strong linkages (backward and forward) in the economy.

32
 Figure 4.8 Election spending

A. 3.4. Movie & Television Ratings & Classification Board (MTRCB)

The Movie and Television Ratings and Classification Board (MTRCB) is a government body that
reviews programmes on television and movies, as well as publicity materials in print relating to

33
such shows. In May 2005, the MTRCB issued a circular memorandum requiring television public
affairs, news documentaries and similar programmes to submit their material to the board for
review before broadcast. Television newsrooms and media groups protested against the
memorandum, called it prior restraint, and branded it a suppression of TV news coverage. The
protests forced the MTRCB chair to revise the memorandum, specifying this time that the
board would review public affairs programmes only after they had been aired. The common
basis for government censorship and monitoring are security of the state, general welfare and
morality (pornography, obscenity, protection of minors, rape, private crimes). The Movie and
Television Review and Classification Board is a government agency that screens movies and
television programmes for public viewing.

Table 4.9 Analysis of Political, Legal, Governmental forces

Analysis of the Political, Legal, Governmental Forces

ABS-CBN, GMA7, & TV5 are implementing measures to ensure
Monitoring continued trust from viewers given the legal/political forces herein
set forth.
The three major private broadcasting stations in the Philippines are
Forecasting seen to boost their earnings over environmental factors nowadays
especially applying these forces.
Opportunities:
O1. The free media will let the firms in media sector to express &
develop further their core services namely the entertainment &
news factors.
O2. Election season means election spending. Candidates will then
Assessment
put chunks of their campaign funds in TV advertisements costing
millions of pesos that will boost the firms earnings for this year.
Threats:
T1. Media belongs to the Negative list provided under Foreign
Investments Act in accordance w/ foreign ownership restrictions.

34
 This will then prohibit the firms to import services coming from
international firms while the latter holding an interest in the media
sector.
T2. The censorship board (MTRCB) observes the programs of these
firms & regulates the same.

A4. Technological forces

Technological forces influence organizations in several ways. A technological innovation can

have a sudden and dramatic effect on the environment of a firm. First, technological
developments can significantly alter the demand for an organization's or industry's products or
services. Technological change can decimate existing businesses and even entire industries,
since its shifts demand from one product to another. Moreover, changes in technology can
affect a firm's operations as well its products and services.

Key technological findings Source

http://www.econtentmag.com/Articles/Colum
1. Social Media n/Social-Pulse/Social-Media-is-Mass-Media-
88315.htm
http://www.investopedia.com/articles/person
2. Smartphones al-finance/062315/how-smartphones-are-
changing-advertising-marketing.asp
https://books.google.com.ph/books?id=dzvg3
NmTCKkC&pg=PA291&lpg=PA291&dq=audio+
-+visual+technology+for+broadcasting-
3. Audio visual technology +studies+made&source=bl&ots=POb2rZcqSI&s
ig=7P1oYBy367atXOMtB9qnWE3hAwY&hl=en
&sa=X&ved=0ahUKEwjn6dvnp4nLAhXnFaYKH
UO_C8UQ6AEIRzAI#v=onepage&q=audio%20-

35
 %20visual%20technology%20for%20broadcast
ing-%20studies%20made&f=false
http://www.informationr.net/ir/11-
4. Internet usage
3/paper259.html

A.4.1. Social Media

The fact that social media is mass media has positive implications for marketers. It means that
there is less of a mystery to social media marketing than many marketers were previously led to
believe. It's now clear that, while the user experience in social media is indeed novel, the
ultimate aim of the advertiser remains the same as in mass media - namely to expand reach as
much as possible among existing and potential buyers. Furthermore, with the economics of
social media increasingly resembling those of traditional mass media, advertisers can be sure
that marketing opportunities will continue to expand across the social media landscape. In an
ironic twist social media, just as the traditional mass media that preceded it, appears to be
more a utopia for marketers than for users.
Figure 4.10 Digital in the Philippines

36
A.4.2. Smartphones
The mobile components of the global media market are booming. Global mobile advertising
rose 83.9 percent in 2013 & will increase by a projected 34.5 percent compounded annually
over the next five years. Three key trends are fueling this growth still increasing penetration of
tablets & smartphones, upgrades in wireless infrastructure that enable faster connectivity, &
continued growth in number of mobile applications. As people spend more of their time going
online to shop, be entertained, and seek out a variety of digital information platforms like
computers, tablets and mobile phones, the traditional forms of advertising and marketing such
as TV and print forms have been displaced. However, these new digital platforms are not
entirely equivalent. Smartphone usage will continue to grow and understanding how and when
consumers are using them is crucial for companies ad and marketing campaigns. As
smartphone data collection and analysis technology becomes more sophisticated, the speed
and relevance of ad and marketing campaigns will be significantly more important.

Figure 4.11Mobile/Smartphone activities

37
A.4.3. Audio Visual technology
Television technology presents interesting challenges for the workings of the art market, w/
digital technology eroding the uniqueness of the artistic work even further than still
photography. Others have used television to create webcam events, merging broadcasting w/
artistic concerns w/ time, process, biography, & exhibitionism to create a new category of
artistic experience.
Figure 4.12Traditional v. Digital spending

A.3.4. Internet usage

Online news and information usage at different usage levels is positively associated with the
use of traditional news and information sources, especially those that are more information-
intensive. Those who relied on the Internet the most for news and information still used
traditional sources substantially. The findings suggest that even if a displacement effect takes
place, there will be no replacement (absolute displacement): traditional media will still exist to
complement the Internet in serving human beings' news and information needs.

38
 Figure 4.13 Time spent on the internet

Table 4.14 Analysis of the Technological Forces

Analysis of the Technological Forces

As of now, the three giant broadcasting networks are equipped w/
Monitoring these technological devices to further their competitiveness as well
as to keep them on track of the playing field.
With the continuing advancement of technology, ABS CBN,
GMA7, & TV5 are likely to purchase any new or innovated
Forecasting technological equipment that would likely give them an edge over
competing firms. As soon as there is innovation, these firms will
immediately make available of these technologies.
Opportunities:
O1. Smartphones are now being relied on by many as the most
Assessment
convenient source of all information. TV5 can take advantage of
this as to how make this network accessible by means of a

39
 smartphone.
O2. Audio-visual technology satisfies viewership. On that premise,
TV5 could gear up their facilities, production, & equipment to
attract more audience.
Threats:
T1. The unstoppable rise of Social Media halves the attention of
potential viewers on broadcasting. Too much reliance on Social
Media could compromise the TV network because the time to
watch entertainment on watching TV are being put in Social Media
instead.
T2. Internet usage. Almost all can be found now on internet. By this
fact, TV5 will be having a difficulty in getting more viewers as
almost everything, including news, can be found on the internet.
Although, this threat can also be an opportunity as it is said that
internet & TV are complementary.

A5. Competitive forces

These are the forces that shape industries & economic sectors, which can be used to determine
the competitive strength or weakness of a company. Some competitive forces include the
threat of substitute products, the power of customers, the power of suppliers, the potential of
new competitors, & the current number of competing firms in the industry.

