BA190 STRATEGIC MANAGEMENT CASE STUDY
CONSUL , Christine PAJOTAGANA , Hazel May PEÑAFLOR , Ma. Vanessa SULAPAS , Alpha Cino Estos TALAGON , Ana Mae TUSING , Beatrice Emilia
I.
STATEMENT OF THE PROBLEM
What strategies should Dynamic Packaging Company execute to increase its market share in its three major service lines and increase sources of growth?
FRAMEWORK ANALYSIS
Based on the thorough analysis that the case was subjected to, it was determined that the organization fell short on the 5 th phase, which is the generation, evaluation and selection of strategies. Their 25 years of existence was mainly run in the past by the connections they have established wi th their clienteles. They haven’t really made something outside the industry of repacking (NOTE: without without their name on it) despite the age of their business. It was only last 2001 that the manager realized that he wanted his company to be recognized for its company name which is already a bit too late considering the pace of their environment’s growth. They’ve been hidden behind the names of their big clienteles that their
I.
STATEMENT OF THE PROBLEM
What strategies should Dynamic Packaging Company execute to increase its market share in its three major service lines and increase sources of growth?
FRAMEWORK ANALYSIS
Based on the thorough analysis that the case was subjected to, it was determined that the organization fell short on the 5 th phase, which is the generation, evaluation and selection of strategies. Their 25 years of existence was mainly run in the past by the connections they have established wi th their clienteles. They haven’t really made something outside the industry of repacking (NOTE: without without their name on it) despite the age of their business. It was only last 2001 that the manager realized that he wanted his company to be recognized for its company name which is already a bit too late considering the pace of their environment’s growth. They’ve been hidden behind the names of their big clienteles that their
name wasn’t able to reach its end consumers. They’ve been focused on striking deals with
clienteles to gain revenue and eventually profit, nothing more. They weren’t able to anticipate the fact that their big clienteles may suddenly opt to
perform the packaging of their products on their own that when Nestle decided to do it with Nescafe they were caught off guard. It was only then that they realized they really need to make adjustments in their current strategies in terms of the incorporation of their brand name in the products they are repacking, venturing into repacking even non-food products, and finally into retailing.
II.
COMPANY ANALYSIS Dynamic Packaging Company (DPC) which started its operations in 1988 is engaged in
the repacking of food-based products such as liquid items like catsup and other food sauces, and powdered products like coffee, sugar and crème. It operates in three major service lines: (1) packaged products (all in), (2) contract packaging, and (3) toll packaging/manufacturing packaging/manufacturing services. DPC has four major product types: t ypes: (1) liquid portion packs, (2) powder portion packs, (3) hot cups, and (4) special projects. The owners of DPC have also invested in another business entity called Marketing Systems, Inc. (MSI). This firm handles the toll manufacturing service lines of DPC. In 2001, DPC was the third largest in the food pac kaging industry. The company’s President is Mr. Gabby Santos and the marketing manager is Mr. Lloyd Silvestre. Silvestre. Key Focuses
Management. Currently, Currently, the company has a centralized organizational structure structure given that MR. Santos preferred a centralized decision-setting style. For the future performance performance of the company, it is better to have a decentralized decision-setting decision-setting since DPC will go into retailing.
Financial Health. The company has increasing sales revenue over the years from P 40 million in 1999 to P 48 million in 2000. The sales reach of the company has also expanded from 1999 which caters Metro Manila, North Luzon, North Mindanao, Iloilo and Bacolod to 2000 which already included Mega Manila and Suburbs, the whole of Mindanao and part of Cebu in addition to the previous market reach in 1999. The net profit of the company has also increased from P 3.3 million in 1999 to P 4.3 million in 2000.
III.
STRATEGIC MANDATES OF DYNAMIC PACKAGING COMPANY
A. Vision Statement
To participate actively in the upliftment of the food service industry of the Philippines by providing quality, value-for-money products and services.
To uplift the reputation of Philippine Packaging industry and step up the game by providing packaging solutions that does not only enhance the aesthetics of the products and services it covers, but the perception of their quality as well.
To enhance the image of products and services in the Philippines by exhibiting striking product and service personality through aesthetics development/enhancement
B. Mission Statement We commit ourselves to:
Provide packaging solutions to customers in need of efficient, economic, and effective dispensing of their products
Provide our customers a range of choices from a menu of products and services that will offer convenience and savings in their operations
Provide packaging solutions that’ll give the customers the unwavering feeling of security
in consuming the products and services we cater to
To build a profitable and reliable company that can withstand the test of time and circumstances and upholds the culture of integrity and humility
To harness out resources, channel them to greater productivity and, ultimately, share the fruits of our labor with our shareholders, employees, and the community
To unceasingly safeguard the environment by utilizing production processes that are environment friendly while at the same time still efficient and effective
C. Core values
The Customer is King “If we do not take care of him, somebody else will.”
