Filinvestland-compile-strama.docx

I. INTRODUCTION Filinvest Land, Inc. (FLI) is one of the leading real estate developers in the Philippines. It is a subsidiary of Filinvest Development Corporation (FDC), which has more than 40 years of experience in real estate development. FLI was incorporated on November 24, 1989 as Citation Homes, Inc. and changed its name to FLI on July 12, 1993. It began commercial operations in August 1993 after FDC spun off its real estate operations and transferred all related assets and liabilities to FLI in exchange for shares in FLI. FLI was listed on the Philippine Stock Exchange (PSE) on October 25, 1993. FLI’s business has historically focused on the development and sale of affordable and middle-market residential lots and housing units to lower and middle-income markets throughout the Philippines. It has developed over 2,400 hectares of land, and provided home sites for over 150,000 families, which makes it one of the largest home providers in the Philippines today. In recent years, FLI has expanded its residential business to include other income segments (highend) and themed residential projects with a leisure component, such as farm estates and developments anchored by sports and resort clubs. FLI has substantial experience in developing and introducing new formats to the residential real estate market. The Company intends to be at the forefront of market changes by continually innovating and introducing new project formats to anticipate and meet market demands. Recent innovations includes: (a) Homes situated on small lots designed to be expanded vertically through the addition of a second storey without requiring the occupants to vacate the home while the second storey is being added. (b) The “Entrepreneurial Village” or “Asenso Village” concept which is the result of a collaborative effort with the Government to allow entrepreneurs with small- and medium-size businesses to live and work in a residential development with access to Government agencies that assist small businesses.

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FLI is also a pioneer in the development of very large master-planned township developments which provide a convenient mix of commercial, industrial and residential uses. FLI currently has over 150 projects located in 48 cities and municipalities nationwide. The Company has an extensive network of sales offices, in-house sales agents and independent brokers located throughout the Philippines, as well as accredited brokers in countries and regions with large Overseas Filipino Workers (OFW) and expatriate Filipino populations (such as Japan, Italy, the United Kingdom and the Middle East). Approximately half of FLI’s real estate sales are directly or indirectly derived from Overseas Filipinos (OFs). FLI has, over the years, accumulated an extensive, well-located, low-cost landbank. As of the end of 2016, FLI’s landbank stood at 2,390 hectares, bulk of which is located just outside Metro Manila in the nearby provinces of Rizal, Bulacan, Batangas, Cavite and Laguna, as well as in growth areas such as Cebu, Davao and General Santos City in South Cotabato province. FLI currently has significant investments in rental properties for office and retail tenants. Among these investments are: (1) The Festival Supermall, in Filinvest City (FC) in Muntinlupa (southern Metro Manila), (2) A 60% stake in Filinvest Asia Corporation which owns half of PBCom Tower within the Makati Central Business District, and (3) A 60% stake in Cyberzone Properties, Inc., developer of office buildings in Northgate Cyberzone, a 10-hectare Business Process Outsourcing (BPO) office park with multinational tenants. Festival Supermall is the largest shopping center in Southern Metro Manila with a gross area of 200,000 square meters. It has over 600 retail stores and outlets, ten cinemas and two themed amusement centers. It also has exhibit, trade and music halls which are leased out to events like trade fairs. PBCom Tower is currently the tallest building in the Philippines with 52 floors. It is located at the corner of Ayala Avenue and Herrera Street in Makati City. Filinvest Asia Corporation owns 35,000 square meters of leasable office space in PBCom Tower, which is leased out to about 30 tenants which include multinational companies and BPO firms. Meanwhile, Northgate Cyberzone, the BPO campus within Filinvest Corporate City, currently has eighteen (18) office buildings. This makes FLI the leader in developing offices with infrastructure to support IT-related and BPO businesses in the growing southern Metro Manila area. Filinvest Land Incorporated – Strategic Management Paper P a g e 2 | 69

FLI has a 20% stake in Filinvest Alabang, Inc. (FAI), the developer of the 244-hectare Filinvest City (FC). Since the start of its development in 1995, FCC has grown to become a major destination in southern Manila that services all segments of the population with a wide array of retail, office and residential developments. The corporate city is home to key anchors such as the Asian Hospital and a fast growing office base in the Northgate Cyberzone. The second busiest transport terminal in Metro Manila is in the immediate vicinity, making FCC a major gateway for commuters going into and out of Metro Manila from the south. The completion of the extension of the Skyway elevated road to Alabang will significantly enhance the value of FCC and further increase its attractiveness as the location of choice for offices and residential living in the South of Metro Manila. II. RESEARCH DESIGN AND METHODOLOGY Data and Information

Methodology

III. COMPANY’S MISSION, OBJECTIVE, AND SHARED VALUES. MISSION: The primary responsibility of Filinvest Land is to the people that inhabit the cities, communities, and homes it has created. Filinvest will continually contribute to the economic development of society and will function as a good corporate citizen. OBJECTIVE: Filinvest shall provide its customers with universally competitive products that are valued not only for quality but in terms of affordability for all income levels. Only through research and

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development, innovation, and the use of appropriate technology can high quality services be provided. Affordable housing shall always be a high priority in company endeavors. Coupled with safeguarding and maximum utilization of company assets, this long-term view (one of holding permanent the strategic health of Filinvest) should lead to better and sounder returns for stockholders. The continuous pursuit of this mission can only result in industry leadership. SHARED VALUES In the delivery of service to these people, high quality will be the one and only standard. A singularity of interest exists between the company and its employees, providing good working conditions, compensation based on performance, opportunity for growth and employment security are musts. Innovation, professionalism, and teamwork are highly valued. The highest standards of business and moral ethics shall be exercised. The long-term strategic health of Filinvest will always be paramount over short-term financial gains.

REVIEW OF THE EXISTING VISION AND MISSION Parameter

Y/N

Why?

Does it clearly answer the

Y

It is to offer affordable

question: What do we want

service

to become?

people

which to

to

the

inhabit

the

cities, communities and homes it has created

Filinvest Land Incorporated – Strategic Management Paper P a g e 4 | 69

N

Is it concise enough yet

It is too short but the quality of inspiration is

inspirational?

high

that

it

can

encourage its costumer to

patronize

their

products Does

it

give

N

clear

Since the business is in

indication as to when it

going concern principle,

should be attained?

there mission and vision should be continuous as to its action

Parameter CUSTOMERS:

Y/N Who

are

the firm’s customers?

Why? Those are in the low to middle and

income

earner

overseas Filipino

Worker PRODUCTS

OR

Residential lots, housing

SERVICES: What are the

unit,

other

income

firm’s major products or

segments (high-end) and

services?

themed

residential

projects with a leisure Filinvest Land Incorporated – Strategic Management Paper P a g e 5 | 69

component, such as farm estates

and

developments by

sports

anchored

and

resort

clubs. To those extensive but

MARKETS: Geographically,

where

low-cost

land

bank,

located outside of metro

does the firm compete?

manila

in

provinces Bulacan,

the

nearby

of

Rizal, Batangas,

Cavite, and Laguna. TECHNOLOGY: firm

Is

the

technologically

current? CONCERN

FOR

SURVIVAL,

GROWTH

AND PROFITABILITY: Is the

firm

growth

committed and

to

financial

soundness? PHILOSOPHY: What are the basic beliefs, values,

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aspirations

and

ethical

priorities of the firm? SELF-CONCEPT: What is the

firm’s

distinctive

competence

or

major

competitive advantage? CONCERN FOR PUBLIC IMAGE:

Is

responsive

the to

community

firm social, and

environmental concerns? CONCERN EMPLOYEES:

FOR Are

employees a valuable asset of the firm?

