IEBP302

Case Study (5.2)

Proponent: Justine Jude Pura

Case Study Title: Metropolitan Housing Project Company

- CASE BACKGROUND Story: On November 30, 1998, Mr. Roy Roxas, Project Manager of the
Metropolitan Housing Project Company (MHPC) was preparing a three year
plan for the period (1989-1991) for presentation to the Board on December
31, 1998. The MHPC was formed in 1982 to develop real estate properties for
sale to the public. The first project undertaken by the company is the
development of a real estate property located in Laguna called Lagunaville.
The site is near the University of the Philippines campus in College, Laguna.

Problem: What are the possible ways/strategies/plans of actions should

Metropolitan Housing Project Company implement or do to develop the
housing project (Lagunaville) in three years successfully?

- EXTERNAL ENVIRONMENT -

Economic: In terms of economic, the project manager must clearly state all
the plan of actions that supplements the minor problems, which are the
following: In what ways can MHPC pay the liabilities? How can MHPC
generate income? What are the marketing strategies in selling the lots?
Housing projects have a lot of opportunities since the economy nowadays
demands high for these businesses. MHPC must consider these common
economic indicators: (1) Interest Rates, (2) Housing Costs, (3) Average
Hourly Earnings & (4) Consumption Expenditures.
Threats in economic involve the following: (1) Natural disasters and (2)
Globalization. These two (especially no. 1) are the possible threats on a
housing company.

Socio-cultural: Opportunities in terms of socio-cultural is high especially

the housing project that is planned is located strategically as it is near one of
the top universities in the Philippines. In terms of threats, the preference of
the people in terms of house designs, house capacities, amenities must be
considered. The socio-cultural problem of a business usually deals with the
preferences of the people/target audience/market.
Political-legal: Opportunities in political-legal in terms of government
loaning in supplementing the funds of the Housing Project as the project
manager aims to collect loan from Pag-ibig. This means that the housing
project will be able to suffice the funds needed in doing the housing project
despite liabilities that are relative to the project. The threat is adjacent to the
opportunity where if it MHPC cannot pay the loaned cash, the liability of the
housing project may definitely increase.
As stated in the case study, one of assumptions involve the purchasing
power of the salaries of government employees is maintained at present
level.
With relevance to the first statement, the company may also help potential
buyers in connecting with pag-ibig house loans.
Rivalry of Competitor: Housing Projects are ubiquitous outside the Metro.
This means that the threat for this aspect of the business are also from
different housing projects existing in the vicinity of Lagunaville.

- INTERNAL ENVIRONMENT Administration: The administration of this housing project must be able to
supervise all the functional units of the Housing Project. Otherwise, it will be
a plan failure of Mr. Roxas. This functional unit must also ensure that the site
will be developed efficiently in accordance to the plan of Mr. Roxas which is 3
years.
The administration functional unit must also review intensively the cash
flows and plan made by Mr. Roxas.
Accounting: This functional unit has a big role in this business where the
accounting must be able to audit all the transactions and must ensure that
all the liabilities will be settled relative to the project. As stated in the case
study, the success of the project will depend on the total cash inflows of

P20.7 M which will be generated during the next 3 years from the collection
of installment sales from the sale of new lots.
The target Cash Balance of the plan made by Mr. Roxas must be targeted
and observed. With the target cash inflows and outflows, the accounting unit
may easily monitor whether the housing project is a success or no.
Marketing: This will involve a number of people to commercialize the
advertisement for the residential lots for sale.
This will involve a wise marketing strategy as the housing project is located
outside Metro Manila (which is an hour or more away).
One of the strengths of the Marketing of this company is that they can
benchmark that the housing project is strategically located as it is located
near UP-LB.
Sales: One of the objectives of the housing project is shouldered by this
functional unit, which is to sell all the residential lots.
Human Resource: The feasibility of the plan made by Mr. Roxas depends on
the people involved in this project. Not just in the number of people but also
with the kind of people working with this project.

- ALTERNATIVE COURSES OF ACTION Problem and Objective: As stated earlier, here are the problem statements
which can be observed in the case study: (1) What are the ways MHPC can
generate income? (2) How can MHPC sell/market the lots/units? (3) How can
MHPC pay the liabilities? And objectives are as follows: (1) Complete the site
development in the span of three years. (2) Sell all the residential lots. (3)
Settle all the liabilities that are relative to this project.

ACAs: (1) MHPC must be able to market or commercialize all the

advertisement for the residential lots. The company must also encourage the
prospective buyers in buying the residential lots by helping them apply for
PAG-IBIG housing loans. The selling of the residential lots will somehow pay
off the liabilities. The faster the cash inflows will be, the earlier the liabilities
will be paid off.

One of the information that is lacking in the plan made by Mr. Roxas is the
advertisement fund which will be used in marketing the residential lots. This
can be an efficient tool in commercializing the advertisement in selling
residential lots.
As observed in the plan, the liability is bigger than the cash flows. This
means to say that if the liabilities are paid first, the funds for the
development of the site will be scarce. And selling lots takes a lot of time.
(2) Revise the plan. Instead of paying off all the liabilities first, start with the
site development, then everything follows.
Lastly, the plan should emphasize that it is maximizing the assets and
incurring lower costs.
A lot of potential risks involve such as the following:
1. Low turn-out of sales
2. Liabilities were not settled or even increased
3. Natural disasters that may disrupt the housing development
4. Lack of manpower/human resource
5. Declining prospective buyers