2014 Sarap Sample Strama

Ateneo Graduate School of Business
A Strategic Management
Paper
for SARAP
Submitted to Professor Hilda Teodoro
Submitted by Your Name

July 1, 2014
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Table of Contents
EXECUTIVE SUMMARY 4
1 INTRODUCTION 6
2 RESEARCH DESIGN AND METHODOLOGY 7
LIMITATION OF THE STUDY 8
3 VISION/MISSION 9
4 EXTERNAL ENVIRONMENT 15
4.1 ECONOMIC FORCES 15

4.1.1 Less but Frequent Purchases of Goods by Consumers 15
4.1.2 Decrease in Food Expenditure at the Expense of Other Commodities 15
4.2 SOCIO-CULTURAL, DEMOGRAPHIC, AND ENVIRONMENTAL FORCES 15

4.2.1 Significant Distribution of Households in Visayas and Mindanao areas 18
4.2.2 Fast-paced Lifestyle Calls For Quick And Easy Dependable Solutions 19
4.2.2 More Women are Joining the Work Force and Becoming More Independent 21
4.2.2 Still Low Dish Penetration of Packaged Soups in Regularly Cooked Soupy Dishes 22
4.2.2 People are Becoming More Health Conscious 23
4.3 TECHNOLOGICAL FORCES 21
4.3.1 Increasing use of the Internet 23
4.4 POLITICAL, GOVERNMENTAL & LEGAL FORCES 24
4.4.1 Political Instability 24

5 INDUSTRY AND COMPETITIVE ANALYSIS 26
5.1 INDUSTRY ANALYSIS 23
5.1.1.Growth of the Flavorings Category whilst the Packaged soups 23
5.1.2. Lack of Differentiation Amongst Cooking Aids Brands 26
5.1.3. Versatility Proposition of Competitors 27

5.2 PORTERS 5 FORCES ANALYSIS 28
5.2.1 THREAT OF NEW ENTRANTS 28
5.2.2 BARGAINING POWER OF BUYERS 29
5.2.3 BARGAINING POWER OF SUPPLIERS 29
5.2.4. THREAT OF SUBSTITUTES 30
5.2.5. RIVALRY AMONG COMPETITORS 30
5.3 COMPETITIVE PROFILE MATRIX 31
5.4 COMPETITORS 37
5.4.1 Misan Corporation 39
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5.4.2 Yummy Philippines, Inc 39

6 EXTERNAL FACTOR EVALUATION MATRIX 41
7 INTERNAL ASSESSMENT 45
7.1 CULTURE 45
7.1.1 Values 45
7.1.2 C ORPORATE S PIRIT 45
6.1.3 PROFITABILITY 39
6.1.4 GROWTH RATES 39
7.2 MANAGEMENT 46
6.2.1 M ANAGEMENT S YSTEM 46
6.2.2 S TRATEGY 46
6.2.3 O RGANIZATION 47
6.2.4 SYNERGY AMONG THE SM GROUP OF COMPANIES 43
7.3 MARKETING 48
7.3.1 P RODUCT 48
7.3.2 P RICING 48
7.3.3 M ARKET D ISTRIBUTION 49
7.3.4 C HANNEL P RIORITIES 49

7.3.5 Good Customer Marketing Standards 51
7.3.6 Excellent Market Research Capability 51
7.4 FINANCE 51
7.4.1 Liquidity 52
7.4.2 L EVERAGE 53
7.4.3 A CTIVITY 53
7.4.4 P ROFITABILTY 53
7.4.5 G ROWTH 54
7.5 OPERATIONS 54
7.6 RESEARCH AND DEVELOPMENT 54
8 INTERNAL FACTOR EVALUATION MATRIX (IFE MATRIX) 56
9 STRATEGY FORMULATION 61
9.1 THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) 61
9.2 STRATEGIC POSITION & ACTION EVALUATION MATRIX (SPACE) 62

9.3 INTERNAL-EXTERNAL (IE) MATRIX 64
9.4 GRAND STRATEGY MATRIX 65
9.5 GE MCKINSEY MATRIX 66
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10 SUMMARY OF MATRICES & ANALYSIS 67
11 QUANTITATIVE STRATEGY PLANNING MATRIX 69
12 PROPOSED STRATEGY 71
12.1 STRATEGIC OBJECTIVE 71
12.2 MARKET PENETRATION 72
12.3 MARKET SEGMENTATION 72
12.4 STRATEGIC POSITIONING 73
13 ACTION PLANS AND PROGRAMS 74

14 STRATEGY EVALUATION AND CONTROL 75
14.1. BALANCED SCORECARD 76
15 STRATEGY MAP 78
16. PAST AND PROJECTED FINANCIAL STATEMENTS 79
REFERENCES 83
APPENDIX
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Executive Summary
This strategic management paper aims to develop a viable strategy for the Sarap
packaged soups business retail business in the Philippines. The global brand Sarap
first came into the Philippine market in 1972, with packaged soup cubes as its
pioneering and flagship entrant in this high-potential Asian market. Sarap is a
relatively familiar brand known not just for packaged soups but for Sinigang mixes,
liquid seasonings, recipe mixes, powdered flavorings, packed soups and pasta as
well. To date, packaged soups is the biggest contributor in volume and value
amongst the products in the Sarap portfolio. With 90% market share in a Php 2
billion market, Sarap cubes revenue in 2004 is estimated at Php1.6 billion and still
managed to grow by 7% with an estimated Php1.7 billion sales in 2005.
However, the packaged soups category is experiencing flat growth and has reached
its maturity at the dawn of powdered flavorings. The brands strategic objective is
to defend the relevance of packaged soups by positioning it as best for soupy
dishes whilst establishing its presence and leadership in the powdered flavorings
segment. With the use of several strategic management tools, it was identified that
it is best to employ market penetration.
It was established through Project Pinoy that the market for packaged soups still
has a lot of room to grow, especially in soupy dishes where only 12% of all soupy
dishes is penetrated by packaged soups. By utilizing brilliant marketing, campaigns
on soup can help arrest a possible decline in the packaged soups category.
Other opportunities identified through the study apart from aggressive marketing
campaigns behind packaged soups are deemed to be necessary to realize and
expedite the achievement of the brands objective:
On product distribution, improving the Sarap portfolio to be able to cater to

downline channels via direct servicing.
On geographies, valuing the Visayas and Mindanao regions as a separate

entity from that of Luzon and GMA for reasons that the cultures and taste
preferences are so distinct in itself creating a world of possibilities for the
business.
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On consumer purchasing habits, developing lower cash outlay products as

an answer to a growing economic reality.
Simultaneously, other efforts on master brand activations and company-wide

initiatives are deemed to be necessary as it can assist Sarap address growing
direct and indirect consumer concerns such as:
The health factor in the use of cooking aids or any convenient, ready-to-eat,
easy-to-prepare commodity is addressed by Saraps thrust on Vitality.
Certification of all cooking aids as good for you products.
Differentiating the Sarap brand from competition or other food brand with a
relevant and aspiring proposition that consumers will be able to connect to.
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1 Introduction
A viable strategy for the Sarap packaged soups business in the Philippines is what
this strategic management paper aims to develop. The global brand Sarap first
came into the Philippine market in 1982, with packaged soups as its pioneering
and flagship entrant in this high-potential Asian market. Sarap is a big player in the
packed soups category. Through Saraps diverse portfolio, it has established itself
to be market leader in several categories and has always been referred to as a
respectable brand in the categories it plays in.
Sarap packaged soups remains the undisputed market leader in the packaged
soups category with an estimated market size of Php2 billion. With over 90%
market share, Sarap packaged soups revenue in 2004 is Php1.6 billion and still
managed to grow by 7% with Php1.7 billion sales in 2005. The packaged soups
category is considered to be one of the core categories since not only does Sarap
packaged soups stand for the category in itself but it is also very profitable and is
able to support other adjacent categories in the Sarap portfolio.
Sarap packaged soups are available in various retail channels nationwide -

supermarkets, groceries, market stalls and sari-sari stores. It is sold at a very
affordable price of Php 9.50 per shell box (box of 2 packaged soups) and Php28.00
per pantry box (box of 6 packaged soups).
Sarap has an estimated 500 direct hire employees working in different functions in
head office whilst there are a thousand or so working in the different factories of
Saraps 3rd party manufacturers and outsourced agencies.
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2 Research Design & Methodology

The construction of this paper needed several facts and information which were
obtained primarily through public and private sources alike.
The websites of the following government agencies were accessed to get the
necessary and pertinent information needed as references for this study:
National Statistics Office www.nso.gov.ph
Bangko Sentral ng Pilipinas www.bsp.gov.ph
Department of Trade and Industry www.dti.gov.ph
National Economic Development Authority www.neda.gov.ph
Securities and Exchange Commission www.sec.gov.ph
M e t h o d o lo g y
Summary of Frameworks, Tools, Activities and Outputs

for this Strategic Management Paper
Framework Tools Activities Output
Ten Essential
Mission Statement Mission and Vision
Components of a
Evaluation/Formulation Statements
Mission statement
External Factor
General Environment
Evaluation (EFE)
Analysis Opportunities and
Matrix
Threats
Porters Five Forces Competitive Profile
Industry Analysis
Model Matrix (CPM)
Internal Factor
Davids Functional Strengths and
Evaluation (IFE) Company Analysis
Analysis Weaknesses
Matrix
Internal-External
Matrix (IE)
Davids Matching TOWS Matrix Objectives and
Strategy Formulation
Tools SPACE Matrix Strategies
Grand Strategy
Matrix
Quantitative
Davids Matching Prioritization of Recommended
Strategic Planning
Tools Strategies Strategies
Matrix (QSPM)
Market Segmentation Action Plans
Implementing
and Product Proforma Financial
Strategies
Positioning Statements
Norton and Kaplans Strategy Evaluation Performance
Balanced Scorecard and Control Measures
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Other research tools made available through Sarap were also used such as:
Global Market Research Advisor
Global Market Research Retail Audit
Global Market Research Homepanel
ATP (Advance Tracking Program)
The Sarap Story (to quote brand values and corporate spirit)
Project Sarap In-House Monitoring Study
L im it a t io n s
This strategic management paper is limited to the packaged soups business of
Sarap Foods.
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3 Vision & Mission
Amidst stiff competition in the fast moving consumer goods industry of cooking
aids, Saraps commitment is most evident in its continued desire to perfect its
business where it is currently playing a major role as a market leader in the
packaged soups category.
3 .1 C u r r e n t V is io n a n d M is s io n S t a t e m e n t
3 .1 .1 V is io n
To be a Homemakers Best Friend.
3 .1 .2 M is s io n
With the help of our cooking aids, she is able to integrate her two desires: to
nourish her family and nurture her relationships. She is able to create joyful,
nutritious meal experiences. Through the meal she creates, she can make an
impact on relationships with people around her to suit her personal agenda. She
becomes an inspired cook and also an accomplished woman. This 2-fold Daily
Victory renews her feeling of personal accomplishment and self-worth.
3 .1 .3 R e v i e w o f t h e C u r r e n t V is io n a n d M is s io n
S tate m e n ts
Saraps vision is currently designed as a brand capsule where it is succinctly

described as such for a very targeted subject the woman. It may be clear and
compelling enough to refer to a unifying focal point of effort since cooking is
considered to be a mundane household chore that is most often than not
associated with the woman, especially in the Philippines.
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Vision
C r it e r ia E v a lu a t io n
1. Vivid image no
2. Realistic no
3. Aspirational yes To be a Homemakers Best Friend
However, as far as the vision is concerned, it seems to lack the aspirational yet
realistic angle that is to inspire and move the team as one since it is stated in a
manner of activity portraying not only commitment but conviction to do its part in
realizing a dream. This is good in so far as marketing is concerned but as a
business, it should be further enhanced to embody more meaning for all
stakeholders.
Similarly, the mission is reflective of the brands commitment as to what it can and
will do. However, it doesnt quite capture what the business is about in totality. If
evaluated using the criteria of designing a mission statement, it would only be able
to satisfy several components:
With the help of our cooking aids, she is able to

integrate her two desires: to nourish her family and
nurture her relationships. She is able to create
joyful, nutritious meal experiences. Through the
1. Customers yes
meal experiences she creates, she can make an
impact on relationships with people around her to
suit her personal agenda. She becomes an inspired
cook and also an accomplished woman.
With the help of our cooking aids, she is able to

