A Case Study: Fil General Blower Corporation

Executive Summary

Fil General Blower Corporation, or FilGen, was a fabricator of industrial fans and

blowers used in air-conditioning, air handling, and the pneumatic conveying of material

which was founded in 1960. They offer design of exhaust and ventilation systems,

installation, repair, and servicing of fans and blowers. Considered being one of the

pioneers in the industry, they acquired a strong local client base in industry and

commercial corporations and in the food and drugs manufacturing industry which resulted

to a steady growth. Also, all of its products were made to order, statically and dynamically

balanced to industry standards, and often adhered to strict customer specifications.

Since the changes is the only thing permanent in the world, changes in industry’s

standards affects FilGen badly because they failed to adapt or cope up with the changes.

Besides to that problem, they also suffered a serious blow when their founder and

chairman who was the main source of strategic direction and innovation to the company

passed away. The operation was paralyzed and resulted to a steady decline in sales.

With the current operational department, containing finance, production and

engineering, FilGen cannot achieve its goal given the current situation. The group
recommends that they should establish additional departments specifically the marketing
and sales department that would boost their sales. Also, investing in research &
development is another solution to know what are the needs and wants of the customers.
Lastly, since they lost their customers, they should offer big trade discounts or
promotions, it would be a good start for them to regain its customers.
 I. Statement of the Problem

With the changes in the industry’s standards, competitors overtaken the Fil

General Blower Corporation because they failed to adapt or respond to the changes

which leads to a steady decline in their sales.

I. Framework of Analysis

The group used the following tools in analyzing the problem:

SWOT Analysis – this tool is used to know what are the internal and external factors

that the business needs to consider or disregard.

Porter’s Five Forces Model– this tool seeks to explain competitive pressures within an

industry to ascertain how powerful, influential, and competitive a firm can be.

II. Situational Analysis

SWOT Analysis

Strengths

Being one of the pioneers in the industry of Heating, Ventilation, Air-conditioning

and Refrigiration(HVAC/R), FilGen acquired a strong local client base in industrial and

commercial corporations and in the food and drugs manufacturing industry. They also

offer high quality products which were made to order, statistically and dynamically

balanced to industry standards, and often adhered to strict customer specification.

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Weaknesses

FilGen faces a downturn specifically when its founder and chairman who was the

main source of strategic direction and innovation of the company passed away. Since the

problem occurred at the top, it is considered as a pervasive problem which affects the

whole operation. Also, made to order products means high cost, so the tendency for the

customers are to switch ways and look for alternatives with lower cost but same quality.

In addition, FilGen doesn’t have a sales and marketing department which would be a

great help to boost their sales.

Opportunities

Offering a standardized product to the market would be a feasible opportunity since

it is more favorable to the consumers because of the low cost but quality products.

Besides, FilGen will also benefit from it as it will lessen the cost to the production, it is a

win-win situation.

Threats

Industry players endeavored to develop new and smarter methods, greater

efficiencies and effective air control systems which are in line with the industry’s standard.

It is a serious threat for FilGen since they failed to cope up with the changes, and it refrains

them to be ahead over its competitors.

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Porter’s Five Forces Model

Industry Rivalry

Large number of industry players. Fil General Blower Corporation, being in HVAC/R

industry, faces a huge number of competitors. Since the industry is into architecture and

engineering for enhancing and building environments, the competitors are eager to

produce methods and techniques that are new and relevant to the market. Almost all of

the customers are buying these kinds of product in this industry; hence, the competition

is extensive.

Changes in industry standards. The industry, considering the changes in the standards

through the years, has been a quite battle between the companies. In result, industry

players are very compliant with the demands and endeavored to develop new and

smarter methods of air control systems.

Bargaining power of suppliers

Just-In-Time inventory system. Fil General Blower Corporation uses this inventory

system since they produce product according to the customer specifications which

statistically and dynamically balanced to industry standards. So they hold a high

bargaining power chip over the suppliers because they can make their product on time

with sufficient materials.

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Bargaining power of buyers

Customers’ specification. Customer’s capacity to order gives firm a guarantee of

revenue because FilGen acquired strong and local clients. But customer have a high

bargaining power over the firm since the firm produce product if the customer wants to

order and it is based on the customer specification. And also there are many

competitors who offers a low cost but high quality product so the customer have a

discretion to choose where they are going to buy those products.

Threats of potential entrants

Expansive List of Functions. Since the industry covers a wide range of function, the

possibility of new competitors will increase in the future. Also, the advancement of the

technology that gives an opportunity to every investors and companies to foresee that the

HAVC/R industry will expand the market share in the near future that will give positive

outcomes. Even though it is costly and the need of more investment to enter in this

industry, the possibility of gaining profit surpass the risk of high investment needed.

Customer’s Loyalty. In the past years, FilGen does not seek customers rather they are

waiting for the customers to approach them. Since they are on the steady growth, they

did not question the possibility of failure and declining sales through the increasing

number of competitors instead their technology and improvements also remain steady.

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The customers always seek for changes and innovations, which is why FilGen

experienced a decline in their sales throughout the years.

Threats of potential substitutes

Rapid change in technology. Over the years, rapidly change in technology affects not

just the FilGen Corporation but the industry. The advancement of technology creates new

development and new discoveries that produce better products. It includes a low-cost

standard products and other alternatives that satisfied the needs of the consumers. Thus,

the FilGen corporation are having a hard time in dealing to the rapid change of technology

that leads to the decline in sales.

III. Alternative Courses of Action

Improving the functional department would be the best possible strategy to regain their

sales. Establishing a sales and marketing department is one of the best ideas since it has

a vital role for the company–it can help the company to increase their profitability and

sustainability. These departments will be the one who’ll be in charge in reaching out to

customers and offer their products and services. Also, investing more to research and

development is another solution that could be considered since it’s a preparation to regain

its customers and sales–on how they will use its resources efficiently and effectively.

Trade discounts and other product promotions could also be considered; it could attract

more customers given their quality products.

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 IV. Recommendation

 Additional Departments

With the current changes in industry’s standards, FilGen was being overtaken by its

competitors and struggling to find its position in the market. Establishing a sales and

marketing department would be the best solution to regain its customers and eventually

increase its sales.

 Invest on research and development

This strategy will be a big help in order to know the needs and wants of the target

customers, though it’s expensive, our group believes that it will be worth it in the end.

 Offer trade discounts or product promotions

Since they lost some of its customers, this strategy is the best fit in order to regain its

customers. Given the quality of their products, there will be a higher chance for them to

attract more customers if they consider this strategy.

 Standardized products

Though FilGen’s products were made to order, they should also consider producing

standardized products than producing only highly-customized products, in a way to be

able to compete with its competitors.

V. External Sourcing

Business Policy and Strategy by A.B. Llano (2018)