REVISED VISION AND MISSION Revised Vision Statement

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Parameters

Y/N

Why?

Does it clearly answer the question: What do we want to become? Is it concise enough yet inspirational? Does

it

give

clear

indication as to when it should be attained?

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Revised Mission Statement

Parameter CUSTOMERS:

Y/N

Who

Why?

are

the firm’s customers? PRODUCTS

OR

SERVICES: What are the firm’s major products or services? MARKETS: Geographically,

where

does the firm compete? TECHNOLOGY: firm

Is

the

technologically

current? CONCERN SURVIVAL,

FOR GROWTH

AND PROFITABILITY: Is Filinvest Land Incorporated – Strategic Management Paper P a g e 9 | 69

the

firm

growth

committed and

to

financial

soundness? PHILOSOPHY: What are the basic beliefs, values, aspirations

and

ethical

priorities of the firm? SELF-CONCEPT: What is the

firm’s

distinctive

competence

or

major

competitive advantage? CONCERN FOR PUBLIC IMAGE:

Is

responsive

the to

community

firm social, and

environmental concerns? CONCERN EMPLOYEES:

FOR Are

employees a valuable asset of the firm?

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IV. EXTERNAL ANALYSIS 4.1 General Environment 4.1.1 Political and Governmental Forces -

Change in Tax Law “Tax reform Acceleration and inclusion law”

-

Size of the government fund/budget: According to the administration of Duterte “the 2018 general appropriations act, which is 12% higher than last year’s budget, will primarily support infrastructure development and free education in state universities and colleges, universal health care, free irrigation” related to this, in the 2018 national budget the Department of public works and highways (DPWH) with allocation of 637.86 billion. This may have a huge impact to the real estate industry, the time consume in the traffic in the Philippines may reduce which leads to better transportation subsequently consumer may use to go home rather to have condominiums.

4.1.2 Economic Forces 4.1.2.1 GDP and GNP -

According to the Philippine statistic Authority, the Philippines economy grew an annual 6.9 percent in the September of 2017, further, an upwardly revised of 6.7 percent expansion in the last quarter of the year 2017, furthermore, the market consensus of the Philippines grows up to 6.5 percent. The said growth was the strongest since the third quarter of 2016, it is happened because of the faster pace and the rose of the government spending from 7.1 percent last June year

2017

to

8.3

percent last September it is because of the large infrastructure construction program e.g Slex-Nlex skyway, also the decrease in private consumption from 7.2 percent to 4.5 percent it is because of the decelerate of the top contributor in the house hold expenditure, as the food and non-alcoholic consumption from 8.4 recorded from the previous year to 3.4 percent, aside from that, the housing, water, Filinvest Land Incorporated – Strategic Management Paper P a g e 12 | 69

electricity, gas and fuels slowed down by 2.6 percent from 8 percent of the previous year 2016, investment and the increase in exports. -

Services are the biggest sector of the Filipino economy and account for 57 percent of total GDP. Within services the most important segments are: trade, repair of motor vehicles and household goods (17 percent of total GDP); real estate, renting and business activities (11 percent); transport, storage and communication (8 percent); financial services (7 percent) and public administration, defense and social security (4 percent). Industry accounts for 31 percent of GDP. Within industry, manufacturing (22 percent of total GDP) and construction (5 percent) are the most important. Agriculture contributes the remaining 12 percent of GDP.

4.1.2.2 Real Estate, Renting, and Other Business Activities (RERBA) -

RERBA posted a 7.7 percent growth in the third quarter of 2017, slower than the 8.9 percent growth recorded in the previous year. The growth was driven by Renting and Other Business Activities which grew by 11.0 percent as compared with the 13.1 percent growth in the same period of the previous year. Meanwhile, Ownership of Dwelling sped up by 2.9 percent from 2.8 percent growth in the third quarter of 2016. Real Estate expanded by 7.7 percent, slower compared with the 9.7 percent growth recorded in 2016.

4.1.2.3 Tax impositions that increase the take home profits of the workers 4.1.2.4 Changes in market rental rates; 4.1.2.5 BPO’s -

In 2016, BPO in the Philippines continued to experience a positive growth rate. Activity in the industry appears to be robust enough such that the industry’s projected total income range would reach US$ 40 to 55 billion by 2020. The Industry, currently employing about 1 million Filipinos, is also projected to increase employment by providing a total

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of about 1.3 to 1.5 million new jobs in the next three years, both in terms of employees directly and indirectly employed. The BPO industry is regarded as a priority by the Philippines Development Plan as essential to the country’s ten high priority development areas. To further entice investors, existing government programs include incentives such as tax holidays, tax exemptions, and simplified export and import procedures. For local industry sectors, the leading subsector is Call Centers. The Philippines BPO industry has overtaken India as the leading call center country, and due to this, the subsector is projected to continue to maintain the largest contribution to the industry’s growth in future years. According to a UA&P (University of Asia and the Pacific) industrial economist, the call center sector is projected to continue a robust growth rate until 2020. 4.1.3 Social, Cultural and Demographic Forces 4.1.3.1

Population is increasing -

According to world meter in 2016 the Philippines population is 103,320,222 and it increase in the year 2017 to 104,918,090 with the yearly percentage change of 1.55%

4.1.3.2 Number of employed, unemployed and underemployed -

According to Philippine Statistic Authority the preliminary results of the Annual Labor and Employment Estimates for 2016 based on the average of the four (4) LFS rounds (January, April, July and October) reported an annual labor force participation rate of 63.4 percent out of the 68.1 million population 15 years old and over. Compared to the 2017 annual labor force participation rate with the same basis it declines to 61.2 percent out of 69.9 million. This is equivalent to about 43.2 million to 42.8 million economically active population comprising either the employed or unemployed persons.

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-

The annual employment rate in 2016 was reported at 94.5 percent or approximately 40.8 million matched to the annual employment rate in 2017 was reported at 94.3 percent approximately 40.3 million, it was decreased by .2 percent or approximately 500,000

-

The 2016 annual unemployment rate was 5.5 percent it is about 2.4 million match up to 2017 annual unemployment with the rate of 5.7 percent it is about 2.4 million.

-

The underemployed persons or those employed persons who express the desire to have additional hours of work in their present job or to have additional job, or to have a new job with longer working hours was estimated at 7.5 million persons corresponding to an underemployment rate of 18.3 percent. Judge against 2017 underemployed with the estimate at 6.5 million persons corresponding to an underemployment rate of 16.1 percent.

4.1.3.3 Lifestyle choice -

Institutional population constitutes that part of the total population whose usual place of residence are collective or institutional living quarters (ILQs) such as hotels, motels, lodging houses, and dormitories; hospitals and nurses' homes; welfare institutions; corrective and penal institutions; convents, nunneries, seminaries, and boarding schools; military camps and stations; logging, mining, construction/public works camps; oceangoing and interisland/coastal vessels; and refugee camps. As of August 1, 2015, the institutional population of the country totaled 405,588 persons, or 0.4 percent of the country's total population of 100,981,437 persons. This figure is higher by 168,453 persons compared with the 237,135-institutional population that was reported in 2010. 114,392 persons came from hotels, motels, lodging houses, and dormitories.

