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Colegio de San Juan de Letran Manila

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I. INTRODUCTION A. Company Profile Global Excellence Human Resources Academy, Inc. (Global) is engaged in the business of contracting, enlisting, recruiting professionals and workers - both skilled and unskilled - for local work in hotels, resorts, restaurants and other firms and act as an agent of individuals or companies in the supply of manpower, human resources development, training and consultancy services as required by the client. It registered with the Securities and Exchange Commission on April 21, 2006 as well as the Department of Labor and Employment and the Local Governments of Quezon City.

Global can be considered as one of the countrys prime manpower development, training, consultancy and outsourcing services firms. It is a totally Filipino owned corporation operated by people honed in professionalism, exposure and experience in dealing with people of different cultures, characters and personalities.

Recently Global Excellence established another company with a separate identity that can focus on training alone. Excellent Choice Training Center was established to focus on hospitality management trainings and computer tutorials. TESDA accreditation for Excellent Choice Training Center is currently in process to further boost its competitiveness.

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Global is an advocate of quality training, quality employees, quality management and is intent at producing socially responsible people within and outside its organization. Globals Training Modules are carefully designed by its topnotch Resource Persons and Board of Advisers to fit present industry needs. These modules are meant to develop and produce a new breed of individuals known for their reliability, integrity, suitability and eligibility.

Global claims to have a solution to the perennial problem of both employers and labor, during economic crisis that requires downsizing of manpower. Global applies the principle that an ounce of prevention is better than a pound of cure by supplying its clients with the right number of quality standard personnel who fit in their respective fields of endeavors as demand arises.

1. Pre-employment Screening. Global ensures that all pre-employment requirements are complied with prior to the deployment of the employees to their respective assigned workplace. Applicants are thoroughly screened before being accepted or hired on the following areas: Maturity; Attitude; Appearance; Communicative Skills; Employment History; Drug Use History; Agreement to drug testing policy;

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Dependability; Background Investigation. The Background Investigation includes the complete medical history, complete physical examination, and standard laboratory examinations such as CBC, routine urinalysis, fecalysis, chest x-ray (10 x 12 inch film), optical clearance and classification as to fitness to work of the applicants. Global also administers psychological examination and evaluation to rank & file, supervisory and managerial positions if clients require so. Global assures that all supplied personnel are technically, physically and emotionally fit.

2. Profile of Key Officers

a. Consultant/Founder Mr. Rafael S. Chico is a professional hotelier. He has been in the hotel and tourism industry for twenty-seven (27) years. Honing his craft, he rose from the ranks and held key positions from one hotel to another, not only in Metro Manila, but across the country as well.

He has traveled in many Asian and European countries thereby making him a wellrounded executive in all facets of hotel operations. He came to be noted as an Award Winning Manager when the resort he was managing won in 1991 the Kalakbay Award by the Department of Tourism, and a Hotel-Resort also under his management won in 1996 the Outstanding Hotel Resort awarded by the Consumers Union of the Philippines 1996.

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He has been Consultant to different companies and personages to the extent of mastering the art of business development and its profitability. He is a champion of Service Excellence in the Hospitality Industry and is the author of The Power of Service Excellence Training and Workshop and The Power of Management in Control Seminar.

b. The President Ms. Priscila Y. Carabeo, the President of Global Excellence Human Resource Academy, Inc. is one of the original graduates of Hotel and Restaurant Operations short courses in 1980 that was initiated by Sulo Management Group and pioneered by Mrs. Trinidad Enriquez. Ms. Carabeo is a professional entrepreneur with vast exposures and experience in importation, exportation, cargo handling and forwarding. She is a graduate of Philippine Marine Institute in Custom Administration. Presently she is the Operations Manager of Cousin Food Corporation. Ms. Carabeo is also an active member of the Fruit Importation and Brokers Association, Inc. and is a registered member-representative to PALSCON. She is known to be hardworking, dynamic and a proactive person who believes that success is the product of hard work and Godliness in all her undertakings

c. The Vice President for HR/Marketing Mr. Aristotle C. Chico, is currently the Vice-President of Human Resources Development in Global Excellence and Training Director in Excellent Choice Training Center (Hotel Department). He graduated from Colegio de San Juan de Letran with a degree in BSBA Major in Marketing. His expertise combines the power of a natural-born speaker with great interpersonal skills. He has an excellent communication skill and can definitely speak fluent English. During his school days, he was noted to be a top orator and

Colegio de San Juan de Letran Manila


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extemporaneous speaker, winning in various National and Regional Competition all over the Philippines. He is currently finishing his Masters in Business Administration at Letran too and has been teaching in the Lyceum of the Philippines and in his Alma Mater as well.

d. The Vice President of Management Information System Mr. Adonis Chico is the Vice President of Management Information System. A product of AMA Computer University (Bachelor of Science in Computer Science) , Mr. Chico is equipped with a vast knowledge in Database Programming and the author/creator of the Global Excellence Academy, Inc. and Interlink Manpower Development Services Human Resources Database Software. A respected database developer, Mr. Chico also teaches several subjects regarding computer application software and hardware. Presently taking up his Masters in Computer Science in AMA, Mr. Chico continuously fabricates his genius craft for the betterment of the company.

e. The Vice President for Operations Mr. Abraham C. Chico is a product of AMA Computer College (Bachelor of Science in Computer Science) and is also a web designer and developer using Macromedia Flash MX , Dreamweaver, Fireworks and Adobe Photoshop. He uses his talents to create marketing instruments and strategies for Global clients.

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B. Background of the Paper 1. The Industry Global Excellence Human Resources Academy, Inc. is in the industry of Job Contracting and Human Resource Outsourcing specifically catering to the needs of the Hospitality Sector. The industry of Job Contracting started in the Philippines when the Department of Labor and Employment promulgated Article 106 stating;

Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (Labor Code of the Philippines).

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A company that wants to venture in this type of business needs to have a permit from DOLE, DO 18-02, which provides for the protection of employees and differentiates labor only contracting from Job Contracting which is legal.

Another permit that can be issued is that for Private Recruitment and Placement Agency (PRPA) that legally allows firms to recruit and place people for a job with a fee. According to the Department of Labor, a licensed company can charge a Placement fee to the workers endorsed, and a Service Fee that can be charged to the client. This is how Recruitment/Outsourcing Agencies earn profit.

a. Job Contracting vs. Private Recruitment Agencies Job Contractors earn differently from Private Recruitment Agencies. As stated earlier these companies are contracted by the client for a specific job only and should not be directly related to the business of the client such as, for example, maintenance of air conditioning, construction of buildings etc.. Fly-by-night agencies became a plague in the industry and as a result, licensed agencies find it hard to get applicants because of the tainted reputation of these despicable agencies. Such a dreadful problem continue to exist and thus affects the image of the Private Recruitment Agencies and Licensed Contractors. Another concern that needs to be looked into are the registration of these fly-bynight agencies. Job Contractor license is actually cheaper than PRPA license simply because a PRPA license will only be given if the concerned entity will be able to pay the bond required by the Department of Labor whereas a DO 18-02 license can be given for Php100. Thus, many companies register for DO 18-02 but operate like a PRPA which is

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prohibited. They even collect illegal fees to applicants which makes matters worse.

b. Manpower Cooperative vs. PRPAs/Job Contractors The practices of Manpower Cooperatives also pose a major problem in terms of competition in the Industry. Unlike Corporations, these Cooperatives have a huge advantage over their competitors simply because they are tax exempt (according to Revenue Regulations No. 20-2001 Sec 3). The Philippine Association of Local Service Contractors (PALSCON), of which Global Excellence is a member, opposes Manpower Cooperatives because they are defeating their purpose of being cooperatives as most of them earn profits in their operation and these amounts are not intended for the benefit of their members. An article by Melgar (2006) on a wesite entitled Palscon advises: Avoid Manpower Cooperatives stated that getting a Manpower Agency as a Service Provider can be costly to the client because these cooperatives circumvent the law. Melgar said such circumvention of the law can prove very costly to a company hiring workers from a manpower cooperative which is into labor-only business that lacks the authority and capacity to supply workers to a client firm.

(http://www.thenewstoday.info/2006/11/10/palscon.advises.avoid.manpower. cooperatives.html) To avoid inconvenience and costly litigation, Melgar said, companies should hire workers only from legitimate service providers complying with the Labor Code and other measures protecting workers, and not from manpower cooperatives.

He cited the "landmark decision" of the Supreme Court in G.R. No. 149011, San

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Miguel Corp. vs. Aballa et al., which ruled that the 97 workers supplied by the Sunflower Multi-Purpose Cooperative to the SMC Bacolod Shrimp Processing Plant were SMC employees and as such are entitled to corresponding damages, amounting to at least P100,000 each. On February 7, 2001, the Court of Appeals reversed the labor arbiter and NLRC decisions, and ordered the SMC to grant workers separation pay and other benefits. The decision cited Article 106 of the Labor Code: "There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment... and the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer."

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II. RESEARCH DESIGN AND METHODOLOGY

Since the author is one of the incorporators of Global Excellence Human Resources Academy Inc., he was able to easily gather primary data from the company itself. The Company Profile and other confidential information regarding operation flows and organizational chart were actually created by the author since he is the Vice President for Human Resources.

Secondary Data were sourced from books, periodicals, theses, magazines, websites and other government agencies related to the operation of Global Excellence.

The author used Fred Davids Tool Designs when he assessed the Internal and External Environment of the company.

Several tools were used such as TOWS analysis, IFE, EFE and IE Matrix, GRAND Strategy Matrix, BCG Matrix, and SPACE Matrix.

A. Scope and Limitation of the Study Environment Analyses and Industry Competitors were derived from the Internet and some useful data were gathered within Metro Manila only. Since Global Excellence is operating in the NCR, the focus of the study was in this region only but also tried to explore other opportunities.

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Assessing Direct Competitors were based on the same profile of clients such as Hotels, Restaurants and other Service Establishments related to the Hospitality Industry.

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The weights that were given in the matrices such as IFE, EFE, and CPM were determined by the authors personal perception and were based on the analyses of some facts researched by the author (financial statements).

Confidentiality may become an issue, so an intelligent estimation from time to time was used for comparison of data with competitors.

Financial Projections were made spanning 3 years and were based on the Industry of Manpower and Outsourcing.

B. Methodology

This research was based on FRED DAVIDs method of Strategic management planning process. It dealt with analyzing Internal and External Environment using different matrices for INPUT STAGE, MATCHING STAGE AND EVALUATION STAGE then recommending strategies to improve industry performance.

The Department of Labor and Employment was one of the main sources of information simply because of the sensitivity and scope of this business in the manpower industry.

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The Department of Tourism was also a source of information to analyze tourism rate in Metro Manila to see opportunities in different sectors in the Hospitality Industry. The higher the tourism rate, the more jobs become available for people and the industry can get more clients.

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Some interviews and internet research were conducted to gather data and have support for further information.

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III. VISION MISSION STATEMENT (Current Vision and Mission Statement) A. VISION GLOBAL envisions itself to be the premier source for the delivery of quality services with quality manpower, quality training and professional certification that serves the needs of the Hospitality Industry and other industries locally and worldwide.

B. MISSION GLOBAL is to nurture, cultivate and advocate for creating, developing and producing socially responsible employees, skilled workers, managers and leaders. Global adheres to the principle of do what we teach.

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IV. EXTERNAL ANALYSIS

A. Macro-environmental Analysis

Analyzing the environment of an organization is very important in strategic planning because from here the analyst can pinpoint opportunities that the company can take advantage of and anticipate threats to minimize its effect in the company.