Fairness “Fairness is our guiding principle in dealing with our workers, suppliers, customers, shareholders, and the community where we belong.”
IV.
STRATEGY FORMULATION A. INPUT STAGE a) External Evaluation Matrix
External Factor Evaluation (EFE) Matrix for Dynamic Packaging Company (A) Weight
Rating
Weighted Score
1. Clients want convenience at a relatively affordable price
0.17
2
0.34
2. To venture into retailing or repackaging items, carrying their own brand name
0.15
2
0.3
3. Diversification to repacking even nonfood items (e.g. shampoo, toothpaste, gel, etc.)
0.17
2
0.34
4. potential
0.12
3
0.36
5. Toll packing/manufacturing another 0.11 venue for growth
2
0.22
1. Greatest competitor holds 50% of 0.11 market share
2
0.22
2. Possibility of major clients repacking their own products
0.17
3
0.51
Total
1
Key External Factors Opportunities
Limited industry players; huge growth
Threats
2.29
b) Internal Factor Evaluation (IFE) Matrix Internal Factor Evaluation (IFE) Matrix for Dynamic Packaging Company (A) Key Internal Factors
Weight
Rating
Weighted Score
Strengths 1.
Does an annual planning session
0.03
3
0.09
2.
Operates in three service lines
0.02
3
0.06
3. Major clienteles include 7-Eleven, Shell, Pizza Hut, Star Mart, Total, CM Star, Kraft)
0.07
4
0.28
4. Products in generic prints can be customized on request
0.06
3
0.18
5. Personalization to customers desired 0.06 package design and their preferred contents
3
0.18
6. Product liability is extended only to the 0.02 packaging materials (not to the contents)
3
0.06
7. Provides packing services to large 0.07 companies such as RFM, LTS, Phils., Wrigleys, Kraft
4
0.28
8. Contract/purchase duration of 6 months or more
0.01
3
0.03
9. Four major product types include special 0.04 projects for specific customer interest
3
0.12
10. Investment in Marketing Systems, Inc. to handle toll manufacturing and service lines of DPC
0.04
3
0.12
11. 3rd Place in terms of market share in the industry
0.06
4
0.24
12. Good corporate values and strong 0.06 customer relationships
3
0.18
13. The president is highly engaged in the operations
0.03
3
0.09
14. Liquid line repacking services provides best income opportunities
0.07
4
0.28
orders
have
a
15. Toll packing/manufacturing entails small working capital
0.05
3
0.15
16. Cost Leadership
0.06
4
0.24
17. Strong Brand Image
0.06
4
0.24
1. Did not have formal written company policies on procedures of different functions 0.04
1
0.04
2. policies
0.02
2
0.04
0.02
2
0.04
4. Packaging or repacking function did not bear DPC’s name 0.07
1
0.07
1
0.04
Weakness
3.
5.
Was only able to update HR-related
Fair product position
Centralized organizational structure
Total
0.04
1
3.05
c) Competitive Analysis Dynamic Packaging Company’s direct competitors would include all the other companies
in the packaging industry who are into food repackaging. In terms of market share, DPC’s greatest competitor still holds 50% of the market. The
other major competitors of the company in the industry holds an advantage in terms of forward integration and cost position in relation to their resource position. Major competitor’s level of product differentiation, product line breadth, marketing/sales, and technology used is almost the same as DPC’s.
The price of the services offered by major competitors is relatively higher. Major competitor’s brand reputation and s pecial customer relationships are not that strong compared
to DPC. Their customer and resource position are also relatively weaker than DPC.