Key competitors Source

http://www.starmometer.com/2016/02/20/n
ational-tv-ratings-its-showtime-continues-to-
win-against-eat-bulaga/
1. ABS CBN primetime block
http://www.pep.ph/guide/agb/21312/agb-
nielsen-mega-manila-ratings-october-14-18-
2015-gma-7-dominates-noontime-block-

40
 while-abs-cbn-tele

http://www.philstar.com/business/2016/01/1
0/1540931/gma-dominates-2015-tv-ratings
http://tvnetworkwar.blogspot.com/
http://www.pep.ph/guide/agb/21312/agb-
2. GMA7 daytime/noontime shows
nielsen-mega-manila-ratings-october-14-18-
2015-gma-7-dominates-noontime-block-
while-abs-cbn-tele

A.5.1. ABS CBN

ABS CBN is currently strengthening its primetime block w/ the biggest stars &
personalities in the showbiz industry lining up to the firms stronghold. Likewise, the firm,
according to different audience market research companies, continues to rule the primetime
block gaining the highest audience share against GMA7 & TV5. However, rival GMA7 continues
to dominate the daytime to noontime shows according to AGB Nielsen, a research firm, though
ABS CBN continues to soar high according to Kantar media, another research firm. ABS CBN
is likely to strengthen their noontime show primarily Its Showtime offering different
segments to boost audience share. It is likely that this firm will revive their past successful
reality shows & talent-search programs like The Voice Kids showcasing the young bloods
singing talent & Pinoy Big Brother.

41
 Figure 4.15 ABS CBN audience share

A.5.2. GMA7

Noontime show is the stronghold of GMA7 during weekdays. According to two research
firms specializing in advertising & media, GMA7 continues to rule the noontime show w/ its
Eat Bulaga show plus the continuing AlDub phenomenon among the audiences against rivals
ABS CBN & TV5. However, GMA7 is consistently lagging behind rival ABS CBNs primetime
block, the most important timeslot of the day, for the past years. The firm is currently offering

42
the audience a line-up of variety shows to boost their audience share. GMA7 is likely to revive
also their past primetime shows that brought them to the top spot in primetime years ago.

Figure 4.16 GMA audience share

A.5.3. Critical Success Factor

Table 4.17 Critical Success Factors

Critical Success Factor or CSF Definition

1. Identify & exploit global The growing number of OFWs
market. worldwide demands the need for these

43

2. Strong program image &
awareness.
3. Aggressive commitment
when required.
4. Large marketing resource
budget.
5. Train existing talents,
personnel.
6. Managerial ability &
experience.
broadcasting media giants to reach
them w/ Filipino programs to ease their
emotions of being away from their
families.
Establish strong point among the
offered programs that would help
identify & distinguish the chosen firm
against rivals.
The consistency in ranking of the
chosen firm behind the two major rivals
pushes the former to be committed
aggressively in courting the audience.
The firm needs to allocate huge amount
of marketing budget to let the audience
know their programs & keep these
programs to stick w/ their minds.
Train existing best talents in the
industry that plays significant role in
Philippine entertainment as well as
personnel to work behind these talents.
Years & decades of service in the media
sector is a factor that can boost the
competitiveness of the chosen firm.
Experienced managers provide bright
ideas that could turn the playing field
slowly but surely
44
 Competitor Profiling:

Figure 4.18 Competitor profiling

CSF1 Global Market High Low

High Low
CSF2 Program awareness

CSF3 Aggressiveness High Low

CSF4 Marketing budget High Low

CSF5 Best personnel, talent High Low

CSF6 Experienced managers High Low

Figure 4.19 Competitor Group map

Group map:

Viewer
satisfaction

Timeslot
programs

45
 Table 4.20 Analysis of Competitive forces

Analysis of the Competitive Forces

As of now, the current trend is the offering of new shows &
programs among these three TV stations to jumpstart the 2016. A
Monitoring
variety of shows are lining up to provide viewers new shows.

The three TV networks will battle for audience shares as it will be

rated by research firms like Kantar Media & AGB Nielsen.
Forecasting
The competitors are likely to import artists/talents coming from
rival networks to maximize their strengths.
Opportunities:
O1. Growing numbers of OFWs abroad serves as an opportunity for
TV5 to intensify their reach abroad w/ these OFWs as the primary
audience.
O2. TV5 can import experienced &/or established
talents/broadcasters that can fuel up the firms competence which
could also edge out rival networks.
Threats:
Assessment
T1. The dominant players in the field namely ABS CBN & GMA7 as
established networks makes it difficult for TV5, as the emerging
one, to reach at par w/ them at least w/ close one in terms of
ratings.
T2. The word of mouth has conditioned the minds of Filipino
viewers that in the Philippines, only two TV networks exist ABS
CBN & GMA7. This hinders TV5 to attract viewers & as well
maintain them in the long run.

46
 B. Industry Analysis

B.1. Porters Analysis.

Porter identifies five basic competitive forces, which determine the state of competition and its
underlying economic structure: The threat of new competitors entering the industry, the
intensity of rivalry among existing competitors, the threat of substitute products or services,
the bargaining power of buyers, the bargaining power of suppliers. These five forces of
competition determine the rate of return on invested capital (ROI) in industry, relative to the
industry's cost of capital. The strength of each of the competitive forces is determined by a
number of key structural variables.

Figure 4.21 Porters analysis

Potential new entrants to the
market [LOW]

- High capital
- Constitutional
restriction
- Focus on manufacturing

Suppliers of Key Resources Industry Competitors Customers [HIGH]

[LOW]
[HIGH] - Viewership satisfaction
- Production sets - ABS CBN - Always wants
- Cable providers innovation
- WorldWideWeb - GMA7 - Busy life

Substitute products from

organization in other industries -
[MEDIUM]
- Social Media
- Radio
- Newspapers 47
- WorldWideWeb
B.1.1. Rivalry among competing firms

Rivalry refers to the degree to which firms respond to competitive moves of the other firms in
the industry. Rivalry among existing firms may manifest itself in a number of ways- price
competition, new products, increased levels of customer service, warranties and guarantees,
advertising, better networks of wholesale distributors, and so on.

The degree of threat is HIGH. This is so because the three competing TV networks are evidently
showing aggressiveness as evidenced by the statistics provided by the media rating authorities.
ABS CBN, GMA7, & TV5 are adapting to the fad & mainstream events leading them to utilize
these in offering programs w/ obviously the same substance. Rivalry between the three media
firms continues to heat up also due to the current events happening around like that of the
election season. Moreover, the rising popularity of Filipino digital entertainment contributes to
the tight race between three major TV networks. The rivalry between ABS CBN, GMA7, & TV5
is expected to heat up for the succeeding years to come.

48
 Figure 4.22 ABS CBN, GMA7, TV5 timeslot programs (daytimne)

B.1.2. Potential entry of new competitors

A major force shaping competition within an industry is the threat of new entrants. The threat
of new entrants is a function of both barriers to entry and the reaction from existing
competitors.

The degree of threat is LOW. Influential conglomerates in the country are showing less interest
in entering the media sector. Due to Constitutional requirement that mass media should be
100% owned by Filipinos & belonging to Foreign Investment Negative list, the media sector
trims down potential competitors who are non-Filipinos. Also, entering this market is costly as

49
regards the capitalization in setting up a media arm of a certain conglomerate. Furthermore,
most industries are focusing now on manufacturing sector to cater to the consumers needs in
everyday living. This is true in a country like the Philippines wherein the surge in population
growth continues.