Global Excellence Human Resources Academy Inc. is in the Service Industry. Its market is very saturated because a lot of Manpower and Recruitment Agencies are being established, especially in Metro Manila. Factors in Economic and Political Environment will greatly affect Global Excellence due to the nature of its business, which is explained later on.

1. Social Environment

a. Population a factor

Since Global Excellence relies on manpower to serve its clients, one factor that the company needs to look at is the number of population especially in Metro Manila. An increase in the population may give Global Excellence the opportunity to recruit people for employment. The bigger is the manpower pool, the more are its choices.

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According to the National Census and Statistics Office (NSO) website, as of 2010, there were 11,552,100 people comprising the total population of Metro Manila alone, for an increase of 148,800 from 2009. According to The Philippine Daily Inquirer, the United Nations identified Metro Manila as the 15th largest city in the world and ranked it as the worlds 11th most populous city.

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Population becomes a more meaningful data if the literacy rate is considered or the number of graduates at the tertiary level. Pooling of applicants is more useful if this includes qualified candidates for the vacant position. However, opportunities may arise if the client requires blue collar jobs because it is much easier to get candidates for such positions. Most of the companies right now are requiring their candidates to be College graduates, especially for skilled positions, but it may be easier to search for maintenance staff and janitors because there are a lot of Filipinos who are undergraduate.

b. Hospitality Courses becoming a trend

Another factor to look into is the trend of courses offered in different Universities nowadays. If there are more students enrolling in or graduating from HRM and Tourism Courses then there is a greater opportunity for the company to recruit these graduates to endorse to its clients. Experience with the Lyceum of the Philippines showed that there are an estimated total of 7,000 enrollees for HRM and Tourism Courses alone which is 60% of the total enrollees for this year. Colegio de San Juan de Letran also offered HRM and Tourism courses not more than a year ago. De La Salle College of St. Benilde has been attracting students because of its Laboratory Hotel in Taft Avenue which made it

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competitive in the Hotel and Restaurant Field. This goes to show that HRM is becoming a popular choice among freshmen which Global Excellence can take advantage in the future because it specializes in this field. A detailed analysis of unemployment and underemployment, including fresh graduates, will be discussed later inn the Economic Environment Sector.

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c. Negative Impression on Manpower Agencies

Perceptions of applicants and freshmen graduates can also be a factor. The term Agency or Manpower Agency poses a negative perception among graduates and applicants. Based on experience on the operation of this business, many applicants tend to reject or back-out from the application upon learning that we are a manpower agency. There is a negative impression among agencies because of some bad experiences of these people from their previous agency or simply had bad publicity because of fly-by-night which collects illegal fees from the applicants even before their deployment. Security of tenure also plays a factor because some are looking for a probationary employment instead of a contractual status. These perceptions may pose a threat to the organization if not handled well. Problems may arise if these applicants are not encouraged and oriented about the organization for they may label the company among with the illegal recruiters.

2. Economic Environment Unemployment and underemployment plays a factor Employment rate can affect Global Excellence operations and may prove to be an opportunity if it create strategies to take advantage of such a development. According to the

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National Statistics Office (NSO), there was a slim decline in the unemployment rate and an increase in the underemployment rate from the previous year. (Table 1)

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Table 1: EMPLOYMENT RATE JANUARY 2010 EMPLOYMENT RATE REPORTED AT 92.7 PERCENT IN JANUARY 2010 Results from the January 2010 Labor Force Survey (LFS) Philippines Labor Force Participation Rate (%) Employment Rate (%) Unemployment Rate (%) January 2010 1/ 64.5 92.7 7.3 January 2009 58,657 63.3 92.3 7.7

Population 15 years and over (in '000) 60,208

Underemployment Rate (%) 19.7 18.2 1/ Notes: Estimates for January 2010 are preliminary and may change. 2/ Population 15 years and over is from the 2000 Census-based population projections.

The number of employed persons in January 2010 was estimated at 36.0 million, increasing by 5.0 percent over last years estimate of 34.3 million persons. This placed the latest estimated employment rate at 92.7 percent, which is not significantly different from the estimate reported the previous year at 92.3 percent.

Across regions, Cagayan Valley and the Autonomous Region of Muslim Mindanao (ARMM) posted the highest employment rate at 97.0 and 96.0 percent, respectively. Meanwhile, lowest employment rate was posted by the National Capital Region (NCR) at 89.2 percent.

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Out of the estimated 60.2 million population 15 years old and over in January 2010, around 38.8 million persons were reported to be in the labor force. This figure placed the January 2010 labor force participation rate (LFPR) at 64.5 percent for an increase of 1.2 percentage points from last years estimate of 63.3 percent. Among the regions, Northern Mindanao registered the highest LFPR at 70.2 percent while the lowest LFPR was posted in ARMM at 59.2 percent.

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Of the estimated 36.0 million employed persons in January 2010, more than onehalf (52.4%) worked in the services sector. The bulk of increase in employment (1.3 million) can be found with those employed in wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods sub-sector comprising the largest sub-sector (19.6% of the total employed). Workers in the agriculture sector accounted for 32.8 percent of the total employed, with those engaged in the agriculture, hunting and forestry sub-sector making up the largest sub-sector (28.7% of the total employed). Only 14.8 percent of the total employed were in the industry sector, with the manufacturing subsector making up the largest percentage (8.4% of the total employed).

The employment numbers for the service sector may indicate that there are a lot of people who could be looking forward to working in the service industry. Since Global Excellence specializes in the Hospitality Industry which falls under the service industry it would be an opportunity for the company to recruit more candidates who are interested to work in the service sector especially in different prestigious hotels.

Employed persons are classified as either full-time or part-time workers. Full-time workers are those who work for 40 hours or more per week while part-time workers work

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for less than 40 hours per week. In January 2010, six in every 10 employed persons were full-time workers, with those working for 40 to 48 hours having the highest proportion (40.6% of the total employed). Part-time workers comprised 34.2 percent of the total employed.

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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 are considered underemployed. The number of underemployed persons in January 2010 was estimated at 7.1 million or an underemployment rate of 19.7 percent. Around 4.0 million or 57 percent of the total underemployed persons were reported as visibly underemployed or working less than 40 hours during the reference week. Those working for 40 hours or more accounted for 41.3 percent. Most of the underemployed were working in the agriculture sector (46.7%) and services sector (39.0%). The underemployed in the industry sector accounted for 14.3 percent.

Global Excellence can help the 39% who are underemployed in the service sector, to find a job that would be suitable for them. Global Excellence also provides an on-call duty basis where it can help the underemployed and at the same time gain profit from it. Those who are underemployed can find jobs in Global Excellence or give them flexible contract other than being a seasonal worker.

3. Political Environment The rampant existence of fly-by-night agencies brought about a lot of politicians who wish to abolish contractual employment. These fly by night agencies continue to tarnish the image of the industry, with its malpractices of collecting illegal and unfair fees

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to applicants. According to the Department of Labor and Employment, agencies should not collect any fee from its applicants unless there is already an employment waiting for him/her. An Employment Contract should already be signed by the applicant and a specified date of the start of his employment should already be defined before the agency collect a fee.

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Illegal collection of fees includes those for medical examination being collected by agencies with a contracted percentage to a third party. It is done by asking the applicants to compulsory undergo medical examinations even without any proof of employment. These agencies also collect processing fees even before interviews and other miscellaneous fees that are non-traceable.

According to the Labor Code RULE V Section 29 PLACEMENT FEE, SERVICE FEE, AND OTHER CHARGES, A licensed PRPA may charge workers a placement fee which shall not exceed twenty percent (20%) of workers first month basic salary; in no case shall such fee be charged prior to the actual commencement or employment. Global Excellence charges the employees it place a one time placement fee of 600 pesos, way below the 20% maximum requirement of DOLE. Global deducts placement fee on the first salary of the employees, and sometimes on a staggered basis if there are uniforms and other fees to pay.

Another Fee that Global Excellence collect is the ADMIN SERVICE FEE which is not collected from the employees but from the client. According to Rule V Section 30 PLACEMENT, SERVICE FEE and OTHER CHARGES, a licensed PRPA may charge employers a service fee which shall not exceed twenty percent of the annual basic salary of

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the worker. In no case shall the service fee be deducted from the workers salary. For Global Excellence this is a case to case basis. It actually negotiates depending on the number of people to be deployed. On other circumstances, sometimes, clients request that the employees be under Global Excellence for five (5) months. For five (5) months Global bills such clients monthly for an administrative service fee per employee which usually ranges from 6-10% of the employees basic salary.

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Politicians are currently drafting Bills to abolish contractualization. Global Excellence believes that this development is extremely dangerous for its type of business. Senate Bill 922 or the REGULARIZATION ACT OF 2007, was introduced by Senator Loren Legarda as AN ACT PROVIDING FOR THE REGULARIZATION OF EMPLOYEES, PROHIBITING CONTRACTUAL OR LABOR-ONLY CONTRACTING FOR REGULAR POSITIONS, PROVIDING PENALTIES FOR VIOLATION. If this Bill passes into a law, the operation of the Global Excellence organization will be severely affected because most of the companys income comes from supplying contractual employees to its clients. Most clients prefer contractual employment because of its flexibility where they can terminate the employment anytime, if and when the services of an employee are no longer needed. In the Hospitality Industry, a lot of hotels and restaurant use Manpower Agencies to get casual staff for the purpose of cutting costs. For the Hospitality Sector there are Peak and Lean seasons, so in order to reinforce their manpower they hire seasonal employees to augment their services. But how can they cut costs if all their employees are regular, especially during lean season? Thats where Manpower Agencies come in.

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Minimum Wage Hike

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THE P22 increase to minimum wage earners in the National Capital Region (NCR) will take effect on July 1, 2011, the Department of Labor and Employment (Dole) announced on June 25, 2011. The additional salary was approved by the Regional Tripartite Wages and Productivity Board (RTWPB) on June 7, 2011, three weeks after the deliberation and consultation with the representatives from the labor sector and other stakeholders. With the hike, the minimum wage of workers in the private sector for nonagricultural workers will now be pegged to P404 per day.

For the agricultural sector, private hospitals with bed capacity of 100 or less, service establishments employing 15 or less, and manufacturing establishments employing less than 10 will be receiving P367 from P345. The last wage adjustment was given in 2008 with an P18.49 increase. Some 2.18 million workers in the NCR will benefit in the said recent wage hike. The Trade Union Congress of the Philippines (TUCP) originally asked for a P75 across-the-board increase. The labor department also said that minimum wage earners will continue to be exempted from paying taxes. Those who are covered by the new wage hike are minimum wage workers in the private sector in NCR regardless of their position, and irrespective of the method by which they are paid.

Exempted from the coverage of the new wage order are the following: distressed establishments; those whose total assets are not more than P3 million; retail/Service establishments regularly employing not more than 10 workers; and those adversely affected by natural calamities. ---(news at Sunstar June 26, 2010)

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Wage Hike, can affect the administrative cost of Global Excellence but not the companys contracted rate with its clients. In fact, the higher the minimum wage the better, because Globals rate given to its clients are on a percentage basis on top of the minimum wage. Here is a basic sample administrative fee computation; Previous: P 382 minimum wage multiplied by 6% admin fee = P22.92 for the admin fee per person New Minimum wage: P404 minimum wage multiplied by 6% admin fee = P24.24 for the admin fee per person. Thus, there is a P1.32 increase in Globals administrative fee per person. Profit increases by the bulk of people deployed in different clients are considered.