2. Products & integrate her two desires: to nourish her family and
yes
Services nurture her relationships. She is able to create
joyful, nutritious meal experiences.
3. Markets no
4. Concern for
Survival, Growth & no
Profitability
5. Technology no
6. Philosophy no
7. Self-Concept no
8. Concern for Public
This 2-fold "Daily Victory" renews her feeling of
Image/ Nation yes
personal accomplishment and self-worth.
Building
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9.Concern for
no
Employees
10. Nation Building no
Revised Vision and Mission Statements
3 .1 .4 V is io n
To be the most relevant and preferred cooking aid brand in the Philippines.
3 .1 .5 M is s io n
It is our reason for being to provide our customers nourishment and nurturing
through joyful meal experiences created with 'The Sarap Effect', which makes a
difference in the lives of Filipino people.
Through Sarap's heritage and credibility, our cooking aids has earned its place as
an established and delicious brand preferred in both retail and wholesale markets
nationwide.
By providing adequate training and a great professional working atmosphere

ensuring commitment amongst our employees, we can further improve total
business for all our stakeholders and sustain our presence.
We are committed to continue studying and understanding evolving demands

through research in order to continuously develop solutions to our customers needs
for the changing times.
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3 .1 .6 R e v i e w o f S a r a p s R e v i s e d V i s i o n a n d M i s s i o n
S tate m e n ts
Vision
1. Vivid image To be the most relevant and preferred cooking aid
yes
brand in the Philippines.
2. Realistic yes preferred cooking aid brand in the Philippines.
3. Aspirational yes To be the most relevant and preferred cooking aid
It is our reason for being to provide our customers

nourishment and nurturing through joyful meal
1. Customers yes
experiences created with 'The Sarap Effect', which
makes a difference in the lives of Filipino people.
Through Sarap's heritage and credibility, our cooking
2. Products & aids has earned its place as an established and delicious
yes
Services brand preferred in both retail and wholesale markets
nationwide.
3. Markets yes retail and wholesale markets nationwide
By providing adequate training and a great professional

4. Concern for
working atmosphere ensuring commitment amongst our
Survival, Growth & yes
employees, we can further improve total business for all
Profitability
our stakeholders and sustain our presence.
We are committed to continue studying and

5. Technology yes understanding evolving demands through research in
order to continuously develop solutions to our customers
needs for the changing times.
6. Philosophy yes
Through Sarap's heritage and credibility, our cooking
aids has earned its place as an established and delicious
7. Self-Concept yes
brand preferred in both retail and wholesale markets
nationwide.
8. Concern for Public
Image/ Nation yes
Building
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By providing adequate training and a great professional

9.Concern for working atmosphere ensuring commitment amongst our
yes
Employees employees, we can further improve total business for all
our stakeholders and sustain our presence.
10. Nation Building yes
The vision and mission should be cascaded to the employees of

Sarap by hanging posters of it in strategic locations in the office,
making it part of the orientation and posting it on the website.
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4 External Assessment
There are several external forces that affect the packaged soups industry. This
strategic paper will establish these realities and make it more relevant by
translating it in terms of opportunities and threats for the brand.
4 .1 E c o n o m i c F o r c e s
4.1.1 OPPORTUNITY : Less but Frequent Purchases of Goods by

Consumers
F ig u r e 1 : F r e q u e n c y a n d V o lu m e p e r T rip o f C o o k in g A id s
FREQUENCY
24 25
12 14 12
11
7 7 6 7
3 3
MSG ROOTS CUBES FLAVORINGS SINIGANG PACK SOUPS
VOLUME PER TRIP

32
28 25
22 24
20 19
16 15 14
2 2
MSG (gm) ROOTS (gm) CUBES (gm) FLAVORINGS (gm) SINIGANG (gm) PACK SOUPS (pc)
YTD05 YTD06
Source: Global Market Research Homepanel
Indicative of how difficult life is becoming, more and more, it can be observed that
people are really trying to live on a day to day basis. Filipinos spend less whenever
they shop or buy commodities. As much as possible only what they need for the
day or for a short span of time is what they purchase. However, the frequency of
which is increasing. They wont mind going through the hassle of having to buy
again especially once the need for it arises.
Relative to the uptrend in the frequency, the quantity of what they purchase is
lessening. In the case of Sarap, a shell box has 2 packaged soups and it can be
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bought at Php 9.50. However, since 2005, the trend of purchasing just 1 packaged
soup (11 gms) has more than doubled and this phenomenon would most likely
continue on as traders are adjusting towards shoppers buying habits, selling by the
packaged soup and more shoppers are moving towards this direction as well.
F ig u re 2 : V o lu m e S h a re o f 1 1 g m s p u rc h a s e
VOLUME % SHARE
85 89 85 84 84 85 81 82 81 81 81
92 92 92 93 92 87 90 87 89 89 89 others
11GM
15 11 15 16 16 15 19 18 19 19 19
8 8 8 7 8 13 10 13 11 11 11
5
e 27 5
e 26 6
2 05
6
5
6
e 11 5
e 09 5
10 6
06
5
2 05
e 22 5
e 21 6
6
4w n 1 05
4w n 1 006
4w ec 200
00
00
4w Apr 2 00
4w ug 200
4w ug 200
00
4w Jul 200
4w ov 20 0
4w an 200
4w e b 200
00
4w Jul 200
00
00
0
4w Apr 2 0
0
Ju 2 0
20
20
20
Fe 0 2
M 72
M 62
S 42
Se 3 2
M 42
M 32
Ju 2
D 6
A 7
A 6
9
J 1
F 9
8
e 04
0
1
1
3
2
1
1
2
4w b
n
4w an
4w ar
4w ar
4w ct
4w ep
p
4w y
4w ay
Ja
J
e
e
e
e
e
e
e
e
e
e
4w
4w
Source: Global Market Research
Currently, there is no SKU that addresses a single packaged soup purchase. Only
traders own the initiative of opening a shell box (2 packaged soups) or a pantry
box (6 packaged soups) and sell by the packaged soup. The current strategy can
demand a bit more effort from the trader but they do not mind selling in tingi so
as long as they are able to sell more. As a risk due to this phenomenon, Saraps
sales may experience a slight dip since shoppers who are accustomed to buying a
shell box may resort to buying just a packaged soup and this immediately cuts
Saraps sales into half. However, this threat may also be seen as a golden
opportunity because packaged soups in a smaller format is something that is
prevalent in other countries and this just might be the solution to this rising
phenomenon.
4.1.2 THREAT: Decrease in Food Expenditure at the Expense of

Other Commodities
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From 1991 to 2003, family expenditures have been growing at a double digit rate
per annum. If we look closely into this expenditure type, it can be drawn that food
and housing is what families spend on the most nourishment and shelter.
However, unlike housing which is more stable in the 14% levels, +/-1%, food,
specifically, food consumed in-home has decreased significantly at the expense of
several expenditure types and shifting consumption from in-home to out-of-home.
This is an indication of shifting behaviour or value wherein food is sacrificed for
something deemed more important such as convenience, transportation and
communication, personal care effects, and the like.
T a b le 1 : D is t r ib u t io n o f T o t a l F a m ily E x p e n d it u r e b y M a j o r E x p e n d it u r e G r o u p
Expenditure Group 1991 1994 1997 2000 2003
Total Family Expenditures (in million pesos) 623 863 1413 1802 2005
Percent 100 100 100 100 100
Food 48.5 47.8 44.2 43.6 42.6
Food consumed at home 44.7 43.5 39.5 38.7 37.3

Food regularly consumed outside the home 3.8 4.2 4.7 5.0 5.3
Housing 13.5 14.1 15.3 15.1 14.3
Transportation & Communication 5.4 4.7 5.6 6.8 7.4
Fuel, Light & Water 5.7 5.5 5.3 6.3 6.5
Education 3.0 3.7 3.7 4.2 4.0
Personal Care & effects 3.3 3.2 3.3 3.6 3.9
Other expenditures 1.9 1.7 3.0 2.9 2.9
Clothing, footwear & other wear 3.7 3.5 3.3 2.7 2.9
Household operations 2.7 2.6 2.3 2.3 2.2
Miscellaneous Expenditure 3.4 3.6 3.4 3.3 3.7
Special Occasions 2.4 2.6 2.4 2.4 2.5

Gifts & contributions to others 1.0 1.0 1.0 0.9 1.2
Households furnishings & equipment 2.4 3.1 3.3 2.7 2.8
Taxes paid 1.4 1.4 2.5 2.1 2.2
Medical care 1.8 2.3 2.2 1.9 2.2
Tobacco 1.7 1.4 1.3 1.1 1.1
Alcoholic beverages 1.0 0.9 0.9 0.7 0.7
Recreation 0.4 0.4 0.4 0.5 0.5
Source: National Statistics Office
In other countries, eating out and the shift of home-cooked meals to easy-to-
prepare, ready-to-eat format defines in-home consumption. In the Philippines,
though meals are important and is a big thing in so far as family members look
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forward to this occasion of eating together, it is an inevitable event that more and
more people will be living a very fast paced lifestyle and time would just be so little
to even have time to prepare and dine over a home-cooked meal.
4 .2 S o c io - C u l t u r a l , D e m o g r a p h i c , a n d E n v i r on m e n t a l
F o rc e s
4.2.1 OPPORTUNITY: Significant Distribution of Households in

Visayas and Mindanao areas
Given the statistics (Year 2000) below at 2.5% year-on-year growth rate, the
Philippine population is currently estimated to be 85 Million with 16 Million
households nationwide.
T a b le 2 : T o t a l P h ilip p in e P o p u la t io n ( Y e a r 2 0 0 0 )
The Philippines is known for its 7,107 islands scattered all over the different
regions of the country - Luzon, Visayas and Mindanao. It is quite evident that each
region has its own distinct culture. However, it is also the very distinct differences
in culture that make up what the Philippines is in itself.
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There are millions of Filipinos residing in each region and what clicks in one region
most likely differs in another. There is an obvious culture that dominates over each
and this makes each one unique in its own right.
With over 40% of the Philippine population in Visayas and Mindanao, there is a
huge potential to make it big in these areas, just the way Luzon is being valued as
the standard. However, if treatment for all regions is done in a national scale, it will
not be appreciated as much in other parts of the country where it is very different
(i.e. Visayas and Mindanao). Though there is the potential to be a big hit in the
southern part of the country, one will only succeed if they are addressed in their
own tongue, relating to them in their own ways.
F ig u r e 3 : D is t r ib u t io n o f H o u s e h o ld P o p u la t io n b y R e g io n
% Distribution of Household Population by Region
24 24
Mindanao
21 20
Visayas
South Luzon
21 22
North Luzon
21 21 NCR
14 13
1995 2000
Source: National Statistics Office, Global Market Research
The different regions of the Philippines are evidently distinct from each other.
Though one country, its culture is translated and brought to life locally. This is
very much apparent in the different festivals, dialects, delicacies and the like of the
local areas. Given this, there really is an opportunity for Sarap to look into each
region as a distinct market in itself.
4.2.2 OPPORTUNITY: Fast-paced Lifestyle Calls For Quick And Easy

Dependable Solutions
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It is inevitable that as time becomes more scarce, people would tend to look for
solutions that would help them continue what they used to or even do more
amidst time constraints. This need would then be answered best by products that
are seen to hinge on convenience as a selling proposition whilst quality and
affordability are also important considerations especially to the Filipino market.
In the latest retail audit done by Global Market Research, on analyzing shoppers
behaviour and category trends, it was gleaned from the study that several
categories are out performing others primarily because of the aforementioned
must haves.
F ig u re 4 : F o o d C a te g o ry T re n d s
FOOD TRENDS 2006

60
50
40
30
20
10
0
yogurt
baby food
spaghetti
chocolate
catsup
flavorings
lollipops
noodles
spirits
biscuits
packaged
packaged
tea drinks
pet foods
tomato paste
ice cream
soft drinks
coffee mixes
instant
sauce
soups
water
GROWING SLIGHTTLY STABLE