B. MATCHING STAGE a) SWOT MATRIX SWOT MATRIX
STRENGTHS WEAKNESSES 1. Does an annual planning 1. Did not have formal session written company 2. Operates in three service lines policies on procedures 3. Major clienteles include 7of different functions Eleven, Shell, Pizza Hut, Star 2. Was only able to Mart, Total, CM Star, Kraft) update HR-related 4. Products in generic prints can policies be customized on request 3. Fair product position 5. Personalization to customers 4. Packaging or repacking desired package design and function did not bear DPC’s name their preferred contents 6. Product liability is extended 5. Centralized only to the packaging materials organizational (not to the contents) structure 7. Provides packing services to large companies such as RFM, LTS, Phils., Wrigleys, Kraft 8. Contract/purchase orders have a duration of 6 months or more 9. Four major product types include special projects for specific customer interest 10. Investment in Marketing Systems, Inc. to handle toll manufacturing and service lines of DPC 11. 3rd Place in terms of market share in the industry 12. Good corporate values and value for customer 13. The president is highly engaged in the operations 14. Liquid line repacking services provides best income opportunities 15. Toll packing/manufacturing entails small working capital 16. Cost Leadership 17. Strong Brand Image 18. Strong Customer Relationships
OPPORTUNITIES 1. Clients want convenience at a relatively affordable price 2. To venture into retailing or repackaging items, carrying their own brand name 3. Diversification to repacking even nonfood items (e.g. shampoo, toothpaste, gel, etc.) 4. Limited industry
SO
WO 1.
(S3, O1) Reach out to
1. (W3,
untapped Big Clienteles for Business Partnerships 2.
(Market Development) (S14, O4) Maintain and
2.
improve Liquid Line Services 3.
(Market Penetration) (S16, S17, S18, O2, O3)
Create New and Related product lines (Related 4.
Diversification) (S18, O1) package in a lot
smaller quantities or do some pairing with products to
O4,
O2,
O3)
Diversify and improve product lines (Product
3.
Development) (W1, O2, O3) Taylor policies that can control employees to work effectively and efficiently to address the future expansion (W1,O2, 03) Establish a written policy pertaining to the do’s and don’ts in dealing new clients and
players; huge growth potential especially on liquid line services 5. Toll packing/manufacturing another venue for growth
entice clients cost sensitive and convenience focused clients (Product
geographic area 4.
Development) 5. (S4, O14) Capitalize on liquid 6.
line services by allocating more budget and focus on it (S17,O2)Retailing of repacked items under the company’s own brand name (Product
5.
Development) 6.
THREATS 1. Greatest competitor holds 50% of the market 2. Possibility of major clients deciding to repack their products
ST
(W5,O2, O3) Apply a centralized organizational structure to accommodate new product venture and diversification (W3,W4, O2) Create a brand logo that will immediately make the end consumers recognize the products the company caters to (W4, O5) Strike an agreement with companies being dealt in toll packing/manufacturing for the company to have the ability to put their own brand in the packaging, like a partnership
WT 1.
(S7,
T2) Maintain
Cost Leadership to keep Clients
1.
(W3,
2.
(S3, S4, S12, S17, T1, T2)
2.
Offer (W3, T2) product/service packages to major client (W1, T1) formulate formal policies on procedures of different functions to help guide the employees of the company
3.
Maintain and Improve Market Position (S3, S7, S15, T1,T2) Give more attention on the toll packing/manufacturing services and offer incentives or profitable packages to the clients/customers to ensure that they will retain in the company and to attract possible customers
3.
T1) product position
Improve
b) SPACE MATRIX FINANCIAL STRENGTH 1. Return on Investment on the year
Rating 4
2000 is 33% and is expected to become 40% in the year 2004. 2. Return on Equity is 38% by the year
5
1999 and 65% on 2000 3. Net profit is too small. If the sales
1
revenue is 40-48 Million from 1992000, and the net profit is 3.3-4.3 Million pesos, it only means that the expenses is too high
INDUSTRY STRENGTH 1. The company’s reach is growing wider
Rating 6
and the number of customers is increasing 4 2. Technology/Innovation 4 3. Does not entail large working capital other than accounts receivable requirements
6
4. Profitability ENVIRONMENT STABILITY
Rating
1. Barriers to entry
-2
2. Competitive market
-2
3. Replacement potential
COMPETITIVE ADVANTAGE
-5
Rating
1. Large customer base
-2
2. Higher margins, limited players in the
-1
industry 3. Third place in terms of market share in
-2
the industry 4. Technological know-how
-3
5. Backward Integration
-2
6. Forward integration
-5
7. Customer Relationships
-1
CONCLUSION: FS Average: 10.00/3= 3.33 IS Average: 14.00/3= 4.67 ES Average: -9.00/3= -3 CA Average: -16/7= -2.29
Directional Vector Coordinates: x-axis: -2.29 + 4.67=2.38 y- axis: -3.00 + 3.33= 0.33
CONCLUSION: Given the results, Dynamic Packaging Company (A) should employ aggressive strategies.