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4. Technological Environment

In the area of technology, services have greatly improved because of computers and other softwares that make work easier. Nowadays there are a lot of softwares for human resources and accounting operations. Such softwares can greatly increase service efficiency which can result to higher productivity. One of the softwares found on the net is the HRIS offered by a particular company. HRIS means Human Resources Integrated Software, a software combined for tracking employee records with payroll system to make it easier for you. Aside from HRIS, Peach Tree is also a software tool for accounting automation which improves accuracy and makes accounting work easier. Company Websites are becoming a trend nowadays which makes it easier to get information and inquire about products and services. They also help speed up transactions and communication between the customer and service provider. Another technology is the

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biometrics system of time keeping replacing the old fashioned Bundy Clock. For easier recording a lot companies tend to shift to this process to avoid tampering of time cards and for easier tracking of attendance and payroll computations. B. Industry Analysis 1. Porters Framework

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Low

Intense Low High

High

FIG. 1: COMPETITIVE FORCES (Porters Model)

a. Rivalry among Manpower Agencies: (Intense)

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According to pinoyoverseas.net there are approximately 100 manpower agencies in manila alone and about 500 more manpower agencies in Metro Manila. These only include Manpower Agencies in the Local Employment Sector. Direct Competitors includes Manpower Agencies directly catering to hotels and restaurants while indirect would be outside of the Hospitality Management Sector. Given the number of Manpower Agencies in Manila alone, competition would be tight considering hotels and restaurants choose their manpower contractors. Most of the time Large Hotels and Restaurants choose 3 to 5 agencies depending on the size of their establishments but it will not be easy to penetrate clients with existing agencies because they need to prove first that they are worthy of replacing their existing agency. Some clients will consider replacing agencies if they find the admin istrative fee or rate lower than usual.

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b. Threat of New Entrants (Low)

A manpower agency business is easy to put up and a lot of agencies each year are being established. If a particular agency applies for D.O. 18-02 license it would only cost the agency P300. A lot of manpower agencies abuse the use of such license, using it to recruit people and charge illegal fees. These are called fly by night agencies. But a few new entrants in the market invest on getting PRPA (Private Recruitment and Placement Agency) license because of the Bond Requirement from DOLE. DOLE requires a company to invest an amount of P30,000 for the bond requirement. Only PRPA licensed companies are allowed to recruit and charge placement fees. Although some try to circumvent the law, many of them are caught by DOLE.

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c. Threats of Substitutes (High)

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Manpower Agencies nowadays are not only formed as a corporation. A major problem right now is the rampant formation of Manpower Cooperatives. Cooperatives have advantages over corporations because of the exemption of taxes, the self-employed classification in SSS for its employees and others. The Philippine Association of Local Service Contractors filed a complaint against Manpower Cooperatives because of its inability to supply manpower and failure to comply with the LABOR CODE standards way back in 2006 (Newstoday.info). Threats are really high especially for Manpower Corporations because the competing manpower cooperatives can further lower their administrative rate (service fee). Such practice destroys the competitiveness of manpower agencies. Since the Manpower Cooperatives are exempted from taxes, they can survive even if they lower their rate to 3% administrative fee. Companies may also directly hire employees as casuals which can also affect the business of Global Excellence.

d. Bargaining Power of Suppliers (Low)

Global Excellence relies on people to be able to supply manpower to its clients. Since there is a high unemployment rate, a lot of people are looking for a job. Different schools may also be a source of manpower, especially graduating students in Hospitality Management Courses. Job Portals online is also a source of manpower such as Jobstreet and JobsDB. However some applicants are picky when it comes to their employment status. New Graduates tends to reject offers when they find out that Global Excellence is an

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agency. A Negative Impression on agencies is inevitable due to the existence of illegal recruiters and fly by night agencies.

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e. Bargaining Power of Buyers (High)

Clients of Global Excellence are mostly in the Hospitality Industry Sector. Based on experience, clients do not usually change agencies unless they see anomalies and inefficiencies on the part of the service provider. Newly established businesses are a good target because if you can start with them, then you also grow with them. Partnership with a new firm increases the chance of building a clients relationship, thus strengthening an agencys position against its competitors. If an agency is a starter and still in the process of getting a client, the bargaining power of buyer is very high. Even if an agency has existing clients, it is still hard to get new clients, and negotiations can last from one month to six months. Competition is stiff, but the practice of other hotels is to invite manpower agencies for bidding. A lower rate doesnt always guarantee a win. PADRINO and other factors affect the decision of the client whom to choose. It would be an advantage on the part of the agency if it already has previous clients related to the business operation of the client. Nevertheless, years of existence in the industry also plays a major factor for an agency to be considered. A SUBSTANTIAL CAPITAL and the ability to finance payroll would be a HUGE advantage because salaries will be paid on time.

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2. Industry Comparison TABLE 2: INDUSTRY COMPARISON

* All data are gathered from Securities and Exchange Commission.


*All are corporations and members of Philippine Association of Local Service Contractors * Formula for AVG Deployment AVG Deployment = [Annual Revenue/1.18]/min wage per month. *P12,500 is used for min wage per month *Formula for Market Share is MARKET SHARE = current sales revenue/total sales of the entire market. (based on the book of John Davis Measuring Maketing 2007 edition) Random sampling was used in comparing Global Excellence Human Resources INC with chosen companies that are existing members of PALSCON so that the gathering of data Data from the SEC was used so that the analysis would be more focused. Global was compared to fourteen companies to assess its performance and status among other agencies. According to pinoyoverseas.net there are approximately 100 manpower agencies in Manila alone and about 500 more manpower agencies in the NCR.

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a. Assumptions 1. All deployment are on contractual basis/casual employees. 2. Since it is impossible to get all sales revenue in the Industry due to confidentiality and other forms of business ownership like SOLE PROPRIETORSHIP and COOPERATIVES. This paper selected companies that are readily available which are members of PALSCON and operating in the NCR, that is, METRO MANILA.

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FIG .2: MARKET SHARE PIE CHART

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Currently, Global Excellence has the smallest market share at .17%. There are many players in the industry and they can easily surpass each other if the right strategy is implemented. Although there are some leaders in the market, it is clear that there is no agency that dominates the industry. The margin is very slim from each other and changes in position is possible. The market pie is growing steadily and the steady market share may hold an opportunity for Global to gain a bigger portion in the future.

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b. Competitive Analysis 1) Profile of Competitors TABLE 3: COMPETITORS PROFILE

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2) Basis for choosing competitors; Line of Clients, Familiarity, access to information and realistic goal for benchmarking.

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Global Excellence Human Resources Academy INC. is a young company compared to Interlink and JECH. With just about four years of existence in the industry, Global thrives on its quality manpower by strict screening and hiring the right people for the right job. One of the assests of Global Excellence is its ability to train and create its own manpower pool by way of training and nurturing them to become responsible employees.

Interlink Manpower Services, although considered as a sister company of Global Excellence due to the fact that the president was the former consultant of the company, is still considered as a competitor because it is also serving the hospitality sector. The main advantage of this company is the experience of the President and its involvement with different sectors in the industry. Mr. Rafael C. Chico an award winning manager and one of the established consultants in the hospitality sector, uses its network and experience in gaining clients.

JECH MANPOWER has been in the industry for quite sometime. According to their facebook account they have been existing for a decade now and has been one of the major competitors of Global Excellence. Due to confidentiality, only a few information were gathered about their clients. Some clients listed were based on the writers experience on the industry, for there were instances when JECH and Global have been chosen together to serve the same client.

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3. Criticial Success Factors (Basis for CPM)

The following are factors/variables which the author believe is necessary to be able to become successful in the industry of manpower outsourcing.

a. Financial Position

All Manpower Agencies should have good financial stability that also includes substantial capital. The reason for this is that they do not want to be labeled as a labor-only contracting, which is prohibited by the Department of Labor. According to the Labor Code:

Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the

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main business of the principal; or ii) the contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248 (C ) of the Labor Code, as amended.

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"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out.

The "right to control" refers to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

Manpower Agencies must be able to finance payroll and give it on time. Based on the authors experience, 90% of Globals clients get their services for the company to be able to finance payroll for the staff which will be paid later on by the client together with the administrative service fee which usually takes 15 -30 days upon submission of billing. If a company has, say, 50-100 staff for 1 client, it takes millions of pesos for the company to be able to finance payroll, for employees getting minimum salary plus overtime pays. This is just for 1 client, how much more if the company has thousands of people deployed to its different clients.

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b. Clients and/or no. of deployment

Number of Clients is a big advantage over competitors if one has gained enough experience in the industry by acquiring clients and retaining them. Most of the time if one presents his company during bidding sessions, clients always ask for the previous or existing clients that one has. If the company has an impressive list of clients most likely they will consider it to be their partner. However its not just the number of clients that clients look for but the number of people one has in those clients. One may have a lot of clients but if one only has a few staff like 3-5 people for each, then it will not be very convincing. Existence in the industry plays a factor because for clients, if one survived the industry for many years, it goes to show that the organizations financial stability is in place considering the nature of business of manpower. There may be some clients who are looking for younger companies with a few clients because they want them to be the priority of the manpower agency. A younger company tends to have more control especially if it has just started business operation with fewer clients. The firm will be able to focus more on deploying quality manpower if it has fewer clients, however financial stability may be an issue.

c. Manpower Resources/Pool

Manpower Agencies have two different customers. First is the client, second is his products which are people. Without resources or enough pool of choices for the client, an agency will not be successful. Manpower Agencies should simultaneously look for clients

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and at the same time pool quality candidates to be endorsed to the clients. One may get clients but if one doesnt have enough candidates, it may turn out ugly and may eventually lead to termination of services due to inability to supply quality manpower.

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d. Management and Leadership

An experienced management team is a great asset for any manpower agency. Clients also look for the experience of the people behind the company, and surely experienced leaders can stir the company to the right directions. The company must be knowledgeable in all facets of business operations especially human resources and labor laws. Implementing certain rules and regulations without consulting the law and the economic environment may harm the company and face charges which will be costly for them.

e. Rates

Rates given to clients play a major factor especially when bargaining with them. I believe that a good constructed rate without jeopardizing the profit of the company can attract clients to outsource manpower. Rates or admin service fee collected to the client if implemented properly can give positive results to the income of the company. The ability to pay the client is another issue because some deliberately delay payments not just for the administrative fee but also payroll of employees.

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f. Network (affiliates)

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It is hard to get clients without expanding ones network or affiliates. If one has plenty of affiliates it can help the organization find clients or even quality candidates for deployment. Being a member of different organizations can help the company find opportunities and find potential clients in the future.

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V. INTERNAL ANALYSIS A. Management

An analysis of the management team of Global Excellence shows that the company has professionals but they are young managers. Global Excellence is functioning as a family corporation which further strengthens the bonding of the incorporators and officers. As Vice President for Human Resources, this writer is one of the people who started the business and created the business manual together with the consultant of the firm since he has the most relevant experience in the business operations. After four years of existence, the management team gained experience in operating the firm. Currently Mr. Abraham Chico is in charge of the entire operation, and is doing well handling several clients and endorsement for different positions. Although unfamiliar with the task given to him during the early stages of the operation, he was able to adjust and handled pressures well in the manpower industry. The President, Ms. Priscila Carabeo, serves as the Financier of the Company and serves as the Decision-Maker for the entire organization. Mr. Adonis Chico head of the Management Information System was able to create HR and software system that speeds up operational transactions and keeps these upto-date. As a family corporation its inevitable to sometimes argue about certain situations about the business and sometimes affect personal relationships within the family.