B.1.3. Potential development of substitute

All firms in and industry compete with other industries offering substitute products or services.
Steel producers are in competition with aluminum producers. Sugar producers are in
competition with the firms which are introducing sugar-free products. The competitive force of
closely-related substitute products impact sellers in several ways.

The degree of threat is MEDIUM. In terms of news updates, the broadcast industries share the
dissemination of information w/ alternatives such as newspapers, radio, & internet. The shows
being televised can be viewed also online, although these online websites are also being utilized
by the three major TV networks to attract more viewers. Moreover, Filipinos seem not to be
contented in Filipino entertainment so they resort on other shows & replayed films like that
coming from the Hollywood. However, these media firms have been accorded fair play in
aspects like for example, during a live telecast, more viewers are expected to view on TV more
than the substitutes. These in return serve as an avenue for these TV giants to keep viewers in
track.

50
 Figure 4.23 Video games spending

B.1.4. Bargaining power of suppliers

Supplier power refers to the ability of providers of inputs to determine the price and terms of
supply. Suppliers can exert power over firms in an industry by raising prices or reducing the
quality of purchased goods and services, so reducing profitability.

The degree of threat is LOW. The nature of the industry tells that the bargaining power of
suppliers does not affect substantially the sector. The suppliers of transmitters being afforded
to the TV stations serve these three major media firms. The use of Social media or World Wide
Web can be used freely by these TV networks to reach the viewers. The production sets mainly
during the filming or shooting stage of the entertainment programs of these firms also dont
play a major role in terms of competition in supplying.

51
B.1.5. Bargaining power of consumers.

Buyer power refers to the ability of customers of the industry to influence the price and terms
of purchase.

The degree of threat is HIGH. The Filipinos often look for entertainment as watching TV is part
of their leisure time. This fact moves the three major TV networks to be further aggressive in
terms of offering Filipinos more entertaining shows. Filipinos need to be satisfied by the
programs being offered by these firms. The growing standards of the Filipinos in terms of
satisfaction in viewership also demands innovation among these shows. As much as possible,
from time to time, ABS CBN, GMA7, & TV5 need to experiment on new programs that would
give viewers the best satisfaction.

52
 Table 4.24 Analysis of Industrys Porters analysis

Analysis of the Industry under Porters Analysis

Overall, from these spotted factors affecting the industry, The
competition is high & that these three major TV networks are
Monitoring
providing the customers satisfaction.

ABS CBN, GMA7, & TV5 are seen to focus more on developing
drama series. Also, these firms will aggressively develop variety
shows that can discover more potential talents in Show business.
Forecasting
These mentioned strategies are seen to kick-off since the start of
this year.

Opportunities:
O1. The use of World Wide Web provides the three competing
firms an opportunity in accessing & engaging in an online discourse
w/ the customers.
O2. The low degree indication in terms of potential entry of new
competitors is seen as an opportunity because the market will now
focus more on these three major competing firms & will make TV5,
the one lagging behind the other two, be more established like its
Assessment
two competitors.
O3. The use of radio as controlled by these competing firms will
make profits also to these broadcasting firms.
Threats:
T1. The customers or the audiences in this case always demand
innovation. On that note, the immediate shift in ones taste
compels the TV networks to make more appealing programs.
T2. The unstoppable rise of Social Media halves the attention of

53
 potential viewers on broadcasting. Too much reliance on Social
Media could compromise the TV network because the time to
watch entertainment on watching TV are being put in Social Media
instead.
T3. The busy life of customers threatens these firms in a way that it
statistically decreases viewership on television.

B.2. Market Analysis

Market analysis is a phase of marketing research conducted to determine the

characteristics and extent of a market.

B.2.1. What are the main features of the market?

Media broadcasting has its own daytime, noontime, & primetime programs catering to Filipino
entertainment. The TV network is being aired in urban areas & in some rural areas in Luzon,
Visayas, & Mindanao. The demand trend is rapidly shifting among its audiences because of the
nature of the business. There is no particular season wherein the media firm is a boom to its
audiences.

B.2.2. Who are the customers?

For purposes of this study, audiences are referred to as the customers. The customers are
Filipinos mainly within the Philippines, of all ages, including non-Filipinos. The common feature
of these customers is that most of them, if not all, tend to watch television as their past-time.
The customers want an innovative entertainment &/or productive program that can satisfy the
most out of them.

54
B.2.3. What are their viewing habits?

The viewing habits of the audiences include looking for something new, criticizing the program,
be excited for the offered programs, etc. The main reason for viewing is for their
entertainment. The probability of audiences maintaining their loyalty to a particular TV network
depends on their programs.

Figure 4.25 Box office & Home video spending

B.2.4. What are their services?

The services of media broadcasting can be found on both television & radio. For purposes of
this study focusing on television, media offers entertainment programs such as telenovelas,
variety shows that include talent shows, game shows, reality shows, etc. Also, media offers
news-related & educational programs such as, but not limited to, primetime news covering the
happenings within the day, daytime news, documentaries, etc.

55
 Table 4.26 Market Analysis

Market Analysis
So far, firms that are engaged in media especially the top three
ruling TV broadcast networks share the same features laid down in
Monitoring the Market analysis especially as regards to the services they
provide.

TV5 is likely to take advantage of the growing demand among its

audiences by studying the psychographics of these audiences to
effectively know the programs that could best satisfy them. Once
Forecasting
the programs are initiated, it is expected that it will last shortly
given the rapid shift in demand.

Opportunities:
O1. The daytime, noontime, & primetime shows can help the firm
surge in the ratings especially, to date, that TV5 is launching its two
new telenovelas that cast veteran & established talents.
O2. The growing number of Filipinos worldwide is an opportunity in
such a way that Filipino audiences outside the country may
introduce Filipino digital entertainment to the non-Filipinos
Assessment O3. The TV networks reach now include rural areas in some part of
the Philippines.
Threats:
T1. Veteran talents & broadcasters are being preferred mostly by
the audiences which TV5 doesnt have in terms numbers.
T2. The rapid shift in entertainment demand makes the firm volatile
when it comes to the audiences taste.
T3. Although now serving rural areas, remote areas are still being

56
 deprived of viewing the programs offered by TV5 which can post a
threat because it lessens the audience share of the said TV
network.

C. Summary of external analysis

1. Summary of Porters five forces

The elaborations made under the Porters analysis indicate that the media industry varies in
terms of the five forces that can shape the competitiveness of the major players engaged in the
sector. As of now, the status of the industry stable amidst the continuing volatility of the
Philippine economy.

Table 4.27 Porters Five forces rating

Porter Five Forces Rate (High, Moderate, Low)

1. Rivalry among Competing Firms HIGH
2. Potential Entry of New Competitors LOW
3. Potential Development of Substitute MEDIUM
4. Bargaining Power of Suppliers LOW
5. Bargaining Power of Consumers HIGH

Interpretation:

Two of Porters five forces got a rating of HIGH, namely the rivalry among competing firms &
bargaining power of consumers. The other two, namely Potential entrants & bargaining power
of suppliers rated LOW. The remaining one which is the potential substitute rated MEDIUM.

57
2. Profile of competitors

The two major competitors are ABS CBN & GMA7. ABS CBN are being credited for its
primetime programs ruling for the past years & decades. While GMA7 bested main rival ABS
CBN in terms of noontime show. These rivals compete closely in daytime & matinee programs.