4.1.3.4 Number of OFW and their remittance Filinvest Land Incorporated – Strategic Management Paper P a g e 15 | 69

-

According to the survey done by the PSA, the number of Overseas Filipino Workers (OFWs) who worked abroad at any time during the period April to September 2015 was estimated at 2.4 million. In the same period any time during the April to September 2016, the number of the overseas Filipino workers decrease to 2.2 million.

-

In the same survey, the total remittance sent by OFWs during the period April to September 2015 was estimated at 180.3 billion pesos. These remittances included cash sent home (135.6 billion pesos), cash brought home (37.3 billion pesos) and remittances in kind (7.4 billion pesos). However, even though the number of the OFW decrease the total remittance sent by OFWs during the period April to September 2016 was estimated at 203.0 billion pesos higher than last survey period. These remittances included cash sent home (146.0 billion pesos), cash brought home (45.7 billion pesos) and remittances in kind (11.1 billion pesos).

4.1.3.5 Staycation -

Accordingly, the term staycation has been rising every year in the Philippines since 2011. In fact, the average increase has been 10%. This implies that more and more Filipinos are searching for staycation options and would prefer to stay not only in the country but also in close proximity to home. There are some factors that account for this increasing staycation trend in the Philippines. Staycations provide cheaper cost to a better alternative to inter-island or international travel. It also provides them with that much-needed rest and relaxation, much better than tiring themselves out again on a long trip.

4.1.4 Natural Environment Forces 4.1.4.1 Climate change

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-

The Philippines has experienced a number of major natural catastrophes over the years, including typhoons, droughts, volcanic eruptions and earthquakes. There can be no assurance that the occurrence of such natural catastrophes will not materially disrupt the Company’s operations. These factors, which are not within the Company’s control, could potentially have significant effects on the Company’s housing and land development projects, many of which are large, complex estates with infrastructure, such as buildings, roads and perimeter walls, which are susceptible to damage. Damage to these structures resulting from such natural catastrophes could also give rise to claims against the Company from third parties or from customers, for example for physical injuries or loss of property. As a result, the occurrence of natural or other catastrophes or severe weather conditions may adversely affect the Company’s business, financial condition and results of operations.

-

Further, although the Company carries insurance for certain catastrophic events, of types, in amounts and with deductibles that the Company believes are in line with general real estate industry practice in the Philippines, there are losses for which the Company cannot obtain insurance at a reasonable cost or at all. Neither does the Company carry any business interruption insurance. Should an uninsured loss or a loss in excess of insured limits occur, the Company could lose all or a portion of the capital invested in a property, as well as the anticipated future turnover from such property, while remaining liable for any project construction costs or other financial obligations related to the property. Any material uninsured loss could materially and adversely affect the Company’s business, financial condition and results of operations.

-

To mitigate the impact of natural and other catastrophes on the Company’s operations, the contractors are required to get Contractor’s All Risk Insurance which covers all risks, including acts of God. Upon

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the completion and turnover of the units to FLI, the Company gets Commercial All Risk Insurance, which also includes acts of God, with the amount insured equivalent to the construction cost. Even when the unit is turned over to the buyer, and still under in-house financing, the unit continues to be covered by Commercial All Risk Insurance. For the properties FLI leases out, these are covered by Commercial All Risk Insurance, which include acts of God, as well as Business Interruption Insurance wherein lost revenues due to conditions covered by the Commercial All Risk Insurance can be claimed. 4.1.4.2 Traffic in the Philippines, -

according to a study conducted by Boston Consulting Group, the Philippines’ capital region placed at the 3rd spot of the most worst traffic in Southeast Asia, and it shows Metro Manila Motorist and Commuters get struck in the traffic for an average of 66 minutes daily. On the top of 66 minutes traffic experience, driver also spend an average of 24 minutes per day in searching of parking. Moreover, as expected, according to the respondent from metro manila, the travel time doubles during the rush hour in the morning and in the evening

4.1.5 Legal Forces 4.1.5.1 Government regulations that help in fair business competitions by securing domestic company from foreign investors who would like to have business in the Philippines 4.1.5.2 The Company is subject to Republic Act No. 6552 (the “Maceda Law”), which applies to all transactions or contracts involving the sale or financing of real estate through installment payments, including residential condominium units (but excluding industrial and commercial lots). Under the Maceda Law, buyers who have paid at least two years of installments are granted a grace period of one month for every year of paid installments to cure any payment default. If the contract is cancelled, the buyer is entitled to receive a refund of Filinvest Land Incorporated – Strategic Management Paper P a g e 18 | 69

at least 50% of the total payments made by the buyer, with an additional 5% per annum in cases where at least five years of installments have been paid (but with the total not to exceed 90% of the total payments). Buyers who have paid less than two years of installments and who default on installment payments are given a 60-day grace period to pay all unpaid installments before the sale can be cancelled, but without right of refund. While the Company historically has not experienced a material number of cancellations to which the Maceda Law has applied, there can be no assurance that it will not experience a material number of cancellations in the future, particularly during slowdowns or downturns in the Philippine economy, periods when interest rates are high or similar situations. In the event the Company does experience a material number of cancellations, it may not have enough funds on hand to pay the necessary cash refunds to buyers or it may have to incur indebtedness in order to pay such cash refunds. In addition, particularly during an economic slowdown or downturn, there can be no assurance that the Company would be able to re-sell the same property or resell it at an acceptable price. Any of the foregoing events would have a material adverse effect on the Company’s business, financial condition and results of operations. 4.1.5.3 The Philippines’ property development industry is highly regulated. The development of subdivision and other residential projects is subject to a wide range of government regulations, which, while varying from one locality to another, typically include zoning considerations as well as the requirement to procure a variety of environmental and construction-related permits. In addition, projects that are to be located on agricultural land must get clearance from the Philippine Department of Agrarian Reform (“DAR”) so that the land can be re-classified as non-agricultural land and, in certain cases, tenants occupying agricultural land may have to be relocated at the Company’s expense. Presidential Decree No. 957, as amended, (“PD 957”) and Batas Pambansa Blg. 220 (“BP 220”) are the principal statutes which regulate the Filinvest Land Incorporated – Strategic Management Paper P a g e 19 | 69

development and sale of real property as part of a condominium project or subdivision. PD 957 and BP 220 cover subdivision projects for residential, commercial, industrial or recreational purposes and condominium projects for residential or commercial purposes. The Housing and Land Use Regulatory Board (“HLURB”) is the administrative agency of the Government which enforces these statutes. Regulations applicable to the Company’s operations include standards regarding: the suitability of the site; road access; necessary community facilities; open spaces; water supply; sewage disposal systems; electricity supply; lot sizes; the length of the housing blocks; and house construction. All subdivision development plans are required to be filed with and approved by the local government unit with jurisdiction over the area where the project is located. Approval of development plans is conditioned on, among other things, completion of the acquisition of the project site and the developer’s financial, technical and administrative capabilities. Alterations of approved plans that affect significant areas of the project, such as infrastructure and public facilities, also require the prior approval of the relevant government unit. There can be no assurance that the Company, its subsidiaries or associates or partners will be able to obtain governmental approvals for its projects or that when given, such approvals will not be revoked. In addition, owners of or dealers in real estate projects are required to obtain licenses to sell before making sales or other dispositions of subdivision lots and housing units. Project permits and any license to sell may be suspended, cancelled or revoked by the HLURB based on its own findings or upon complaint from an interested party and there can be no assurance that the Company, its subsidiaries, associates or partners will in all circumstances, receive the requisite approvals, permits or licenses or that such permits, approvals or licenses will not be cancelled or suspended. Any of the foregoing circumstances or events could affect the Company’s ability to complete projects on time, within budget or at all, and could have a material adverse effect on its financial condition and results of operations. To mitigate Filinvest Land Incorporated – Strategic Management Paper P a g e 20 | 69

the risk of development and application regulations in the Philippines having an adverse effect on FLI’s projects, the Company’s Legal Department and Engineering Department ensure that all projects are compliant with Government regulations and specifications. 4.1.6 Technological -

Availability of technologies for efficient business transactions and operations

-

Entry of the third-party internet provider

-

Online reservation of rooms and payment in banks through the use of cellphones.