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1. Current Organizational Chart

FIG 3: ORGANIZATIONAL CHART

Based on the illustration above, Global Excellence has a small family. Since it is operating as Manpower agency, multitasking should be more than enough to keep the operations flowing. The management team as stated earlier is composed of family members headed by Ms. Priscila Carabeo, Mother of Abraham Chico (VP Operations/Finance), Aristotle Chico (VP Marketing and Human Resources), and Adonis Chico (VP Information Technology and Training). The President serves as the main financier of the company and, at the same time, the ultimate decision maker of the company.

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B. Financial Performance

Based on the writers experience, problems encountered in the operations include limited funds for payroll financing. It has been proven time and time again that 90% of Global Excellences client doesnt pay on time. Some keeps on finding excuses or loopholes in the billing statement to prolong their terms of payment. Currently the accounting department has only two employees while HR department helps in payroll checking and preparations. Because of the delay of payments, funds are greatly affected; there are times that there are more receivables than cash on hand. Its inevitable for the management to sometimes delay salaries because of the lack of funds affected by the delay of payments by the clients. During the early stages of the operations Global Excellence consulted some of the finest financial management practitioners to help the business grow and set up the accounting operation flow.

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1. FINANCIAL RATIO ANALYSIS TABLE 4: CURRENT RATIO

Formula

The current

ratio

is a

popular

financial

ratio

used

to

test

company's liquidity (also referred to as its current or working capital position) by deriving the proportion of current assets available to cover current liabilities. The concept behind this ratio is to ascertain whether a company's short-term assets (cash, cash equivalents, marketable securities, receivables and inventory) are readily available to pay off its short-term liabilities (notes payable, current portion of term debt, payables, accrued expenses and taxes).

In 2010 Global Excellence was able to increase its Liquidity (current ratio) from .43 (2009) to .66(2010) according to some expert the ideal current ratio should be 1.5 2.0. If the current ratio is very high, then it only means that the company is not utilizing its resources wisely.

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Formula
TABLE 5: AVG SALES PER DAY

Average sales per day is computed to be able to compute for average collection period. An increase sale from 2009 to 2010 can be observed, but 2008 had the greatest no. of average sales per day.
TABLE 6: AVG COLLECTION PERIOD

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A decrease of collection period was experienced by Global in 2010, but its far from the industry of 30 days collection period. Although an improvement from previous year, the company had a horrible average collection period of 377 days that should also be addressed by the management.

Activity Ratios or Efficiency Ratios are used to measure the effectiveness of a firms use of resources. Good companies would always put their resources to optimum utilization. The better the activity or efficiency ratio, the better it is for the company and it means the company is utilizing its resources properly and effectively.

Average Collection Period Most organizations make sales on credit. They usually deliver goods/services to their customers without taking the payments due immediately. There could be a credit cycle understanding between them and their customers who would make periodic payments for the goods/services rendered to them. This ratio is used to calculate the efficiency with which an organization is able to collect the payments due to them from their customers. In order to get the average collection period, you need to get the average sales per day.

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TABLE 7.1: DEBT RATIO

Global Excellence had a Debt Ratio of 1.29 (2010) according to some experts in the service industry .5 1.0 is an ideal debt ratio.

The debt ratio compares a company's total debt to its total assets, which is used to gain a general idea as to the amount of leverage being used by a company. A low percentage means that the company is less dependent on leverage, like money borrowed from and/or owed to others. The lower the percentage, the less leverage a company is using and the stronger its equity position. In general, the higher the ratio, the more risk that company is considered to have taken on.

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TABLE 7.2: PROFITABILITY RATIOS

Global Excellence was able to increase its profitability ratio from -21% (2009) to 13% (2010) which is a good sign. Operating profit margin has -98% which means that the company has a lot of expenses from the operations which should be improved for the next year.

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Profitability Ratios is a class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, having a higher value relative to a competitor's ratio or the same ratio from a previous period is indicative that the company is doing well.

Gross profit margin is a financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. Also known as "gross margin".

The operating profit margin ratio indicates how much profit a company makes after paying for variable costs of production such as wages, raw materials, etc. It is expressed as a percentage of sales and shows the efficiency of a company controlling the costs and expenses associated with business operations. Phrased more simply, it is the return achieved from standard operations and does not include unique or one time transactions.

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2. Latest Financial Statements

FIG. 4: COMPARATIVE INCOME STATEMENT

Global Excellence currently is not doing well as it is incurring heavy losses. Although an improvement from 2010 can be seen, the management must take immediate action to substantially improve the situation.

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FIG. 5.1: COMPARATIVE BALANCE SHEET

It can be observed in the Current Asset Section that Global Excellence has greater accounts receivable but does not have substantial Cash in Bank.

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FIG. 5.2: COMPARATIVE BALANCE SHEET

Total stockholders equity reflects negative results since 2007. Equity is very low which is not good for the company.

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FIG 6: COMPARATIVE STATEMENT OF CASH FLOW Interpretation of Financial Statement

Lack of Equity - Global needs to have more equity and needs an investor to invest at least 2 million pesos, in order for it to be Liquid. A company cannot expand if it has limited

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capital and will not be able to operate efficiently if theres no capital.

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Collection Cycle A horrendous 377 avg collection period is one of the reasons why the company has very low liquidity. They may be earning profit but in the form of collectibles. Cash on Hand is very important in operating the business.

Huge Operating Expense A huge operating expense should be minimized. Find sources of INCOME to coup up with the huge expenses.

C. Production and Operations

Globals Vice President for HR, as one of the creators of the operations manual for human resources, operates to recruit quality people with job matching qualities and right attitude. In order for Global to be able to build up its manpower pool, the organization subscribed to different job portals like Jobs DB and Jobstreet to further strengthen its network and source of people. For the HR recruitment system, this is how Global Excellence operates.

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FIG 7: PROCESS OF RECRUITMENT AND SCREENING OF APPLICANTS

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D. Marketing

Another problem is the saturated market in Metro Manila. Its difficult to close a deal with hotel and restaurants because some already have existing contract with other agencies especially those who established their own agency to take advantage of contractualization of employment which is prohibited. Global Excellence provides sales kit to its sales force to present to their clients. It includes company profile of the organization, services offered, rates and other proof of legal existence such as Business Permits, DOLE Licenses, SSS Clearance etc. Below is a process how marketing is being operated in the company.

PLANNING STAGE

IDENTIFY POTENTIAL MARKET /LOCATION

CREATE STRATEGIES TO CAPTURE MARKET

PERSONAL SELLING

PROMOTIONAL ADS

TELEMARKETING

NETWORKING

FOLLOW UP

FINALIZE AND CLOSE DEAL FIG. 8: MARKETING OPERATION

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FIG. 9: SAMPLE MARKETING ADVERTISEMENT

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E. Research and Development

For Research and Development, Global Excellence has not yet produced or conducted a thorough research for development. However for the past four years that it has existed it depended on former consultants of the company to make strategies and critical decisions.

F. Management Information System

The Vice President for operations, Mr. Abraham Chico, together with Mr. Adonis Chico, teamed up to make a website and create program database to efficiently improve the process of recruitment and filing system. With the help of a consultant programmer, they were able to create a payroll system custom-fit for the daily operations of the company.

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VI. STRATEGY FORMULATION

The writer used the following tools by FRED DAVID in the formulation of strategies.

INPUT STAGE External Factor Evaluation Matrix. Internal Factor Evaluation Matrix Competitive Profile Matrix STRATEGIC POSITION & ACTION EVALUATION (SPACE) MATRIX MATCHING STAGE IE Matrix SPACE RESULTS (GRAPH) Boston Consulting Group GRAND STRATEGY TOWS MATRIX

EVALUATION STAGE
QUANTITATIVE STRATEGIC PLANNING MATRIX

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A. INPUT STAGE 1. External Factor Evaluation Matrix TABLE 8: EFE MATRIX

Weight determines the weight of importance in the industry from 0.0(not important) up to 1.0 (solely important). Ratings indicate the response of the company to a particular variable whether poor, average, above average, or superior.

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External Factor Evaluation (EFE) matrix method is a strategic-management tool often used for assessment of current business conditions. The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing.

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The EFE matrix is very similar to the IFE matrix. The major difference between the EFE matrix and the IFE matrix is the type of factors that are included in the model. While the IFE matrix deals with internal factors, the EFE matrix is concerned solely with external factors.

Developing an EFE matrix is an intuitive process which works conceptually very much the same way like creating the IFE matrix. The EFE matrix process uses the same five steps as the IFE matrix.

List factors: The first step is to gather a list of external factors. Divide factors into two groups: opportunities and threats.

Assign weights: Assign a weight to each factor. The value of each weight should be between 0 and 1 (or alternatively between 10 and 100 if you use the 10 to 100 scale). Zero means the factor is not important. One or hundred means that the factor is the most influential and critical one. The total value of all weights together should equal 1 or 100.

Rate factors: Assign a rating to each factor. Rating should be between 1 and 4. Rating indicates how effective the firms current strategies respond to the factor. 1 = the response is poor. 2 = the response is below average. 3 = above average. 4 = superior. Weights are industry-specific. Ratings are company-specific.

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Multiply weights by ratings: Multiply each factor weight with its rating. This will calculate the weighted score for each factor.

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Total all weighted scores: Add all weighted scores for each factor. This will calculate the total weighted score for the company.

The proponent listed the following variables, which can greatly affect the organization.

OPPORTUNITIES

1. Increase of Unemployment Rate

Increase of unemployment rate means opportunity for Global Excellence. More people will be looking for jobs and Global Excellence would be more than willing to help them. Global Excellence will be able to place them and endorse them to their different clients especially if they are qualified for the position. Training can also be an option if the candidate is not yet competent for a particular field.

An increase in the unemployment rate means also an increase of opportunity for other competitors. Global responds well to this development by partnering with different barangays to disseminate information regarding job availabilities, conducting free seminars to attract prospective applicants to join the team, and joining job fairs to get more pool of candidates. Through Print ad and flyer distribution, it helps them promote and reach out to our target people.

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2. Booming of Hospitality Industry in the Philippines

Different schools right now are offering Hospitality Management Courses like Far Eastern University, Colegio de San Juan de Letran and etc. Globally Hospitality Industry is becoming a hot commodity thats why a lot of students opt to choose courses related to this field. Working abroad or in cruise ship would motivates them in getting this course, however employers abroad are looking for people who already have experience working in the same industry. Global Excellence can grab the opportunity to become a stepping stone to realize their dream of working abroad or in a cruise ship. Global can encourage people to work first locally just to gain enough experience for them to be able to qualify working abroad.

Global takes advantage of this opportunity by joining job fairs in schools and universities, investing on getting graduate list to recruit them to become our pool. The management is also taking advantage of this by teaching in different universities as a part-time faculty professor to widen its network.

3. Other Markets available outside Metro Manila

Global Excellence can look at the opportunity of getting clients outside Metro Manila. As matter of fact, they already have a few or previous clients outside Metro Manila like Petron Marketing Corporation in Pangasinan. If the Market is already saturated in Metro Manila why not consider looking for clients in other areas like Bulacan, Cavite or other provincial

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areas. Global chose to stay in Metro Manila Market area due to lack of funds or capital to establish a network office in other provincial areas. Transactions from provincial clients are done through mail and internet. Though plans of expanding through other provinces are on the horizon, it will not happen until enough capital is generated.

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4. Other Industry available

Global Excellence may be able to serve other sectors as well. It can start looking for other opportunities like manpower in different factories or maybe placing professional executives or secretarial positions. We can also look in the field of engineering or computer related works. Currently Global is already filling up other positions other than Hospitality Sector like Griller in (Chickboy), Machine Operator and Chemist, although positions are being filled up Global is not really planning to exclusively shift in other sector.