INCREASING
According to the study, the reasons for the good performance of certain categories
are due to the following:
Introduction of new brands that come in convenient format and an affordable
price allowed new users to get into the category or consumer needs are met.
Introduction of new flavors allowed current users to increase their range.
Downsizing as earlier mentioned in the growing trend of less but frequent
purchases of shoppers/ consumers.
Promotional activities that drive purchase
The study was also able to determine that the 5 consumer benefits that drive
product launches are as follows:
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Value for money

Vanity
Variety
Availability
Convenience.
Convenience is indeed a proposition that consumers will be vying for more and
more since time is becoming scarce and the pressure of having to do what they
used to or even more or better is definitely something people are worried about.
This is also the case in cooking. There is less time to cook or room for error is no
longer a luxury since every minute is valuable. But food is something that is said to
be the glue that keeps the family together so it is very important that good food is
served even if life has become extremely fast in a sense.
4.2.3 OPPORTUNITY: More Women are Joining the Work Force and
Becoming More Independent
Based from the National Statistics Office, the proportion of women in the labor
force has increased and primarily because nowadays, dual-income households are
becoming a common practice since sustaining a certain lifestyle has become quite
a challenge. It has become normal for women to join the work force to help their
husbands support the family, to earn and be independent altogether. Even the
employment rate among women is said to be higher than the men and the age
group of which is higher between 25-44 years of age. Probably because there is
more to being a female - the available job would probably require the female
gender or working attributes of that one.
F ig u r e 5 : W o m e n in t h e W o r k F o r c e
The proportion of women in the Employment rate among women is

labor force has increased higher than men and half them are
LABOR FORCE % SPLIT BY GENDER between 25-44 yrs old
% FEMALE EMPLOYMENT
38 38 38 38 38 39 39 39 38 39 by Age- as of 2006 Q2
FEMALE
15-24 19
MALE 25-34 25
62 62 62 62 62 61 61 61 62 61 35-44 23
45-54 18
55-64 10
65 & Above 4
2004 Q1
2004 Q2
2004 Q3
2004 Q4
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
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However, joining the work force does not excuse women from their roles at home
which make it doubly hard for them to balance. To be a good wife and mother, she
has to be able to keep up with the chores. Even if there is enough help around, it is
still her who is responsible for managing everything. The typical household chores
of a woman are to keep the house clean, do the laundry, to cook and a whole lot
more. Cooking can be seen as a mundane household chore but this is where Sarap
tries to come in and help. Whilst Saraps competitors say that the secret is in what
you use therefore attributing it to their product, Sarap merely empowers the
woman thereby branding itself as A Womans Best Friend. For Sarap, it is all
about the woman.
4.2.4 OPPORTUNITY: Still Low Dish Penetration of Packaged Soups

in Regularly Cooked Soupy Dishes
In the realm of cooking aids and dishes, packaged soups are said to be best for
soupy dishes since a packaged soup format locks in the flavour of the broth that is
crucial in every soupy dish base. Whilst it is also used in sauted and saucy dishes,
there are other cooking aids best positioned to work with these dishes.
Project Sarap is a month long usage, attitude & image study with diary method
conducted by Global Research for Sarap Philippines that looked into cooking aids in
dish preparation in the Philippines. It was nationwide in scope with about 1,100
female respondents from class ABCDE, aged 25-45 years old, purchase decision
makers and in-charge of cooking at home.
F ig u r e 6 : C o o k in g A id s P e n e t r a t io n in D iffe r e n t D is h T y p e s
OTHERS
SAUTEED 7%
11%
FRIED
31%
SINIGANG
6%
The PENETRATION of packaged

SOUPY SAUCY
soups 25% 20%
into Soupy dishes is just 12%
Source: Project Sarap
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The study reveals that out of all dishes prepared in a month, 25% are soupy and of
which, only 12% has a packaged soup in it. If further quantified this would mean
that out of a hundred soupy dishes, only 12 were prepared with a packaged soup.
Hence, there is still a huge potential by increasing the penetration of packaged
soups in soupy dishes. Probably, the most practical thing to do is to look into what
kind of soupy dishes are actually being prepared and Sarap should increase the
relevance of using packaged soups in these dishes so as to be made a part in the
must haves in preparation of it.
4.2.5 THREAT: People are Becoming More Health Conscious
With the increasing importance of living a healthy lifestyle, individuals and

manufacturers alike are becoming more conscious about what constitutes a certain
product. This growing concern about what is good for you does not necessarily
mean one would have to do away with all unhealthy food since it would be
extremely difficult and quite impossible too. Sometimes, there is a compromise
between health and pleasure as properly described in Datamonitors debit and
credit lifestyle article.
D A T A M O N I T O R S V I E W : 1
I n b a la n c in g h e a lt h a n d p le a s u r e c o n s u m e r s a r e m o v in g t o w a r d s a d e b it s a n d
c r e d it s life s t y le
Increasingly informed consumers have become more aware of the link between
diet, health, well-being and performance. However, in an increasingly
individualized, high-paced and pressurized society, health intentions often
collide with the need for moments of escape, reward and comfort. As
consumers become more informed about health issues, they are
accommodating the conflicting needs in an increasingly calculating debits and
credits approach to their lifestyle.2
I n a d e b it s a n d c r e d it s w o r ld o c c a s io n s b e c o m e s k e y
Consumer behavior continues to polarize between a focus on functionality,
convenience and health at more routine moments and pure uncompromising
indulgence at special, escapist or reward occasions. As a result, it becomes
1
DATAMONITOR Market Analysis Experts Future Briefings Debit and Credit, Balancing health and
pleasure
2
ibid.
22
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increasingly important to look beyond the traditional one-dimensional focus on

consumer groups and towards consumer occasions.3
For cooking aids, wherein MSG or sodium content are being watched out for,
consumers would be pleased to know that manufacturers are conscious of the
allowable dosage in every unit. There are several wellness campaigns from
different manufacturers that would promote what is good for you. In the case
of MSG, according to expert opinions on monosodium glutamate by Steve L.
Taylor, Ph.D. and Susan L. Hefle, Ph.D. of the Food Research Allergy and
Resource Program, Institute of Agriculture and Natural Resources of the
University of Nebraska, Lincoln:
MSG is a flavor enhancer that is added to many foods but which also occurs
naturally. MSG is the sodium salt of one of the most common amino acids in
the human body MSG occurs naturally in virtually all foods.4
4 .3 T e c h n o lo g ic a l F o rc e s
4.3.1 OPPORTUNITY: Increasing use of the Internet
Internet usage in the Philippines has been growing rapidly although penetration
rate still remains low. Statistics on the countrys Internet usage are important
decision-making variables for the government and companies doing business in the
Philippines. Companies in the cooking aids industry are able to create websites that
give customers nutritional information as well as a variety of recipes that use their
cooking aids to create nutritious and delicious meals.
4 .4 P o lit ic a l, L e g a l a n d G o v e r n m e n t F o r c e s
4.4.1 THREAT: Political Instability
Because of its history of people power and various EDSA uprisings, the Philippines
is considered politically unstable. Charges of graft and corruption are constantly
3
ibid
4
DATAMONITOR Market Analysis Experts Future Briefings Debit and Credit, Balancing health and
pleasure
23
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being hurled at the current government and while the president controls the
congress the possibility of impeachment though distant still looms over her. The
extent of graft and corruption throughout the government poses a threat to
multinational companies like Sarap who import many of the ingredients.
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5 Industry and Competitive Analysis
5 .1 I n d u s t r y A n a ly s is
5.1.1 THREAT: Growth of the Flavorings Category whilst the

Packaged soups Category is Flat
The packaged soups industry is Php 2 Billion in size. According to Global Market
Researchs Advisor, the packaged soups market has been experiencing a slight
setback as far as category growth is concerned, primarily because of the shift of
the growth to the flavorings category which is currently Php1 Billion in size and is
growing aggressively.
F ig u re 7 : B a s ic S e a s o n in g s C a te g o ry G ro w th
Soup and Flavorings Category Growth

Jan 2005 Jun 2006
Category Sales
250,000,000
0% MAT Growth
200,000,000
150,000,000
+68% MAT Growth

100,000,000
50,000,000
-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2006 2006 2006 2006 2006 2006
Cubes Flavorings
Source: Global Market Research Advisor
The aggressive and rapid growth of flavorings is really a huge threat to the
packaged soups industry, especially to Sarap who happens to be the market leader
in packaged soups and happens to be a third player in the powdered flavorings
category.
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F i g u r e 8 : F la v o r in g s B u s in e s s S iz e in t h e P h ilip p in e s
With a flavorings market rapidly growing and a packaged soups category that is
flat, flavorings might sooner or later overtake the packaged soups market and this
is not far from happening since it has already happened in other countries, where
powdered flavorings were able to overtake the packaged soups business as far as
market dominance is concerned. This event might also happen in the Philippines.
In fact, the very phenomenal birth and aggressive growth of flavorings into the
market mimics exactly what transpired in other countries. However, unlike the
Philippines who sees this coming, other countries did not have any hunch of what
was happening to their basic seasonings business.
This is a similar threat being faced by the Sarap packaged soups business in the
Philippines but with the familiarity of this occurrence, it is able to ready itself to
defend its market leadership in the packaged soups category.
5.1.2 OPPORTUNITY: Lack of Differentiation Amongst Cooking Aids

Brands
In the minds of consumers, there is the need to reinforce branding and

communication since differentiation amongst existing cooking aids brands is weak.
Though there has been a lot of work done to help consumers distinguish which is
which, there still lies the opportunity to really dominate and furthermore, own the
category in the minds of our consumers by a single-minded strong brand
proposition.
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5.1.3 THREAT: Versatility Proposition of Competitors
Appropriate for any kind of dish and suitable for everyday cooking needs are
versatility characteristics that competitors, both Misan and Yummy want to own in
the minds of consumers. Whereas Saraps strategy is focused packaged soups for
soupy dishes and flavorings for meatiness, criteria is very distinguished from the
rest and this is evidently shown when consumers are able to associate Sarap with
these characteristics.
F ig u r e 9 : B r a n d I m a g e P r o file
Source: ATP (Advance Tracking Program)
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5 .2 F i v e F o r c e s o f C o m p e t i t i o n M o d e l
Threat of
New Entrants
LOW
Bargaining Power Rivalry among Bargaining Power

of Buyers Existing Com petitors of Suppliers
LOW HIGH LOW
Threat of
Substitute Products
HIGH
In evaluating the Sarap Philippines packaged soups retail business using the five
forces of competition, it can be said that there is no middle ground in this category.
Primarily because of the complexity, there is low threat from new entrants, whilst
both buyers and suppliers have low bargaining power. The real and bigger threats
are those that come from substitute products and somehow, from existing
competitors as these are one in the same companies that manufacture both
commodities. This is also probably the same five forces evaluation of any fast
moving consumer goods product such as the packaged soups.
5.2.1 Threat of New Entrants: Low
Entering into the packaged soups business would require huge capitalization
because not only does it entail some sort of technology that can actually transform
all the ingredients into a packaged soup but the whole production line that would
eventually yield the finished goods. Also, other corresponding support that it would
require to ensure success in bringing it to market would also mean more
investment and resources.
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S a ra p
A new entrant would be competing with the big players, well-entrenched into the
market and are actually brands of stable multinational companies such as Sarap,
Yummy and Misan.
Given this, it only means that the players in the market are well aware of their
position vis--vis existing players in the industry. They are able to manage
competition and the market may be considered as sizeable, measurable or for the
market leader, Sarap is able to confidently say that they are the market. However,
it may also run the risk of underestimating new players to come in and give them a
run for their money.
5.2.2 Bargaining Power of Buyers: Low
Most consumer goods products have the liberty to design their brand mix without
limitations or subject to the mercy of buyers as long as it is sound enough. By
sound it simply means that the mix is designed for the right target consumer and
this is most evident in the 4 Ps of marketing product, price, place and
promotion.
However, for a consumer goods product such as Sarap, the inputs of buyers are
still held important. This is most evident in the way it values feedback for a product
that is just about to be brought to market, a product that is already out and doing
very well and most especially for a product that is on the rocks. The danger with
this is that if buyers inputs, customers and consumers alike are taken for granted,
the brand mix put together just might be off as far as filling in the gap or
answering a consumer need is concerned.
5.2.3 Bargaining Power of Suppliers: Low
Regional sourcing is enjoyed by brands that are managed by multinational