3. List of All Opportunities and Threats Identified from the General Environment and Industry
Analysis
Table 4.28 Opportunities list
Category Opportunity Factor
A1. Economic Forces O1. Gross Domestic Product (GDP) surge
O2. Audience demand
A2. Social, Cultural, O1. Corporate Social Responsibility (CSR)
Demographic and
O2. Leisure time
Natural
Environment Forces O3. Urbanization
A3. Political, O1. Free media
Governmental and
O2. Election season
Legal Forces
A4. Operations O1. Smartphones
Management Trend
O2. Audio visual technologies
and Technological
Forces
A5. Competitive O1. Growing number of OFWs
Forces
O2. Rising talents, best personnel
B1. Porters Analysis O1. The use of World Wide Web
O2. Established/developing firm
O3. Radio
B2. Market Analysis O1. Daytime, noontime, primetime programs
O2. Growing number of OFWs
O3. Reaching both urban & rural areas

58
 Table 4.29 Threats list

Category Threat Factor

A1. Economic Forces T1. Unemployment rate
T2. Competition
A2. Social, Cultural, T1. Cultural Diversity
Demographic and
Natural Environment
Forces
A3. Political, T1. Foreign ownership restriction
Governmental and
T2. Movie & Television Ratings & Classification Board (MTRCB)
Legal Forces
A4. Operations T1. Social Media
Management Trend
T2. Internet usage
and Technological
Forces
A5. Competitive T1. Program awareness
Forces
T2. Experienced competitors
B1. Porters Analysis T1. Audiences always demand innovation
T2. Rise of Social Media
T3. Busy life of people
B2. Market Analysis T1. Veteran talents & broadcasters
T2. Rapid shift in entertainment demand
T3. Remote areas unreached

C.4. Summary of Key Opportunities and Threats

Table 4.30 Top eight (8) Opportunities

# Opportunities Basis Dimension Rate

1 Audience demand Industry
Economic forces 4
positioning
2 Leisure time Socio- Industry
7
demographic positioning

59
 forces
3 Urbanization Socio-
Industry
demographic 3
positioning
forces
4 Election season Political forces Stable positioning 9
5 Rising talents, best personnel Competitive Industry
4
forces positioning
6 Radio Porters analysis Stable positioning 8
7 Daytime, noontime, primetime Industry
Market analysis 3
programs positioning
8 Reaching both urban rural areas Industry
Market analysis 2
positioning

Analysis:

Opportunity #4 gives the firm the best opportunity w/ nine points among others. This is so
because election season means election spending & that the media industry is one of the key
sectors that would most benefit from this. Opportunity #8 is the lowest rated opportunity w/
only two points for the firm. Due to signal issues, rural areas are almost unreachable.

Table 4.31 Top eight (8) threats

# Threats Basis Dimension Rate
1 Competition Economic forces Stable positioning 7
2 Social media Technological
Stable positioning 7
forces
3 Internet usage Technological
Stable positioning 6
forces
4 Experienced competitors Competitive
Stable positioning 9
forces

60
5 Audiences always demand innovation Porters analysis Stable positioning 8
6 Veteran talents & broadcasters Industry
Market analysis 8
positioning
7 Rapid shift in entertainment demand Market analysis Stable positioning 8
8 Remote areas unreached Industry
Market analysis 8
positioning

Analysis:

Threat #4 is the worst threat as shown above w/ nine points. The firm is competing against
established competitors that made the audiences loyal to these developed firms. Threat #3 is
the lowest-rated threat w/ only six points, namely internet usage. Though it is fact that Internet
usage plays a huge role as an alternative or even primary entertainment hub, the firm made use
of this as an advantage to reach out those netizens.

61
 CHAPTER 5
INTERNAL ANALYSIS

Internal analysis identifies and evaluates the company's specific characteristics,

including its: resources, capabilities and core competencies. This chapter identifies the
strengths and weaknesses of the company in order for them to know its basic competencies
and the desirable improvements that it can make to help meet the requirements of potential
customers within its intended market. The company can use the result of analysis to develop
strategic planning objectives to sustain and grow the business.

A. FUNCTIONAL ANALYSIS

A.1. Management

It is very important for a company to analyze the management practices that are being utilized
by the company. It is an analysis about a companys structure, culture, plans & objectives and
the current strategies that a company uses. Usually the basic function of management is to
plan, organize, motivate, to choose the correct people and to control.

Key Management Findings Source

1. Corporate Structure TV5
2. Corporate Culture TV5 / PhilStar.com
3. Company Plans and Objectives TV5
4. Current strategies TV5 / Inquirer

62
A.1.1 Corporate Structure

Figure 5.1 Corporate Structure

BOARD OF DIRECTORS

CHAIRMAN

CEO / PRESIDENT

COO

CORPORATE
TV GROUP RADIO GROUP COO GROUP ENGINEERING SERVICES
GROUP GROUP

NEWS &
CEO GROUP PUBLIC REGIONAL TV
AFFAIRS GROUP
GROUP

PRESIDENT

VP (SALES &
ADVERTISING)

63
The structure above shows the Board of Directors as the governing body of the Corporation.
The CEO heads the corporation w/ President overseeing the same. The CEO is followed by COO
or Chief Operating Officer. Under COO, there are several departments responsible for operating
their respective offices. Under CEO is the News group responsible for all-day news. The
President is then followed by the VP for sales/advertising by which the company receives its
revenues.

A.1.2 Corporate Culture

TV5 takes pride of living in a corporate culture that continually looks for opportunities to
improve customer satisfaction and operational efficiencies. It is anchored in using best-in-class
technology and facilities. This is part of the companys culture. Also, it is part of their culture to
assess the employees by his/her co-workers within the same level. In this way, the employees
are learning in how to cooperate well w/ other employees. Also, recognition is given to well-
performing employees from the management. The firm believes that through this, it will help
motivate these employees to work harder in positioning the firm as established as major
competing firms.

A.1.3 Company plans & Objectives

The Companys objective aims to dominate the broadcast industry. It plans to mark its goal as a
top broadcast network, outpacing the major rivals within the same industry. It is planning to be
aggressive in terms of ramping up its production to further their objective. Moreover, the
company is planning to provide their talents/broadcasters a well-crafted contract for them to
stay. Its objective is to remain a key-player in media industry.

64
A.1.4. Current strategies.

One of the current strategies the company is undertaking is entering into a contract w/
international firms that offer programs-platform such as the use of internationally-made
animated programs. This strategy is seen as alternative programs to supplement the networks
timeslot programs. Also, the company is partnering w/ international firms involved in the same
industry to acquire a franchise of these international programs. The partnership aims to provide
the audiences different programs especially in the broadcasting news area. An example of this
is the acquisition of franchise of Bloomberg. One of the notable strategies that the firm
undertook is that when Manny Pangilinan decided to offer early retirees a 2-month yearly
compensation based on the years of service of that employee, the move suggests that it is a
strategy to curb losses. To date, TV5 is allocating millions of pesos to shift in digital TV.

