OUR LADY OF FATIMA UNIVERSITY

120 McArthur Highway, Marulas, Valenzuela City

Research about the Company of

Puregold Price Club Inc. Tayuman

In partial fulfillment of the requirement in

Strategic Management for the degree of

Bachelor of Science in Accounting Technology

Members:

Dimaano, Maria Michaela B.

Fabregas, Val Christian

Marcos, Mary Grace

Quiambao, Alyssa

Quilongquilong, Wenchie T.

Reyes, Jelah Mae

1
Table of Contents

CHAPTER 1
THE COMPANY -------------------------------------------------------------------------------------------
1.1 THE BACKGROUND -----------------------------------------------------------------------
1.2 VISION STATEMENT
1.3 ANALYSIS OF VISION STATEMENT
1.4 MISSION STATEMENT
1.5 ANALYSIS OF MISSION STATEMENT
1.6 PROPOSED VISION
1.7 ANALYSIS OF PROPOSED VISION
1.8 PROPOSED MISSION
1.9 ANALYSIS OF PROPOSED MISSION

CHAPTER 2
2.1 EXTERNAL ANALYSIS
2.1.1 MACRO EXTERNAL ANALYSIS
2.1.2 POLITICAL CONDITION
2.1.3 ECONOMIC CONDITION
2.1.4 SOCIAL CONDITION
2.1.5 TECHNOLOGICAL CONDITION
2.1.6 ENVIRONMENTAL CONDITION
2.1.7 LEGAL CONDITION
2.2 MICRO EXTERNAL ANALYSIS (PORTER’S FIVE FORCES ANALYSIS)
2.2.1 RIVALRY OF COMPETITION
2.2.2 POTENTIAL FOR NEW ENTRANTS
2.2.3 POTENTIAL FOR SUBSTITUTES
2.2.4 BARGAINING POWER OF BUYERS
2.2.5 BARGAINING POWER OF SUPPLIERS
2.3 COMPARATIVE PROFILE MATRIX (CPM)
2.4 EXTERNAL FACTOR EVALUATION (EFE)

CHAPTER 3
3.1 INTERNAL ANALYSIS
3.3.1 FINANCIAL RATIO ANALYSIS
3.3.2 INTERNAL FACTOR EVALUATION (IFE)

2
CHAPTER 4
4.1 MATCHING STRATEGIES
4.2 TOWS ANALYSIS
4.3 SPACE MATRIX
4.4 GRAND STRATEGY MATRIX
4.5 IE MATRIX
4.6 BCG MATRIX
4.7 SUMMARY OF MATRIX

CHAPTER 5
5.1 DECISION, CONCLUSION, RECOMMENDATION
5.2 QUANTITATIVE STRATEGIC PLANNING MATRIX
5.3 DECISION
5.3.1 CORPORATE STRATEGY
5.3.2 BUSINESS STRATEGY
5.4 CONCLUSION
5.5 RECOMMENDATION
5.5.1 MARKET DEVELOPMENT

3
CHAPTER 1

THE COMPANY

1.1. BACKGROUND AND IT’S HISTORY

Puregold Price Club, Inc. (“Puregold” or “the Company”) was incorporated on September 8,

1998 and opened its first Puregold hypermarket store in Mandaluyong City in December of the

same year. In 2001, it began its expansion by building 2 additional hypermarket stores in Manila

and Paranaque. It also launched its loyalty program, which was eventually renamed as “Tindahan

ni Aling Puring” in 2004. Between 2002 to 2006, Puregold continued its expansion at an average

of 3 new stores every year and established operations in North and South Luzon.

In 2008, Puregold was recognized by Reader’s Digest Asia’s as the Most Trusted Brand

in supermarket category. To expedite market coverage, a new format called “Puregold Jr.

Supermarket” was introduced in the 4th quarter of 2008. By mid-2009, the Company gained

market leadership being the second largest hypermarket and supermarket retailer in the

Philippines in terms of net sales. By 2010, it was already operating 62 stores, and launched

another format called, “Puregold Extra”. In the same year and henceforth, Puregold was

recognized by Retail Asia Pacific as one of the top 500 retailers among the 14 economies of the

region.

2011 saw the highest number of store openings in Puregold history with the launch of 38

new stores making its number of stores to a total of 100.  In the succeeding year, Puregold

acquired a related retail company, Kareila Management Corporation, with 6 S&R Membership

Shopping Warehouses (patterned after the Costco and Sam’s Club in the USA), opened 31 new

4
Puregold organic stores and acquired Gant Group of Companies known as “Parco supermarkets”

with 19 stores.

In 2013, Puregold acquired another supermarket chain, Company E Corporation, with 15

stores and opened 40 new stores. S&R opened 2 warehouses located in Davao Province and

Mandaluyong City. Company E and Gant Group of Companies later merged with Puregold.

In 2014, Puregold opened 28 stores, 1 S&R store and 4 S&R New York Style Pizza/quick

service restaurants (QSR). It also partnered with Lawson, Inc. and Lawson Asia Pacific Pte Ltd.

under a joint venture company called PG Lawson, Inc. PG Lawson plans to build and operate a

chain of Lawson convenient stores all over the Philippines targetting a total of 500 stores by

2020. The parties’ investment share is 70% Puregold and 30% Lawson.

In 2015, Puregold opened 15 hypermarkets, 11 supermarkets, 1 S&R Warehouse and 10

QSRs.

In 2016, Puregold opened another 15 hypermarkets, 8 supermarkets, 2 extras,  1

minimart, 2 S&R Warehouse and 7 QSRs.

By the end of 2016, Puregold was operating a total of 147 hypermarkets, 100

supermarkets, 29 extra, 1 minimart, 12 S&R warehouse clubs, 23 S&R-QSRs, 9 stores under NE

Bodega and 8 Budgetlane stores, for a total of 329 stores.