5. BMBE LAW (REPUBLIC ACT NO. 9178)

Global Excellence is currently researching if it is possible to apply to operate under this law. Approval may greatly increase financial stability because of the exemptions and other benefits that it can give to a particular company. The following are some information regarding the LAW;

Section 3. Definition of Terms As used in this Act, the following terms shall mean:

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(a) "Barangay Micro Business Enterprise," hereinafter referred to as BMBE, refers to any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity's office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00) The Above definition shall be subjected to review and upward adjustment by the SMED Council, as mandated under Republic Act No. 6977, as amended by Republic Act No. 8289.

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For the purpose of this Act, "service" shall exclude those rendered by any one, who is duly licensed government after having passed a government licensure examination, in connection with the exercise of one's profession.

(b) "Certificate of Authority" is the certificate issued granting the authority to the registered BMBE to operate and be entitled to the benefits and privileges accorded thereto.

(c) "Assets" refers to all kinds of properties, real or personal, owned by the BMBE and used for the conduct of its business as defined by the SMED Council: Provided, That for the purpose of exemption from taxes and fees under this Act, this term shall mean all kinds of properties, real or personal, owned and/or used by the BMBE for the conduct of its business as defined by the SMED Council.

(d) "Registration" refers to the inclusion of BMBE in the BMBE Registry of a city or municipality.

(e) "Financing" refers to all borrowings of the BMBE from all sources after registration.

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REGISTRATION AND OPERATION OF BMBE The Law provides that Sec. 4. Registration and Fees - The Office of the Treasurer of each city or municipality shall register the BMBE's and issue a Certificate of Authority to enable the BMBE to avail of the benefits under this Act. Any such applications shall be processed within fifteen (15) working days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered. The Municipal or City Mayor may appoint a BMBE Registration Officer who shall be under the Office of the Treasurer. Local government units (LGU's) are encouraged to establish a One-Stop-business Registration Center to handle the efficient registration and processing of permits/licenses of BMBEs. Likewise, LGUs shall make a periodic evaluation of the BMBE's financial status for monitoring and reporting purposes.

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The LGUs shall issue the Certificate of Authority promptly and free of charge. However, to defray the administrative costs of registering and monitoring the BMBEs, the LGUs may charge a fee renewal.

The Certificate of Authority shall be effective for a period of two (2) years, renewable for a period of two (2) years for every renewal.

As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees and charges.

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Sec. 5. Who are Eligible to Register Any person, natural or juridical, or cooperative, or association, having the qualifications as defined in Sec. 3(a) hereof may apply for registration as BMBE.

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Sec. 6. Transfer of Ownership - The BMBE shall report to the city or municipality of any changer in the status of its ownership structure, and shall surrender the original copy of the BMBE Certificate of Authority for notation of the transfer.

INCENTIVES AND BENEFITS

Sec. 7. Exemption from Taxes and Fees All BMBEs shall be exempt from tax for income arising from the operations of the enterprise.

The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt BMBEs from local taxes, fees and charges.

Sec. 8. Exemption from the Coverage of the Minimum Wage Law The BMBEs shall be exempt from the coverage of the Minimum Wage Law: Provided, That all employees covered under this Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.

Section 9. Credit Delivery upon the approval of this Act, the land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation

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(SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a special credit window that will service the financing needs of BMBEs registered under this Act consistent with the Banko Sentral ng Pilipinas (BSP) policies; rules and regulations. The Government Service Insurance System (GSIS) and Social Security System (SSS) shall likewise set up a special credit window that will serve the financing needs of their respective members who wish to establish a BMBE. The concerned financial institutions (FIs) encouraged to wholesale the funds to accredited private financial institutions including community-based organizations such as credit, cooperatives, non-government organizations (NGOs) and people's organizations, which will in turn, directly provide credit support to BMBEs.

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All loans from whatever sources granted to BMBEs under this Act shall be considered as part of alternative compliance to Presidential Decree no, 717,, otherwise known as the Agri-Agra Law, or to Republic Act. No. 6977, known as the Magna Carta for Small and Medium Enterprises, as amended. For purposes of compliance with presidential Decree no. 717 and Republic Act No. 6977, as amended, loans granted to BMBEs under this Act shall be computed at twice the amount of the face value of the loans.

To minimize the risks in lending to the BMBEs, the SBGFC and the Quedan and Rural Credit Guarantee Corporation (QUEDANCOR) under the Department of Agriculture, in case of agribusiness activities, shall set

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up a special guarantee window to provide the necessary credit guarantee to BMBEs unde rtheir respective guarantee programs.

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The LBP, DBP. PCFC, SBGFC, SSS, GSIS, and QUEDANCOR shall annually report to the appropriate Committee of Both Houses of Congress on the status of the implementation of this provision.

The BSP shall formulate the rules for the implementation of this provision and shall likewise establish incentive programs to encourage and improve credit delivery to the BMBEs.

Sec. 10. Technology Transfer, Production and Management Training, and marketing Assistance A BMBE Development Fund shall be set up with an endowment of Three Hundred Million pesos (P300,000,000.00) from the Philippine Amusement and Gaming Corporation (PAGCOR) and shall be administered by the SMED Council.

The Department of Trade and Industry (DTI), the Department of Science and Technology (DOST), the university of the Philippines Institute for Small Scale Industries (UP ISSI), Cooperative Development Authority (CDA), Technical Education and Skills Development Authority (TESDA), and Technology and Livelihood Resource Center (TLRC) may avail of the said Fund for technology transfer, production and management training and marketing assistance to BMBEs.

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The DTI, in coordination with the private sector and non-government organization (NGOs), shall explore the possibilities of linking or matching-up BMBEs with small, medium and large enterprises and likewise establish incentives therefor.

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The DTI, in behalf of the DOST, UP ISSI, CDA. TESDA and TLRC shall be required to furnish the appropriate Committees of both Houses of Congress a yearly report on the development and accomplishments of their projects and programs in relation to technology transfer, production and management training and marketing assistance extended to BMBEs.

Sec. 11. Trade and Investment Promotions The data gathered from business registration shall be made accessible to and shall be utilized by private sector organizations and non-government organizations for purposes of business matching, trade and investment promotion.

THREATS

1. Bills proposed to abolish contractual employment

Senate Bill 922 otherwise known as REGULARIZATION ACT OF 2007, was introduced by Senator Loren Legarda and it is AN ACT PROVIDING FOR THE REGULARIZATION OF EMPLOYEES, PROHIBITING CONTRACTUAL OR LABORONLY CONTRACTING FOR REGULAR POSITIONS, and PROVIDING PENALTIES FOR VIOLATION. If this will push through then Agencies will greatly be affected, solely

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because the nature of business of these companies depend on contractual employment. Many companies will also be affected because some cannot afford to regularize all their employees because of the peak and lean season in the hospitality industry sector. Global has been actively participating in its organization (PALSCON) Philippine Association of Local Service Contractors to prevent this bill from being passed into a law. The organization act as an industry spokesperson and is actively participating in different sessions to represent manpower agencies.

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2. Increased number of Manpower Cooperatives

Manpower Cooperatives remain to be a threat because of their exemption from taxes which puts at a disadvantage Manpower Corporations. As cited in the External Analysis, many are shifting to this form of ownership mainly because of the great benefit or exemption of taxes. PALSCON members are currently taking action to fight for the rights of Manpower Corporations to level the playing field against cooperatives. 3. Increase of Fly-by-Night Agencies

Fly-by-night agencies or illegal agencies that collects money from the candidates or workers without permit or just right before placement of job ruins the image of other manpower agencies. Trust is becoming more of an issue for applicants because of the bad image projected by their embarrassing practices. As a result, if applicants find out that Global an agency, they immediately back out of the application because of the bad image that they have on agencies. GLOBAL participates in helping people by disseminating information about fake

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agencies displaying licenses giving warning signs in their fl yers to be aware of fly by night agencies. GLOBAL also participates in different media publicity by guesting in different radio stations to inform the public on the topic how to spot fly-by-night agencies

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I.

Internal Factor Evaluation Matrix


TABLE 9: IFE MATRIX

Weight determines the weight of importance in from 0.0(not important) up to 1.0 (solely

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important). Ratings are used to determine if it is a weakness or strength of a particular company.

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Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or evaluating major strengths and weaknesses in functional areas of a business.

IFE matrix also provides a basis for identifying and evaluating relationships among those areas. The Internal Factor Evaluation matrix or short IFE matrix is used in strategy formulation.

The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be utilized to evaluate how a company is performing in regards to identified internal strengths and weaknesses of a company. The IFE matrix method conceptually relates to the Balanced Scorecard method in some aspects.

The IFE matrix can be created using the following five steps:

Key internal factors...

Conduct internal audit and identify both strengths and weaknesses in all the business areas. It is suggested that one identify 10 to 20 internal factors, but the more one can provide for the IFE matrix, the better. The number of factors has no effect on the range of total weighted scores (discussed below) because the weights always sum to 1.0, but it helps to diminish estimate errors resulting from subjective ratings. First, list strengths and then weaknesses. It is wise to be as specific and objective as possible. One can, for example, use percentages, ratios, and comparative numbers.

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Having identified strengths and weaknesses, the core of the IFE matrix, assign a weight that ranges from 0.00 to 1.00 to each factor. The weight assigned to a given factor indicates the relative importance of the factor. Zero means not important. One indicates very important. If one works with more than 10 factors in ones IFE matrix, it can be easier to assign weights using the 0 to 100 scale instead of 0.00 to 1.00. Regardless of whether a key factor is an internal strength or weakness, factors with the greatest importance in ones organizational performance should be assigned the highest weights. After one assigns weight to individual factors, one have to make sure that the sum of all weights equals 1.00 (or 100 if using the 0 to 100 scale weights).

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The weight assigned to a given factor indicates the relative importance of the factor to being successful in the firm's industry. Weights are industry based.

Rating... Assign a 1 to X rating to each factor. The rating scale can be per ones preference. Practitioners usually use rating on the scale from 1 to 4. Rating captures whether the factor represents a major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating = 3), or a major strength (rating = 4). If you use the rating scale 1 to 4, then strengths must receive a 4 or 3 rating and weaknesses must receive a 1 or 2 rating.

Note, the weights determined in the previous step are industry based. Ratings are company based.

Multiply...

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Now one can get to the IFE matrix math. Multiply each factor's weight by its rating. This will give a weighted score for each factor.

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Sum...

The last step in constructing the IFE matrix is to sum the weighted scores for each factor. This provides the total weighted score for your business.

STRENGTHS:

1. NETWORK

One of the strengths of Global Excellence is network. Even though it competes with Interlink Manpower Services; still they work together to lend manpower just in case the other one is short of pool for a particular position. Global is known to have quality manpower for food and beverage while Interlink is known for the quality of manpower when it comes to housekeeping.

Another advantage is Globals network in the academe industry. It has partnerships with different schools for On the Job Training Venues. One of the Incorporators is teaching in Lyceum of the Philippines and also a former instructor in Letran. This way, Global can recruit fresh graduates and encourage them to be part of the company just in case clients will see them fit for the position someday.

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2. QUALITY MANPOWER

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Global Excellence also has a training center which is Excellent Choice Training Center. Before Global used to train its own staff before deploying them, but since Global has vision of creating an academy they decided to create a separate entity for training thus it the birth of Excellent Choice Training Center.

The training center can create manpower pool for Global Excellence. All applicants who wish to be deployed in a particular position but does not have the required skills or experience can undergo training first with excellent choice training center for them to become competent. A thorough screening is done together with background investigation to further validate and analyze skills and attitudes. There are also loyal employees that started with Global Excellence and eventually became successful in their respective field that continue to support and help the organization.