Table 5.2 Analysis of Company Management

Analysis of the Management of the Company

Resources S1. Corporate Structure w/ the organized organizational structure,
the firm is on the green light to further its goals & objectives.
W1. Current strategies To date, the firm is lacking in competent
personnel that would craft or design better programs thats why its
currently undertaking franchising.
Capabilities S2. Corporate culture Despite external difficulties, the employer-
employee relationship in the firm is of sound & healthy one,
meaning, workers are cooperating & helping each other out to
advance its firm.
W2. Company plans & objectives The firm is yet to prove a lot if it
aims to become the topmost reliable broadcast network

65
A.2. Marketing

This pertains to an organization's strategy that combines all of its marketing goals into one
comprehensive plan. A good marketing strategy should be drawn from market research and
focus on the right product mix in order to achieve the maximum profit potential and sustain the
business.

Key Marketing Findings Source

1. Service description and planning TV5
2. Customer analysis or target market TV5 /
http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/
3.Selling, Advertising, Distribution of TV5 /
Products and services http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/
4.Marketing Research TV5 /
http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/

A.2.1. Service description & planning

The firm is a service-based company that appeals to the entertainment of its audiences. The
firms service embraces a part of lifestyle of an individual by providing the latter viewership
satisfaction as it brands itself as young & aggressive & innovator. The service includes
Filipino entertainment such as, but not limited to, daytime to primetime programs like
telenovelas, reality shows, game shows, etc. Also, the firm serves as a broadcasting network,
delivering real-time news to audiences keeping them updated. TV5 plans to expand its services
through high-frequency studios that would reach far-flung areas in the three major islands in
the country.

A.2.2. Customer analysis / Target market

Initially, TV5 planned to get the outliers in the market audience. They are the young, male, &
older segments of the audience. It also targeted the underserved demographic of 30 & below.

66
At present TV5 deals w/ wider mass market. These are the kids & the seniors, though they
appeal more to the lower bracket CDE. TV5 also targets the housewife market. This is due to
the fact that they constitute the greatest number of TV viewers at home.

A.2.3. Selling, advertising, distribution of services

Improving the networks capacity in terms of position, reach (distribution-wise & signal-wise),
& reception is both physical & emotional. Physically, the network conducted transmission roll-
outs in many provinces, promoted the use of Cignal as a vehicle for distribution, & talked w/
regional cable providers, TV5 also used promotional tactics such as the use of jeepney toppers
& LED-roving vans. Being present everywhere is as important as being relevant to the audience.
Thus, together w/ the transmission roll-outs, TV5 made sure that they were delivering the
brand message & the right content to the audience through the platform that is most relevant
to them. For instance, TV5 used the radio to reach audience in far remote areas. Through cross
promotions, the radio publicized TV5s programs.

A.2.4. Marketing research

TV5 did a lot of research & tried to identify the needs of viewers at different times at the day.
For example, early morning thats when Filipinos wake up. Theyre getting ready for work or
school. Particularly, at that time, theyre objective is to find out what they need to know when
they go through their whole day. In birds eye view, TV5 had the news & public affairs programs
in the early morning. Then they had cartoons. The early morning block was tagalized cartoon
for kids. During noontime, there came dubbed movies. Then in the afternoon, TV5 had two
drama series. At night were th game shows followed by drama series. Then late at night were
the news & public affairs program & documentaries.

Table 5.3 Analysis of Company Marketing

Analysis of the Marketing of the Company

Resources S1. Marketing research Since PLDT & MediaQuest Inc. is funding

67
 this network, TV5 is on heavy marketing research mode.
W1. Selling, advertising, distribution TV5 is still having a difficulty
making itself known as an innovator especially towards living in
remote areas.
Capabilities S2. Service description & planning Since TV5 has a fresh start, it is
currently undertaking investment mode to provide audiences quality
Filipino entertainment.
W2. Target market Since its a young TV network, TV5 is having a
difficulty to penetrate the said target market.

A3. Finance / Accounting

According to James Van Horne, the functions of finance/accounting comprise

three decisions: the investment decision, the financing decision, and the dividend decision. 20
Financial ratio analyses is the most widely used method for determining an organizations
strengths and weaknesses in the investment, financing, and dividend areas.

Key Finance / Accounting Findings Source

1. Liquidity ratios Financial Statement
2. Leverage Ratios Financial Statement
3. Activity Ratios Financial Statement
4. Profitability Ratios Financial Statement
5. Growth Ratio Financial Statement

A.3.1. Liquidity Ratios

Liquidity Ratios measure the extent to how the firm can meet its short-term obligations.
Under this ratio is quick ratio which measures how a firm can meet such obligations without
relying in their sale on inventories.

68
 Table 5.4 Liquidity ratio
Year ( 2012 ) Year ( 2013 ) Year ( 2014 ) Observations
Current ratio =
= 3,883,659,649.00 = 3,313,168,746 = 3,834,466,856 There has been a progressive ratio
= Current Assets 5,400,969,518.00 4,690,422,897 4,616,690,724 covering the three year
Current Liabilities performance.

= 0.719 = 0.7 = 0.83

Quick (or acid-test) ratio
= Current Assets
- Inventory
Current Liabilities
= 3,883,659,649.00 = 3,313,168,746 = 3,834,466,856
1,582,838,363.00 - 1,824,536,970 2,074,158,906 Year 2012 has the companys most
5,400,969,518 4,690,422,897 4,616,690,724 progressive ratio covering 2012 -
2014

= 0.42 = 0.31 = 0.38

Analysis:
The below 1 ratio indicates the companys ability to pay its short-term
obligations or indebtedness. The quick ratio results show that the company can pay its debts
better on 2012 compared to that of 2013 & 2014, w/ 2013 slightly declined than that of 2012
however regained momentum on 2014.

A.3.2. Leverage Ratios

A leverage ratio is any one of several financial measurements that look at how much
capital comes in the form of debt (loans), or assesses the ability of a company to meet financial
obligations.
Table 5.5 Leverage ratio
Year ( 2012 ) Year ( 2013 ) Year ( 2014 ) Observations
Debt-to-total-assets ratio
= 8,989,021,660 = 8,085,856,707 = 7,901,212,417 Almost stable debt-to-total-assets
= Total Debt 11,415,017,129 10,378,147,065 11,224,965,640 ratio.
Total Asset
= 0.78 = 0.77 = 0.7

69
Debt-to-equity ratio
= 8,989,021,660 = 8,085,856,707 = 7,901,212,417 Declining in value since 2012
= Total Debt 2,465,951,069 2,292,300,358 3,323,753,223
Total Stockholders
Equity = 3.64 = 3.52 = 2.37
Long-term debt-to-equity
ratio = 3,588,052,142 = 3,395,423,810 = 3,284,521,693 Sideways performance of long-
16,399,259,767 22,579,166,576 6,497,110,558 term debt-to-equity
= Long Term Debt
Stockholders Equity = 0.21 = 0.15 = 0.5
Times-interest-earned (or
coverage) ratio

N/A N/A N/A N/A

= Profits before interest
and taxes
Total interest charges

Analysis:
From the table above, the Debt-to-total assets ratio & Long-term debt-to-Equity
ratio show the companys ability to pay its financial obligations steadily. While the Debt-to-
Equity ratio suggests that the company can fulfill its obligations satisfactorily, meaning that it
can pay on due time.

