Case1-mama-bear.docx

Title of the Case: MAMA BEAR Time Context/Period: August of 2010/3rd Quarter of 2010

Summary/Abstract Different business organizations aim to be successful with their chosen venture. Most of them use different ways and strategies on how to attain their goal which require rational decision making among its owners. Unfortunately, not all the owners commingle with the same idea as of the others. Which leads to some difficulty in formulating a sound and thorough judgment. In relation to that, this case leads us into an analysis of what best alternative will the partners of Mama Bear choose to optimize the potential of the partnership. Mama Bear is a business that started with only four enrollees which radically increased into greater numbers due to referrals of satisfied clients. Their hardships and collaborative efforts drove them into the success more than they expected to be. The partnership is experiencing a steady growth and studies show that the need for quality child care is continuously increasing. With this juncture, they are planning to expand their business into a corporation that caused the partners to some disagreements about the said plan. Furthermore, this case analysis provides guidance into which action will give the best outcome base on the analysis and considerations of the alternative courses of action.

Corporate Social Responsibility 

Partners at the Mama Bear Child Care Center aim to help working parents specifically mothers in addressing their work/life issue of taking full responsibility of their children while their work done through the development of quality childcare center.



They also want to contribute to the alleviation of the country’s unemployment rate through the employment of more personnel with the addition of more centers.

I.

STATEMENT OF THE OBJECTIVE To distinguish the best course of action on how the partners will invigorate the company’s potential as to whether the partners will retain or expand the business.

II.

CENTRAL PROBLEM How will the partners venture to optimize the business' potentials and to expand the business considering the different point of views of the owners that set the disagreements between them.

III.

AREAS OF CONSIDERATION STRENGTHS 1. Mama Bear company is referred by satisfied clients to other working parents. 2. They have the advance tools and quality services that accommodates the parents’ necessity. (e.g. The use of networked digital cameras so parents can have real-time connection with their children. 3. The business is experiencing a steady growth of operations

4. They have co-partnered with big and stable companies such as PLDT, Philippine Stock Exchange, CitiBank, HSBC, and BPI. 5. The partners are hardworking, frugal, and do have positive mindsets and attitude. 6. The partners are proficient or expert on their assigned fields. (e.g. Alayn who is a special education teacher and a childcare specialist.) 7. Their participation in helping others through Gawad Kalinga that gives a good perception of the business. WEAKNESSES 1. The conflicting point of views of the partners 2. The impertinence of the partners to their employees by not giving some of their benefits. 3. Employees leave the company after gaining experience and training. 4. Unskilled employees assume temporarily the vacant roles of the employees who resigned. 5. Partners do not have much bargaining power with customers and suppliers as to what a big player does. OPPORTUNITIES 1. They have a growing number of potential customers due to the increasing number of women in the workforce. 2. The increase in demand for quality childcare due to the significant changes in the family dynamics.

3. The ability of the company to become a larger organization specifically being a corporation. 4. Technological innovations to improve their business processes and give a competitive edge. 5. Market opportunities that will exploit the company’s potential as the organization becomes larger. THREATS 1. The increasing number of competitors 2. The carnage that happened at the Quirino Grandstand that might lead to losing some of their clients 3. Copycat businesses who imitate the services provided by the company. 4. Technological changes that might make their current services outdated

IV.

ALTERNATIVE COURSE OF ACTION 1. Retain the current status as it is. ADVANTAGES Lesser cost of converting larger business organization

DISADVANTAGES They will lose their opportunity to grow as a business.

Less pressure on the partners with respect to growing and declaring dividends as a corporation.

Fast growing competitors may surpass them.

Lesser time devoted on the decision making process.

They will lose chance to earn a higher profit.

Lesser span of control results to more accurate control of the company. Lesser risk of losing capital and profit due to risky decisions

The opportunity for bargaining power will also not be attained Lesser people in the hierarchy means little contribution of ideas in the decision and strategy making of the company.

2. Expand the business by making it a corporation ADVANTAGES There will be a greater chance of earning a higher profit

DISADVANTAGES Higher cost incurred of changing into a new organizational structure

They will have the bargaining power to its customers and suppliers

It requires a higher capitalization.

There will be more ideas contributed that will help in the decision and strategy making of the company.