companies because these companies have the muscle to put together volumes
from several countries all over the world and use it as a leveraging factor to get
the best deals from the supplier or country from anywhere in the world. Given this
worldwide phenomenon brought about by free trade, it makes it easier and
cheaper for the manufacturer to acquire the raw materials and other supplies it
needs to produce the finished goods where it is cheapest then produce it in the
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market that would also be wisest in terms of cost and regulations which then yield
the finished goods that will be shipped and sold to the different markets all over
the world.
In the traditional buying practice by manufacturing companies, they are able to

have and sustain partnerships with their suppliers. Partnership may be in terms of
the bargain price given to them and other non-monetary terms as well such as
customer service, the sharing of the same vision, and the like. This is quite difficult
or it becomes more challenging given that the suppliers in the new world are
separated by bodies of water. Hence, the relationship becomes purely supplier-
principal in nature.
5.2.4 Threat of Substitute Products: High
Every consumer product should always innovate and want to be better not only
because it is a promise it has made to its consumers the moment they brought
their product to market but there is the reality that substitute products will always
try to make customers switch to a cheaper or better alternative.
It can be said that the packaged soups business is under-attack by the powdered
flavorings category. This new player is a big threat since it is aggressively growing
and eating up into the shares of the packaged soups market. When this happens,
value lost is a risk that the packaged soups market is faced with because it means
there is not much differentiation in terms of usage.
5.2.5 Rivalry Among Existing Competitors: High
With the whole competitive activity of stealing shares from competitors, the very
existence of competition motivates all players to be the best there can be in the
category. Continuous improvement is definitely an advantage that consumers can
expect from their leading brands since battling with other big players in the
category is an everyday reality that every brand wakes up to. Saraps dominance
in the category is something that is very much valued and watched out for by the
brand management team.
In a high-heat category such as packaged soups, brand switching is not a far-

fetched possibility since this is a very vulnerable category. Vulnerability in the
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S a ra p
sense that once one stops making noise or buzz in media or on-ground, further
aggravated by competition, shares are sure to be at risk.
The fact that Sarap is always present above-the-line or running some activity in-
store, shows it wants to always stay top of mind amongst consumers. Women refer
to it as their best friend in cooking. Oftentimes, it is part of their ingredient list
and this is because Sarap has always reminded women about the value of Sarap
packaged soups. This place however can and will be easily foregone if competition
such as Yummy and Misan, both two big and very able players decide to give Sarap
a run for their money. At the end of the day, all these are brands that claim to be
the best and say that they have the ability to deliver the results. It only takes a
consumer to try and experience it once for them to decide what brand to continue
purchasing. Also, losses cannot only be quantified for current markets but for
possible new category entrants as well.
5 .3 C o m p e t i t i v e P r o fi l e M a t r i x ( C P M )
S a ra p M is a n Yum m y
C R IT IC A L S U C C E S S F A C T O R S
Wt Rating Score Rating Score Rating Score
Product Quality &
1 0.30 4 1.20 2 0.60 3 0.90
Performance
Effective Sales
2 0.20 3 0.60 2 0.40 1 0.20
Distribution
3 Market Acceptability 0.15 4 0.60 1 0.15 2 0.30
4 Brand Management 0.10 4 0.40 2 0.20 2 0.20
5 Customer Loyalty 0.15 3 0.45 2 0.30 2 0.30
6 Pricing 0.10 2 0.20 4 0.40 3 0.30
TOTAL 1 3 .4 5 2 .0 5 2 .2 0
Note: weight score: 0.0 (not important) to 1.0 (very important)

Rating score: 4= major strength, 3= minor strength, 2= minor weakness, and 1= major weakness
In determining competitive superiority of the players in the category, the following

critical success factors have been identified:
1. Product Quality & Performance: The true measure of a brands commitment to

deliver what the consumer expects because products are bought or in marketing
they say brands are hired to answer a need. Hence, the utmost consideration for
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a products success is its ability to play the part which is mirrored in its quality and
performance.
Sarap packaged soups was able to garner market leadership primarily because
of product quality and performance. In several consumer tests, it does not fail
to deliver the best broth savouriness results vis--vis competitors and so it got
a score of 4.
Yummy packaged soups is a far second player in the packaged soups category.
It got a score of 3 only because in the absence of Sarap, it will be the go-to
brand to fulfill the need for packaged soups especially in broth preparation.
Misan got a score of 2 because though it is categorized to compete in the

packaged soups market its format is in powder form and the distinct qualities of
a packaged soup versus powder are quite obvious which is why the whole
Sarap campaign of Sarap worked.
2. Effective Sales Distribution: The key to success for a consumer goods product
such as the packaged soups is availability in all channels. In the Philippines,
downline channels such as sari-sari stores are very crucial. Whereas other channels
such as supermarkets, groceries and market stalls also play a significant role for it
caters to a different set of shoppers.
In Global Market Research, effective sales distribution is actually measured by

what they call Numeric In-Stock or NIS. With a given universe, it will give you data
on how widely distributed your product is. Another tier of analysis on effective
distribution is the Weighted In-Stock or WIS reading which will generate quantities
in each distribution point. An indication of whether or not there is enough stock
cover on-shelf or in the stock room.
An accounts acceptability however greatly depends on offtake. This is sometimes

referred to as secondary sales, our customers sales to their customers (our end-
consumers). Indirectly, offtake is also indicative of shelf turnover, how often do
retailers replenish their stocks on-shelves. No retailer would be willing to purchase
products that are slow moving or worse, not moving at all because their shelves
would be useless in terms of income generation. This may be the case for products
that are not relevant, hence, do not fill in a need or in most cases the demand for
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that product is being monopolized by a bigger player as the case with Sarap
packaged soups.
F ig u r e 1 0 : N u m e r ic I n - S to c k T r e n d e d C o m p a r is o n b y C h a n n e l
Junichero
Vane
Blair
Sarap got the highest score because it dominates the market and is more often
than not present in all channels. In fact, if there was only one brand being
carried by the trader, it would surely be Sarap. However, it only got a score of
3 because there are still opportunities for improvement as far as distribution is
concerned, most especially in downline channels. This is because of practical
reasons - Saraps distribution strategy does not rely on direct distribution only
to get its products in the stores of all of the accounts especially far-flung
downline channels. Its distributors profitability is compromised beyond a
certain proximity limit. Thus, Sarap had to explore other ways and means to
get its products in the most crucial channels (i.e. sari-sari stores).
Team Sari Sari is an in-direct distribution (IDD) strategy that caters to sari-sari
store owners who prefer to buy their stocks from nearby groceries rather than
being serviced directly by cash van sales. This solution does not only provide
answers to Saraps distributors profitability dilemma but rather it was also able
to give the sari-sari store owners the liberty to come and go or rather,
purchase what they need and when they need it. Furthermore, since Saraps
Team Sari Sari is targeted to a captured and relevant market (sari-sari store
owners), they were able to design the whole program in such a way that it talks
to them in a manner that would be clearly understood and appreciated. It was
designed to be a free membership and earn points whenever you buy type of
scheme. Thus, even the prizes for redemption are exactly what the sari-sari
store owners want and need. This is a brilliant way to temporarily hold off the
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need to cover stores directly. However, there is still no substitute for direct
coverage because it not only allows one to sell per se but rather, it also gives
Sarap the edge to merchandise and to create partnerships with traders through
our regular visits. Eventually, this is still the direction where Sarap distributors
want to lead to as a key distribution strategy. It is just a matter of time or
rather a strengthening of portfolio that needs to be done so that with every
trip, it is well worth the distance because Saraps distributors would have sold a
significant amount because most if not all the products they carry are relevant
in the eyes of its traders or more importantly, to its traders customers, its end-
consumers.
Yummy packaged soups and Misan both got a score of 2 because though these
brands are carried by companies that also have the muscle or the capability to
distribute, they lost against Sarap for the reality that oftentimes, traders have
a limited budget and since Sarap is pretty much the category in itself or has the
greatest demand, the trader would tend to just purchase Sarap. It still got a
score of 2 because there are also some traders who would want to have at least
2 or 3 other brands apart from the market leader in their shelves to be able to
also cater to customers of Yummy and Misan or for new customers, to give
them a choice amongst the 3 category players.
3. Market Acceptability: An indication of a brands success is market acceptability.

It signals dominance and stronghold into the category. More importantly, market
acceptability is also an indication of consumer trust in the brand.
Sarap packaged soups is market leader in the packaged soups category with
over 90% market share it got a score of 4.
Yummy packaged soups got a score of 2 because it is next to Sarap with an
estimated 8% market share.
Misan has negligible share values at about 2% and so it got a score of 1.
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F ig u re 1 1: M a rk e t S h a re s ( P a c k a g e d s o u p s M a rk e t)
Junichero
Vane
Blair
4. Brand Management: A brands performance is highly dependent on the

marketing plan that companies design for it. Plans are dependent on company
strategies. Not all plans are actually geared to succeed, some are designed to fail.
As absurd as it may sound but brands, especially those that are part of a portfolio
are managed to play a part in the bigger scheme of things or rather, to deliver not
just brand targets but more importantly, business targets. Brands are a means to
achieve and resources are allocated to do brand management. Whilst brand
management may pertain to only managing a brand or a portfolio of brands, there
are also ways on how to go about it especially given dynamic times, companies
should be flexible enough to adapt to changing times versus traditional ways of
doing things.
Sarap is the biggest food brand and the packaged soups category is considered
to be the core category being managed under the Sarap brand. This is a highly
valued brand and category so the company gives more than what it requires to
ensure superb brand management. Given the new structure, Sarap got a score
of 4. This is needed in order to compete. On people resources, the local Sarap
brand management team or brand building team comprise of a group brand
manager with several brand managers that manage the different categories of
Sarap and a particular region as well. On packaged soups alone, it has a brand
manager looking after the whole range and a dedicated resource looking after a
specific variant for a specific region. In conjunction to this local structure,
Sarap, being multinational in nature has brand development counterparts in the
region who ensure that all details pertaining to the brand are tied-up to the
global brand strategy.
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Yummy packaged soups got a score of 2 because the brand Yummy is just
managed as one of the many brands bulked together in the food and culinary
milks business unit wherein there is a head leading the team, under him is the
food group product manager who has respective managers for the different
categories meal solutions, flavor world, noodles, etc. Depending on the size
of the category, assistant brand managers and executives are assigned.
There is no marketing director, since each business unit operates on its own
and reports directly to the CEO. This structure is unique but tends to be missing
out on the opportunistic advantages that one category can benefit from another
since the business units are separate entities altogether and the only point of
reconciliation is already at the CEOs level whose concern is too many.
Misan got a score of 2 because the way the brand management team is
structured is still a bit on the traditional side though wisely integrated between
sales (category) and marketing (section). These functions are supported by
brand managers, assistant brand managers and brand assistants. The brand
manager may directly report to the marketing manager in the absence of a
section manager whose function directly relates with the end consumer whilst
the category manager in the sales function coordinates directly with trade
marketing for trader concerns.
5. Customer Loyalty: With the proliferation of all sorts of media and on-the ground
activities, loyalty is so easy to win and lose. Even though market shares are high
and would seem to be stable enough, it still faces a lot of risk. It has been said that
it is easier to make a customer stay because all you have to do is to keep them
happy whereas, if you lose a customer, it would be more difficult to win them back
or to look for new ones.
Sarap packaged soups got a score of 3 for it is able to satisfy and retain its
customers.
Yummy packaged soups has a following and so it got a score of 2 being second
player next to Sarap.
Misan also got a score of 2 because interestingly enough, this player has a
niche market following and probably because of its product design, an Misan
variant for a particular soupy dish. With this strategy, it was able to create and
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sustain its own market somehow different from that of what Sarap and Yummy
currently caters to.
6. Pricing The only criteria where Sarap got a 2 rating is in pricing. Below is a
summary of competitive pricing for comparison:
T a b le 3 : C o m p a ra tiv e P ric e L is t
P r ic e P e r P r ic e P e r
% A b s o lu te
C a s e I n c l. P ie c e I n c l. SRP
B R A N D / D E S C R IP T IO N T rad e T rad e
Tax Tax (p er p c)
M a r g in M a r g in
(LPA T /cs) (LPA T /p c)
S A R A P (a s o f O c to b e r 2 0 0 6 )
SAR AP PACKAG ED SO UPS