c) GRAND STRATEGY MATRIX Quadrant I
Quadrant II
Firm is in excellent strategic
position
Industry is growing but cannot compete effectively
Firms are in rapid market growth industry
Strategies
Strategies
Market penetration and market
Intensive strategy
development
Horizontal integration if the firm is
Product development
lacking a distinctive competence
Can take risk aggressively when
or competitive advantage
necessary
When
there
resources,
is
then
Divestiture
or
divestiture
excessive backward,
needed
forward or horizontal strategy
can to
liquidationprovide
acquire
funds other
businesses or buy back shares of stocks
Quadrant III
Quadrant IV
Firm is in a low growth industries and
have
weak
competitive
Firm is in a strong competitive position but in a slow growth industry
positions Strategies Strategies
Have the strength to launch diversified
Firm must make some drastic
programs into more promising growth
changes quickly to avoid further
areas
decline and possible liquidation
diversification)
Extensive cost and asset reduction
Shift resources away from the current business into different areas (diversify)
Divestiture or Liquidation
(related
Joint ventures
or
unrelated
Fast Market Growth
Quadrant II
Quadrant I
Weak
Strong
Competitive
Competitive
Position
Quadrant III
Quadrant IV
Position
Rapid Market Growth
Dynamic Packaging Company (A) belongs to Quadrant I. It is in a strong competitive position and rapid market growth industries. The following strategies could be applied by the firm:
Market penetration and market development
Product development
When there is excessive resources, then backward, forward or horizontal strategy
d) Initial Strategies from Matching Stage SWOT Matrix Grand Strategy SPACE Matrix (S3, O1) Reach out to Maintain and improve Maintain and improve untapped Big Clienteles Liquid Line Services Liquid Line Services for Business (Market Penetration) (Market Penetration) Partnerships (Market Maintain and Improve Create New and Related Penetration) Market Position (Market product lines (Related Penetration) Diversification) (S14, O4) Maintain and Create New and Related package in a lot smaller improve Liquid Line product lines (Related quantities or do some Services (Market Diversification) pairing with products to Penetration)
(S16, S17, S18, O2, O3)
Create New and Related product lines (Related Diversification) (S18, O1) package in a lot
smaller quantities or do some pairing with products to entice clients cost sensitive and convenience focused clients (Product
of repacked items under brand
name
own
(Product
O4,
O2,
O3)
Diversify and improve product lines (Product Development)
Taylor policies that can control employees to work effectively and efficiently to address the future expansion (W1,
O2,
Diversify and improve product lines (Product Create a brand logo that will immediately make the end consumers recognize the products the company (Product caters to Give more attention on the toll packing/manufacturing services and offer incentives or profitable packages to the clients/customers to ensure that they will retain in the company and to attract possible customers
O3)
Strike an agreement with companies being dealt in toll packing/manufacturing for the company to have the ability to put their own brand in the packaging, like a partnership
name
own
Development)
written policy pertaining
Maintain and Improve Market Position (Market
Penetration)
brand
(Product
Give more attention on the toll packing/manufacturing services and offer incentives or profitable packages to the clients/customers to ensure that they will retain in the company and to attract possible (Product customers
Development)
(W1,O2, 03) Establish a
Strike an agreement with companies being dealt in toll packing/manufacturing for the company to have the ability to put their own brand in the packaging, like a (forward partnership
integration)
(S17,O2)Retailing of repacked items under the company’s
Create a brand logo that will immediately make the end consumers recognize the products the company caters to
(Product Development)
(forward integration)
Diversify and improve product lines (Product
Development)
(Product Development)
Development) (W3,
Development)
(S17,O2)Retailing
company’s
Development)
Development)
liquid line services by allocating more budget and focus on it
the
entice clients cost sensitive and convenience focused clients (Product
Development)
Development) (S4, O14) Capitalize on
package in a lot smaller quantities or do some pairing with products to entice clients cost sensitive and convenience focused clients (Product
(S17,O2)Retailing of repacked items under the company’s
own
brand
to the do’s and don’ts in
dealing new clients and geographic area O3) Apply a centralized organizational structure to accommodate new product venture and diversification (W5,O2,
(W3,W4, O2) Create
a brand logo that will immediately make the end consumers recognize the products the company caters to (Product Development)
an agreement with companies being dealt in toll packing/manufacturing for the company to have the ability to put their own brand in the packaging, like a partnership (forward (W4,
O5)
Strike
integration) (S7, T2) Maintain Cost
Leadership to keep Clients (Cost Leadership)
(S3, S4, S12, S17, T1, T2)
Maintain and Improve Market Position (Market Penetration) (S3, S7, S15, T1,T2) Give
more attention on the toll packing/manufacturing services and offer incentives or profitable packages to the clients/customers to ensure that they will retain in the company and to attract possible customers (Product Development) (W3,
T1)
Improve
name
Development)
(Product
product position (W3,
T2)
Offer
product/service packages to major client formulate formal policies on procedures of different functions to help guide the employees of the company (W1,
T1)
e) Strategy Criteria These criteria will help in choosing and prioritizing the strategies that will best help Dynamic Packaging Inc., in advancing its goals: (1) to be king in its industry in terms of sales and market share; and (2) to be able to create their own brands and product lines. 1. SPECIFIC- Is the strategy specific? Can it solve or attend to a specific issue and problem? 2. MEASURABLE- Is the strategy measurable? Can we determine whether or not the strategy can be successful? 3. ATTAINABLE- Is the strategy attainable? Can we achieve and perform the strategy with the given resources of the company? 4. REALISTIC- Is the strategy realistic? Can we perform the strategy with the given resources elsewhere? 5. TIME-BOUND- Is the strategy time-bound? Can we achieve it in a particular and reasonable time schedule? 6. PROFITABILITY - Is the strategy profitable? Can it provide more returns than the costs it can incur?