1.2. VISION STATEMENT

5
 To be the Most Customer-Oriented Hypermart offering a One-Stop Shopping

convenience and Best Value to our Customers.

Sa PUREGOLD, Always Panalo.

1.3. ANALYSIS OF VISION STATEMENT

The vision statement is concise as regards to its content. The vision contains a

very much meaning to lead them to future advancement. They aim to be the most

customer-oriented supermarket and to give the best value to their customers. The

statement mentioned “Sa Puregold, always panalo” is inspirational to both employees

of Puregold and their customer but it does not contain the target place specifically.

1.4. MISION STATEMENT

Our Mission is to Provide Products, Services and Business Opportunities to Every

Filipino Family.

We Establish Lasting Relationship with Our Suppliers and Business Partners.

We Strive to Promote the Personal and Professional Development of our Employees.

We Commit Profitable Results to the Stockholders.

6
 Sa bawat araw, PUREGOLD kasama mo!

1.5. ANALYSIS OF MISSION STATEMENT

Component Statement
Yes No
1. Customer “Filipino Family”

2. Products and “Provide products,

Services services and business

opportunities”
3. Markets NIL

4. Technology NIL

5. Concern for “Commit profitable

survival, growth, results to the

and profitability stockholders”

6. Philosophy “Sa bawat araw,

Puregold kasama mo!”
7. Self-Concept NIL

8. Concern for NIL

Public Image
9. Concern for “To promote the personal

Employees and professional

development of our

employees”

7
 In the mission statement of the compamy, it lacks some of thee requirements that

need to be emphasized and it should be suitable to the needs and wants of their

customers, community, and stockholders. Though the current mission statement is very

encouraging, it lacks a few method necessary to have a proper mission statement.

1.6. PROPOSED VISION

To be the Most Customer-Oriented Hypermarket Accessible Nationwide offering a

One-Stop Shopping convenience and Best Value to our Customer

Sa PUREGOLD, Always Panalo.

1.7. ANALYSIS OF PROPOSED VISION

The Vision of the company is very much brief and concise as regards to its contents.

The proposed Vision statement provides more efficient and effective vision statement

that will be the company’s guide or medium for its personal growth as regards to its

financial and developmental process.

1.8. PROPOSED MISSION

Our Mission is to provide high quality and competitive pricing products, services and

business opportunities to every Filipino Family, nationwide, with the support of modern

technology.

8
We establish lasting relationship with our consumer, suppliers and business partners. A

vibrant community with access to affordable products though us.

We strive to promote the personal and professional development of our employees.

We Commit Profitable Results to the Stockholders.

Sa bawat araw, PUREGOLD kasama mo!

1.9. ANALYSIS OF PROPOSED MISSION

Component Yes No Statement

1. Customer  “Filipino Family”

2. Products and  “Provide products,

Services services and business

opportunities”
3. Markets  “Nationwide/Philippines”
4. Technology  “With the support of

modern technology”
5. Concern for  “Commit profitable

survival, growth, results to the

and profitability stockholders”;

9
 “Establish relationship

with our suppliers and

business partners”
6. Philosophy  “Sa bawat araw,

Puregold kasama mo!”

7. Self-Concept  “Provide high quality and

competitive pricing

products, services and

business opportunities”
8. Concern for Public  “Establish lasting

Image relationship with our

consumer”; community

with the access to

affordable product”
9. Concern for  “To promote the

Employees personal and

professional

development of our

employees”

The table above is the Proposed Mission of the company. It has already complied with all

the necessary factors and terms to amend the situation for a proper version of the mission

statement. It provides a clear thought of Puregold which is aiming to be more convenient and

reliable supermart in the Philippines.

10
CHAPTER 2

11
2.1 EXTERNAL ANALYSIS

2.1.1 MACRO EXTERNAL ANALYSIS

PESTLE analysis covers external influence that affects the performance of a business. It

is a concept in marketing principles. Moreover, used as a tool by companies to track the

environment they’re operating in or are planning to launch a new project/product/service etc.

There are many external environmental factors that can affect your business. It is a framework or

tool used by marketers to analyze and monitor the macro-environmental (external marketing

environment) factors that have an impact on an organization.

2.1.2 POLITICAL CONDITION

Puregold usually considers policies specially government policies concerning in retail

market. In the PESTEL analysis model, politically active groups are also important. The

following are the political external factors in Puregold macro-environment: High stability of

politics, Political support for globalization, political pressure for higher wages.

The macro-environmental factors show that Puregold must give attention to the threat of

higher wages.

2.1.3 ECONOMIC CONDITION

Economic factors have a important impact on how a company does business. Recession

or growth can affect the business.

Puregold is under significant pressure from economic changes. Any changes directly

leads in the company’s revenues. Based on the PESTEL analysis model, the following are the

economic external factors in Puregold macro environment: Strong GDP growth, continued

growth of developing countries, high productivity, competitive market, economic structure,

population growth rates, global competitiveness.

12
 2.1.4 SOCIAL CONDITION

The sociocultural factors in the business environment of Puregold influence consumer

perception and preferences. Social factors will have an impact on your business. The structure of

families could change and this will influence the way in which you sell your products. In the

PESTEL analysis model, the following are the social or sociocultural external factors in Puregold

macro environment: Healthy lifestyle trend, cultural diversity trend, stability of social structures,

online marketing and online shopping.

Both of these social/sociocultural factors present opportunities for Puregold. The

company can increase its parcel of healthful products . Puregold can also increase the variety of

its products to satisfy cultural preferences. Online marketing is helpful nowadays. Filipino are

using internet in average of 4-8 hours a day.