4.2 Industry and Competitor Analysis 4.2.1

Five Porter’s Forces FORCES

Rivalry among competing firms

Strong force

Potential entry of new competitors

Medium force

Bargaining power of consumers

Strong force

Potential development of substitute products

Medium force

Bargaining power of suppliers

Medium force

4.2.1.1

Rivalry among competing firms -

Its direct competitors include Ayala Land Inc., Vista Land, Robinsons Land, and DMCI.

4.2.1.2

Bargaining power of consumers -

There only few real estate developers who offers affordable and high quality services. Therefore, the bargaining power of consumer is very low

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4.2.1.3

Potential development of substitute products -

According to Philippine Statistic Authority Final results of the 2014 Annual Survey of Philippine Business and Industry (ASPBI) showed that a total of 4,862 establishments in the formal sector of the economy were engaged in real estate activities. Majority (89.6%) or 4,358 establishments had a total employment (TE) of less than 20. The remaining 504 establishments (10.4%) were with TE of 20 and over.

-

Real estate activities with own or leased property had the highest number of establishments with 4,240 establishments (87.2%) while the rest of the firms were involved in real estate activities on a fee or contract basis. The threat of hotels who offers contractual basis, and check-in basis is a small threat compare to the competitors of the business. Therefor the risk of substitution is low to average.

4.2.1.4

Bargaining power of suppliers -

The Parent Company’s cost of sales is affected by volatility in the price of construction materials such as lumber, steel and cement. While the Parent Company, as a matter of policy, attempts to fix the cost of materials component in its construction contracts, in cases where demand for steel, lumber and cement are high or when there are shortages in supply, the contractors the Parent Company hires for construction or development work may be compelled to raise their contract prices. As a result, rising cost of any construction materials will impact the Parent Company’s construction costs, and the price for its products. Any increase in prices resulting from higher construction costs could adversely affect demand for the Parent Company’s products and the relative affordability of such products as compared to competitors’ products. This could reduce the Parent Company’s real estate sales.

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-

The major raw materials used by the Company for the development and construction of its projects are cement and steel bars as well as the finishing materials. These materials are sourced from local suppliers. The Company has about 150 suppliers, the major ones of which include the following: Material supplied

Company

-

-

Cement

Apo Cement Corporation and Holcim Phils., Inc.

-

Steel Bars

-

Capitol Steel Corporation, Pagasa Steel Works, Inc., Universal Steel Smelting Co., Inc.,Steel Asia

and

Cebu

Steel

Ceramics,

Inc.,

Corporation -

Tiles

-

Lepanto

Mariwasa Siam Ceramics, and Cebu Oversea Hardware Co., Inc. -

PVC Pipes, Cast Iron

-

Materials -

Philippine

Valve

Manufacturing Co.

Plumbing Materials

-

Cebu Oversea Hardware Co., Inc.

and

Co

Bian

Kiat

Hardware, Amici Mercantile, Inc. -

The Company uses over 100 contractors for land development and construction works. These include the following contractors: Longridge Construction,

Inc.,

CE

Construction,

Megawide

Builders,

RvabKonstruct Inc., RGL Construction, Primavera Construction and Nippon Formworks & Construction Corp. Therefore, the supplier of Filinvest Land cannot demand high price without any justification Filinvest Land Incorporated – Strategic Management Paper P a g e 23 | 69

because they are easily remove to the contract and find another as replacement. 4.2.1.5

Threat of new entry -

In terms of potential entry of new competitors, the quality of filinvest land is high-quality for it is maintained by professional staff of the company, the pricing of the services that the company offers is affordable for the main market of Filinvest land is focuses to the low and medium earners, and the marketing and advertisement of Filinvest land through Television and billboard endorse by famous artist may have impact to the potential costumer and to the loyal costumer of Filinvest. All this may overcome the barrier which the new competitor may enter.

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4.3 Summary and Conclusion 4.3.1 External and Evaluation Matrix External Factor Evaluation Matrix Weight

Rating

Weighted Score

a. GDP and GNP

.05

1

.05

b. New tread: Staycation

.12

4

.48

c. Lifestyle choice

.11

3

.33

d. Increase in remittance of the OFW

.04

1

.04

e. Heavy traffic in the Philippines

.16

4

.64

f. Online reservation

.08

3

.24

.06

2

.12

b. Decrease in number of OFW

.06

1

.06

c. Climate change

.09

3

.27

d. Entry of hotels/motels

.1

3

.3

e. Maceda Law

.04

1

.04

f. Budget to DPWH increases

.09

2

.18

Key External Factors Opportunities

Threats a. Decrease

in

number

of

employed,

underemployed and unemployed

TOTAL

1

2.75

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External Factor Evaluation (EFE) matrix 4.3.2 Competitive Profile Matrix Competitive Profile Matrix FILINVEST

VISTA LAND

SMDC

LAND INC. Critical Success Factors

Weight

Rating

Score

Rating

Score

Advertisement

.1

1

.1

1

.1

2

.2

Product/service quality

.2

3

.6

2

.4

4

.8

Price competitiveness

.15

3

.45

3

.45

1

.15

Target market

.15

4

.6

2.5

.375

2

.3

Customer loyalty

.05

2

.1

2

.1

4

.2

Management

.10

3

.3

2

.2

4

.4

Location

.25

4

1

2.5

.625

3

.75

Total

1

3.15

Rating

Score

2.25

2.8

Filinvest Land Incorporated – Strategic Management Paper P a g e 26 | 69

V. COMPANY ANALYSIS 5.1 Management 5.1.1 Planning -

FLI’s objective is to strengthen its market position in its core residential house and lot business by capitalizing on economic and social trends in the Philippines and to develop its portfolio of commercial office and retail properties. FLI intends to achieve this objective through the following strategies: Continue to grow its residential housing and lot business, Develop and introduce new development project formats, Widen Reach through Product Expansion and Extension of Geographic Coverage, adhere to prudent financial management to ensure sustainable growth and capital sufficiency, and Enhance the value of its investment properties.

5.1.2 Organizing

Filinvest Land Incorporated – Strategic Management Paper P a g e 27 | 69

Name

Position

Jonathan T. Gotianun

Chairman of the Board

Lourdes Josephine G. Yap

President and Chief Executive Officer

Mercedes T. Gotianun

Director

Andrew T. Gotianun, Jr.