f) Strategy Analysis
Strategy 1: Maintain and improve Liquid Line Services
Strategy 2: Reach out to untapped Big Clienteles for Business Partnerships
Create New and Related product lines
Advantages Disadvantages 1. 1.It increases the 1. 1.They may lose focus probability of higher on and neglect their profit since Liquid line other product lines has the highest 2. 2. Being too focused potential among its on a single thing can lines block one’s view on 2. Strengthens the roots the bigger picture of their Liquid Line services 3. Liquid Line Services has low manufacturing/fixed cost 1. Increase in 1. 1.Promotes coverage/reach dependence on (Market Share and different partners for Market Growth) productivity 2. Not that costly to 2. Possibility of being implement controlled by partners 3. It becomes closer to because of the the end customers partnership 4. It improves their brand 3. Promotes the image due to clienteles’ brand name, additional big names not theirs that’ll be associated to them 5. Better Public Relations to big companies 6. Opens more opportunities and chances of penetrating larger markets 7. Gains more connections 8. Lessens their liabilities on the repacked products 1. Creates opportunities 1. Costly of getting into new 2. Requires research and untouched market about the market they segments want to tap 2. Increases the number 3. Attracts more of their product lines competition 4. Risky because it is offerings 3. Diversification going beyond what
4. Retailing items company’s
name
of repacked under the own
1.
brand
2.
3.
4.
5.
6.
increases their reach They’ll be able to really meet the customers’ other needs Provides more control on the products being packaged Their own brand name will be more visible to the market They’ll be more independent from other clienteles products They’ll be able to capitalize on their strength in terms of cost leadership They’ll be able to create their own name both in the packaging and commodity provider industry Less dependence on clienteles and partners
they are used to
1. 1.It is costly because they will be needing to change their organizational culture to accommodate their growth 2. Costly because they may need a R&D team to formulate new products 3. They’ll have increased liability in the items that they’d release in the market 4. They’ll be competing their newly established brand against the established ones in the market
C. DECISION STAGE a) Quantitative Strategic Planning Matrix (QSPM)
Strategy 1:
Strategy 2:
Strategy 3:
Reach out to Maintain and untapped Big improve Liquid Clienteles for Create New and Line Services Business Related product Partnerships lines Key Factors
Weight
Opportunities 1. Clients want convenience at a relatively 0.17 affordable price 2. To venture into retailing or repackaging items, carrying their 0.17 own brand name 3. Diversification to repacking even non-food items (e.g. 0.15 shampoo, toothpaste, gel, etc.) 4. Limited industry players; 0.1 huge growth potential 5. Toll packing/manufacturing another 0.16 venue for growth
AS
TAS
2
0.34
2
Strategy 4: Retailing of repacked items under the company’s own brand
name
AS
TAS
AS
TAS
AS
TAS
4
0.68
3
0.51
1
0.17
1
0.17
3
0.51
4
0.68
0.34
0 0 2
0.2
1
0.16
0
0
4
0.4
3
0.3
1
0.1
4
0.64
3
0.48
2
0.32
3
0.39
2
0.26
1
0.13
Threats 1. Greatest competitor 0.13 holds 50% of market share
4
2. Possibility of major 0.12 clients repacking their own products
Total Strengths 1. Does an annual planning session 2. Operates in three service lines 3. Major clienteles include 7-Eleven, Shell, Pizza Hut, Star Mart, Total, CM Star, Kraft) 4. Products in generic prints can be customized on request
0.52
0
0
0
0
0
0
0
0
0
0
1
0.03
0
0.02