The possibility of having a business failure if they keep numb of significant market data that is relevant to the business.

Market opportunities will help the organization exploit its potential.

Continuous innovation to keeping updated with the new trends requires more cost.

Being a corporation helps the company to have more funds through investors that may become attracted because of its new structure.

It will take longer time for a decision to be processed.

3. Sell the whole business ADVANTAGES It will take out the tension of the partners with the problems that the company entails. There will have more time for themselves for there will be no more business that will take much of their time. The proceeds from the sale of the business can be used into other forms of business for each partner.

DISADVANTAGES They partners lose a huge amount of income. They will lose the chance earn a higher profit They will lose the opportunity to exploit the potential of the company.

V.

RECOMMENDATION/STRATEGY FORMULATION I therefore conclude that the best solution to the problem is alternative course of action number 2 which is to expand the business by making it a corporation because even though incorporating it as a corporation is risky, the returns and the rewards that it constitutes will be beneficial to the partners and to the future investors of the corporation. Although there are disadvantages with this alternative, this can be reduced or prevented to the implementation of different strategy and plan of action that the company will create. Since risk is directly proportional to returns and rewards, it would be good for everyone in the long run. Expanding into greater business structure leads to a lot of market opportunities that will exploit the company’s potential. There will also be greater capital from investors that is necessary for the corporation’s continuous growth that will result into gaining higher profit. It will also help reduce unemployment in the country because larger companies require more personnel which in turn achieves its corporate social responsibility objective. Risk is inherent in every business and if we don’t have the courage to do it, we wouldn’t be enjoying the rewards and benefits associated with it.

VI.

PLAN OF ACTION 1. Before restructuring the partnership into a corporation, every partner should agree to the chosen alternative course of action. The benefits associated with fulfilling the alternative must be clearly presented to everyone to help them convince to form a corporation.

2. They must raise enough capital or funds in preparation of the company’s change of business structure. They could take the advantage of having a good credit line to borrow funds needed for the said expansion. 3. They must seek for the help of an expert or an adviser to ask for advice to give them the details and information that they will need as they go along with the business restructuring. 4. Look for a venture capitalist who has a meaningful and relevant experience that can greatly contribute creative and essential ideas that is of great help to the business for further success 5. Study and research for applicable marketing strategy to improve the corporation’s performance and standing in the competition 6. Employ skilled and qualified workers that will give value added services to the business 7. Reduce the weaknesses of the business such as giving incentives to the employees for their overtime work. VII.

POTENTIAL PROBLEMS 1. What if the funds needed or the contributions from the prospective shareholders do not meet the required amount? 2. What if there is a sudden decrease in demand for quality childcare center due to the internal failure caused by the personnel? 3. What if the survey that was used as basis for target customers suddenly becomes unfavorable on the part of the company?

4. What if the expected cash inflow does not cover and exceed the estimated cash out flow? 5. What if the government imposed a new order that is unfavorable for the business? 6. What if a change in technology makes the currently used tools of the center outdated and requires the fund established to be used for improvement rather than forming a corporation? 7. What if economic fluctuations arise affecting the company as well as the prospective investors? VIII.

CONTINGENCY PLAN 1. Since Mama Bear has a good credit standing, the partners could borrow the amounts needed to suffice the required funds. 2. The partners should think of a marketing strategy or prove that the failure is already solved that will clear their name out of the internal glitch and any failure of the personnel should be given appropriate actions. 3. The partners must think of a new way on how they could be into the current trends even if they are experiencing a decrease in target customer. 4. Look for some cost that can be reduced prior to the formation of the corporation and also seek for an advice on how to increase the business’ cash inflow. 5. Retain the business as a partnership because unfavorable effect of the imposed policy might result to a risk not being compensated with the returns and rewards expected if the formation of the corporation was still pursued.

6. The partners should choose to acquire the necessary tools needed for improvement rather than forming the corporation because the tendency is that the partnership will lose its clients and go to some other child centers who is better than Mama Bear. It is better to secure the partnership’s customers than to form a corporation with no clients in the future. 7. The partnership must be retained as it is to reduce the risk associated with the change from partnership to corporation because economic fluctuations will cause the risk to be higher and make this risk into heavy losses of the capital invested rather than being compensated with high returns and rewards.