2.1.5 TECHNOLOGICAL CONDITION

Puregold needs to look for technological trends. New technological trends can increase

market size. Data has opened up a need for information processing. In the context of the

PESTEL analysis model, technologies affect the retail industry’s competitive landscape. The

following are the technological external factors in Puregold macro environment: Increasing

business automation, business analytics or big data, increasing mobile device usage among

consumers, credit card trends, and credit card frauds and scams.

2.1.6 ENVIRONMENTAL CONDITION

Changes affect the business environment. Businesses frequently looking at how green

they are. In the PESTEL analysis model, environment affects the company and how they

response on the total ban of plastics. The following are the environmental external factors in

13
Puregold macro environment: Green products and services, business sustainability, and

infrastructures.

2.1.7 LEGAL CONDITION

Factors that includes any law which may influence the operations of the company. Legal

policies could affect minimum wages. This would mean that it will cost more for the business.

The following are the legal external factors in the Puregold macro environment: following

government regulations and business regulations, increasing in development costs.

2.2 Micro External Analysis (PORTER’S FIVE FORCES ANALYSIS)

2.2.1 RIVALRY OF COMPETITION

Moderate to High: The rivalry among the competitors in this field of business is very

high. Competitors like SM and Robinson’s Retail Group are funded by large conglomerates

which are positioned for aggressive expansion. The modern penetration of retail chain is far from

any saturation point at 22% which decreases the impact of competition. Though Puregold is

branded as one of the leading hypermarkets in the Philippines, it cannot ignore the fact that SM

is still the leading hypermarket in the country and both companies are doing very well in their

fields. They are both competitive and upgrading.

2.2.2 POTENTIAL OF NEW ENTRANTS

Low: There is difficulty for new entrants to enter the market because of presence of

established brands like SM, Puregold, Robinsons’s and Rustan’s. Scale is needed to be able to

14
access good terms with suppliers. High fixed costs associated with leasing of land and building

in prime locations also make it hard for to enter. This requires high capital investments. The

threat of entry of foreign retail chains is yet to be seen. The entry of new competitors could be

very low because it is very hard to enter into this line of business since the former companies

have already established a good reputation in the society. Also, consumers prefer an established

company over a new one especially if it is not in a large-scale business.

2.2.3 POTENTIAL FOR SUBSTITUTES

High: Puregold offers a wide variety of products and mainly composes of basic

household grocery items and household needs. The development of substitute products does not

affect the company much because Puregold is very flexible when it comes to adapting to sudden

changes in the new products being introduced in the market. Grocery retail formats are

threatened by traditional retailers like the wet market and the sari-sari store. This is an attractive

alternative for the mass market because of the informal credit system and sachet size serving

which makes it an affordable alternative for consumers who earn wages by the day. While the

threat is high, Puregold does not face this threat by making sari-sari stores their customers

instead.

2.2.4 BARGAINING POWER OF BUYERS

Low to Moderate : It is evident that the general public is the target market of the

company. Subject to support this statement is that the price of the commodities offered by the

company is inexpensive. Puregold offers affordable and quality products, they are giving out

numerous promotions, discounts, and the like for the consumers to have and enjoy. The company

sells at the suggested retail price or less, and this is because they do not only sell in retail but also

in wholesale which is not applicable to Puregold Jr. And Puregold Extra.

15
 2.2.5 BARGAINING POWER OF SUPPLIERS

Low to Moderate: Developing good ties with their suppliers, the company is not prone

to suppliers haggling with regards to their product offers. Key suppliers consist of large fast-

moving consumer good companies (P&G, Unilever, URC, etc). Because of competition among

these suppliers, bargaining power is limited as they try to compete for key accounts of retail

chains. Suppliers can be moderately powerful when expanding outside of Metro Manila because

of their national distribution networks. SM Hypermarkets is the leading competitor of Puregold.

Bargaining with suppliers could be at a strong factor if SM could try to buy the suppliers of

Puregold.

2.3 COMPARATIVE PROFILE MATRIX (CPM)

It is based on the variables of marketing operations and finance of three

supermarkets in the Philippines. The CPM categorizes the main rivals and its particular strength

and weakness. CPM asses itself and also its rivals by giving rating and weights to key success

factors.

PUREGOLD PRICE SUPER8 GROCERY EVER

CLUB INC. WAREHOUSE SUPERMARKET

Critical Weighted Weighted Weighted

Success Factors Weight Rating Score Rating Score Rating Score

Number of Branches 0.25 4 1.00 3 0.75 2 0.50

Reasonable Price 0.20 3 0.60 3 0.60 3 0.60
Products Variety and Availability 0.30 4 1.20 3 0.90 3 0.90
Facilities and Equipment 0.10 3 0.30 3 0.30 3 0.30
Quality of Service 0.15 4 0.60 3 0.45 3 0.45

Total 1.00 3.70 3.00 2.75

16
 We gave 30% weight on the products variety and availability because

markets are a source of common household products they should be always available and

accessible for the customer. That company’s goal is to sell goods that’s why they focused on

wide variety of product that is available for customers and how they will reach the nearest

branch.

Since the primary business of this companies is to sell goods, we differentiate the companies

through an analysis of how they use these factors. As a result, Puregold Price Club Inc. has the

highest weighted score of 3.70, which shows that Puregold is capable to utilize every

opportunities and strengths they have. Next to it is Super8 Grocery Warehouse with a result of

3.00 and Ever Supermarket with a score of 2.75 which happens to be the lowest.

2.4 EXTERNAL FACTOR EVALUATION (EFE)

Is a strategy tool used to examine company's external environment and to identify the available

opportunities and threat. It is a good tool to visualize and prioritize the opportunities and threats

that a business is facing.