0
0.07
4
0.28 2
0.06
5. Personalization to customers desired package design 0.06 and their preferred contents 6. Product liability is extended only to the packaging 0.02 materials (not to the contents) 7. Provides packing services to large companies such as 0.07
0
0.14
3
0.21
1
0.07
0
0
0
0
0
0
0
0
0
0
0
4
0.28
2. Possibility of major 0.12 clients repacking their own products
Total Strengths 1. Does an annual planning session 2. Operates in three service lines 3. Major clienteles include 7-Eleven, Shell, Pizza Hut, Star Mart, Total, CM Star, Kraft) 4. Products in generic prints can be customized on request 5. Personalization to customers desired package design and their preferred contents 6. Product liability is extended only to the packaging materials (not to the contents) 7. Provides packing services to large companies such as RFM, LTS, Phils., Wrigleys, Kraft 8. Contract/purchase orders have a duration of 6 months or more 9. Four major product types include special projects for specific customer interest
10. Investment in Marketing Systems, Inc. to handle toll manufacturing and service lines of DPC 11. 3rd Place in terms of market share in the industry 12. Good corporate values and strong customer relationships 13. The president is highly engaged in the operations 14. Liquid line repacking services provides best income opportunities 15. Toll packing/manufacturing entails small working capital 16. Cost Leadership 17. Strong Brand Image Weakness 1. Did not have formal written company policies on procedures of different functions
0
0
0
0
0
0
0
0
0
0
1
0.03
0
0.02
0
0.07
4
0.28 2
0.06
0
0.06
0
0.02
0.07
0.14
3
4
0.01
0
0
0
0
0
0
0
0
0.28 0.14
3
1
4
0.07
0
0.03
0
0.07
0 1 1 1
0
0
4
0.16
2
0.08
3
0.12
1
0.06
3
0.18
2
0.12
0.24
0.04
0.04
1
0.04
0
0.06 0.06
0.21
0
0.04
0.07
0.07
0
0
0.06
1
0
2
0.04
0.21
0
0
0
0
0
0
0
0
0
0
0
0
0.07 0.06 0.06
0
4 4 4
0.28 0.24 0.24
0
3 3 3
0.21 0.18 0.18
0
2 2 2
0.14 0.12 0.12
0
10. Investment in Marketing Systems, Inc. to handle toll manufacturing and service lines of DPC 11. 3rd Place in terms of market share in the industry 12. Good corporate values and strong customer relationships 13. The president is highly engaged in the operations 14. Liquid line repacking services provides best income opportunities 15. Toll packing/manufacturing entails small working capital 16. Cost Leadership 17. Strong Brand Image Weakness 1. Did not have formal written company policies on procedures of different functions 2. Was only able to update HR-related policies 3. Fair product position 4. Packaging or repacking function did not bear DPC’s name 5. Centralized organizational structure
Total
V.
0.06
4
0.24 1
0.04
0
0.04
0
0.03
0
0.07
0
0.07 0.06 0.06
1 1 1
0.04
0.06
3
0.18
2
0.12
0
0
0
0
0
0
0
0
0
0
0
0
0.07 0.06 0.06
4 4 4
0
0.28 0.24 0.24
3 3 3
0
0.21 0.18 0.18
2 2 2
0
0.14 0.12 0.12
0
0.02 0.05
4
0 0.2
3
0 0.15
2
0 0.1
1
0 0.05
0.07
2
0.14
1
0.07
3
0.21
4
0.28
0.01
0
0
0
0
1
2.93
3.76
3.62
2.49
STRATEGIC OBJECTIVES
Marketing Objectives: 1. Increase the number of DPC’s loyal customers by 10% 2. Increase liquid line services’ contribution to DPC’s overall sales revenue to 20% 3. Increase DPC’s market share by 5% 4. Financial Objective: 1. To generate sales revenue of P9, 600,000 from retail products
VI.
ACTION PLAN The Quantitative Strategic Planning Process Matrix (QSPM) revealed the attractiveness
V.
STRATEGIC OBJECTIVES
Marketing Objectives: 1. Increase the number of DPC’s loyal customers by 10% 2. Increase liquid line services’ contribution to DPC’s overall sales revenue to 20% 3. Increase DPC’s market share by 5% 4. Financial Objective: 1. To generate sales revenue of P9, 600,000 from retail products
VI.