A.3.3. Activity Ratio

Activity ratios measure how effectively a firm is using its resources.
Table 5.6 Activity ratio
Year ( 2012 ) Year ( 2013 ) Year ( 2014 ) Observations
Inventory turnover
= 14,190,229,694 = 11,545,562,997 = 10,020,146,848 There is a declining value in the
= Sales 1,582,838,363 1,824,536,970 2,074,158,906 three-year performance.
Inventory of Finished
Goods = 8.96 times = 6.32 times = 4.83 times
Fixed assets turnover
= 14,190,229,694 = 11,545,562,997 = 10,020,146,848 Declining value in three years.
= Sales 7,531,357,480 7,064,978,319 7,390,498,784
Fixed Assets

70
 = 1.88 times = 1.63 times = 1.35 times
Total assets turnover
Declining value in three years.
= Sales = 14,190,229,694 = 11,545,562,997 = 10,020,146,848
Total Assets 11,415,017,129 10,378,147,065 11,224,965,640
= 1.24 times
= 1.11 times = 0.89 times
Accounts receivable
turnover
= 11,545,562,997 = 10,020,146,848 Declining value in three years.
= 14,190,229,694
507,603,568
557,855,366
= Annual Credit Sales 535,087,529
Accounts Receivable
= 19.7 times
= 20.69 times
= 26. 5 times

Average collection period

= 365 Increasing value in three years.

= Accounts Receivable
= 365 = 365
Total Credit Sales/ 26.5 20.69 19.7
365 days
= 13.77 days = 17.64 days = 18.52 days

Analysis:
The table above shows that the company is experiencing a slowdown in terms of
using their resources efficiently to meet its objectives. From the period of three years (2012-
2014), the companys activity value is declining.

A.3.4. Profitability Ratios

Profitability Ratios measure managements overall effectiveness as shown by the
returns generated on sales and investment.
Table 5.7 Profitability ratio
Year ( 2012 ) Year ( 2013 ) Year ( 2014 ) Observations
Gross profit margin
= 14,190,229,694 = 11,545,562,997 = 10,020,146,848 Slight increases from 2012-2014
= Sales - 4,796,418,842 - 3,512,979,623 - 2,647,236,308 GPM.
Cost of Goods Sold 14,190,229,694 11,545,562,997 10,020,146,848
Sales
= 0.66 = 0.69 = 0.73

71
Operating Profit Margin
LOSS.
= Earnings Before = (5,969,641,938) = (6,348,724,420) = (4,351,138,635) Constant losses spanning 2012-
Interest and Taxes (EBIT) 14,190,229,694 11,545,562,997 10,020,146,848 2014 OPM.
Sales
= -0.42 = -0.54 = -0.43
Net Profit Margin
LOSS.
= Net Income = (5,969,211,738) = (6,313,601,720) = (4,368,547,135) Steady losses incurred from
Sales 14,190,229,694 11,545,562,997 10,020,146,848 2012-2014

= -0.42 = -0.54 = - 0.43

Return on Total Assets
(ROA) LOSS.
= (5,969,211,738) = (6,313,601,720) = (4,368,547,135) Steady negative ROA.
= Net Income 11,415,017,129 10,378,147,065 11,224,965,640
Total Assets
= -0.52 = -0.6 = -0.38
Return on stockholders
equity (ROE) LOSS.
= (5,977,481,238) = (6,313,601,720) = (4,368,547,135) ROE continually incurs losses in
= Net Income 2,465,951,069 2,292,300,358 3,323,753,223 three year period.
Total Stockholders
Equity = -2.42 = -2.75 = -1.31

Earnings per share (EPS)

= (6,313,601,720) = (4,368,547,135) LOSS.

= Net Income = (5,977,481,238)
Constant losses.
Number of Shares of 10,000,000 10,000,000 10,000,000
Common Stock
= -597.74 = -631.36 = -436.85
Outstanding
Price-earnings ratio
LOSS.
= Market price per share = 100 = 100 = 100 Constant losses likewise from
Earnings per share -597.74 -631.36 -436.85 2012-2014.
= -0.16 = -0.15 = -0.22

Analysis:
The table shows the losses incurred by the firm covering the years 2012-2014.
This is due to the stiff competition in the media industry. The continuous dip in the firms

72
annual financial report further showed that it is having a difficulty to cope w/ the intensifying
competition in the industry.

A.3.5. Growth Ratio

Growth ratios measure the firms ability to maintain its economic position in the growth
of the economy and industry.
Table 5.8 Growth ratio
Year ( 2012 ) and Year ( Year ( 2013 ) and Year ( Observations
2013 ) 2014 )
Growth Ratio on Sales
= 3,512,979,623 = 2,647,236,308 The value is declining.
Annual percentage growth in 4,796,418,842 3,512,979,623
total sales 4,796,418,842 3,512,979,623

= -0.26% = -0.24%
Growth Ratio on Net Income
= (6,313,601,720) = (4,368,547,135) The value slightly increased.
Annual percentage growth in (5,977,481,238) (6,313,601,720)
profits (5,977,481,238) (6,313,601,720)

= 0.05% = 0.3%
Growth Ratio on Earnings per
share
N/A N/A N/A
Annual percentage growth in
EPS

Analysis:
From the above table, one can infer that the firm is having a difficulty recovering
from three year loss. However, from the table above, it seems that the company is recovering
as seen in the growth ratio though at a very slow pace. The company is having a hard time
maintaining its position in the industry.
Table 5.9 Analysis of Company Finance
Analysis of the Finance / Accounting of the Company
Resources S1. Leverage the company is allocating enough capital to finance its
costs.

73
 W1. Activity The firm remains bearish in terms of allocating their
resources in an efficient manner.
Capabilities S2. Liquidity the company is showing its creditors that it can pay its
obligations once it falls due.
W2. Growth The firm is incurring losses. Indicating its incapability to
cope w/ the stiff competition in the industry.

A4. Productions / Operations

Operations management is an area of management concerned with designing, and controlling
the process of production and redesigning business operations in the production of goods or
services.

Key Productions / Operations Findings Source

1. Products and process TV5 /
http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/
2. Capacity TV5 /
http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/
3. Inventory and supply chain TV5
4. Work force TV5
5. Quality TV5 /
http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/

A.4.1. Products & processes

TV5 is faithful in its commitment to provide audiences the best viewing experience in Filipino
entertainment. TV5s choice of technology includes the use of high end audio visual
materials for better digital experience. TV5 invested in their facilities & equipment. Purchasing
hi-tech equipment & building their media center in Reliance were part of the networks
infrastructure & equipment expansion. The location of these technological devices are located
in the Mandaluyong area which is seen as a strategic move to solidify the networks valuable
74
assets & therefore attain its goal as a sustained TV network as it is currently positioned in the
development stage. The services of TV5 include primarily that of TV programs for Filipino
entertainment as well as to educate the viewers through its news & public affairs platform. TV5
provided a lay-out on how to utilize the days timeslot by fragmenting these programs in
connection w/ their appropriate timeslot.
Table 5.10 TV5 Program Genre
TV5 Program Genre
Weekdays Weekends
Genre
Percentage Hours Percentage Hours
Childrens TV 14.29 15 14.10 5.5
Drama 9.52 10 1.28 0.5
Pop Entertainment 44.05 46.25 48.72 19
Comedy 0 0 12.82 5
News & Public Affairs 26.43 27.75 11.54 4.5
Public Service 5.71 6 6.41 2.5
Documentaries 0 0 2.56 1
Others (Religious) 0 0 2.56 1
Note: Total programming hours is 105 hours