EFE MATRIX

17
 Weighted
Critical Success Factors Weight Rating Score
Opportunities
New Products and Services 0.04 4 0.16
Online Market 0.05 4 0.20
Eco Bags since the "I am not Plastic Bag" campaign act
2013 0.05 4 0.20
Pure Gold Memberhsip Cards 0.04 4 0.16
Branded as one of the leading supermarkets in the
Philippines 0.08 4 0.32
Technology advancement 0.04 3 0.12
Stronger and well known company 0.08 4 0.32
Event sponsorship and product exposure 0.05 3 0.15
More promotions and free check-ups at selected
branches 0.04 2 0.08
Increase in consumer consumption 0.04 2 0.08
Threats
Potential new entrants 0.05 3 0.15
Direct competitors 0.07 4 0.28
High land and construction cost 0.04 2 0.08
A competitor opening a new branch nearby location 0.05 3 0.15
Credit card fraud 0.04 2 0.08
Stocks supply shortage 0.05 3 0.15
Business Interruptions such as delay in deliveries 0.04 2 0.08
Demands for higher quality products and services 0.05 3 0.15
Increase in Labor Cost 0.04 2 0.08
Limited Financial Capital 0.06 3 0.18
TOTAL 1.00 3.17

As shown in the matrix above the total is 3.17 which means that the company is equip with the

future threats in the industry. We rated it based on how important or how does it affects the

company. We rated the “stronger and well known company name, and branded as one of the

leading supermarkets in the Philippines” as the highest weighted in the opportunities success

factors because it has a great impact not only to customer but also for the investors. In threat’s

factor “Direct competitors” has the highest weighted score because it has the impact where the

company should focus and work for.

18
CHAPTER 3

19
3.1 INTERNAL ANALYSIS

3.1.1 FINANCIAL RATIO ANALYSIS

Financial ratios are mathematical comparison of financial statement accounts or

categories. These relationships between the financial statement accounts help investors,

creditors, and internal company management understand how well a business is performing and

of areas needing improvement. It is the most common and widespread tools used to analyze a

business financial standing and it uses to identify their strengths and weaknesses of the company.

2017 2016
Liquidity Ratios
Current Ratio 1.60 1.66
Quick or Acid-Test Ratio 0.66 0.68
Leverage Ratios
Debt-to-Total-Asset Ratio 30.47% 31.56%
Times-Interest-Earned Ratio 53.19 60.77
Activity Ratios
Inventory-Turnover Ratio 6.48 6.25
Total-Asset Turnover 1.65 1.55
Fixed-Asset Turnover 8.07 7.50
Average Collection Period 17.22 days 17.41 days

Profitability Ratios
Gross Profit Margin 15.48% 15.45%
Operating Profit Margin 5.84% 5.85%
Return on Stockholders’
Net Profit Margin Equity 11%
4.52% 10%
4.80%
Earnings
Return onper Share
Total Asset (ROA) Php
7.5%1.50 Php
7.2%1.47
Growth Ratios
Sales 9.74%
Net Income 3.34%
Earnings per Share 2%
Dividends per Share N/A

20
 Assessing the health of a company in which you want to invest involves

understanding its liquidity, activity, profitability, growth ratio of the company. Understanding on

how easily that company can turn assets into cash to pay short-term obligations, hoe profitable

the company is, how to determine a company’s sustainable growth rate and many more. We used

the financial statement of the company as a fiscal year ended 2016 and 2017 to compute foe

every financial ratio that is needed to be seen by investor, customer, etc.

3.1.2 INTERNAL FACTOR EVALUATION (IFE)

Is strategic management tool for evaluating major internal strengths and weaknesses in

functional areas of an organization or a business. IFE matrix also provides a basis for identifying

relationships among those areas. Conducting an internal analysis often incorporates measures

that provide useful information about your organization’s strengths, weaknesses, opportunities,

and threats – SWOT analysis.

IFE MATRIX

21
 Weighted
Critical Success Factors Weight Rating Score
Strengths
Good Customer Relationship 0.06 4 0.24
Strong Supplier Relationship 0.06 4 0.24
Brand Name 0.08 4 0.32
Alliances and Joint Venture 0.03 3 0.09
Strong Management 0.04 4 0.16
Cost Advantages 0.05 3 0.15
Supply Chain 0.05 3 0.15
Perks Card Benefit 0.05 4 0.20
Distribution Channel of Goods to Sari store or small
business 0.04 4 0.16
Numerous Branches 0.05 3 0.15
Weaknesses
Low Investment In Research Development 0.04 2 0.08
Hardships in Opening Branches Around Visayas and
Mindanao 0.07 2 0.14
Intensifying Competition Among Industry Players 0.04 1 0.04
Sensitivity to Rising Prices 0.05 2 0.10
Too Much Competition 0.03 1 0.03
Too Many Taxes 0.03 1 0.03
High Labor Cost 0.05 1 0.05
Low Inventory Management 0.07 2 0.14
Lack of Work Force 0.05 1 0.05
Outdated Technology 0.06 2 0.12
TOTAL 1.00 2.64

It shows that the IFE matrix score for Puregold is 2.64 which is above the industry

minimum matrix of 2.50. This means that the company is more capable of resolving their

weakness and can compete. Having a Brand name can attract more customers. So it was given

the highest weighted average. Low inventory management and Hardship in opening branches

around Visayas and Mindanao should be improved and overcome as company weakness because

it has a huge impact to the company that makes it a highest weight in matrix.

22
CHAPTER 4

23
4.1 MATCHING STRATEGIES

It can help you uncover opportunities that you are well-placed to exploit. And by

understanding the weaknesses of your business, you can manage and eliminate threats that would

otherwise catch you unawares. It is concerned with seeking competitive advantage in markets at

the business. It determines how the corporation as a whole support and improve that value of the

business factors within.