ACTION PLAN The Quantitative Strategic Planning Process Matrix (QSPM) revealed the attractiveness
of the four proposed strategies from the Strategy Formulation Stage. These four will be carried over and implemented to best achieve the marketing and management problems to be addressed. The strategies will be implemented in January 2002, nine months after their last annual planning session in March 2001. The nine months will serve as the preparation stage. This plan aims to describe the effect of the proposed strategies within the next five years in terms of financial and competitive growth of the Dynamic Packaging Company. The strategies are all considered to have the attractiveness and propensity to cause growth to the company. So a 4-point Strategic Plan will be used, all having the characteristic to ignite positive change.
Strategy 1 – Maintain and improve Liquid Line Services Rationale: The Liquid Line Services of DPC posed the greatest opportunity for growth. This service line bested in the contribution margin analysis because of higher returns, limited players in the industry, and the huge potential for growth. In order to maximize this strength, DPC should invest to improve its Liquid Line Services. This strategy shall be in two-folds: improve and maintain.
Before we go to the specific actions, presented below are the proposed standards for the products under the Liquid Line Services: Packaging items: a. Should ensure good quality packaging items. There should be no leakage when liquid products are packed. b. Should not have chemical reaction/s with the product. c. Should maintain the original taste of the items d. Should help lengthen the shelf-life of the product e. Crack resistance, puncture and tear resistance and have a tensile strength (for specific products only)
Tactics (1) This strategy will be under the Research and Development , and Marketing Divisions of DPC. (2) The R&D Division will take care of the researches needed to ensure the quality of the packaging system under the Liquid Line Services. (3) Improvements will be also be proposed by the Marketing Division to ensure that each packaging item conforms to the specification of the client ’s needs and the standards of the company.
Strategy 2: Reach out to untapped Big Clienteles for Business partnerships Rationale: Business partnerships with big clienteles will ensure a surge in DPC’s market share
since it entails better penetration of the brand among its customers. Potential clienteles for DPC include Procter & Gamble, PepsiCo, and Unilever. Although establishing partnerships with three of the biggest companies is a long shot, DPC should aim to take a slow but sure approach. This can be done through (a) offering service packages to attract possible cost-sensitive clients, and (b) giving incentives to clients in the form of discounts for specific volume of job orders.
When offering service packages to attract possible cost-sensitive clients: (1) The Sales Department will be tasked to create sales groups (each with a sales manager) to attract potential cost-sensitive clients through sales calls. (2) The Marketing Department can aid in the calls by providing promotional materials regarding the company and its current partners to give potential clienteles an idea about DPC in a nutshell. The marketing department can create service packages that are ideal for the potential clienteles and their existing strategic positions. (3) The Finance and Accounting Department can work together with the Marketing Department to create service packages that will be most
cost-
effective. PACKAGE DEALS PACKAGES
ITEMS INCLUDED
1
6 shampoo + 1 conditioner
2
6 coffee + 1 creamer
3
5 catsup + 1 hot sauce
4
6 bar soap + 1 powdered soap
5
10 chocolate mix + 5 sugar
6
6 toothpaste + 1 bar soap
7
10 vinegar + 5 soy sauce
8
5 chocolate mix + 5 coffee + 5 sugar
9
3 mustard + 1 mayonnaise
10
6 creamer + 6 sugar + 6 milk
11
3 milk + 3 coffee + 3 sugar
12
3 milk + 2 chocolate mix
*minimum size of every items When giving incentives to clients in the form of discounts for specific volume of job orders: (1) The Management Department can work with the Marketing Department regarding the incentive systems that will be most beneficial to the company, with the marketing department placed in-charge of delivering the message to the potential clienteles.
(2) The Finance and Accounting Department will aid the management and marketing departments in coming up with the best incentives (discounts) in accordance with a specific volume of job orders. They will determine the specific volume of job orders and their corresponding discounts.
Strategy 3: Create New and Related Product Lines Rationale: To increase DPC’s market share in the three product lines and augment the company’s sources of growth, DPC can create new and related product lines. This will be done
through product development (by creating a new product line) and propagated by promotional tactics (to increase knowledge of customers about the new product line). DPC can diversify to even repacking the non-food items such as shampoo, gel, toothpaste, and other related products —in addition to their existing product lines. There are two possible actions the company can take: (a) to create a new product line for repacking non-food items; or (b) to create a new product line manufactured from inside and out by DPC’s own production and operations as a result of research and development which will
carry the DPC brand name. The latter will require more expense, which entails that the former will be most ideal. In creating a new product line for repacking non-food items: (1) The company can partner with consumer goods companies and the like to increase its market share and credibility, by having a long-term contractual
partnership to repack their products. (2) The Management Department can assign a manager to the new product line for repacking non-food items, and provide rewards to the employees who are able to establish partnerships with consumer goods companies. With that, the management can link pay to the employees’ performance.