3. PAYROLL SYSTEM AUTOMATION

Global was able to create a payroll system which speeds up the processing of payroll. It benefitted on the on call processing of payroll which is usually released weekly to the employees. It can be considered as strength and can be used as an advantage compared to other manpower agencies. Potential clients might consider Globals services if brought up during service presentation.

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4. RATES

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A sample rate is posted on the Internal Analysis under Finance and Accounting. The admin istrative service fee of Global Excellence is competitive as it which can offer only 6% rate of admin istrative fee. There is also an option for VAT exclusive rates which can be negotiated between parties (no official receipts, just acknowledgement receipts.) Since Global Excellence also has PRPA license it can also collect Placement fee to employees deployed. Some clients prefer not to include 13th month pay for billing, meaning they will directly pay the 13th month pay of employees which can also be modified in the offered rate. Changes like this need to be stated in the contract for legal purposes.

5. DUAL LICENSE

As previously stated, Global Excellence has DO-18 service contractor license and PRPA License which allows it to recruit and charge placement fee to clients and employees. Some Agencies only has DO-18 which limits their operation as service contractors, but some of them still recruits and charge employees without PRPA license which is illegal. Dual License Agencies makes the client secure for potential legal problems that might arise. Definitely a huge advantage over competitors and protects the organization from legal aspects of the operations.

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WEAKNESSES:

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1. Lack of Administration Personnel

Currently, aside from Working Incorporators the company only has five regular employees. There are two employees in the HR dept., two in the accounting dept and one messenger/admin personnel. The other HR assistant is currently pregnant and is expecting to file a maternity leave soon. This writer, as the Head of the HR dept. is currently on leave to finish other matters and fulfill commitments to other organization but actively participates in helping the HR operations from time to time.

2. Lack of Equity

Based on the Financial Statement of the company, mentioned before is the lack of equity, if the company lack funds for operations it will not be able to expand and look for more clients. It must be able to sustain and finance the operations of the company.

In the nature of Manpower Business, a deep financial capital is needed especially when financing payroll which could cost millions of pesos depending on the number of people.

3. Collection Cycle A poor collection cycle with an avg collection period of 377 days, one of the reasons why the company has a low current ratio. Global may be earning income but if it cannot collect efficiently then it may be forced to look for other sources of funds which

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might result to increase in payables in the future. Improving collection cycle can greatly improve Liquidity and may result to a more efficient flow of operations.

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4. Few Clients and Deployment

Compared to its direct competitors currently, Global Excellence has only four active clients, namely, FB Management Group, Petron Marketing Corporations, Tamayos Catering and Albergus. An avg no.of deployment of 55 employees per month of Global Excellence is low compared with its competitors who have thousands of employees. They still need to find suitable clients that will get more people and also pay bills on time. More deployments mean more expenses, and capability of the company to finance more payroll for larger deployment is crucial.

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II.

Competitive Profile Matrix

TABLE 10: CPM MATRIX

Competitive profile matrix is an essential strategic management tool to compare the firm with the major players of the industry. Competitive profile matrix show the clear picture to the firm about their strong points and weak points relative to their competitors. The CPM score is measured on basis of critical success factors, each factor is measured in same scale mean the weight remain same for every firm only rating varies. The best thing

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about CPM that it include your firm and also facilitate to add other competitors make easier the comparative analysis.

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IFE matrix only internal factors are evaluated and in EFE matrix external factors are evaluated but CPM include both internal and external factors to evaluate overall position of the firm with respective to their major competitors.

The competitive profile matrix consists of following attributes mentioned below.

Critical Success Factors

Critical success factors are extracted after deep analysis of external and internal environment of the firm. Obviously there are some good and some bad for the company in the external environment and internal environment.The higher rating show that firm strategy is doing well to support this critical success factors and lower rating means firm strategy is lacking to support the factor.

Rating

Rating in CPM represent the response of firm toward the critical success factors. Highest the rating better the response of the firm towards the critical success factor ,rating range from 1.0 to 4.0 and can be applied to any factor.

There are some important point related to rating in CPM.


Rating is applied to each factor. The response is poor represented by 1.0 The response is average is represented by 2.0

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The response is above average represented by 3.0 The response is superior represented by 4.0

Weight

Weight attribute in CPM indicates the relative importance of factor to being successful in the firms industry. The weight range from 0.0 means not important and 1.0 means important, sum of all assigned weight to factors must be equal to 1.0 otherwise the calculation would not be consider correct.

Weighted Score

Weighted score value is the result achieved after multiplying each factor rating with the weight.

Total Weighted Score

The sum of all weighted score is equal to the total weighted score, final value of total weighted score should be between range 1.0 (low) to 4.0(high). The average weighted score for CPM matrix is 2.5 any company total weighted score fall below 2.5 consider as weak. The company total weighted score higher then 2.5 is consider as strong in position.The other dimension of CPM is the firm with higher total weighted score considered as the winner among the competitors.

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1. Financial Position/Stability TABLE 11: PROFITABILITY RATIO (COMPARISON) Profitability Ratios (GROSS PROFIT MARGIN) Company 2010 2009 2008 13% -21% -5% Global Excellence 17% 12% 8% Jech 17% 25% 18% Interlink

FIG. 10 PROFITABILITY COMPARISON (GRAPH) Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two variables. The most important variable in the Manpower Industry is the Financial Position/Stability. Based on the data gathered, JECH manpower is the most stable in profit.

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According to Profitability Ratio Analysis, JECH has the most outstanding trending of profit ratio, continuously increasing as the year goes. Interlink has the same ratio on 2010 but went down by 7% if compared to the previous year. Global Excellence meanwhile increased its profitability ratio from -21% to 13%. TABLE 12: LIQUIDITY RATIO (COMPARISON) Liquidity Ratio (current ratio) Company 2010 2009 Global 0.66 0.43 Excellence 13.12 10.30 Jech 1.11 1.19 Interlink

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2008 0.86 18.18 1.43

FIG. 11: LIQUIDITY RATIO COMPARISON (GRAPH)

With the help of ratio analysis, conclusions can be drawn regarding the Liquidity position of a firm. The liquidity position of a firm would be satisfactory if it is able to meet its

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current obligation when it becomes due. The ability to meet short-term liabilities is reflected in the liquidity ratio of a firm.

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It can be readily seen that JECH manpower is far ahead of the competition, proving to be the most Liquid company among the rest, scoring 13.12 in 2010. But 13% proves to be too high, causing inefficient utilization of resources, followed by Interlink at 1.11 which is acceptable while Global Excellence is at .66 which is below average.

2. Clients, Deployment and MARKET SHARE

An analysis of the competition in terms of clients show that it would be good if a manpower agency has several clients for it will also be a basis of stability on the perspective of potential clients. Many clients prefer agencies that had been in the industry for quite some time. Although it does not guarantee that more clients mean more income, it does increase a companys credibility and strengthen its resume. Number of

Deployments as an indicator also plays a factor if a company wants to gain more income. In fact, a company can survive with just one or two clients but with thousands of deployment it is easier to manage and less complicated on the part of the agency.

INTERLINK

Being in the industry for quite some time, INTERLINK has gained a competitive advantage especially in this category. Being able to get clients such as Phil. Plaza, Hyatt

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and other De Luxe and First Class Hotel is a feat to behold. INTERLINK has the highest score at .8. Avg no. of deployment/month is 3,323. 83

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JECH This company also had its share of De Luxe and First Class Hotel, and although it may have a short list, the bulk of its manpower also plays a factor. LONGEVITY of partnership with JECH made it stand out from other competitors. INTERLINK and JECH focuses more on hotel clients. JECH score .6 behind INTERLINK. Avg no. of deployment/month is 3240.30

GLOBAL EXCELLENCE

Looking at the list of Globals clients, it can be seen that most of them are in the Food and Beverage Industry. Although this list is longer than its competitors, most of the clients of Global are inferior compared with 5-star hotels in terms of bulk requirements of manpower. Of course prospective clients prefer well known establishments when it comes to industry experience. GLOBAL scores at .4. Avg no. of deployment/month is 55.44

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Market Share TABLE 13: INDUSTRY MARKET SHARE

Jech manpower is leading with a very small margin of 9.71% market share followed by Interlink 9.66% and Global with .17%.

3. Manpower Resources/Pool

The author is only familiar with the system of Global and Interlink because of his experience working on both company. As a former HR employee of Interlink he knew that they get their resources most of the time through networking. With a vast affiliation of its

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president it gets manpower pool in all sectors of the industry, another advantage is that the president is an anchorman on one of the radio AM station in the Philippines. Global on the other hand uses its technology efficiently partnering with different websites and investing on print ADS to further recruit manpower for pooling. Another advantage is the network of schools connected with them because two of the corporators are affiliated with different UNIVERSITIES. Based on interview with the former employee of JECH (HR specialist), JECH ties up with different schools and also invests heavily on Print ADS and Public Relations. All of them are tied at the score of .6.

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4. Management and Leadership

Interlink has great advantage when it comes to Management and Leadership. Its President and other management personnel already has vast experience compared with the management team of Global Excellence who are younger and less experienced in the industry. Its President Mr. Rafael Chico is a former hotelier and also working as a freelance consultant of different HOTELS not just in Metro Manila but also all over the Philippines. The Management Team of Global Excellence is composed of Graduates in different fields of Expertise in Business, Information Technology, and in Education. The writer has limited information about its management team because of confidentiality, but based on experience working with them (co-supplier) Jun Alido has been a solid leader, being able to invest his money in all types of business and well known when it comes to allocating and financing his manpower business. It was also known that a lot of clients were indebted to him because of inability to settle payments. INTERLINK has the edge scoring .4.

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5. Rates

When it comes to rates, all scored .15. Confidentiality becomes a factor in gathering data for my research but based on experience when it comes to offering rates GLOBAL EXCELLENCE has the most affordable rates compared to them but INTERLINK offers a more flexible option based on previous rates offered to clients. JECH on other hand prefers to offer a higher rate than usual, using image pricing strategy, offering a higher rate in a belief of rendering quality service.

6. Networks

INTERLINK obviously leads the pack when it comes to network and publicity. Newspaper Publicity has been its strength since it has a lot of tie ups/partnership with the media. Considering the fact that its president is an anchorman, it has the easiest access to media. Its president is also affiliated with the tourism council, red cross and other government bodies and organization. Global Excellence thrives more on networks on schools, Training Centers and Universities. There is limited information on JECH but based on interview, JUN ALIDO its President, is also affiliated with other organizations and ties up with other agencies to do sub contracting.

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III.

SPACE MATRIX (INPUT) TABLE 14: SPACE MATRIX

Financial Strength has an average score of 3, Environmental Stability has average score of -3.66, Competitive average score of -4.75 and has an average score of 4 in the Industry Strength area.

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The SPACE matrix is a management tool used to analyze a company. It is used to determine what type of a strategy a company should undertake.

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The Strategic Position & ACtion Evaluation matrix or short a SPACE matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization.

The SPACE matrix can be used as a basis for other analyses, such as the SWOT analysis, BCG matrix model, industry analysis, or assessing strategic alternatives (IE matrix).

The SPACE matrix is constructed by plotting calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions. The SPACE matrix can be created using the following seven steps:
Step 1: Choose a set of variables to be used to gauge the competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).

Step 2: Rate individual factors using rating system specific to each dimension. Rate competitive advantage (CA) and environmental stability (ES) using rating scale from -6 (worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale from +1 (worst) to +6 (best).

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Step 3: Find the average scores for competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).

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Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the appropriate axis.

Step 5: Add the average score for the competitive advantage (CA) and industry strength (IS) dimensions. This will be your final point on axis X on the SPACE matrix.