4.2 TOWS ANALYSIS

Strengths S-O Strategies Opportunities

Good Customer 1. Conduct events to supply 1. New Products and

Relationship products in able to expose Services

and promote the company

(S7-O8)
Strong Supplier 2. Showcase the brand name 2. Online Marketing is a big

Relationship to attract consumers (S3- trend in the Philippines

O10)
Brand Reputation 3. Establish more free check- 3. Eco Bags since the "I am

up to numerous branches not Plastic Bag"

(S10-O9) campaign act 2013

Alliances and Joint 4. Showcase the perks card 4. Puregold Membershiip

Venture benefit to increase Cards

consumer (S8-O10)
Strong Management 5. Strengthen supplier 5. Branded as one of the

relationship to bring new leading supermarkets in

products and services (S2- the Philippines

O1)
Cost Advantages 6. Strengthen management 6. Technology

24
 team to achieve awards advancement

and be branded as one of

leading supermarket (S5-

O5)
Location 7. Promote membership cards 7. Credit card trends

and it's benefits to improve

customer relationship (S1-

O4)
Perks Card Benefit 8. Use online market to 8. Event sponsorship and

supply products to the product exposure

establish good customer

relationship (S1-O2)
Distribution Channel of 9. Promote new products and 9. Free check-ups at

Goods to Sari store or services through selected branches

small business distribution channel like

sari sari store or small

businesses (S9-O1)
Numerous Branches 10. Branded as one of the 10. Increase in consumer

leading supermarkets in consumption

the Philippines as they

have numerous branches

(S10-O5)

Weaknesses W-O Strategies Opportunities

Difficulty in Opening 1. Upgrade the technology 1. New Products and

Branches Around Visayas change the old one into Services

25
and Mindanao new one (W10-O6)
Absence of important 2. Conduct events to have 2. Online Marketing is a

skills additional workforce (W4- big trend in the

O10) Philippines
Intensifying Competition 3. Use technology 3. Eco Bags since the "I am

Among Industry Players advancement to be known not Plastic Bag"

by the consumers (W6-O6) campaign act 2013

Sensitivity to Rising 4. Strengthen the inventory 4. Puregold Memberhsip

Prices management to come up Cards

new products and service

(W8-O1)
Low communication of 5. Improve online presence 5. Branded as one of the

employees for the improvement of leading supermarkets in

online market (W6-O2) the Philippines

Weak online presence 6. Promote the use of ecobag 6. Technology

to the consumers being advancement

ecofriendly to be ahead

with other competitors

(W3-O3)
Limited working hours 7. Use the brand as one of the 7. Credit card trends

leading supermarkets in

the Philippines to open in

areas such as Visayas and

Mindanao (W1-O5)
Low Inventory 8. Event sponsorship and 8. Event sponsorship and

Management product exposure to be product exposure

well known company in

26
 order to meet the

competition against rivalry

(W3-O8)
Lack of Work Force 9. Use the technology 9. Free check-ups at

advancement for easier selected branches

inventory management

inventory (W8-O6)
Outdated Technology 10 Additional workfoce to 10 Increase in consumer

. conduct event in . consumption

sponsorship and product

exposure (W9-O8)

Strengths S-T Strategies Threats

Good Customer 1. Use strong management to 1. Potential new entrants

Relationship resolve business

interruptions such as delay

deliveries (S5-T7)
Strong Supplier 2. Low price that suits 2. Direct competitors

Relationship consumers' demand, in

spite of economic

slowdown (S6-T3)
Brand Reputation 3. Reduce delay of deliveries 3. Economic slowdown

by having strong

relationship and

communication with the

supplier (S2-T7)
Alliances and Joint 4. Binding contracts with 4. A competitor opening a

27
Venture companies to increase new branch nearby

revenue and to reduce location

delay in deliveries that

cause business interruption

(S4-T8)
Strong Management 5. Showcase the perks card 5. Credit card fraud

benefits to be ahead with

new potential entrants (S8-

T1)
Cost Advantages 6. Use strong relationship 6. Extreme cases of natural

with consumer to meet the disasters occuring

competition (S1-T4)
Location 7. Plan and make sure all 7. Business Interruptions

branches have a good such as delay in

location (S10-T4) deliveries

Perks Card Benefit 8. Strengthen the 8. Demands for higher

management to be more quality products and

competitive to compete services

with new entrants (S5-O1)

Distribution Channel of 9. Use the ability of strong 9. Increase in Labor Cost

Goods to Sari store or managerial not to over

small business power by the new opened

branch by the competitor

(S5-T4)
Numerous Branches 10 Use the perks card benefit 10 Transition of traditional

. to avoid credit card fraud . instore shopping to

28
 (S8-T5) internet shopping

Weaknesses W-T Strategies Threats

Difficulty in Opening 1. Improve the inventory 1. Potential new entrants

Branches Around Visayas management to avoid stock

and Mindanao shortage (W8-T6)

Absence of important 2. Upgrade system and 2. Direct competitors

skills machine to lessen credit

card fraud (W10-T5)

Intensifying Competition 3. Improve strong online 3. Economic slowdown

Among Industry Players presence for instore

shopping to internet

shopping (W6-T10)
Sensitivity to Rising 4. Establish more branches 4. A competitor opening a

Prices around Visayas and new branch nearby

Mindanao to have an location

advantage to the direct

suppliers (W1-T2)
Low communication of 5. Additional workforce for 5. Credit card fraud

employees higher demand and

services (W9-T8)
Weak online presence 6. Upgrade outdated 6. Extreme cases of natural

technology to provide disasters occuring

better service on internet

shopping (W10-T10)
Limited working hours 7. Improve the inventory 7. Business Interruptions

management for higher such as delay in

29
 demand and service (W8- deliveries

T8)
Low Inventory 8. Empower inventory 8. Demands for higher

Management management to lessen quality products and

business interruptions services

(W8-T7)
Lack of Work Force 9. Reducing overtime and 9. Increase in Labor Cost

other pay overages to avoid

increase in labor cost (W7-

T9)
Outdated Technology 10 Upgrade into new 10 Transition of traditional

. technology for promotion . instore shopping to

to overcome direct internet shopping

competitors (W10-T2)