Table 5.11 TV5 Program Functions

TV5 Program Functions
Weekdays Weekends
Genre
Percentage Hours Percentage Hours
Information to Entertain 16.67 17.5 3.85 1.5
Entertainment to Inform 4.76 5 1.28 0.5
To Entertain 63.1 66.25 74.36 29
To Inform 15.48 16.25 20.51 8
Note: Total programming hours is 39 hours

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A.4.2. Capacity
TV5 struggled to be inside developers when it comes to programming. Even though, their
programming was generally focused on the housewife market, TV5 tried experimenting on their
shows by offering programs that were of different taste. The network also employed counter-
programming when necessary. With use of three-screen approach, TV5 hoped to deal w/ the
different needs of different types of audience. With the use of their different platforms, TV5
made their content more relevant to their target audiences. The network was under talent &
staff expansion. The network was hiring more talents & employees. The network had been
known for getting big names such as Nora Aunor, Aga Muclach, Lorna Tolentino, Sharon
Cuneta. Also, one informant noted that since 2008, the number of employees exponentially
grew from 261 to 1,200 w/ the entry of MVP.

A.4.3. Inventory & Supply Chain

TV5, since engaged in the services (media) sector, made use of their talents, broadcasters,
platform of programs as the inventory for purposes of this study. These talents are undergoing
the re-packaging stage wherein TV5 aims to provide viewers new faces in show business. The
contracts between these talents & the network, as the supply chain for purposes of this study,
serves as the networks vehicle to lure prospective talents that will contribute to the networks
growth.

A.4.4. Workforce
TV5, together w/ its employees agreed that the former shall increase the latters wages, more
medical & hospitalization benefits & a rebuilding fund. This move is seen to ensure the
networks future growth. In line w/ this, the employees feel motivated to strive hard in order to
achieve the companys future plans as wells as to justify the increase in benefits. Through this
inked pact, the workforce of the company solidifies its commitment as partners in fueling the
companys capabilities despite the company downsizing in manpower to prepare in the digital
age.

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A.4.5. Quality
TV5 employed programming, promotional activities, advertisements, & contests as branding
strategies. Presently, promotional activities included on-air promotions, cross promotions, &
community events. Community events included barangay & mall shows, caravan shows, &
motorcades through its Sugod Mga Kapatid. The network also did traditional, out-of-home &
on-ground advertisement. TV5 advertised on billboards, newspapers & other traditional media.
The network also text promos or contest as the Kapatid New Year Pabuenas which run
January to February 2012. Branding TV5s talents is a boost to enhance the quality of their
people primarily the talents & its broadcasters.
Table 5.12 Analysis of Company Operations
Analysis of the Productions /Operations of the Company
Resources S1. Capacity Money is not a problem to upsize the pool of their
talents as they are being financed by parent company, MediaQuest,
Inc.
W1. Inventory / Supply Chain TV5 is lacking in terms of attractive
talents compared to rivals.
Capabilities S2. Quality Potentially uplifting the networks branding.
W2. Workforce Due to shift in Digital TV, TV5 is downsizing its
workforce.

A.5. Research & Development

Research and development (R&D) consists of investigative activities that a business chooses to
conduct with the intention of making a discovery that can either lead to the development of
new products or procedures, or to improvement of existing products or procedures.

Key Research and Development Source

Findings
1. Developing new services (future TV5 /
plan) http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/

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2. Improving existing product & its TV5 /
quality http://iskwiki.upd.edu.ph/flipbooks/tv5anewbra109/

A.5.1. Developing new services (future plan)

To increase audience adoption, TV5 use branding & promotional strategies. Re-packaging was
one way by which TV5 made their content more relevant. Whenever the network pirated
talents, they re-imaged him or her before presenting him or her to the viewers. This is part of
their mantra to offer something new. Also, TV5 also re-packaged not only people but also
programs. PBA was re-packaged to look more like a professional league. Foreign movies were
tagalized. Programs were scheduled according to the different needs of the audience at
different times of the day. As much as possible, TV5 wanted to bring their programs to the level
where majority could understand & appreciate them. Moreover, TV5 is allocating millions of
pesos to upgrade its infrastructure to shift in digital TV.

A.5.2. Improving existing product & its quality.

TV5 is currently maintaining its talents by offering them better contracts w/ the network. Also,
as expected, the network is making use of audio visual technologies to provide audiences well
digitally-powered programs. The network is also empowering its signal provider Cignal, to
bring better viewing experience to audiences especially those living in rural areas. W/ its parent
company consistently funding the network, it is seen that the signal booster will attract more
viewers. This is especially true as TV5 caters to bigger & wider audience share in the industry &
as it sets the launching pad towards Digital TV.

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 Figure 5.13 ABS CBN, GMA7, TV5 budget for Digital TV

Table 5.14 Analysis of Company R&D

Analysis of the Research and Development of the Company

Resources S1. High budget for R&D
W1. Lacking in established talents/personalities
Capabilities S2. Improve existing product
W2. Programs ending early due to unawareness from viewers.

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A.6. Other company analysis (MIS, CSR, others)
Information ties all business functions together and provides the basis for all managerial
decisions. It is the cornerstone of all organizations. Information represents a major source of
competitive management advantage or disadvantage. It also includes other factors such as HR,
corporate social responsibility and other findings that a relevant to the company.

Key MIS, HR, CSR and Others Findings Source

1. IT infrastructure TV5
2. Human resource TV5 / Inquirer
3. CSR TV5
4. Ethics / Image TV5

A.6.1. IT infrastructure
Since the company is involved in media that employs the massive usage of technology, TV5 is
regularly monitors its information department. TV5 has now moved to its media center in
Reliance, a move indicating a debut in their IT strategy. The move intends to consolidate all
news & public affairs related platforms as it is previously located anywhere without having its
own property. The media is acquiring equipment to increase its assets w/ the aim of efficiently
deliver quality information to the viewers. Since TV5 is a subsidiary of PLDT, a leading telecom
company, the former is beefing up its capacity in terms of information technology.

A.6.2. Human Resource

The company adopts the evaluation system of its employees. In TV5s case, the top managerial
posts are also evaluated by their superiors. Through this evaluation, the employees are
becoming more competent as well as effective in terms of performing their jobs. Moreover, it
strengthens the employer employee relationship within the company. Also, the strategy of
Early Retirement package shows that the employer can manage its losses by means of
effectively regulating the human resource department.

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A.6.3. Corporate Social Responsibility
TV5 is helping the marginalized sectors in the society as part of their CSR. Through outreach
programs, TV5 helps in terms of easing the everyday-difficult lives of the poor people. Their
foundation helps in terms of furthering the firms corporate social responsibility as it fulfills the
firms obligation towards the public of being a social worker sharing to the needy. Furthermore,
since the firm is engaged in media, it is their responsibility to be fair while delivering unbiased
news towards the public. TV5s Corporate Social Responsibility demands that the firm should be
a helping partner of the government in eradicating poverty in the society.

A.6.4. Ethics / Image

As the third major broadcaster in the Philippines, TV5 maintains its image as a responsible
media player. This means that the firm is affording other key competitors of equal playing field.
An ethics-based network, as what TV5 wants it to be, shows that its everyday operations &
undertakings are principled by dignified spirit as it aims to be the topmost preferred
broadcaster in the country. In term of its image, their branding position helps as it seen as an
aggressive player in the sector. The brand equity helps shape the image of TV5 as a competing
force in the stiff competition in media.