Step 6: Add the average score for the SPACE matrix environmental stability (ES) and financial strength (FS) dimensions to find your final point on the axis Y.

Step 7: Find intersection of your X and Y points. Draw a line from the center of the SPACE matrix to your point. This line reveals the type of strategy the company should pursue.

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1. MATCHING STAGE I. IE MATRIX (Result of IFE and EFE)

FIG. 12: IE MATRIX GRAPH Graph result of EFE and IFE falls in the GRAY area HOLD and MAINTAIN Strategy means that the company needs stability.

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The Internal-External (IE) matrix is another strategic management tool used to analyze working conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based on an analysis of internal and external business factors which are combined into one suggestive model.

The IE matrix is a continuation of the EFE matrix and IFE matrix models.

The IE matrix belongs to the group of strategic portfolio management tools. In a similar manner like the BCG matrix, the IE matrix positions an organization into a nine cell matrix.

The IE matrix is based on the following two criteria: 1. Score from the EFE matrix -- this score is plotted on the y-axis 2. Score from the IFE matrix -- plotted on the x-axis

The IE matrix works in a way that one plots the total weighted score from the EFE matrix on the y axis and draw a horizontal line across the plane. Then one takes the score calculated in the IFE matrix, plot it on the x axis, and draw a vertical line across the plane. The point where the horizontal line meets the vertical line is the determinant of ones strategy. This point shows the strategy that the company should follow.

On the x axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99

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On the y axis, an EFE total weighted score of 1.0 to 1.99 is considered low. A score of 2.0 to 2.99 is medium. A score of 3.0 to 4.0 is high.

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II.

SPACE MATRIX results (GRAPH)

FIG. 13: SPACE MATRIX GRAPH

Graph for Space Matrix Generated from the 4 quadrants. Falls under Defensive strategy. A template was used automatically plotting the coordinates.

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Defensive Strategies include the following:

Retrenchment Regrouping through cost and asset reduction to reverse declining sales and profit Liquidation Selling all of a companys assets, in parts, for their tangible worth Divestiture Selling a division or part of an organization

The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy:

Aggressive Conservative Defensive Competitive

There are many SPACE matrix factors under the internal strategic dimension. These factors analyze a business internal strategic position. The financial strength factors often come from company accounting. These SPACE matrix factors can include for example return on investment, leverage, turnover, liquidity, working capital, cash flow, and others. Competitive advantage factors include for example the speed of innovation by the company, market niche position, customer loyalty, product quality, market share, product life cycle, and others.

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GRADUATE SCHOOL Every business is also affected by the environment in which it operates. SPACE matrix factors related to business external strategic dimension are for example overall economic condition, GDP growth, inflation, price elasticity, technology, barriers to entry, competitive pressures, industry growth potential, and others. These factors can be well analyzed using the Michael Porters Five Forces model.

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The SPACE matrix calculates the importance of each of these dimensions and places them on a Cartesian graph with X and Y coordinates.

The following are a few model technical assumptions: - By definition, the CA and IS values in the SPACE matrix are plotted on the X axis. - CA values can range from -1 to -6. - IS values can take +1 to +6. - The FS and ES dimensions of the model are plotted on the Y axis. - ES values can be between -1 and -6. - FS values range from +1 to +6.

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III.

BCG MATRIX

FIG. 14: BCG MATRIX Basis for Computation MARKET SHARE = Current SALES REVENUE/TOTAL SALES in the Market (15 companies random sampling was used for getting market share). MARKET GROWTH RATE = Revenue increase(decrease) from previous year/divide by previous year sales Reference: Measuring Marketing by John Davis 2007 edition

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FIG. 15 MARKET SHARE AND MARKET GROWTH

Market Share = .17% LOW MARKET SHARE Market Growth = 98% HIGH MARKET GROWTH

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The BCG matrix, also called the BCG model, relates to marketing. The BCG model is a well-known portfolio management tool used in product life cycle theory. BCG matrix is often used to prioritize which products within company product mix get more funding and attention.

The BCG matrix model is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's.

The BCG model is based on classification of products (and implicitly also company business units) into four categories based on combinations of market growth and market share relative to the largest competitor.

Placing products in the BCG matrix results in 4 categories in a portfolio of a company:

BCG STARS (high growth, high market share)

- Stars are defined by having high market share in a growing market. - Stars are the leaders in the business but still need a lot of support for promotion a placement. - If market share is kept, Stars are likely to grow into cash cows.

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BCG QUESTION MARKS (high growth, low market share)

- These products are in growing markets but have low market share. - Question marks are essentially new products where buyers have yet to discover them. - The marketing strategy is to get markets to adopt these products. - Question marks have high demands and low returns due to low market share. - These products need to increase their market share quickly or they become dogs. - The best way to handle Question marks is to either invest heavily in them to gain market share or to sell them.

BCG CASH COWS (low growth, high market share)

- Cash cows are in a position of high market share in a mature market. - If competitive advantage has been achieved, cash cows have high profit margins and generate a lot of cash flow. - Because of the low growth, promotion and placement investments are low. - Investments into supporting infrastructure can improve efficiency and increase cash flow more. - Cash cows are the products that businesses strive for.

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BCG DOGS (low growth, low market share)

- Dogs are in low growth markets and have low market share. - Dogs should be avoided and minimized. - Expensive turn-around plans usually do not help.

FIG. 16: BCG MATRIX ILLUSTRATION

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IV.

GRAND STRATEGY MATRIX

FIG. 17: GRAND STRATEGY MATRIX Global Excellence falls under Quadrant 2 in GRAND STRATEGY base on data generated in BCG MATRIX computation.

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QUADRANT 2 has the following recommended strategies

Market Development - Introducing present products or services into new geographic area.

Market Penetration - Seeking increased market share for present products or services in present markets through greater marketing efforts.

Product Development - Seeking increased sales by improving present products or services or developing new ones.

Horizontal Integration - Adding new, unrelated products or services for present customers

Liquidation - Selling all of a companys assets, in parts, for their tangible worth

Divestiture - Selling a division or part of an organization

Grand Strategy Matrix is based on two evaluative dimensions: competitive position and market growth. Appropriate strategies for an organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix (David, 2007).

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GRADUATE SCHOOL Firms located in Quadrant I of the Grand Strategy Matrix have a strong competitive position in a rapid growth industry. These firms should concentrate continuously on market penetration, market development, and product development strategies. When a Quadrant I organization has excessive resources, then backward, forward, or horizontal integration may be effective strategies. When a Quadrant I firm is too heavily committed to a single product, then concentric diversification may reduce the risks associated with a narrow product line. Firms positioned in Quadrant II have a weak competitive position in a rapid growth industry and they need to evaluate their present position to the marketplace. Although their industry is growing they are unable to compete effectively and need to determine the firm's ineffectiveness and the way to improve its competitiveness. Quadrant II firms should firstly apply intensive strategies (market penetration, market development, product development). However, if the firm is lacking a distinctive competence or competitive advantage, then horizontal integration is often a desirable alternative. As a last resort, divestiture or liquidation should be considered. Quadrant III organizations have a weak competitive position in slowgrowth industries. These firms must quickly make some drastic changes to avoid further demise and possible liquidation. Extensive cost and retrenchment should be pursued first. Other options for Quadrant III businesses are divestiture or liquidation. Finally, Quadrant IV businesses have a strong competitive position but are

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GRADUATE SCHOOL in a slow growth industry. These firms have strength to launch diversified programs into more promising growth areas. They can pursue concentric, horizontal, or conglomerate diversification successfully.

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V.

TOWS MATRIX TABLE 17: TOWS MATRIX

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TOWS Analysis is an effective way of combining a) internal strengths with external opportunities and threats, and b) internal weaknesses with external opportunities and threats to develop a strategy. To carry out a TOWS Analysis, consider the following combinations:

FIG.18 TOWS MATRIX ILLUSTRATION

Strengths/Opportunities: Consider all strengths one by one listed in the SWOT Analysis with each opportunity to determine how each internal strength can help you capitalize on each external opportunity.

Strength/Threats: Consider all strengths one by one listed in the SWOT Analysis with each threat to determine how each internal strength can help you avoid every external

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Weaknesses/Opportunities: Consider all weaknesses one by one listed in the SWOT Analysis with each opportunity to determine how each internal weakness can be eliminated by using each external opportunity.

Weaknesses/Threats: Consider all weaknesses one by one listed in the SWOT Analysis with each threat to determine both can be avoided.

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TABLE 18: QSPM MATRIX

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JOINT VENTURE has the highest score among the strategies generated. Joint Venture - two or more companies form a temporary partnership or consortium for purpose of capitalizing on some opportunity.

A QSPM uses input information from Stage 1 to objectively evaluate feasible alternative strategies identified in Stage 2. A QSPM reveals the relative attractiveness of alternative strategies and thus provides objective basis for selecting specific strategies. This technique allows top managers to assess alternative strategies objectively based on a firms internal strengths/weaknesses and external opportunities/threats (David, 1986).

In QSPM, left column consists of key external and internal factors from Stage 1, and the top row includes feasible alternative strategies from Stage 2. Specifically, the left column of a QSPM includes information obtained directly from the EFE Matrix and IFE Matrix. In a column adjacent to the critical success factors, the respective weights received by each factor in the EFE Matrix and the IFE Matrix are recorded. The top row of a QSPM includes alternative strategies derived from the SWOT Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix. These matching tools usually generate similar feasible alternatives (David, 2007). QSPM determines best strategy to the firms by calculating weights, attractiveness scores, total attractiveness scores and sum total

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4. SUMMARY OF ALL MATRICES


TABLE 19: SUMMARY OF ALL MATRICES STRATEGY OPTIONS
Integration Strategies 1. Forward 2. Backward 3. Horizontal Intensive Strategies 4. Market Penetration 5. Market Development 6. Product Development Diversification Strategy 7. Concentrentic 8. Conglomerate 9. Horizontal Defensive 10. Joint Venture 11. Retrenchment 12. Divestiture 13. Liquidation 3 1 1 1 1 1 1 4 1 1 1 1 1 0 0 1 1 1 1 1 1 1 3 1 3 1 1 0 0 2

TOWS

SPACE

IEM

GSM

TOTAL

Summary of the matrices are all based on the previous tools used in strategy formulation stage, counting the number of possible strategies that can be used in the company.

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V.

STRATEGIC OBJECTIVES AND RECOMMENDATIONS

A. Critique of the Current Vision and Mission Statement TABLE 20: CRITIQUE OF THE CURRENT VISION AND MISSION Critique of the Current Vision and Mission Essential Components Present (Y/N) 3. 1.Customers Y 4. 2. Products or Y Services 5. 3. Markets Y 4. Technology N 6. 5. Concerns for Y survival, growth and profitability 7. 6. Philosophy Y

Inclusive Statement Hospitality Industry Manpower and Training Locally and worldwide Not mentioned need to add Targets operations worldwide Developing and producing socially responsible employees, skilled workers, managers and leaders Quality Service/Quality People Do what we teach Not mentioned, need to add Nurture and cultivate employees

8. 7. Self-Concept

9. 8. Concern for public N image 9. Concern for employees Y

B. Recommendation of Revised Vision Mission Statements VISION GLOBAL envisions itself to be the premier source for the delivery of quality services with quality manpower, quality training (4) with updated technology integrations and professional certification that serves the needs of hospitality industry and other industries locally and worldwide.

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MISSION GLOBAL is to nurture, cultivate and advocate for creating, developing and producing socially responsible employees, skilled workers, managers and leaders (8) that will help the nation in producing more job opportunities locally and worldwide. Global adhere with the principle of do what we teach.