PACKAGED SOUP 12X24X22 G 2,523.25 8.76 9 .5 0 8% 0.74
PACKAGED SOUP PANTRY 72X66 G 1,886.98 26.21 2 8 .0 0 7% 1.79
Y U M M Y (as of Feb 2 0 0 6 )
YUM M Y PACKAG ED SO UPS

M IS A N (a s o f F e b 2 0 0 6 )
M IS A N
Source: Sarap Foods Trade Marketing Group
Saraps pricing is affordable but in comparison to its competitors, it is the most

expensive, both for the trader and the consumer. For the same commodity, the
trader would have earned more since the margins are bigger with Yummy and/ or
Misan, whilst the consumer would have spent less. However, since Sarap has
established its category superiority well enough, consumers are willing to pay a bit
more for a trusted brand such as Sarap packaged soups and traders are willing to
lose a few centavos compensated by volume sales.
5 .4 C o m p e t i t o r s
There are 2 major competitors considered in the packaged soups industry and
these are Yummy packaged soups manufactured by Yummy Philippines Inc. and
Misan. However, posing as a huge threat to Saraps packaged soups business and
market leadership more than its existing competitors in the category are
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flavorings, of which Misan is the market leader with 67% market share and Yummy
is a far-second while Sarap ranks 3rd in this category.5
Whilst market shares indicate positions in the category, this is further defined by
the growth registered by each player. Hence, not only is the category in itself
expanding but the players, due to its own efforts as well also pose huge growth
themselves.
In terms of communication, it had become so difficult for consumers to tell the

difference already since airwaves are bombarded by the same thing and hence
creating enough jolt to really make the market react in a way that made the
flavorings grow at a very rapid pace.
In 2006 alone, there had been so many activities done by the 3 players both
above-the-line and below-the-line, making competition stiffer than ever before and
as a result, Saraps shares suffered in light of not just packaged soups but
combined packaged soups plus flavorings.
F ig u r e 1 4 : C o m b in e d P a c k a g e d s o u p s + F l a v o r i n g s S h a r e s o f E a c h P l a y e r
Combined Basic Seasonings Shares of Each Player

Jan 2005 Jun 2006
11
24
65
5
Global Market Research Advisor
38
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5.4.1 Misan Corporation
In Misans company profile, it is said that their passion is to produce the best food
seasoning in the world and make it available in every Filipino home. In 1962, Misan
was locally produced. Misan Flavor Mix was launched in 1991.
Today, Misan Philippines Corporation ranks as one of the top 200 corporations in
the Philippines. Misans network has grown to 8 regions overseeing the operations
of 31 sales stations and 9 depots. Misans slogan is associated with good food and
good life.
5.4.2 Yummy Philippines, Inc.
In Yummy Philippines, Inc 2005 corporate profile, it is said that Yummy is proud to
bring the best food throughout the stages of Filipino consumers lives. When it
started in the 1960s, Yummy used to distribute several categories that are not
necessary in line with food just to keep the company afloat due to strict
government regulations on importation. In 1988, Yummy became a wholly owned
subsidiary brand by Yummy SA. Today, Yummy produces and markets products
under some of the countrys well known brands. Its product range has expanded to
include coffee, milk, infant nutrition, infant food, beverages, non-dairy creamer,
food, ice cream and chilled dairy, breakfast cereals, confectionery, and pet care.
Over time, Yummys quality and affordable products have become strong brands,
number 1 or number 2 in their various categories, and a part of the Filipino way of
life.
Competitive rivalry amongst the three multinational companies is very

professional. In fact, the dynamic activities and creative of which may be greatly
attributed to the healthy competition that these players pose against each other.
The very brands and the categories that are being considered in this study
experiences the typical yet expected surprises in any competitive game.
Sarap despite being market leader experiences a lot of challenges mostly due to
the Yummy and Misans expertise in the category. This puts more pressure to the
leading brand because it cannot afford to slip in any way or else competition may
do some drastic moves that may take away its reign and leadership.
Yummy being a far second players strategy is to not allow Sarap to monopolize
the market. For years now, it has kept its packaged soups in the market despite
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the difficulty to grab share from Sarap. It has not had any massive campaign over
packaged soups but through brilliant basics availability in retail channels, it has
established its presence. It also tries to be a strong player in other categories as a
way to attack Saraps core business. They have been fairly successful with it with
Sarap which has tremendously grown even faster than the whole category.
Misan on the other hand is an Misan brand that is more of a niche market player.
This may be just 2% of the market now but it should be taken for granted as this is
also how Misan started too. Knowing especially that Misans expertise is in savoury
and cooking aids, it is a given that Misan very well knows this game.
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6 External Factor Evaluation Matrix (EFE)

W e ig h t e d
Key External Factors W e ig h t R a t in g
S co re
O P P O R T U N IT IE S
Less but frequent purchases of goods by

1-E 0.05 2 0.10
consumers
Fast-paced lifestyle call for 'quick and
2-SC 0.15 4 0.60
easy' dependable solutions
More women are joining the work force

3-SC 0.10 3 0.30
and are becoming more independent
Significant distribution of households in

4-SC 0.10 2 0.20
Still low 'dish penetration' of packaged

5-SC 0.05 3 0.15
soups in regularly cooked soupy dishes
Lack of 'Differentiation' amongst cooking

6-C 0.10 2 0.20
aids brands
7-T Increasing use of the internet 0.05 3 0.15
THREATS
Decrease in food expenditure at the

1-E 0.05 2 0.10
expense of other commodities
People are becoming more and more
2-SC 0.05 2 0.10
health conscious
3-C Growth of the flavorings category 0.15 2 0.30
4-C Versatility' proposition of competitors 0.10 2 0.20
5-P Political instability 0.05 1 0.05
TO TAL EFE SCO RE 1 .0 0 2 .4 5
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive
O P P O R T U N IT IE S
1 - E L e s s b u t fre q u e n t p u rc h a s e s o f g o o d s b y c o n s u m e rs
Saraps rating of 2 is due primarily to the dilly-dallying position it has consciously
taken since it is one reality that they are not riding on just yet especially with the
tingi phenomenon growing and it clearly is a manifestation of downsizing in
purchasing habits of basic commodities. It remains to be an opportunity because in
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other countries Sarap has had existing technology and capability to produce
smaller SKUs in the event that the management in the Philippines decide to get
into the trend then it should not be a problem anymore. With a category that is flat
and sales at risk, then a strategy such as this would most likely merit an increase
in volume to make up for losses and even growth due to the downsizing trend.
2 - S C F a s t - p a c e d l i f e s t y l e c a l l f o r q u i c k a n d e a s y d e p e n d a b l e s o l u t i o n s
Sarap got a perfect 4 rating for this factor because the very products of Sarap sells
convenience as a given apart from the functional benefits that come with the
product.
3 - S C M o r e w o m e n a r e jo in in g t h e w o r k fo r c e a n d a r e b e c o m in g m o r e in d e p e n d e n t
With Saraps campaign on empowering women and the whole marketing strategy
of positioning Sarap as a womans Best Friend, a high score of 3 is given them
since it was smart for Sarap to talk to the woman and it obviously opens a lot of
opportunities for the brand. However, consistency is key to make a campaign
create an impact. Therefore, it is high-time for Sarap to consider improving their
strategy on talking to the woman and this pertains to maximizing communications
in all relevant mediums.
4 - S C S ig n ific a n t d is t r ib u t io n o f h o u s e h o ld s in V is a y a s a n d M in d a n a o a r e a s
Sarap is given a rating of just 2 because it is only recently that it has started to
position itself to address regional differences and the recognition of VisMin
potential is not yet given much importance as it should be. However, directionally,
Sarap is headed to valuing the regions depending on its potential and the
company is geared to even design products that would make it big in those
regions.
5 -S C S t ill lo w 'd is h p e n e t r a t io n ' o f p a c k a g e d s o u p s in r e g u la r ly c o o k e d s o u p y

d is h e s
As done in the past, Sarap will do a dish specific campaign to communicate that
Sarap is best for that particular soupy dish. Knowing especially that it takes a
couple of months with high campaign levels before a consumer can fully absorb the
message that is being conveyed and would tend to show an upward trend in sales.
With this as a strategy that is currently employed, Sarap got a rating of 3.
However, there is still room for improvement for dish-specific campaigns. It should
be done one at a time allowing the consumer to be more receptive and the
campaign to be more effective for it to create a bigger impact to the business.
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6 - C L a c k o f 'D iffe r e n t ia t io n ' a m o n g s t c o o k in g a id s b r a n d s

A rating of 2 is what Sarap got since this very big and important marketing activity
has temporarily taken a back seat not for the wrong reasons but rather, a
comprehensive, well-thought of differentiation strategy is being developed. Once
the brand is ready, it shall immediately bring this to the market and activate it in a
way never done before.
7 - T I n c r e a s in g u s e o f th e I n te r n e t
Internet usage in the Philippines has been growing rapidly although penetration
rate still remains low. Statistics on the countrys Internet usage are important
decision-making variables for the government and companies doing business in the
Philippines. Companies in the cooking aids industry are able to create websites that
give customers nutritional information as well as a variety of recipes that use their
cooking aids to create nutritious and delicious meals. Sarap was given a rating of 3
because its website is quite attractive with many recipes.
THREATS
1 - E D e c r e a s e in fo o d e x p e n d itu r e a t th e e x p e n s e o f o th e r c o m m o d itie s
The brand can probably do an emotional campaign about the value of food to
arrest the decline. This campaign is very much possible and interesting but
something that Sarap has not yet ventured into so a rating of 2 is given the brand.
2 - S C P e o p le a r e b e c o m in g m o r e a n d m o r e h e a lt h c o n s c io u s
Saraps rating is at 2 since nothing has been done yet. However, with the vitality
passport well on its way, it shall give the quality assurance consumers need.
3 - C G r o w th o f th e fla v o r in g s c a te g o r y
Though Sarap is also a player in the powdered flavorings category, it just got a
score of 2 since amongst the 3 players in the industry it currently is the 3rd player.
All its efforts are struggling to improve performance, hence shares. However, it is
not enough. It needs more than what it currently has and is doing to be able to
lessen the risks that is being posted by this huge threat.
4 - C V e r s a t ilit y p r o p o s i t i o n o f c o m p e t i t o r s
Saraps strategy does not entail claiming versatility, rather, it will be single-minded
with its communication focusing a particular product to address a specific need.
Therefore, it just got a rating of 2 since not much is being done regarding this
external factor and this is deliberately by design.
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5 - P P o lit ic a l in s t a b ilit y
The extent of graft and corruption throughout the government poses a threat to
multinational companies like Sarap who import many of the ingredients. Sarap was
given a rating of 1 because as a multinational company its policy has been to stay
clear of political influence and has not done anything about this threat.
C o n c lu s io n / S t r a t e g ic I s s u e s
In conclusion, with Saraps external factor evaluation garnering a score of 2.55 its
position is middle ground since there lays a lot more opportunities yet to be
realized and threats to be managed. While it is addressing the desire of people for
quick and dependable solutions it needs to do more to grow the Visayas and
Mindanao markets.
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7 In te rn a l A sse ssm e n t
Likewise, there are several internal forces that affect Saraps status in the
market. These are considered to be the brands strengths and weaknesses and
it shall be established and considered to be as the foundation for the brands
performance.
7 .1 C u l t u r e
7.1.1 Values
Unlike most cooking brands in Asia whose focus is on the dish. Sarap
focuses on the transformation and enhancement of ingredients.
o Sarap is about the creation of food, that appeals to the cook by
enhancing her engagement in her cooking. Sarap speaks to the Asian
woman in a way that conveys profound understanding and respect;
Sarap speak to the soul, not the role.
o It wants to show an empowered woman who can judge her own result -
context of a modern woman, cooking aid, transformation, enhanced
effect, involvement, gratification, self-esteem.
So Sarap is very different from its competition on several levels, particularly

in the way it portrays the woman who is cooking and the concrete level of
the function of the product.
All these set Sarap apart:
They are traditional, Sarap is modern.