(3) The Operations Department can utilize the existing manufacturing and repacking site to keep costs down. Additionally, the management should
allocate a portion of the company’s resources to the new product line. (4) Then, through promotional efforts spearheaded by the Marketing Department , such as pamphlets sent out to consumer goods companies, DPC
may increase awareness about their new product line (repacking of non-food
items) not only to the said companies, but also to non-partner companies who may be interested in availing their repacking function. (5) In addition, the Marketing Department will use exclusive dealerships with potential partners rather than using multiple distribution channels to strengthen the ties between DPC and potential partners. (6) The Management can also utilize management information systems
(MIS) for easier collection, storage, and retrieval of data concerning DPC’s customers, inventory, sales, human resources, and divisions.
In creating a new product line manufactured from inside and out by DPC’s own
production and operations as a result of research and development which will carry the DPC brand name: (1) The company should first conduct research through its Research & Development Department . The purpose of this research is to know which
products would most likely gather the best response from the market, and provide best use of DPC’s existing re sources.
(2) If the company does not have an R&D department, then the Management has the choice to either establish an in-firm R&D department or sign a
contract with outside research firms to make the process less complex for the company. (3) The Finance Department should determine whether the amount of money to be allocated to R&D will be high, average, or low. Considering that the company uses cost leadership as its competitive strategy, it is advisable to use a low to average amount of money. (4) Since the company will be creating new products from scratch, the Management should develop a division for the new product line. In
partnership with the Marketing and R&D departments, the company should look for the vacant niche in the current market scenario. The best way is to look for an unserved segment that will still generate good returns (based on the results of market research). (5) The Marketing Department will use the results of the research to create a
marketing plan for new products and will encompass the price (how much the product will cost), product (what is the product and the possible product
lines it may have), place (how will the product reach the customers), and promotions (how will DPC promote the product) for the said plan. (6) After substantial research has been conducted, the Operations Department can now be placed in-charge for the manufacturing and production of the product, to the packing, and distributing of the product to its channels. The overall packaging and product design will be done in accordance to the vision of the Marketing and Management Departments. (7) When the new product is introduced into the market, not only will it be produced and packed by DPC, but it will also carry the DPC brand name and logo. (8) The Management can also utilize management information systems
(MIS) for easier collection, storage, and retrieval of data concerning DPC’s customers, inventory, sales, human resources, and divisions.
Strategy 4: Retail repacked items under the company’s brand name Rationale: This strategy will come in both push and pull. Push strategy, in the form of Direct Selling, to promote the products to merchandise and retail level establishments, while pull strategy to be implemented in the form of place marketing within these establishments. (1) By October 2001, the Production/Operations Division of Dynamic Packaging Company (DPC) is assumed to have already manufactured and printed both food and non-food products carrying their brand name. (2) To start the push strategy, the Marketing Division will take care of the
Segmenting, Targeting, and Positioning (STP) of the products. They will start segmenting the establishments in the National Capital Region and nearby provinces, particularly Rizal, Cavite, and Bulacan. From a standpoint of starting a new business, it will be strategic for Dynamic Packaging Company to start selling their new product lines within close proximity to minimize logistical costs. (3) After determining the geographical locations of target establishments, Dynamic Packaging Company should then segment them according to size. This strategy will target small to medium merchandising and retailing
stores.
(4) After determining the stores to be partnered, the products of Dynamic Packaging Company will be positioned to be among the cost leaders in its respective categories. The potential partners will enjoy the cheap prices of the products, ensuring to capture the price-sensitive customers. (5) After the STP Process, the Logistics Division will take care of the travelling tasks: carrying the goods and transportation expenses. While Marketing will do the Direct Selling. Funding will then be provided by the Finance Division. (6) To entice these establishments better, discounts and free package deals will be implemented. For example, for every 5 dozens of DPC toothpaste purchased by the establishment, another half dozen will be given for free. The list of package deals is presented below. (7) For the Pull strategy, posters of the products of Dynamic Packaging Company will be placed inside the establishments. It will be displayed in walls and near the shelves. It will emphasize the cheap prices of the DPC product lines.
VII.
RECOMMENDED ORGANIZATIONAL STRUCTURE