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C. Recommended Business and Organizational Strategies

1. Increase Equity and focus on stability Global Excellence needs to increase its equity by finding an investor. At least 2 million pesos is needed for it to be able to efficiently operate. A company without sufficient funds will not be able to expand or even conduct activities that needs funding. Defensive Strategy with Strategic Alliances will be used to increase stability in the first year.

2. Market Penetration Upon achieving stability for the first year, Global needs to penetrate the market to increase its shares. Increasing sales revenue may eventually lead to more income in the future. Global Excellence will aim for a 20% market share in the future provided that it has already been stabilized. Target for achieving the said market share would be 2015. By that time Global Excellence has already expanded its operation not just in Metro Manila but all so near provincial areas.

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3. Improve Collection Cycle Improving Collection Cycle by at least 30 days collection period may improve current ratio. Earning Income in Cash would be valuable for the operation of the company. It will be more efficient to operate with cash than earning collectibles alone.

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4. Joint Venture (strategic alliance) Global Excellence needs to find an alliance to help its financial status and gain more clients and deployment. Interlink may be a suitable partner because of the relationship of the owners and nature of business.

5. Improve Services and Find Possible Untapped Market The Company needs to continuously improve its services and find a potential market that is not saturated. Unsaturated Market can result to a more profitable business.

6. Buying of Competitor to increase Market Share Buying of competitors to increase market share may be possible in the future after the company has stabilized and gain enough income to expand. After 2013 which is the last year for projected strategies, Global Excellence will start to look for potential companies (small) which can be bought in order to gain more market share. A market research and feasibility study will be conducted first before pursuing the said strategy.

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DETAILED ACTION PLAN Developing an Action Plan

1. Actions plans specify the actions needed to address each of the top organizational issues and to reach each of the associated goals, who will complete each action and according to what timeline.

2. Develop an overall, top-level action plan that depicts how each strategic goal will be reached.

3. Develop an action plan for each major function in the organization, e.g., marketing, development, finance, personnel, and for each program/service, etc. These plans, in total, should depict how the overall action plan will be implemented. In each action plan, specify the relationship of the action plan to the organization's overall, top-level action plan.

4. Ensure each manager (and, ideally each employee) has an action plan that contributes to the overall. These plans, in total, should depict how the action plans of the major functions will be implemented. Again, specify the relationship of these action plan to the organization's overall, top-level action plan.

5. The format of the action plan depends on the nature and needs of the organization. The plan for the organization, each major function, each manager and each employee, might specify: a) The goal(s) that are to be accomplished b) How each goal contributes to the organization's overall strategic goals

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c) What specific results (or objectives) much be accomplished that, in total, reach the goal of the organization d) How those results will be achieved e) When the results will be achieved (or timelines for each objective)

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In order for the company to implement its strategies, the proponent created an Action Plan to realize its vision and mission statement.

Strategies chosen needs to be carefully implemented in different departments and set a specific goal what to reach. A timetable is also presented to have a good idea when the strategies should be implemented and achieved. A Three-year action plan has been created as well to successfully plan ahead and achieve greater outcomes. A budget is also being presented and the unit responsible for implementing such strategy for clear understanding of each role and responsibilities.

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TABLE 21.1: ACTION PLAN

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D. Balanced Score Card TABLE 22.1: BALANCED SCORECARD

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TABLE 22.2: BALANCED SCORECARD

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Balanced Scorecard is a performance management framework used by strategic decision makers to make the right decisions about their business. Balanced scorecard not only a set of strategic goals; it is also a method for monitoring progress toward organization's strategic goals.

The balanced scorecard method is a management technique designed to provide a view of an organization from both internal and external perspective. Before we get to the details, let us draw your attention to some other strategic management models, such as SWOT analysis, IFE matrix, EFE matrix, BCG matrix, and SPACE matrix.

Balanced scorecard views organization from four perspectives:


Customer perspective, Internal-business processes, Learning and growth, Financials.

The first step in the balance scorecard framework is to analyze these four perspectives. However, balanced scorecard does not end there, it goes further. Balanced scorecard also develops metrics and methods for collecting data to calculate them. After data is collected and metrics calculated, each of the four perspectives can be analyzed relative to each other.

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FIG. 18:BALANCE SCORECARD ILLUSTRATION Balanced scorecard provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.

Perspective 1: Customer

Customers are the ones who pay the bills; therefore, it is important to keep them satisfied so that they not only come back but also spread the word and bring new customers too. Every business should be constantly asking the question:

"How well are we meeting the needs of our customers, and how can we make them more satisfied?"

Balanced scorecard brings this question into action items. Balanced scorecard includes the

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question, methods for how we measure results, and an analysis of how our results meet our goals. This is an example of how the Customer perspective can be handled in the balance scorecard framework:

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Perspective 2: Internal-business process

After defining our customer and knowing how to make him happy, we also need to focus on our processes that get us to the customer. We ask the question:

"How do our internal processes function to efficiently deliver products and services, and how can we improve our efficiency?"

Perspective 3: Learning and growth

Innovation and learning is the key ingredient needed for being ahead of the competition. Employees need to keep educating themselves and the company needs to provide them the right tools and motivation. Strategic planners need to ask the question:

"How well are we positioned to ensure that goals are met in the future?"

Everything is about the bottom line. A business needs to align its priorities with activities that bring in revenue, and it has to be done in an efficient way. Decision makers need to ask the question:

"How well are our finances managed to achieve our mission?"

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E. Financial Projections

TABLE 23.1: FINANCIAL PROJECTION (COMPARATIVE INCOME STATEMENT)

It is expected that there will still be losses in the first year (2011) a slight increase of income for the 2nd year and major increase of income for the 3rd year.

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TABLE 23.2: FINANCIAL PROJECTION (COMPARATIVE STATEMENT OF CASH FLOW)

An increase of cash is expected after three years (2013).

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TABLE 23.3: FINANCIAL PROJECTION COMPARATIVE BALANCE SHEET

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In 2010 the company is in deficit, after investing 2 million pesos on the nest year it operated efficiently and was able to finance the operations successfully. 2013 showed a positive outcome increasing equity.

PROJECTED RATIOS

TABLE 24: PROJECTED RATIO (LIQUIDITY RATIO)

Current ratio improves as the year progresses. Target of 2.0 is expected to be achieved in the year 2013.

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TABLE 24.2: PROJECTED RATIO (ACTIVITY RATIOS)

Improvement of collection period gradually decreased from 377 to 217 days for the following year is expected. Reducing by 100 days of collection period can be shown as the year progresses. Although 150 days on 2013 is the projected result the goal is pretty much realistic considering it came from 377 days collection period on 2010.

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TABLE 24.3: PROJECTED RATIO (DEBT RATIO)

A good debt ratio is projected on 2013 near the industry standard of .5. It can be seen the company improves as the year progresses from 1.29 down to 0.44.

TABLE 24.4: PROJECTED RATIO (PROFITABILITY RATIOS)

The company becomes profitable on the following year (2011) and substantially increasing its profitability on 2013 by 78%.

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TABLE 24.5: PROJECTED RATIO OPERATING PROFIT RATIO)

Operating profit margin becomes positive on 2012 and becoming more profitable on 2013 with 46% operating profit margin.

TABLE 24.6: RETURN OF INVESTMENT

Return of Investment is presented to show when will you be able to recover your investment or gain income from it. 2010 shows a negative ROI but an increase of equity on 2011 by investing 2 million pesos (refer to balance sheet) shows 0% losses. By 2012 it had an ROI of 31% and a substantial increase of 112% on 2013.

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NET PRESENT VALUE

In finance, the net present value (NPV) or net present worth (NPW) of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values (PVs) of the individual cash flows of the same entity. In the case when all future cash flows are incoming (such as coupons and principal of a bond) and the only outflow of cash is the purchase price, the NPV is simply the PV of future cash flows minus the purchase price (which is its own PV). NPV is a central tool in discounted cash flow (DCF) analysis, and is a standard method for using the time value of money to appraise long-term projects. Used for capital budgeting, and widely throughout economics, finance, and accounting, it measures the excess or shortfall of cash flows, in present value terms, once financing charges are met.

The NPV of a sequence of cash flows takes as input the cash flows and a discount rate or discount curve and outputs a price; the converse process in DCF analysis taking a sequence of cash flows and a price as input and inferring as output a discount rate (the discount rate which would yield the given price as NPV) - is called the yield, and is more widely used in bond trading.

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Each cash inflow/outflow is discounted back to its present value (PV). Then they are summed. Therefore NPV is the sum of all terms,

where

t - the time of the cash flow i - the discount rate (the rate of return that could be earned on an investment in the financial markets with similar risk.); the opportunity cost of capital Rt - the net cash flow (the amount of cash, inflow minus outflow) at time t. For educational purposes, R0 is commonly placed to the left of the sum to emphasize its role as (minus) the investment.

NPV is an indicator of how much value an investment or project adds to the firm. With a particular project, if Rt is a positive value, the project is in the status of discounted cash inflow in the time of t. If Rt is a negative value, the project is in the status of discounted cash outflow in the time of t. Appropriately risked projects with a positive NPV could be accepted. This does not necessarily mean that they should be undertaken since NPV at the cost of capital may not account for opportunity cost, i.e. comparison with other available investments. In financial theory, if there is a choice between two mutually exclusive alternatives, the one yielding the higher

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TABLE 25: NPV IN DECISION MAKING

TABLE 26: NPV RESULT

The year 2010 has 500,000 initial investment while the succeeding years were derived from Statement of Cash Flow (NET INCOME+Depreciation); refer to projected financial statements. NET PRESENT VALUE FORMULA was created in Microsoft Excel following the correct NPV standard formula with 10% discounted rate

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VI.

Strategy Evaluation and Control

The Management Team will see to it, that all strategies proposed shall be implemented by the employees. By guiding and monitoring them, Global Excellence will be able to

effectively implement all proposed strategy, thus creating a new operations manual, which will be the basis of implementing standard operating procedures.

VII.

Definition of Terms

BMBE LAW - Republic Act (RA) 9178 is the Barangay Micro Business Enterprises (BMBE) Law, an act aimed at promoting the establishment of BMBEs, providing incentives and benefits Client the customer servicing by a manpower agency DO 18-02 License given by DOLE to service contractors Fly by Night A company that illegally operates as a manpower agency Manpower Power in terms of the workers available to a particular group or required for a particular task Manpower Agency An agency which provides manopower requirement Outsourcing -is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house PRPA LICENSE - Private Recruitment and Placement Agency) that legally allows firms to recruit and place people for a job with a fee Senate Bill 922 a bill passed by Loren Legarda to abolished contractualization

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REFERENCES Books David, F. (2007) Strategic Management: Concepts and Cases (13th Edition) place and publisher Davis, J, (2007) Measuring Marketing place and publisher Harrison, A. (2009), Strategic Management by Harrison (12th Edition) place and publisher Kotler, P. (2009) Principles of Marketing by Philip Kotler (10th edition) place and publisher

Internet Alcantara The Labor Workforce (2010) www. Sunstar.com Atty. Melgar, M., Manpower Cooperatives http://www.thenewstoday.info/2006/ Business Statistics (2007-2010)www.dti.gov.ph Future workforce and statistics http://www.time.com/time/magazine/article Iview www.sec.gov.ph Knowing your rughts (2010) http://apples-pie.com/... Labor Code of the Philippines(2011) www.dole.gov.ph/labor_codes.php Laws in the USA (2009) www.laborlaw.usc-law.org Manpower numbers and statistics (2010) pinoyoverseas.net National Statistics Office (2007-2010) www.census.gov.ph/

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APPENDICES