They compete with the cook, Sarap satisfies the cook.
All these differences are established to actively position Sarap against

competitors and to establish what the brands values are all about.
7.1.2 Corporate Spirit
O u r C h e fm a n s h ip
Our competence to create recipes, flavour and transformation is in our
products. Our chefmanship rests on our 130 years cumulative experience in
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creating products containing perfectly blended natural ingredients and

connecting to many cuisines in the world.
T h e S A R A P e ffe c t
Saraps products transform ingredients through cooking in a way that can
be experienced via the senses: tasting, seeing, smelling and feeling. This
moment of transformation, is branded the SARAP effect.
7 .2 M a n a g e m e n t
7.2.1 Management System
Sarap is a brand managed under Sarap Foods, a separate business unit

from that of Home and Personal Care and Ice Cream. However, there are
several systems that are shared across all business units as a discipline and
as a Sarap standard in terms of ways of working.
S T R E N G T H : E ffic ie n t b u s in e s s / b r a n d p la n n in g p r o c e s s
Sarap being a multinational company is operated via multi-faceted
disciplines that are rolling in nature. Weekly activities are all linked up
together and cross functional teams are involved in different phases. This
pertains to the operational day-to-day aspect of the business.
This is different from how brands are managed especially for a marketing
company such as Sarap. Its rolling calendar is not on a weekly basis but
rather in a span of 18 months. There is more regional involvement since the
very brands existing in the country such as Sarap are global in nature and
strategies emanate from one brand key and is translated and brought to life
locally.
7.2.2 Strategy
The 3 key strategies being employed currently are as follows:
Dish-specific campaigns communicating clearly what the product is and what

it is for is a strategy that seems to be doing the brand very well. Given that this
has worked in previous campaigns (Pork packaged soups sa Monggo) and there
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are several campaigns (Beef packaged soups sa Nilaga & Fish packaged soups
sa Fish Tinola in VisMin) currently running with that as a core strategy. Sarap
should continue using this as a strategy in the future since it has deemed to be
highly effective. The value of being single-minded and focused in its
communication is that consumers are able to understand and appreciate what
is being communicated in its entirety whereas if a lot of messages are being
communicated, there lays the risk of being half understood and appreciated or
worst, not at all.
Woman Empowerment by talking to the woman and establishing the reason

for the brands being which is to address the womans needs hence, its brand
capsule A Womans Best Friend does a lot of good to the brand and to the
business. It is able to position itself in a way that understands its target market
in a deeper, more holistic level rather than becoming just another consumer
product waiting to be picked up from the shelves. This strategy is evident in all
above-the-line and below-the-line activities of the brand.
STRENGTH: Regional Marketing Saraps performance in every region varies

and the categories that are delivering exceptional growth and suffering the
most are also highlighted in area business reviews. It therefore made a lot of
sense to position the brand team members to specific areas/ regions that are
most relevant to the categories they are managing. Hence, apart from the
category management role that is tasked to each individual, there is also a
corresponding area management role that they would have to fulfil for the
brand as well.
o Sinigang Brand Manager North Luzon
o Soups Brand Manager Greater Metro Manila + Modern Trade
o Flavorings Brand Manager South Luzon
o Packaged soups Brand Manager Visayas & Mindanao
7.2.3 Organization
S a ra p F o o d s M a n a g e m e n t T e a m
The foods executive committee comprise of the following:
o Foods Managing director, who also represents local marketing
o Market Research manager
o Media manager
o Customer Development (Sales) manager
o Human Resources manager
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o Finance manager
o Supply Chain manager
o Corporate Development manager
S a ra p B ra n d M a n a g e m e n t T e a m
Regional marketing as a strategy with clearly defined roles for category/ area
management is currently how the brand management team is structured apart
from the group brand manager heading the whole Sarap brand building team.
7 .3 M a r k e t in g
7.3.1 Product
A Sarap packaged soup is Siniksik sa Sarap to give that perfect broth taste
to your soupy dishes. It is made from real ingredients and choice spices. It
comes in 6 variants: Chicken, Pork, Beef, Shrimp, Fish and Tamarind.
7.3.2 WEAKNESS: Pricing
T a b le 3 : C o m p a ra tiv e P ric e L is t
P r ic e P e r P r ic e P e r
% A b s o lu te
C a s e I n c l. P ie c e I n c l. SRP
B R A N D / D E S C R IP T IO N T rad e T rad e
Tax Tax (p er p c)
M a r g in M a r g in
(LPA T /cs) (LPA T /p c)
S A R A P (a s o f O c to b e r 2 0 0 6 )
SAR AP PACKAG ED SO UPS

Y U M M Y (as of Feb 2 0 0 6 )
YUM M Y PACKAG ED SO UPS

M IS A N (a s o f F e b 2 0 0 6 )
M IS A N
Source: Sarap Foods Trade Marketing Group
Saraps pricing is affordable but in comparison to its competitors, it is the

most expensive, both for the trader and the consumer. For the same
commodity, the trader would have earned more since the margins are
bigger with Yummy and/ or Misan, whilst the consumer would have spent
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less. However, since Sarap has established its category superiority well
enough, consumers are willing to pay a bit more for a trusted brand such as
Sarap packaged soups and traders are willing to lose a few centavos
compensated by volume sales.
7.3.3 Market Distribution
In terms of geographic distribution of accounts, 47% of all accounts are in

Luzon, 38% are in Visayas and Mindanao, with 19% contribution each.
Greater Manila Area or GMA accounts for 15%.
7.3.3.1 WEAKNESS: Weak dominance in VisMin areas
Geographically, the VisMin areas show that there can still be opportunities
for improvement as far as distribution is concerned. Especially in the Central
East Visayas and Mindanao areas where NIS distribution is just half of total
national.
T a b le 4 : U n iv e rs e o f A c c o u n t s (Y e a r 2 0 0 3 )
T o ta l SM GS SSS MS
TOTAL
P H ILIP P IN E S 5 5 6 ,7 3 8 824 4 ,9 5 0 5 0 9 ,3 4 5 4 1 ,6 1 9
1. GM A 8 4 ,6 9 2 288 961 7 9 ,7 7 9 3 ,6 6 4
2. Luzon 2 6 0 ,6 6 6 278 2 ,5 6 5 2 3 8 ,9 3 4 1 8 ,8 8 9
3 . V is a y a s 1 0 4 ,9 8 6 109 849 9 3 ,1 5 3 1 0 ,8 7 5
4 . M in d a n a o 1 0 6 ,3 9 4 149 575 9 7 ,4 7 9 8 ,1 9 1
Source: Global Market Research
7.3.4 Channel Priorities

Packaged soups are actually available in all retail outlets. Retail outlets are
defined to be those that sell 75% of their goods to end consumers. The
different retail channels and its characteristics as identified by Global
Market Researchs retail audit are as follows:
Supermarkets (SM) A large retail store which sells various commodities,

including food, household wares and personal items, arranged in sections. It
has at least three check-out-counters (C.O.C) with cash registers, self-
service/push carts/ baskets are provided, at least 50% of the display area are
grocery items, there are numerous gondolas and mass displays in the area
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which is usually air-conditioned and may have restaurants, refreshment parlors

or food stalls.
Grocery Stores (GS) - Sells more food items relative to other product lines,
presence of 1 or 2 cash registers, smaller than supermarkets, sells generally
the same line of products sold in supermarkets, may or may not have check-
out counters.
Market Stalls (MS) - A sari-sari store inside and at periphery of a market

building. Market Stall X is another type of market stall, which is smaller in
terms of value.
Sari-Sari Stores (SSS) - Small neighborhood stores selling a wide variety of

food and non-food items. Goods are sold by the piece and often by the lowest
possible quantity (tingi). Does not issue receipts to customers. Does not allow
customers to pick things they want to buy - goods in display or in open shelves
are beyond customers reach. Usually sells re-packed items, wherein owner
breaks up manufacturers items into smaller units (e.g., cooking oil, sugar, soy
sauce, vinegar, powdered detergents, sugar, etc.) Stores selling only non-
packed food item such as rice and cereals, fresh vegetables, fish and meat are
not considered as sari-sari stores according to our definition.
Sari-sari stores account for over 90% of the whole retail universe since these
are easier to build and manage, as these are called to be hole-in-the-wall
types of accounts. Whilst Supermarkets may only account for less than 1% of
the universe, it contributes significantly in terms of sales for this industry and
most likely for other goods as well.
7.3.4.1 WEAKNESS: Limited Reach In Downline Channels
By virtue of win-win partnership between Sarap and its distributors, profitability is

kept well-managed in such a way that no activity is to be implemented if it will
compromise profitability. Direct coverage has always been a challenge for Sarap,
especially beyond a certain proximity wherein it does not make sense for a
distributor truck to go the lengths to visit an account that would only purchase a
small value or worst, none at all. Therefore, not until the portfolio of products of
Sarap Foods for downline channels has been improved and chances of making a
sale is bigger then that will only be the time when Sarap distributors will directly
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cover the downline accounts that are outside the coverage within workable
proximity.
7.3.5 STRENGTH: Good Customer Marketing Standards
The structure of Saraps customer development is set up in such a way that good
service is provided to business partners and traders alike. Therefore, there are
account managers dedicated to handle specific accounts or a set of accounts for
modern trade whilst for general trade, there are customer development managers
tasked to look after the distributors business. The make up of Sarap distributors
customers are inclusive of several channels: SMMT (small and modern trade)
accounts, public market stalls and sari-sari stores. For each channel, there are
appointed channel and area channel champions to draw up and implement
strategies accordingly.
7.3.6 STRENGTH: Excellent Market Research Capability
Saraps commitment is to continue knowing its consumer best which makes

market research integral to the brand operation.
Global Market Research Advisor is provided to monitor shares, distribution
performance, growth and many more other brand facts by area or by channel
for any of the categories in our portfolio.
Retail audit monitors retail trends whilst Homepanel monitors household
penetration of a given category or product..
ATP (Advance Tracking Program) monitors advertising effectivity, product and
trial awareness.
Project Sarap and Sunshine are in-house studies that monitor dish penetration.
It measures whether Saraps products are being bought and used by customers
in relevant dishes.
7 .4 F i n a n c e
B r a n d c o n t r ib u t io n t o t o t a l b u s in e s s is in c r e a s in g y e a r- o n - y e a r
Sarap packaged soups is a core business in the Sarap Foods portfolio. With over
90% market share in a Php2 billion market, Sarap packaged soups revenue in
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2004 is estimated at Php1.6 billion and still managed to grow by 7% with an

estimated Php1.7 billion sales in 2005.
FINANCIAL RATIOS 2003 2004 2005
1 L iq u id it y
Current ratio = CA/CL 0.78 0.64 0.74
Quick ratio = CA Inv/CL 0.52 0.39 0.45
2 L e v e ra g e
0.87 1.07 0.95
Debtto-TA ratio = TLiab/TA
6.47 16.28 21.17
LT Debt-to-Equity = LTD/Equity
3 A c t iv it y r a t io s
AR turnover = Rev/AR 5.22 6.19 6.45
Days Receivable = 365/AR turnover 69 59 57
Inventory turnover = Rev/FGInventory 13.6 15.2 16.4
Days Inventory 28 26 25
FA turnover = Rev/FA 42.1 55.6 74.1
4 P r o fit a b ilit y R a t io s
Gross Margin = Rev CGS 70.1% 72.3% 74.6%
Oper exp % = Opex/Rev 55.6% 59.9% 60.9%
Oper margin = EBIT/Rev 14.5% 12.4% 13.7%
ROA = NI/TA 17% 18% 17%