Internal Audit
11

. Strengths
1. Good Customer Relationship
2. Strong Supplier Relationship
3. Brand Reputation
4. Alliances and Joint Venture
5. Strong Management
6. Cost Advantages
7. Location
8. Perks Card Benefit
9. Distribution Channel of Goods to Sari store or small business
10

. Numerous Branches

30
 Weaknesses
1. Difficulty in Opening Branches Around Visayas and Mindanao
2. Absence of important skills
3. Intensifying Competition Among Industry Players
4. Sensitivity to Rising Prices
5. Low communication of employees
6. Weak online presence
7. Limited working hours
8. Low Inventory Management
9. Lack of Work Force
10

. Outdated Technology

External Audit

Opportunities

1. New Products and Services

2. Online Marketing is a big trend in the Philippines
3. Eco Bags since the "I am not Plastic Bag" campaign act 2013
4. Puregold Memberhsip Cards
5. Branded as one of the leading supermarkets in the Philippines
6. Technology advancement
7. Credit card trends
8. Event sponsorship and product exposure
9. Free check-ups at selected branches
10

. Increase in consumer consumption

Threats

1. Potential new entrants

2. Direct competitors
3. Economic slowdown
4. A competitor opening a new branch nearby location
5. Credit card fraud
6. Extreme cases of natural disasters occuring
7. Business Interruptions such as delay in deliveries

31
 8. Demands for higher quality products and services
9. Increase in Labor Cost
10

. Transition of traditional instore shopping to internet shopping

4.3 SPACE MATRIX

It is a matching tool which is an hour Quadrant frame that indicates whether aggressive

conservative defensive or competitive strategies are the most appropriate foe a give organization.

It analyzes four areas to internals and to externals which will represents the Quadrant in

the graphic. The purpose of SPACE matrix is to position the company in one of these Quadrants

to determine the type of strategies is advisable for them.

Internal Strategic Position

Financial Strength +5 +1 Worst +6 Best
Competitive Advantage -2 -6 Worst -1 Best

External Strategic Position

Environmental Stability -3 -6 Worst -1 Best
Industry Strength +4 +1 Worst +6 Best

x-axis: 4.4 + -2 = 2.4

y-axis: 4.6 + -3 = 1.6

We rated the Internal and External Strategic Location based om the outcome of our research.

We looked for the computation of Financial Ratios to identify and rate the Financial Strength. For

32
the Competitive Advantage, we looked for the Internal Analysis of the company using the Inbound

and Outbound Logistics Analysis, Operation Analysis, Marketing-Activities Analysis, After Sales

Analysis and Technology Integration Analysis. For the Environmental Stability. We based it using

PESTEL analysis. And for the Industry Strength. We rated it using the Porter’s Five Forces

Analysis.

Conservative FS Aggressive
+6

+5

+4

+3

+2

+1

+0
-5 -4 -3 -2 -1 +0 +1 +2 +3 +4 +5
CA IS
-1

-2

-3

-4

-5

-6

Defensive ES Competitive

A firm in the Aggressive quadrant should use its internal strengths to (1) take advantage of
external opportunities, (2) overcome internal weaknesses, and (3) avoid external threats. Therefore,
market penetration, market development, product development, backward integration, forward
integration, horizontal integration, conglomerate diversification, concentric diversification, horizontal
diversification, or a combination strategy can all be feasible.

This particular Space Matrix tells our company should pursue an aggressive strategy. Puregold

Price Club Inc. has a strong competitive position in the market with rapid growth. It needs to use

its internal strengths to develop a market penetration and market develop strategy. This includes

33
product development, backward integration, diversification or combination of strategy can also

be feasible.

4.4 GRAND STRATEGY MATRIX FOR PUREGOLD PRICE CLUB INC.

RAPID

MARKET

GROWTH
 
Quadrant

II   Quadrant I
 
 
  Target
 
WEAK  
COMPETITIVE   STRONG
POSITION             COMPETITIVE
  POSITION
 
 
 
  PUREGOLD PRICE CLUB INC.
 

34
  
Quadrant

III   Quadrant IV
 
SLOW

MARKET

GROWTH

1. Concentric diversification
2. Horizontal diversification
3. Conglomerate diversification
4. Joint ventures

It shows a slow market growth compared to other strategies. The market-growth strategy

focuses on growing the market for a current product. Puregold Price Club is located on Quadrant

IV that are strong and competitive position with slow market growth. They need to evaluate the

present approach and the way of communication to the market place. The following are the

recommended strategies: Concentric diversification, Horizontal diversification, Conglomerate

diversification and Joint ventures.

4.5 IE MATRIX

This is a strategic management matching tool used to analyze working conditions and

strategic position of a business. It is based on an analysis of internal and external business factors

which are combined into one suggestive model.

The Internal-External (IE) Matrix

The IFE Total Weighted Score

Strong Average Weak

35
 3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
High I II III
3.0 to PUREGOLD

3.99 PRICE CLUB

  INC.  
Medium IV V VI
2.0 to
The EFE Total
2.99
Weighted Score      
Low VII VIII IX
1.0 to

1.99
     

GROW AND BUILD

They need to use grow and build strategy. This means intensive and aggressive tactical

strategies. Your strategies should focus on market penetration, market development, and product

development. From the operational perspective, a backward integration, forward integration, and

horizontal integration should also be considered.