Co-Vice Chairman

Michael Edward T. Gotianun

Director

Efren C. Gutierrez

Director

Lamberto U. Ocampo

Independent Director

Val Antonio B. Suarez

Independent Director

Nelson M. Bona

Chief Financial Officer

Ana Venus A. Mejia

Treasurer/Deputy Chief Financial Officer

Elma Christine R. Leogardo

Corporate Secretary and Compliance Officer

5.1.3 Motivating 5.1.4 Staffing -

The Company has an experienced management team with an average of more than 30 years of operational and management experience in real estate development and who also have enjoyed long tenure with both the Company and FDC. The Company’s management team has extensive experience in and in-depth knowledge of the Philippine real estate market and has also developed positive relationships with key market participants, including construction companies, regulatory agencies and local government officials in the areas where the Company’s projects are located. Also the Company’s directors and members of its senior management have been an integral part of its success, and the experience, knowledge, business relationships and expertise that would be lost should any such persons depart could be difficult to replace and may result in a decrease in the Company’s operating efficiency and financial performance. If the Company loses the services of any such person and is unable to fill any vacant key

executive or management positions with qualified candidates, its business and Filinvest Land Incorporated – Strategic Management Paper P a g e 28 | 69

results of operations may be adversely affected. To mitigate the risk of FLI’s dependence on certain directors and members of senior management, the Company has a succession program in place. Moreover, promotions are given to deserving employees to ensure the succession within the management team. -

As of December 31, 2016, FLI had a total of 1,062 employees, including 207 permanent full-time managerial employees, 846 support employees and 9 consultants.

Management believes that FLI’s current relationship with its

employees is generally good and neither FLI nor any of its subsidiaries have experienced a work stoppage or any labor related disturbance as a result of labor disagreements. None of FLI’s employees or any of its subsidiaries belongs to a union. FLI currently does not have an employee stock option plan. -

Further, FLI provides managers, supervisors and general staff the opportunity to participate in both in-house and external training and development programs which are designed to help increase efficiency and to prepare employees for future assignments. FLI has also provided a mechanism through which managers and staff are given feedback on their job performance, which FLI believes will help to ensure continuous development of its employees. FLI also offers employees benefits and salary packages that it believes are in line with industry standards in the Philippines and which are designed to help it compete in the marketplace for quality employees.

5.1.5 Controlling

Filinvest Land Incorporated – Strategic Management Paper P a g e 29 | 69

Management Audit Checklist Checklist 

Does the firm use

YES/NO

Explanation

Yes

strategic management concepts? 



Are company objectives

Yes

It is concise in the organization

and goals measurable

chart that all office is well

and well communicated?

communicated

Do managers at all

Yes

Mostly of the officer of the

hierarchical levels plan

corporation is belong to one

effectively?

family, therefore, the power of each office is respected and well effective.



Do managers delegates

Yes

is clear and strictly implemented

authority well? 

Is the organization’s

The corporate organization chart

Yes

structure appropriate?



Are job descriptions

Yes

The position and its job is in the bylaws of the corporation

and job specifications clear? 

Is employee morale

Yes

high? 

Are employee

Yes

turnover and absenteeism low? 

Are organizaional

Yes

reward and control mechanism effective?

Filinvest Land Incorporated – Strategic Management Paper P a g e 30 | 69

5.2 Marketing audit -

FLI’s objective is to strengthen its market position in its core residential house and lot business by capitalizing on economic and social trends in the Philippines and to develop its portfolio of commercial office and retail properties. Subject to market conditions, FLI plans to leverage its reputation as one of the market leaders in the affordable and middleincome residential real estate segment with an established reputation and brand name. The Company plans to expand its market reach and land bank by entering what it perceives as underserved and underdeveloped markets in potential growth areas and regions throughout the Philippines and by accelerating the development of new projects in its existing markets. Because there are still a large number of Filipinos without first homes, FLI intends to attract first-time home buyers and aggressively grow its business to try to maintain its spot as one the market leaders in its core socialized, affordable and middle-income residential house and lot business. In addition to retaining its position as one of the leading residential housing and lot developers in the Philippines, FLI will also seek to develop additional office space by capitalizing on the expected growth in the BPO business. FLI believes that it will be able to enhance its investment portfolio’s competitive strengths through pro-active management, asset enhancement and expansion, and by capitalizing on its extensive real estate experience, size and access to resources, while at the same time maintaining more regular revenue streams. Further, The Parent Company develops customer awareness through marketing and promotion efforts and referrals from satisfied customers. The Parent Company has a real estate marketing team, a network of sales offices located in the Philippines and tie-ups with independent brokers in Europe, Hongkong, the Middle East, Japan, and Singapore. FLI’s marketing personnel, together with in-house sales agents and accredited agents, gather demographic and market information to help assess the feasibility of new developments and to assist in future marketing efforts for such developments. Furthermore, The Parent Company conducts advertising and promotional campaigns principally through print and broadcast media, including billboards, fliers, and brochures designed specifically for the target market. Advertising and promotional campaigns are conceptualized and conducted by FLI’s

Filinvest Land Incorporated – Strategic Management Paper P a g e 31 | 69

marketing personnel and by third-party advertising companies. These campaigns are complemented with additional advertising efforts, including booths at shopping centers, such as Festival Supermall, and other high traffic areas, to promote open houses and other events. Finally, The Parent Company also believes that the OFW population, as well as expatriate Filipinos, constitute a significant portion of the demand for affordable and middle-income housing either directly or indirectly by remitting funds to family members in the Philippines to purchase property. To this end, the Parent Company has appointed and accredited independent brokers in countries and regions with large concentrations of OFWs and expatriate Filipinos, such as Italy, Japan, the United Kingdom and the Middle East. These brokers act as the Parent Company’s marketing and promotion agents in these territories to promote the Parent Company and its products. The Parent Company also sponsors road shows to promote its projects, including road shows in Europe and the United States of America, targeting the OFW and Filipino expatriate markets. FLI also markets its properties using the Internet. 5.2.1 Product/Services 5.2.1.1 Real estate sales segment - FLI’s main real estate activity since it started operations has been the development and sale of residential property, primarily housing units and subdivision lots 5.2.1.2 Leasing segment 5.2.2 Pricing 5.2.2.1 The Company believes it is able to offer customers one of the most diversified ranges of real estate products among all developers in the Philippine real estate market. FLI focuses its business on the socialized, affordable and middleincome market segments, but at the same time it has designed projects that address demand from the lowest end of the real estate market to the highest. The Company has also expanded its portfolio to include new types of residential developments that cater to potentially high-growth niche markets, such as residential farm estate projects, entrepreneurial communities, mediumrise buildings, high-rise condominiums and township developments. Filinvest Land Incorporated – Strategic Management Paper P a g e 32 | 69

5.2.2.2 Affordable housing: These developments are marketed and sold under FLI’s Futura Homes brand and consist of projects where lots are typically sold at prices ranging from above P160,000 to P750,000 and housing units from above P450,000 to P1,500,000. 5.2.2.3 Socialized housing: These developments are marketed and sold under FLI’s Pabahay brand and consist of projects where lots typically sell for P160,000 or less per lot and housing units typically sell for P450,000 or less per unit 5.2.2.4 Middle-income housing: These developments are marketed and sold under FLI’s Filinvest brand and consist of projects where lots are typically sold at prices ranging from above P750,000 to P1,200,000 and housing units from above P1,500,000 to P4,000,000. 5.2.2.5 High-end housing:

Marketed under Filinvest Premiere brand, these

developments consist of projects where lots are sold at prices above P1,200,000 and housing units for above P4,000,000. 5.2.3 Distribution 5.2.3.1 Affordable housing projects are typically located in provinces bordering Metro Manila, including Bulacan, Laguna, Batangas and Cavite, and in key regional cities such as Tarlac, Cebu and Davao. 5.2.3.2 Middleincome projects are typically located within Metro Manila, nearby provinces such as Rizal, Cavite, Pampanga and Laguna, and major regional urban centers in Cebu, Davao, and Zamboanga. 5.2.3.3 FLI’s high-end projects are located both within Metro Manila and in areas immediately outside Metro Manila 5.2.3.4 The Company relies on third-party brokers to market and sell its residential housing and land development projects to potential customers inside and outside of the Philippines. These brokers may also act as brokers for other developers in the same markets in which the Company operates, and there can be no assurance that they will not favor the interests of their other clients over the interests of the Company in lease or sale opportunities, or otherwise act in Filinvest Land Incorporated – Strategic Management Paper P a g e 33 | 69

the Company’s best interests. There is competition for the services of thirdparty brokers in the Philippines, and many of the Company’s competitors either use the same brokers as the Company or attempt to recruit brokers away from the Company. If a large number of these third-party brokers were to terminate or breach their brokerage agreements, the Company would be required to seek other external brokers, and there can be no assurance that the Company could do so quickly or in sufficient numbers. This could disrupt the Company’s business and negatively affect its financial condition, results of operations and prospects. To mitigate the risk of third-party brokers terminating or breaching their brokerage agreements with the Company, FLI offers an attractive incentive program to reward those who are able to sell the Company’s projects. Marketing Audit Checklist

Checklist 

Are markets

YES/NO

Explanation

Yes

The target market of Filinvest

segmented

which is the low and middle

effectively?

class earners is effectively segmented





Is the organization

Yes

According to survey Filinvest

positioned well among

Land is the 2nd place in giving

competitors?

affordable housing

Has the firm’s market

Yes

The Market share of Filinvest Land continuous to grow year

share been increasing?

by year 

Are present channels

Yes

Filinvest Land has been doing

of distribution reliable

good distributing it services

and cost effective?

nationwide through there agents

Filinvest Land Incorporated – Strategic Management Paper P a g e 34 | 69



Does the firm have an

Yes

The Filinvest Land hired

effective sales

additional third party agent

organization?

who are based on branches to focus on acquiring new clients



Does the firm conduct

Yes

The filinvest land continues to research possible land bank

market research?

that may acquire 





Are the product quality

Yes

Filinvest Land offers high

& customer service

quality products and provides

good?

excellent customer service

Are the firm’s products

Yes

The prices of Filinvest Land is

and services priced

quite lower than their

appropriately?

competitors

Does the firm have

Yes

Filinvest Land focuses on Billboards and Signage

effective promotion, advertising and publicity strategies? 



Are the marketing,

Yes

Filinvest land Successfully

planning and budgeting

implemented planning and

effective?

budgeting

Do the firm’s marketing

Yes

Filinvest Land managers are

managers have adequate

well educated and well attached

experience and training?

to the suppliers as well as to the government



Is the firm’s Internet

Yes

Filinvest Land’s presence is

presence excellent as

active on the internet by the

compared to rivals?

use of their website

Filinvest Land Incorporated – Strategic Management Paper P a g e 35 | 69

5.3 Finance/ Accounting -

FLI believes that its focus on housing and land development projects provides it with more attractive margins and reduces its exposure to market and construction risks. FLI plans to continue to closely monitor its capital and cash positions and carefully manage its land acquisition costs, construction costs, cash flows and fixed charges. The Company also prefers to enter into joint venture arrangements to develop land rather than purchasing land outright, which reduces its capital requirements and can increase returns. Further, FLI intends to continue to fund development costs using medium- to longterm financing, which can help mitigate any negative effects of a sudden downturn in the Philippine economy or a sudden rise in interest rates. 5.3.1 Financial Statements

Table 5.3.1

2015

2014

2013

2015

2014

2013

ASSETS Current Assets Non-current Assets Total Assets LIABILITIES AND EQUITY Current Liabilities Non-current Liabilities Total Liabilities Equity Total Liabilities and Equity

5.3.2 Income Statements Table 5.3.2 Net Sales Cost of Sales Gross Profit Filinvest Land Incorporated – Strategic Management Paper P a g e 36 | 69

Operating Expenses Current Operating Profit Other Income Other Expenses Finance Costs Share in the Profit (Loss) of an Associate Income Before Tax Income Tax Expense Net Income

5.3.3 Ratio Analysis 5.3.3.1 Liquidity Ratios Table 5.3.3.1

2015

2014

2013

Current ratio 5.3.3.2 Leverage Ratios Table 5.3.3.2

2015

2014

2013

2015

2014

2013

Debt-to-Total-Assets Ratio Debt-to-Equity Ratio 5.3.3.3 Activity Ratios table 5.3.3.3 Inventory Turnover Fixed Assets Turnover Asset Turnover Accounts Receivable Turnover Average Collection period 5.3.3.4 Profitability Ratios Filinvest Land Incorporated – Strategic Management Paper P a g e 37 | 69

Table 5.3.3.4

2015

2014

2013

Gross Profit Margin Operating Profit Margin Net Profit Margin Return on Assets Return on Equity Earnings Per Share 5.3.4 Investment Decision The following table shows, for the periods indicated, the high, low and period end closing prices of the shares as reported in the PSE: Period

2016

2015

Share price High

Low

End

1st quarter

1.89

1.50

1.53

2nd quarter

2.04

1.82

1.83

3rd quarter

2.08

1.77

1.99

4th quarter

1.84

1.32

1.77

1st quarter

1.90

1.60

1.81

2nd quarter

2.04

1.67

1.68

3rd quarter

2.10

1.75

1.86

4th quarter

1.87

1.51

1.80

The number of shareholders of record as of said date was 5,735. Common shares outstanding as of December 31, 2016 is 24,249,759,506. 5.3.4.1 FLI’s investment properties are the following: a. A 100.0% ownership interest in Festival Supermall. Festival Supermall, with approximately 200,000 sq.m. of floor area, is one of the largest shopping malls in Metro Manila in terms of floor area. FLI has a long-term

Filinvest Land Incorporated – Strategic Management Paper P a g e 38 | 69

lease agreement with FAI for the land on which Festival Supermall is located, as well as for adjacent land that is available for mall expansion. b. A 100% ownership interest in the common stock of Cyberzone Properties Inc. CPI was formerly a joint venture between FLI and Africa Israel Properties (Philippines), Inc. (“AIPPI”), which is a subsidiary of an Israeli company with investments in residential real estate and shopping malls. 5.3.5 Financing Decision 5.3.5.1

On August 20, 2015, FLI issued to the public unsecured fixed rate bonds

with an aggregate principal amount of P 8.00 billion comprising of P 7.00 billion 7-year fixed rate bonds due in 2022 and P 1.00 billion 10-year fixed rate bonds due in 2025. The 7-year bonds carry a fixed rate of 5.36% per annum while the 10-year bonds have a fixed rate of 5.71% per annum. FLI raised net proceeds of P7,913,188,532 after deducting fees, commissions and expenses relating to the issuance of the bonds. These bonds require FLI to maintain certain financial ratios which include maximum debt-to-equity ratio of 2.0x; minimum current ratio of 2.0x; and minimum debt service coverage ratio of 1.0x. As of December 31, 2016 and 2015, FLI is not in breach of any of these debt covenants. 5.3.6 Dividend Decision 5.3.6.1