ROE = NI/SHE 84% 34.6% 13.5%
5 G ro w th R a te s %
Sales 8% 9% 7%
Net Income 6% 7.7% 6.2%
7.4.1 Liquidity
The company has low liquidity over the last three years as shown in its financial
statements because it must maintains a reasonable amount of inventory to service
its extensive distribution system throughout the Philippines.
The liquidity ratios above show the companies ability to pay its debts as it comes
due.
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The Current Ratio shows that in an industry such as Saraps, though the ratios are
lower than a typical manufacturing firms, it can be sustained since it is evident in
their inventory management process that they can move inventory and collect
accounts receivables quickly.
The Acid-Test (quick) Ratio shows that amongst the 3 brands, Sarap has better
cash flow management.
7.4.2 Leverage
The leverage ratios identify the level of debt of the different brands/ companies. It
will mirror manner of financing of assets whether through debt or through equity.
It will also show its ability to pay the debts it has incurred.
The Debt-to-Equity and Debt-to-Capital Ratios show whether the business is

financed by borrowings or by equity. The high Debt-to-Equity Ratio shows that
much of the assets of Sarap is financed by borrowings, this position puts the
company in a risky financial position but may be part of a longer term plan.
7.4.3 Activity
The companys accounts receivable turnover of 6.45 is close to the industry

average.
The Accounts Receivables (AR) Turnover Ratio shows that Sarap is not able to
collect as fast as it should but it shows significant improvement as well from 2003
to 2005 as compared to competition who may have too restrictive credit policy and
is easing up a bit probably to give way to sales.
Lastly, the Inventory Turnover Ratio shows that Sarap is able to move its inventory
faster than competition.
7.4.4 Profitability
The Return on Equity (ROE) shows that huge profit was earned on the
shareholders investment.
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The Return on Sales (ROS) or profit margin for the Sarap brand had been dramatic
since it had achieved a 360 turnaround whilst Yummy is more consistently high
and Misan is flat.
The Return on Assets (ROA) shows that Sarap does a relatively good asset
management job.
7.4.5 Growth rates
Sarap has enjoyed a steady, continuous growth in sales and net income in the
range of 6 to 9 per cent..
7 .5 O p e r a t io n s
WEAKNESS:Outsourced Manufacturing
All variants of Sarap packaged soups except for chicken are produced in Thailand.
For several reasons wherein cost is also a part of, Sarap is better off by
manufacturing packaged soups from Thailand as compared to other parts of the
world, including the Philippines. For the chicken variant however, Sarap Philippines
is tasked to commission a toll packer to manufacture it locally and this is primarily
due to the avian flu scare wherein chickens are said to be the carrier of the avian
flu disease and that it is very dangerous and deadly for human consumption. At the
height of the avian flu scare, it was very difficult for Sarap to import the chicken
variant. Hence, it was agreed that it is better if this variant were produced
(sourcing & manufacturing) locally to have more control of and enough
precautionary measures are taken to eliminate the possibility of avian flu in the
nation. With this setup, it takes a while for the stocks to arrive in the country, so
much so that accurate forecast is critical to the business.
7 .6 R e s e a r c h a n d D e v e l o p m e n t
STRENGTH: Vitality passport to promote good for you products

In line with Saraps thrust of adding vitality to life, meeting the everyday needs for
nutrition, hygiene and personal care with brands that help people feel good, look
good and get more out of life, the vitality passport is a gauge whether dietary
guidelines on daily dosage nutrients are being met. Trans fat, saturated fat,
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sodium and sugar is kept within control. For every product, it is rated as better for
you if all 4 are within acceptable levels of consumption. If there is at least 1 that is
kind of within boundary, it is rated as just good for you. However, if at least one of
the 4 is below acceptable levels then it is rated as informed choice.
It is Saraps commitment to manufacture products that are healthy for you and all
these are made to pass the vitality passport with flying colors. Whilst existing
products that are not yet in better for you zone are undergoing reformulation for
improvement in certain nutrient levels without sacrificing quality taste.
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8 Internal Factor Evaluation Matrix (IFE)

W e ig h t
W e ig h
KEY INTERNAL FACTORS t
R a t in g ed
S co re
STREN G TH S
1-MT Efficient business/ brand planning process 0.20 4 0.80
2-M Excellent market research capability 0.15 4 0.60
3-M Good customer marketing standards 0.10 3 0.30
Brand contribution to total business is

4-F 0.10 3 0.30
increasing year-on-year
Clearly defined roles for category/ area
5-MT 0.10 3 0.30
management
Vitality' passport to promote 'good for you'
6-R 0.03 3 0.09
products
W EAKNESSES
1-M Limited reach in downline channels 0.10 1 0.10
Weak dominance in the Visayas and

2-M 0.15 1 0.15
Mindanao areas
Sarap packaged soups is regarded as
3-M 0.02 2 0.04
expensive
Manufacturing of packaged soups is
4-O 0.05 2 0.10
outsourced
T O T A L IFE S C O R E 1 .0 0 2 .7 8
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations,

HR=Human Resources, I= Information Systems R=Research & Devt
The details presented in the internal assessment were very informative in nature.
The aspects discussed thoroughly were the ones that are deemed to be greater
strengths and weaknesses of the company. These are the factors that are most
influential to the brand and so the scores are given as such with the weight as a
way to value impact to the brand and the rating as a way to measure companys
strengths and weaknesses whether it is major or minor. The internal factor
evaluation for Sarap turned out as follows:
1 - M T E ffic ie n t b u s in e s s / b r a n d p la n n in g p r o c e s s
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Efficient planning is integral to every business. Nothing will be achieved if it were

not planned well. There is high risk for error and miscalculation if companies or
even individuals go about without having to plan. Companies nowadays have
strategic management meetings that are regular in nature. It can be slated to
happen monthly, quarterly or annually and is most of the time even coupled with
business reviews to judge if previous plans were implemented, what worked and
what is the best strategy to employ moving forward. Hence, because of the great
importance of planning be it for the business or in this case, the brand, it got a
weight of 20%. Since Sarap is strict in employing and implementing planning
disciplines that are sure to take the business forward, it got a perfect score of 4.
This is reflective of Saraps excellent management standards making it a major
strength.
2 - M E x c e lle n t m a r k e t r e s e a r c h c a p a b ilit y
Companies competitiveness in the game is indicative of how well they know their
business, so much so that they know what they are going to do, when they are
going to do it and where. The ability to know is very valuable and sometimes, it is
even ones edge to get ahead in the game. Hence, because of its importance, it got
a weight of 15% and the rating Sarap got is a high of 4 because in the recent
years, Sarap Foods built their capability on market research with the foresight that
the success of the future will really be hinged upon dishes since no cooking aid
exists without the benefit of it being used in and for a dish which is called the
masterpiece. Apart from the typical researches available through third-party
agencies whose expertise is really on providing accurate and timely information to
practically everyone in the industry, Sarap commissioned the creation of a study
that is for their own use and these are called Project Ethno and Sunshine with
Ethno as the first crack at getting dipstick indication of dish penetration whilst
Sunshine is the monthly monitoring of which. With this, Sarap is able to craft
marketing strategies accordingly thereby maximizing this strength.
3 - M G o o d c u s to m e r m a r k e tin g s ta n d a r d s
They say Customer is King and by it a weight of 10% is given to this internal
factor. With the current structure of customer development and the involvement of
cross-functional teams, a rating of 3 is garnered by Sarap because operationally
this has clearly been somehow a tried and tested strength.
4 - F B r a n d c o n t r ib u t io n t o t o t a l b u s in e s s is in c r e a s in g y e a r- o n - y e a r
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Amidst trying times, it makes it an even greater challenge to deliver when

everything seems to be working against you, hence, a weight of 10%. If and when
one is able to still meet expectations or even go beyond, it becomes an even
greater glory. This is the story of Sarap for it was able to grow by 7% from 2004
and is positioned to grow even more and so a rating of 3 was given. In addition,
Sarap packaged soups is really a core category which means it is very profitable in
itself that it is able to fund its own operations and other categories that rely on it
too.
5 - M C le a r ly d e fin e d r o le s fo r c a t e g o r y / a r e a m a n a g e m e n t
In the old world of marketing, brand managers only look after the welfare of their
respective categories because the management of which is deemed to be their
primary role. In sales, each area has a manager looking after the areas sales
performance in the bigger scheme of things. However, in the new world,
marketeers and sales managers are no longer just responsible for their primary
roles. To ensure success, the spirit of being one has to move the team. Hence,
marketeers are now also concerned with how the brands are performing in terms
of sales in the respective areas and sales managers are concerned with the
performance of the brands in their areas as well apart from just sales. This is
important, so much so that a weight of 10% is given to this internal factor. With
the new regional marketing structure of Sarap in place, its brand managers are
now tasked to look after the brands performance in their assigned areas. This
restructuring is very appropriate therefore making it a strength, with a score of 3.
6 - R V it a lit y p a s s p o r t t o p r o m o t e g o o d fo r y o u p r o d u c t s
With the growing consciousness for what is good for the body amongst consumers,
the pressure for manufacturers to produce products that are healthy continue to
rise. However, since this does not really yet come on top of the must have list at
the expense of convenience, pleasure, and so, it is weighted at 3%. With the
Vitality passport being constructed in response to this and the conscious repair
efforts that the brand is putting behind this initiative, Sarap gets a rating of 3, a
strength that is still being developed.
1 - M L im it e d r e a c h in d o w n lin e c h a n n e ls
Availability is key and in the Philippines, sari-sari stores and other downline
channels account for over 90% of the universe. This is highly crucial since this is
the nearest point of contact to the consumer. Every street in every town might
have at least one or two to cater to the residents in that road. Hence, it is given a
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weight of 10% for reasons that this is the primary sourcing channel especially for
impulse purchases. With the limitation of direct reach by Saraps distributors with
respect to profitability, a score of 1 is given, making it a weakness inspite of
several efforts with indirect distribution but clearly understandable in light of true
partnership between principal and the distributor. However, there simply can not
be anything to replace the value of direct reach because apart from sales, there
are other benefits such as merchandising, relationship building, and competitive
intelligence amongst many others.
2 - M W e a k d o m in a n c e in t h e V is a y a s a n d M in d a n a o a r e a s
Clearly, the VisMin region has established itself to be a different being altogether
from that of North Luzon, South Luzon and most especially GMA. For many years,
Sarap has tried to replicate its successes in the Northern region of the country in
VisMin. However, it was not a repetitive formula and the success remained to be a
mere vision not because it is not a good plan but there are just certain differences
that needed to be acknowledged. With over 40% of the countrys household
population in VisMin, this is as stated earlier, a gold mine waiting to be discovered
and so the weight of 15% to stress on the importance of this internal factor.
However, Sarap just got a score of 1 because though there had been some efforts
already with the current restructuring done to the brand team, this appeared to be
an apparent weakness still because to make it big in VisMin, it indeed meant more
than just addressing the lack of resources dedicated for the region but rather
walking the talk hence, full support should be provided.
3 - M S a ra p p a c k a g e d s o u p s is r e g a r d e d a s e x p e n s iv e
In comparison to competitors, Sarap packaged soups appear to be the most
expensive. However, since this does not cause much of a problem especially for
those who have come to believe and stay loyal to the brand, a weight given this
internal factor is just 2% and Sarap got a rating of 2 making it a minor weakness.
4 - O M a n u f a c t u r i n g o f p a c k a g e d s o u p s is o u t s o u r c e d
With this operational reality that Sarap packaged soups are produced in Thailand
for several business reasons (except for the Chicken variant) and the pressure that
accurate forecasting is a must to have sufficient stocks on hand, a weight of 5% is
given this internal factor. This is a weakness in itself especially if preventive
measures are not taken. It risks advertising without sufficient stocks on shelf or
running sampling efforts that would deplete existing stocks meant for selling.
However, with the relative experience of having to deal with this kind of business
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reality in the past, Sarap has the muscle and the experience to deal with it hence,
a rating of 2 is given.
C o n c lu s io n / S t r a t e g ic I s s u e s
In conclusion, the internal factor evaluation for Sarap show that Sarap needs to
draw on it strengths of efficient business planning process and excellent market
research to address it weakness in the Visayas and Mindanao regions. Its IFE
score of 2.78 reveals that Sarap is only doing slightly better than average internal
position.
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9 Strategy Formulation
9 .1 T h re a ts - O p p o r t u n it ie s - W e a k n e s s - S t r e n g t h s
STRENG TH S S W EAKNESSES- W
1. Efficient business/ brand 1. Limited reach in downline
planning process channels
2. Excellent market research 2. Weak dominance in the
capability Visayas and Mindanao areas
3. Good customer marketing 3. Sarap packaged soups is
standards regarded as expensive
TOWS ANALYSIS 4. Brand contribution to total 4. Manufacturing of packaged
business is increasing year-on- soups is outsourced
year
5. Clearly defined roles for
category/ area management
6. 'Vitality' passport to promote
'good for you' products
O P P O R T U N IT IE S - O S O S T R A T E G IE S W O S T R A T E G IE S
1. Less but frequent purchases 1. Strengthen the selling 1. Explore less cash-outlay
of goods by consumers proposition of Sarap packaged products that will be a more
2. Fast-paced lifestyle call for soups in the minds of viable selling proposition for
'quick and easy' dependable customers & consumers thru ad downline channels (W1, O1)
cooking solutions campaign (S1, S3, S6, O1, O2, 2. Reinforce the superiority of
3. More women are joining the O3, O5, O6) packaged soups in terms of
work force and are becoming 2. Own 'best for soups' as jobs- product quality and
more independent to-be-done for buillion as a performance (W3, O2, O5)
4. Significant distribution of cooking aid (S1, S2, O2, O5) 3. Establish and reinforce brand
households in Visayas and 3. Clearly differentiate Sarap presence and superiority in the
Mindanao areas from competitors (S1, S2, S4, VisMin areas (W2, O4)
5. Still low 'dish penetration' of S5, O6)
packaged soups in regularly
cooked soupy dishes
6. Lack of 'Differentiation'
amongst cooking aids brands
7. Increasing use of internet
T H R E A T S -T S T S T R A T E G IE S W T S T R A T E G IE S
1. Decrease in food expenditure 1. Promote Saraps 'Vitality' 1. Create a viable 'trade story'
at the expense of other campaign amongst consumers to make products available in
commodities to create the awareness on downline channels (W1, T1)
2. People are becoming more 'good for you' products (S3, S6,
and more health conscious T2)
3. Growth of the flavorings 2. Devise a 'defense' plan for
category whilst the bullion the buillion category and an
category is flat 'offense' plan for the flavorings
4. 'Versatility' proposition of category (S1, S2, S5, T3, T4)
competitors
5. Political instability
T O W S S T R A T E G IE S
M a r k e t P e n e t r a t io n M a r k e t D e v e lo p m e n t P r o d u c t D e v e lo p m e n t
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9 .2 S t r a t e g ic P o s it io n & A c t io n E v a lu a t io n M a t r ix ( S P A C E )
X AXIS
In d u s try S tre n g th (IS ) 6 b e st, 1 w o rst
1 Low bargaining power of suppliers 6