Table 5.15 Analysis of Companys other aspects

Analysis of the Other Aspect of the Company
Resources S1. IT infrastructure funding from PLDT & MediaQuest, Inc. helps
the firm to modernize its media-related operations.
W1. Corporate Social Responsibility Losses as shown in the
Financial Statements of the company trims down its expenses on
outreach programs.
Capabilities S2. Human Resource Solid & healthy HR department makes a
growing company.
W2. Image Though a major broadcaster in the Philippines, ordinary
viewers are still becoming unaware of the networks programs.

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 B. Value Chain Analysis
Value Chain is all the various activities that a company performs that are internally combined.
The Value Chain Analysis is very important because it is an ideal tool for examining how a
company delivers on its customer value proposition. The main purpose for such analysis is to
facilitate a comparison, activity-by-activity, of how effectively and efficiently a company
delivers value to its customers relative to competitors.

Figure 5.16Value Chain Analysis

Product R&D, Technology, and System Development Rate- 3

Human Resource Management Rate- 2

General Administration Rate- 2

Customer
Value
Supply Chain Operations Distribution Sales and Service
Management - - Marketing -
- Rate - 2 Rate - 3 - Rate - 3
Rate-1 Rate - 4

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 Table 5.17 Company rating

Rate on Value Comments Best Practice of Best Practice of

Adding Competitor 1: ABS CBN Competitor 2: GMA7

Supporting Activity
Product R&D, Technology, ABS launched its TVPlus & Still reliant on its online
To date, TV5 is investing on its
and System Development ABS-CBN mobile sim to portal though allocating
3 infrastructure & equipment
cope w/ the rising budget for systems
development.
demand of digital TV upgrading
Human Resource ABS values its employees
TV5 is offering an early retirement
Management by providing them
2 package curb losses while strengthening GMA7 offers the same.
benefits for the years of
those quality employees
service
General Administration The firm is coping w/ the demands of
2 company trends
Primary Activity

Supply Chain Since engaged in services (media), TV5 ABS CBN has a
GMA7 is also showcasing
Management 1 has no supply chain except that of powerhouse pool of
their homegrown talents.
importing talents. talents.
Operations ABS has regional offices
With its main office in Mandaluyong,
2 that could best reach the GMA7 goes the same w/
TV5 is set to strengthen its operations in
outskirts especially rural that of ABS CBN.
Manila.
areas unreachable.
Distribution GMA7 likewise has its
ABS distribution channels
Through their Cignal, viewers can access own facilities regionally
range from NCR to other
3 the programs of TV5. serving as distribution
regions in the country.
channels.
Sales and Marketing Since TV5 is a young network, it is ABS CBN has established
GMA7 is also ramping up
currently undertaking a massive a sustainable marketing as
its marketing & sales as it
investment mode to boost its operations its branding continues to
4 is stable like that of ABS
as mother company, MediaQuest, Inc. dominate a wider
CBN.
including PLDT is funding the network. audience share.
Service GMA7 provides Filipinos a
Filipinos clamoring for innovation in ABS CBN services has a
wider scope of Social
Philippine entertainment caused TV5 to full-scale platform
services through its
3 be branded as an alternative & catering to Filipinos locally
foundation like ABS
innovator. & overseas.
CBN.

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 Table 5.18 Analysis of Company Value Chain

Analysis of the Value Chain of the Company

Resources S1. Sales & Marketing Funding operations are being co-shouldered
by parent company.
W1. Supply Chain management TV5 is yet to develop their existing
talents.
Capabilities S2. R&D / Technology TV5 is capable of coping w/ the innovation in
technology especially when its parent company PLDT, a telecom, is
helping out TV5.
W2. Human Resource Due to shift in digital age, TV5 is downsizing
its manpower to mitigate expenditures & therefore put it to invest in
upgrading technological equipment.

C. Summary of Internal analysis

C.1. List of Strengths & Weaknesses identified

Table 5.19 Strengths list
Category Strength Factor
A1. Management S1. Corporate Structure
S2. Corporate Culture
A2. Marketing S1. Marketing research
S2. Service description & planning
A3. Finance / S1. Leverage ratio
Accounting S2. Liquidity ratio
A4. Productions / S1. Capacity
Operations S2. Quality
A5. Research and S1. High budget for R&D
Development S2. Improve existing product

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A6. Other Company S1. IT infrastructure
Analysis (MIS, HR, S2. Human Resource
CSR & Others)
B. Value Chain S1. Sales & Marketing
Analysis S2. R&D / Technology

Table 5.20 Weaknesses list

Category Weakness Factor

A1. Management W1. Current strategies
W2. Plans & objectives
A2. Marketing W1. Selling, advertising, distribution
W2. Target Market
A3. Finance / W1. Activity ratio
Accounting W2. Growth ratio
A4. Productions / W1. Inventory / Supply chain
Operations W2. Workforce
A5. Research and W1. Lacking in established talents
Development W2. Programs ending early due to viewer unawareness
A6. Other Company W1. Corporate Social Responsibility
Analysis (MIS, HR, W2. Image
CSR & Others)
B. Value Chain W1. Supply chain management
Analysis W2. Human Resource

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C.2. Summary of Key Strengths & Weaknesses

Table 5.21 Top eight (8) Strengths

# Strengths Basis Dimension Rate
(From what category or business (Classify if in Competitive (-1 to -7 or +1
function) Position or Financial Position) to +7)

1 Marketing research Marketing Financial Position 5

2 Service description & planning Marketing Competitive 3

Position
3 Capacity Productions / Financial Position -1
Operations
4 Quality Productions / Financial Position -2
Operations
5 High budget for R&D Research & Financial Position 6
Development
6 Improve existing product Research & Financial Position 4
Development
7 IT Infrastructure Other Company Competitive 3
Analysis (MIS, HR, Position
CSR & Others)
8 Sales & Marketing Value Chain Financial Position -1

Analysis:
Strength #5 got the highest rating w/ 6 points. This is so because the parent company of TV5 is
also funding the operations as well as the developments in the network. Strength #4 got the
lowest grade w/ -2 points. Viewers unaware of their programs view the network as a weakling
compared to the two major broadcasting networks ABS CBN & GMA7.

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 Table 5.22 Top eight (8) Weaknesses

# Weaknesses Basis Dimension Rate

(From what category or (Classify if in Competitive (-1 to -7 or +1
business function) Position or Financial Position) to +7)

1 Current strategies Management Competitive

3
Position
2 Plans & objectives Management Competitive
2
Position
3 Selling, advertising, distribution Marketing Competitive
-3
Position
4 Target Market Marketing Competitive
-2
Position
5 Activity ratio Finance Financial Position 4
6 Growth ratio Finance Financial Position 3
7 Lacking in established talents Research & Competitive
5
Development Position
8 Programs ending early due to viewer Research & Competitive
4
unawareness Development Position

Analysis:
Weakness #7 got the highest grade of 5 points. It means that lacking in established talents
make up for the losses of the company, though not wholly, since the company is engaged in
show business & broadcasting. Weakness #3 got the lowest grade of -3 points. TV5 can easily
cope w/ this since funding from the parent company helps the network in making it known to
the public.

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