36
 4.6 BGC MATRIX

The BGC Matrix allow an organization to manage its portfolio to business by assessing

its

relative market share position and the industry growth rate. Having one of the largest market

share in the industry and ahead of other retail company, like SM Hypermarkets and Robinsons

Supermarket, and with the high market growth rate, Puregold Price Club Inc. can be considered

in the star position in the BCG Matrix. Having considered as largest market share, the strategies

appropriate may either be market penetration and market development as intensive strategies or

related diversification.

37
 4.7 SUMMARY OF MATRIX

Matrix Analysis and TOWS

Summary

Alternative Strategies IE SPACE GRAND COUNT

Forward Integration X X   2
Backward Integration X X   2
Horizontal Integration X X   2
Market Penetration X X   2
Market Development X X   2
Product Development X X   2
Concentric Diversification - X X 2
Conglomerate Diversification - X X 2
Horizontal Diversification - X X 2
Joint Venture -   X 1
Retrenchment       0
Divestiture       0
Liquidation       0

The result for IE Matrix, SPACE Matrix and GRAND Matrix are used to determine which

alternative strategy is to be use in Quantitative Strategic Planning Matrix for Puregold Price Club

Inc. and to determine what should be improve in the company’s current standing. Using this

Summary of Matrix, we can now identify which alternative strategy will be used to increase the

market share of Puregold in its industry.

38
CHAPTER 5

39
 5.1 DECISION, CONCLUTION, RECOMMENDATION

Options

1. Market Penetration

2. Market Development

5.2 QUANTITATIVE STRATEGIC PLANNING MATRIX FOR PUREGOLD

PRICE

CLUB INC.

           
    Strategic Alternatives
Market Market

Penetratio Developmen

Critical Success Factors Weight n t

Strengths   AS TAS AS TAS
Good Customer Relationship 0.06 3.00 0.18 3.00 0.18
Strong Supplier Relationship 0.06 4.00 0.24 3.00 0.18
Brand Reputation 0.08 3.00 0.24 4.00 0.32
Alliances and Joint Venture 0.03 3.00 0.09 4.00 0.12
Strong Management 0.04 3.00 0.12 4.00 0.16
Cost Advantages 0.05 4.00 0.20 4.00 0.20
Location 0.05 3.00 0.15 4.00 0.20
Perks Card Benefit 0.05 4.00 0.20 2.00 0.10
Distribution Channel of Goods to Sari store or small

business 0.04 3.00 0.12 4.00 0.16

Numerous Branches 0.05 4.00 0.20 3.00 0.15
Weaknesses        
Difficulty in Opening Branches Around Visayas and

Mindanao 0.07 3.00 0.21 4.00 0.28

Absence of important skills 0.04 ---- ---- ---- ----
Intensifying Competition Among Industry Players 0.07 4.00 0.28 3.00 0.21
Sensitivity to Rising Prices 0.04 4.00 0.16 2.00 0.08
Low communication of employees 0.03 2.00 0.06 4.00 0.12
Weak online presence 0.05 4.00 0.20 2.00 0.10
Limited working hours 0.03 3.00 0.09 4.00 0.12
Low Inventory Management 0.05 4.00 0.20 3.00 0.15

40
Lack of Work Force 0.05 3.00 0.15 4.00 0.20
Outdated Technology 0.06 4.00 0.24 3.00 0.18
SUBTOTAL 1.00   3.33   3.21

Market Market

Penetratio Developmen

Critical Success Factors Weight n t

Opportunities   AS TAS AS TAS
New Products and Services 0.05 4.00 0.20 3.00 0.15
Online Marketing is a big trend in the Philippines 0.03 4.00 0.12 2.00 0.06
Eco Bags since the "I am not Plastic Bag" campaign

act 2013 0.05 3.00 0.15 4.00 0.20

Puregold Memberhsip Cards 0.04 3.00 0.12 4.00 0.16
Branded as one of the leading supermarkets in the

Philippines 0.08 3.00 0.24 4.00 0.32

Technology advancement 0.04 3.00 0.12 4.00 0.16
Credit card trends 0.05 4.00 0.20 2.00 0.10
Event sponsorship and product exposure 0.05 2.00 0.10 4.00 0.20
Free check-ups at selected branches 0.03 4.00 0.12 3.00 0.09
Increase in consumer consumption 0.04 3.00 0.12 4.00 0.16
Threats        
Potential new entrants 0.05 3.00 0.15 4.00 0.20
Direct competitors 0.07 2.00 0.14 4.00 0.28
Economic slowdown 0.08 3.00 0.24 4.00 0.32
A competitor opening a new branch nearby location 0.05 3.00 0.15 4.00 0.20
Credit card fraud 0.08 4.00 0.32 2.00 0.16
Extreme cases of natural disasters occurring 0.05 4.00 0.20 2.00 0.10
Business Interruptions such as delay in deliveries 0.04 2.00 0.08 4.00 0.16
Demands for higher quality products and services 0.05 2.00 0.10 3.00 0.15
Increase in Labor Cost 0.04 3.00 0.12 4.00 0.16
Transition of traditional instore shopping to internet

shopping 0.06 4.00 0.24 2.00 0.12

SUBTOTAL 1.03   3.23   3.45
SUM TOTAL ATTRACTIVENESS SCORE     6.56   6.66

41
 Based on the QSPM, market development is the most attractive strategy

for Puregold to pursue with the sum total attractiveness score of 6.78. On the other hand, market

penetration received a total score of 6.68.

Puregold Price Club as proposed by the QSPM, should consider the market

development as their strategy. A market development involves identifying a target market and

finding a way to sell them. Target market are flexible concept that can include factors like

location, demographics customer needs, customer preference and lifestyle.