On January 8, 2007, the Board of Directors approved an annual cash

dividend payments ratio for the Parent Company’s issued shares of twenty percent (20%) of its consolidated net income for the preceding year, subject to compliance with applicable laws and regulations and the absence of circumstances which may restrict the payment of such dividends, including, but not limited to, when Company undertakes major projects and developments requiring substantial cash expenditures, or when the Parent Company is restricted from paying cash dividends by its loan covenants, if any. The Board of Directors may at any time modify such dividend payout ratio depending on the results of operations, future projects and plans of the Parent Company. On May 9, 2014, the BOD approved the declaration from unappropriated retained Filinvest Land Incorporated – Strategic Management Paper P a g e 39 | 69

earnings of cash dividend of P 0.050 per share or a total of P1.21 billion for all shareholders of records as of June 6, 2014. On May 8, 2015, the BOD approved the declaration from unappropriated retained earnings of cash dividend of P 0.056 per share or a total of P1.37 billion for all shareholders of record as of June 5, 2015. On April 22, 2016 the BOD approved the declaration and payment of cash dividend of P 0.061 per share or a total of P1.48 billion for all shareholders of record as of May 22, 2016. Financial Audit Checklist

Checklist 

YES/NO

Explanation

Yes

Filinvest Land can raise

Where is the firm financially strong and weak as indicated by financial ratio analyses?



Can the firm raise needed short-term

short-term capital due to its

capital

reputation in relation to its credit



Can the firm raise

Yes

Filinvest Land is more on

needed long-term

long-term capital through

capital through debt

debt and/or equity.

and/or equity?

Filinvest Land Incorporated – Strategic Management Paper P a g e 40 | 69



Does the firm have

Yes

Filinvest Land has more than

sufficient working

enough capital to continue

capital?

working even on an event of a economic crisis.



Are capital budgeting

Yes

procedures effective? 

Are dividend payout

Yes

are well supported

policies reasonable? 

Does the firm have

To Insure that their stockholders

Yes

Filinvest Land has good

good relations with its

relationship with it’s

investors and

investors and stockholders.

stockholders?

All because majority of their stockholders are belong to one family





Are the firm’s

Yes

Filinvest Land managers are

financial managers

well educated and well

experienced and well-

attached to their suppliers as

trained?

well to the government

Is the firm’s debt situation excellent?

Yes

Filinvest Land can maintain its debt ratio well

Filinvest Land Incorporated – Strategic Management Paper P a g e 41 | 69

5.4 Production/Operation -

Since its incorporation, the Company has invested in properties situated in what the Company believes are prime locations across the Philippines for existing and future housing and land development projects. It is important for the Company to have access to a steady supply of land for future projects. In addition to directly acquiring land for future projects, the Company has also adopted a strategy of entering into joint venture arrangements with land owners for the development of raw land into future project sites for housing and land development projects. Such arrangements allow FLI to reduce its capital expenditures for land and to substantially reduce the financial holding costs, which result from owning land for development.

5.4.1 Process -

Over the years, the Company believes it has established an excellent reputation and brand name in the property development business. If any of the Company’s projects experience construction or infrastructure failures, design flaws, significant project delays, quality control issues or otherwise, this could have a negative effect on the Company’s reputation and make it more difficult to attract new customers to its new and existing housing and land development projects. Any negative effect on the Company’s reputation or its brand could also affect the Company’s ability to presell its housing and land development projects. This would impair the Company’s ability to reduce its capital investment requirements. The Company cannot provide any assurance that such events will not occur in a manner that would adversely affect its results of operations or financial condition. To mitigate the risk of projects not being completed on time, FLI relies on the services of its over 100 contractors for land and construction works, many of which have been providing their services to the Company for several years. FLI’s engineering team oversees the projects to ensure that these are completed within specifications, within cost estimates and on time. Furthermore, the Company has a Customer Service Department where customers’ concerns are taken care of.

Filinvest Land Incorporated – Strategic Management Paper P a g e 42 | 69

5.4.2 Capacity -

Over the years, the Company has accumulated an extensive, lowcost land bank. As at 31 March 2015, the Company’s land bank totaled approximately 2,400.33hectares of raw land, including 324.44 hectares available for development pursuant to joint venture agreements. The bulk of the Company’s land bank consists of land situated in regional centers primarily outside of Metro Manila that FLI believes are prime locations across the Philippines for existing and future property development projects, including land in the nearby provinces of Rizal, Bulacan, Batangas, Cavite and Laguna, as well as in growth areas such as Cebu, Davao and General Santos City in South Cotabato province. The Company believes that the diversity of its current projects and land bank will allow it to benefit from these areas’ continued economic development. The Company also has land available for future developments located in central and southern Philippines, which it believes has allowed it to position itself as a leading residential project developer in these new and expanding markets. The Company also believes that its strong reputation and reliability as a developer allows it to attract joint venture partners with desirable land banks, allowing it to access additional land for future development.

5.4.3 Inventory -

The firm also has a sizable land bank of 2,390ha in key growth areas equivalent to over 10 years of development. In terms of geographic focus, FLI will continue to expand in areas outside of Metro Manila dubbed as the “zoom towns” of the Philippines. If we take a look at its land bank, about 66% is in the Calabarzon area (Cavite, Laguna, Batangas) followed by Central Luzon at 22% (Bulacan, Pampanga - Clark), with the remaining 11% in the Vismin zoom towns (Cebu, Ilo-Ilo, Bacolod, Dumaguete, Davao and Cagayan de Oro).

Filinvest Land Incorporated – Strategic Management Paper P a g e 43 | 69

5.4.4 Workforce -

As of December 31, 2016, FLI had a total of 1,062 employees, including 207 permanent full-time managerial employees, 846 support employees and 9 consultants.

Management believes that FLI’s current relationship with its

employees is generally good and neither FLI nor any of its subsidiaries have experienced a work stoppage or any labor related disturbance as a result of labor disagreements. None of FLI’s employees or any of its subsidiaries belongs to a union. FLI currently does not have an employee stock option plan. -

FLI provides managers, supervisors and general staff the opportunity to participate in both in-house and external training and development programs which are designed to help increase efficiency and to prepare employees for future assignments. FLI has also provided a mechanism through which managers and staff are given feedback on their job performance, which FLI believes will help to ensure continuous development of its employees. FLI also offers employees benefits and salary packages that it believes are in line with industry standards in the Philippines and which are designed to help it compete in the marketplace for quality employees.

-

The Company’s ability to plan, design and execute current and future projects depends on its ability to attract, train, motivate and retain highly skilled personnel, particularly architects and engineers. The Company believes that there is significant demand for such personnel not only from its competitors but also from companies outside the Philippines, particularly companies operating in the Middle East. Any inability on the part of Company in hiring and, more importantly, retaining qualified personnel could impair its ability to undertake project design, planning and execution activities in-house and could require the Company to incur additional costs by having to engage third parties to perform these activities. To mitigate the risk of the Company being unable to attract and retain skilled professionals, FLI has lined up a number of training programs to enable its employees to serve its customers better, increase productivity and improve their skills.

Filinvest Land Incorporated – Strategic Management Paper P a g e 44 | 69

5.4.5 Suppliers 5.4.6 Customers 5.5 Research and Development 5.6 Summary and Conclusion 5.6.1 Internal Factor Evaluation Matrix Internal Factor Evaluation Matrix Key Internal Factors

Weight

Rating Weighted Score

Strength 1. 2. 3. 4. 5. 6.

Weakness 1. 2. 3. 4.

Filinvest Land Incorporated – Strategic Management Paper P a g e 45 | 69

VI. STRATEGY FORMULATION 6.1 SWOT Matrix

Filinvest Land Incorporated – Strategic Management Paper P a g e 46 | 69

Opportunities

SO Strategies

1

1.

Threats

ST Strategies Strengths 1.

WO Strategies 1.

WT Strategies Weaknesses 1.

Tally of Strategies in SWOT STRATEGY OPTIONS

Frequency

Forward Integration Backward Integration Horizontal Integration Filinvest Land Incorporated – Strategic Management Paper P a g e 47 | 69

Market Penetration Market Development Product Development Related Diversification Unrelated Diversification Retrenchment Divestiture Liquidation

Analysis of SWOT Matrix

Filinvest Land Incorporated – Strategic Management Paper P a g e 48 | 69

6.2 SPACE Matrix

Strategies under the Aggressive Matrix

Filinvest Land Incorporated – Strategic Management Paper P a g e 49 | 69

SPACE Matrix Ratings Financial Position (FP)

Industry Position (IP)

Stability Position (SP)

Competitive Position (CP)

Filinvest Land Incorporated – Strategic Management Paper P a g e 50 | 69

Conclusion SP Average is

CP Average is

IP Average is FP Average is Directional Vector Coordinates: x-axis: Directional Vector Coordinates: y-axis: The Republic Cement should pursue Aggressive Strategies SPACE Matrix Analysis

6.3 Boston Consulting Group (BCG Matrix)

Filinvest Land Incorporated – Strategic Management Paper P a g e 51 | 69

Relative Market Share High

Medium

Low

High

1.0

0.50

0.0

+15

STAR

Question Mark

1

Industry Sales Growth Rate

3 4

2

6

Medium 0

Cash Cows

Dogs

5

Low -15

Filinvest Land Incorporated – Strategic Management Paper P a g e 52 | 69

Division 1- Rizal 2- Batangas 3- Minuyan, Bulacan 4- Bigte, Bulacan 5- Cebu 6- Iligan

6.4 Internal- External (IE) Matrix TOTAL IFE RATING

IFE = 3.01

STRONG

AVERAGE

WEAK

EFE = 2.94

3.0 to 4.0

2.0 to 2.99

1.0 to 1.99

HIGH

I

II

III

IV

V

VI

3.00 to 4.00 MEDIUM 2.00 to 2.99

Filinvest Land Incorporated – Strategic Management Paper P a g e 53 | 69

LOW

VII

VIII

IX

1.00 to 1.99

6.5 Grand Strategy Matrix

Filinvest Land Incorporated – Strategic Management Paper P a g e 54 | 69

Analysis of Grand Strategy Matrix

6.6 Summary of Matrices and Analyses STRATEGY OPTIONS

SWOT SPACE

IE

GRAND

BCG

TOTAL

INTEGRATION STRATEGIES Forward Integration









Backward Integration















Horizontal Integration

Market Penetration











Market Development











Product Development











DIVERSIFICATION STRATEGIES Related Diversification



Unrelated Diversification





Retrenchment Divestiture Liquidation

Analysis of the Summary of Matrices and Analyses 6.7 Quantitative Strategic Planning Matrix STRATEGIC ALTERNATIVES

Filinvest Land Incorporated – Strategic Management Paper P a g e 55 | 69

Key Factors

Weight

Increase its

Further

production

improve the

capacity in in

quality of the

milling,

products

packing and

offered by

clinkering

the company

(Market

(Product

Penetration)

Development)

AS

TAS

AS

TAS

Opportunities

Threats

Total Strengths

Weaknesses

Total

1.00

Grand Total

Analysis of the Quantitative Strategic Planning Matrix

VII. OBJECTIVES, STRATEGY RECOMMENDATIONS AND ACTION PLANS 7.1 Strategic and Financial Objectives Strategic Objectives

Filinvest Land Incorporated – Strategic Management Paper P a g e 56 | 69

Revised Vision Statement

Revised Mission Statement

Financial Objectives *In thousand pesos Year

Sales Revenue

Net Income

2015 2016 2017 2018 2019 2020 *Sales Revenue is based on 12% increase while net income is based on 14% increase 7.2 Recommended Business Strategies

Filinvest Land Incorporated – Strategic Management Paper P a g e 57 | 69

7.3 Recommended Organizational Strategies

7.4 Financial Projections Republic Cement and Building Materials, Inc. and Subsidiaries Financial Projections December 31, 2016 to 2020

(in

CURRENT

(EST.)

(EST.)

(EST.)

(EST.)

(EST.)

thousand

2015

2016

2017

2018

2019

2020

pesos) Net Sales Cost of Sales Gross Profit Operating Expenses Current Operating Profit Other Filinvest Land Incorporated – Strategic Management Paper P a g e 58 | 69

Income Other Expenses Finance Costs Share in the Profit (Loss) of an Associate Income Before Tax Income Tax Expense Net Income

Filinvest Land Incorporated – Strategic Management Paper P a g e 59 | 69

2015

2016

2017

2018

2019

ASSETS (In thousand pesos) Current assets Cash and cash equivalents Trade and other receivables – net Receivable from related parties Inventories net Prepayments and other current assets - net

Non-current Assets Classified as Held-for-Sale TOTAL CURRENT ASSETS

Filinvest Land Incorporated – Strategic Management Paper P a g e 60 | 69

2020

Property, plant and equipment – net Investment properties Goodwill and other intangible assets – net Deferred tax assets Other noncurrent assets and availablefor-sale investments TOTAL NON CURRENT ASSETS TOTAL ASSETS

LIABILITIES AND EQUITY Current Liabilities Trade and other payables

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Loans payable Income tax payable Derivative liability – net TOTAL CURRENT LIABILITIES Non-current Liabilities Loan Payable Payable to a related party Provisions Dealers’ cash bond Retirement benefit obligation Deferred tax liabilities Other longterm deposits TOTAL NONCURRENT LIABILITIES TOTAL LIABILITIES Filinvest Land Incorporated – Strategic Management Paper P a g e 62 | 69

Equity Attributable to Equity Holders of the Parent Share Capital Additional paid-incapital Reserves Retained earnings Total attributable to equity holders of the parent Noncontrolling interest TOTAL EQUITY TOTAL LIABILITIES AND EQUITY

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2015

2016

2017

2018

2019

Net cash from operating Activities Net cash from investing Activities Net cash used in financing activities Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, Beginning Cash and Cash Equivalents, End

7.5 Departmental Programs

Activities

Team Responsible

Timeline

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2020

Product Development Activities

Team Responsible

Timeline

VIII. STRATEGY EVALUATION, MONITORING AND CONTROL 8.1 Balance Scorecard FINANCIAL PERSPECTIVE Objective

Performance

Target

Initiatives

Measure

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CUSTOMER PERSPECTIVE Objective

Performance

Target

Initiatives

Measure 1. 2.

INTERNAL BUSINESSES PERSPECTIVE Objective

Performance

Target

Initiatives

Measure 1. 2.

LEARNING & GROWTH PERSPECTIVE Objective

Performance

Target

Initiatives

Measure 1. 2.

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IX. APPENDICES

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9.2 Financial Statements

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X. BIBLIOGRAPHY

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