5.3 DECISION

5.3.1 Corporate Strategy

Puregold Price Club Inc. has a strong dominant presence in the market industry. Through

Market Development Strategy, it can be the key in providing direction of company to a new

growth levels. Market Development strategies will be driven by targeting non-buying and new

customers in targeted segments. This involves identifying a target market and finding a way to

sell to them. Target markets are a flexible concept that can include factors like locations,

demographics, customer needs, customer preferences and lifestyle. As target markets are diverse,

so are strategies to reach them.

5.3.2 Business Strategy

Conduct events to supply products in able to expose and

SO promote the company (S7-O8)

Showcase the brand name to attract

consumers (S3-O10)
Establish more free check-up to

42
 numerous branches (S10-O9)
Showcase the perks card benefit to

increase consumer (S8-O10)

Strengthen supplier relationship to bring new

products and services (S2-O1)

Strengthen management team to achieve awards and be branded as one of

leading supermarket (S5-O5)

Promote membership cards and it's benefits to improve

customer relationship (S1-O4)

Use online market to supply products to the establish good

customer relationship (S1-O2)

Promote new products and services through distribution channel like sari

sari store or small businesses (S9-O1)

Branded as one of the leading supermarkets in the Philippines as they

have numerous branches (S10-O5)

W Upgrade the technology change the old one

O into new one (W10-O6)

Conduct events to have

additional workforce (W4-

O10)
Use technology advancement to be known

by the consumers (W6-O6)

Strengthen the inventory management to come up new

products and service (W8-O1)

Improve online presence for the

improvement of online market (W6-O2)

Promote the use of Eco bag to the consumers being ecofriendly to be

ahead with other competitors (W3-O3)

Use the brand as one of the leading supermarkets in the Philippines to open in

areas such as Visayas and Mindanao (W1-O5)

43
 Event sponsorship and product exposure to be well known company in order to

meet the competition against rivalry (W3-O8)

Use the technology advancement for easier inventory

management inventory (W8-O6)

Additional workforce to conduct event in sponsorship and

product exposure (W9-O8)

Use strong management to resolve business interruptions

ST such as delay deliveries (S5-T7)

Low price that suits consumers' demand, in spite of

economic slowdown (S6-T3)

Reduce delay of deliveries by having strong relationship and

communication with the supplier (S2-T7)

Binding contracts with companies to increase revenue and to reduce delay in

deliveries that cause business interruption (S4-T8)

Showcase the perks card benefits to be ahead with new

potential entrants (S8-T1)

Use strong relationship with consumer to

meet the competition (S1-T4)

Plan and make sure all branches have

a good location (S10-T4)

Strengthen the management to be more competitive to compete

with new entrants (S5-O1)

Use the ability of strong managerial not to over power by the new opened

branch by the competitor (S5-T4)

Use the perks card benefit to avoid

credit card fraud (S8-T5)

W Improve the inventory management to avoid

T stock shortage (W8-T6)

Upgrade system and machine to

44
 lessen credit card fraud (W10-T5)
Improve strong online presence for in store shopping to

internet shopping (W6-T10)

Establish more branches around Visayas and Mindanao to have an

advantage to the direct

suppliers (W1-T2)
Additional workforce for higher

demand and services (W9-T8)

Upgrade outdated technology to provide better service on

internet shopping (W10-T10)

Improve the inventory management for

higher demand and service (W8-T8)

Empower inventory management to lessen

business interruptions (W8-T7)

Reducing overtime and other pay overages to avoid increase

in labor cost (W7-T9)

Upgrade into new technology for promotion to overcome

direct competitors (W10-T2)

5.3 RECOMMENDATION

Market Development

In Puregold Price Club Inc. market position should increase its market share by

introducing present products and services into new geographic area because maximizing the

stockholder’s investment through expansion will have a greater chance of getting back the return

on investments and profit of the company.

Puregold should focus more on market development strategy to attract new potent

customers and to increase their sales by putting branches in semi-urban areas, large scale

45
organization and by doing business operation nationwide. Puregold should strategize through

product development by continuously improve their products and services. By doing research

and development to satisfy customer wants and needs

5.4 CONCLUSION

Puregold is well established supermarket in the Philippines, mostly in Luzon area. It is

also one of the fast growing franchising business, and they posed a big threat as against to their

competitors in the country. However, there is still some weakness of the company, meaning that

even though they are known locally, still there are supermarkets who are more popular than

Puregold, just like SM Hypermarket and Robinson’s Supermarket.

In this thesis, we adopted the strategic management to analyze the external and internal

factors of Puregold and we formulate the new strategy for the implementation plan to help

achieve its goal.

Firstly, research explained the external and internal factors that affect the situation of the

business from political, economic, social, technological, legislative and environmental aspects.

Moreover, we analyzed the problem arises in the competition situation in local market. From

those analyses, we found out that expanding in rural areas is a good opportunity for Puregold

Price Club Inc. However, in the meantime, people living in rural areas earn low income, and

have different product needs. Therefore, entering the rural market will be a big step for the

company.

46
 Secondly, we analyzed the internal factors of the company, including its core

competencies, current marketing strategy, and business model in Puregold. Overall, the internal

analyses demonstrate the weakness of the company is the expansion of branches in Visayas and

Mindanao.

Thirdly, based on the company’s mission and goal, we suggest to the company to enter

the rural market to increase the profit and to satisfy the needs of the customers.

Additionally, on this study, we conclude the Market Development is the new strategy for the

Puregold Price Club Inc. to cater and attract customer which have entered nationwide market for

expansion. With this strategy, it maximized the stockholder’s investment through expansion will

have a greater chance of getting back the return on investments and profit of the company. It also

builds the strong reliable brand image of the Puregold.

47