Significant growth potential given that there is still low
2 4
packaged soups penetration into soupy dishes
Packaged soups business is under-attack by the powdered
3 2
flavorings category
4 Low threat of new entrants 4
IS A v e ra g e 4 .0 0
C o m p e t it iv e A d v a n t a g e ( C A ) - 1 b e s t , - 6 w o r s t
1 90% market share in the packaged soups category -1
2 Superior product quality and performance -1
3 Strong brand management -2
4 Customer loyalty -3
C A A v e ra g e -1 .7 5
D ir e c tio n a l V e c to r C o o r d in a te X = I S A v e r a g e + C A A v e r a g e 2 .2 5
Y AXIS
F in a n c ia l S tr e n g th ( F S ) 6 b e s t, 1 w o r s t
1 Healthy gross margin 6
2 Revenue increase by 21% versus previous year 4
3 Highly leveraged business 1
FS A verag e 3 .6 7
E n v ir o n m e n t a l S t a b ilit y ( E S ) ) - 1 b e s t , - 6 w o r s t
Fast-paced lifestyle call for 'quick and easy' dependable
1 -1
solutions
More women are joining the work force and are becoming
2 -2
more independent
3 Versatility' proposition of competitors -6
E S A v e ra g e -3 .0 0
D ir e c tio n a l V e c to r C o o r d in a te Y = F S A v e r a g e + E S A v e r a g e 0 .6 7
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FS
C O N S E R V A T IV E 5 A G G R E S S IV E
2 * (2. 25, 0. 67)
CA IS
-5 -4 -3 -2 -1 0 1 2 3 4 5
-1
-2
-3
-4
D E FE N S IV E -5 C O M P E T IT IV E
ES
Given all of the aforementioned financial strengths (FS), competitive

advantage (CA), environmental stability (ES) and industry strength (IS) and
the corresponding ratings and scores computed for each, the vector shows
that it is in the aggressive quadrant. Sarap is in a position to utilize its
strengths to take advantage of external opportunities and deal with internal
weaknesses and external threats. Therefore, the following are the
corresponding aggressive strategies that can be used:
Market penetration
Market development
Product development
Backward integration
Forward integration
Horizontal integration
Related diversification
Unrelated diversification
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9 .3 I n t e r n a l- E x t e r n a l M a t r i x ( I E )
THE IFE TOTAL WEIGHTED SCORE
THE EFE TOTAL WEIGHTED SCORE

IF E = 2 .7 8 STRO N G AVERAGE W EAK
E F E = 2 .4 5 ( 3 .0 - 4 .0 ) ( 2 .0 2 .9 9 ) ( 1 .0 1 .9 9 )
H IG H
I II III
( 3 .0 4 .0 )
M E D IU M
IV V VI
( 2 .0 2 .9 9 )
LO W
V II V III IX
( 1 .0 1 .9 9 )
With the weighted scores computed as Saraps external and internal factors were
evaluated in the Internal-External (IE) Matrix, it shows that it belongs to Quadrant
V, an average hold and maintain quadrant wherein the 2 commonly employed
strategies are market penetration and product development.
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9 .4 G ra n d S tra te g y M a trix
STRONG COMPETITIVE POSTION

RAPID MARKET GROWTH
WEAK COMPETITIVE POSTION

Q U A D R A N T II QUADRANT I
Q U A D R A N T III Q U A D R A N T IV
SLOW MARKET GROWTH
The Grand Strategy Matrix (GSM) is constructed based on competitive

position and market growth. Relating this to Sarap whose competitive
position is strong but with a market that is slow-growth, clearly, its strategy
is that of quadrant IV. It can get into diversified programs that are
promising enough to deliver growth. Some of the strategies that may be
employed by a quadrant IV position are as follows: related diversification
a n d u n r e la te d d iv e r s ific a tio n .
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9 .5 G E M c K i n s e y M a t r ix
The GE McKinsey Matrix (GSM) is constructed based on business strength-

competitive position and industry arractiveness. Relating this to Sarap
whose competitive position is strong and a strong industry attractiveness,
its strategy is that of cell I. Some of the strategies that may be employed
by a cell I position are as follows: intensive, integrative and diversification
s t r a t e g ie s .
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10 Summary of Matrices & Analysis
STRATEGY OPTION TOW S SPACE GE IE M GSM TOTAL
IN T E G R A T IO N S T R A T E G IE S
1 Forward Integration 1 1 2
2 Backward Integration 1 1 2
3 Horizontal Integration 1 1 2
IN T E N S IV E S T R A T E G IE S
4 Market Penetration 1 1 1 1 4
5 Market Development 1 1 1 3
6 Product Development 1 1 1 1 4
D IV E R S IFIC A T IO N S T R A T E G IE S
7 Related Diversification 1 1 1 3
8 Unrelated Diversification 1 1 1 3
D E FE N S IV E S T R A T E G IE S
9 Retrenchment 0
10 Divestiture 0
11 Liquidation 0
The summary above shows that based on the different matrices used to determine
which strategy to employ the following strategies were suggested as it seemed to
show potential given the current position of Sarap packaged soups in the
Philippines. However, basing it on what the strategy is and considering the
readiness of the brand or the company to pursue the given strategy, the evaluation
below shall determine the top 3 strategies to be evaluated in the QSPM
(Quantitative Strategy Planning Matrix).
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S a ra p
Market Penetration was suggested across all 3 matrices primarily because this
simply entails improving brand performance by being aggressive in utilizing
greater marketing efforts. Sarap being a marketing company and Sarap being a
known commodity, the name of the game is no longer about awareness but
taking it a step further by increasing brand relevance making it more effective
with its communication. Hence, this strategy seems to be one of the more
viable ones and as quoted in the book, Strategic Management by David, p.
167- Market Penetration is an effective strategy if current markets are not
saturated with a particular product or service or usage rate of present
customers could be increased significantly.
Market Development appeared to be a viable strategy in the TOWS and SPACE
matrices probably because this strategy entailed introducing existing products
to new territories. Although Sarap packaged soups is found nationwide already,
this can still be a key strategy especially that dominance in certain areas needs
to be reinforced further.
Product Development is the strategy employed if it entails improving or
modifying present products or services to increase sales and this strategy was
suggested in the SPACE and IEM. As it is, Sarap packaged soups formulation is
accepted because it delivers and fulfils the need.
Given the comparative analyses done on all the possible strategies to implement,
what seemed to be viable are the following: market penetration, market
development and product development. Hence, these are the ones that shall be
evaluated in the QSPM (Quantitative Strategy Planning Matrix).
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11 Quantitative Strategy Planning Matrix

M a rk e t M a rk e t P ro d u ct
P e n e t r a t io n D evt D evt
KEY FACTORS Wt
AS TAS AS TAS AS TAS
E x t e r n a l O p p o r t u n it ie s
Less but frequent purchases of goods by

1 0.05 4 0.20 2 0.10 3 0.15
consumers
Fast-paced lifestyle call for 'quick and easy'

2 0.15 4 0.60 2 0.30 3 0.45
dependable cooking solutions
More women are joining the work force and

3 0.10 - - -
are becoming more independent
Significant distribution of households in

4 0.10 3 0.30 4 0.40 2 0.20
Still low 'dish penetration' of packaged soups

5 0.05 4 0.20 2 0.10 3 0.15
in regularly cooked soupy dishes
Lack of 'Differentiation' amongst cooking aids

6 0.10 - - -
brands
7. Increasing use of the Internet 0.05
E x te rn a l T h re a t
Decrease in food expenditure at the expense

1 0.05 - - -
of other commodities
People are becoming more and more health

2 0.05 - - -
conscious
Growth of the flavorings category whilst the

3 0.15 3 0.45 2 0.30 4 0.60
bullion category is flat
4 Versatility' proposition of competitors 0.10 3 0.30 2 0.20 4 0.40
5 Political instability 0.05
In te rn a l S tre n g th s
1 Efficient business/ brand planning process 0.20 - - -

2 Excellent market research capability 0.15 - - -
3 Good customer marketing standards 0.10 - - -
Brand contribution to total business is
4 0.10 - - -
increasing year-on-year
Clearly defined roles for category/ area

5 0.10 3 0.30 2 0.20 4 0.40
management
Vitality' passport to promote 'good for you'

6 0.03 - - -
products
In te rn a l W e a k n e sse s
1 Limited reach in downline channels 0.10 4 0.40 2 0.20 3 0.30

Weak dominance in the Visayas and
2 0.15 3 0.45 4 0.60 2 0.30
Mindanao areas
Sarap packaged soups is regarded as
3 0.02 3 0.06 2 0.04 4 0.08
expensive
Manufacturing of packaged soups is
4 0.05 - - -
outsourced
T O T A L A T T R A C T IV E N E S S S C O R E 3 .2 6 2 .4 4 3 .0 3
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Rating score: 4= most acceptable, 3= probably acceptable, 2= possibly acceptable, and 1= not acceptable
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12 Proposed Strategy
Given all of the evaluations and analyses done with Saraps internal strengths and
weaknesses, as well as the external opportunities and threats, the strategies that
shall be employed to pursue further progress is a mix of market penetration and
concentric diversification.
1 2 .1 S t r a t e g ic O b j e c t iv e
Since the packaged soups market has registered flat growth, Sarap puts itself in a
defense mode. Being market leader, sustaining leadership and delivering
incremental business by increasing penetration into soupy dishes is definitely a big
challenge to the brand. The strategic objective for the packaged soups business is
stated as follows:
Grow sales by 10% year-on-year from 2006-2009
This is the summary statement of what Sarap will do to make this possible:
O n P r o d u c t s P a c k a g e d s o u p s & F la v o r in g s
To reinforce the superiority of packaged soups in terms of product
quality and performance
To strengthen the selling proposition of Sarap packaged soups in the
minds of customers & consumers
To own 'best for soups' as jobs-to-be-done for buillion as a cooking aid
O n G e o g r a p h ic a l/ C h a n n e l D is t r ib u t io n & C o n s u m e r P u r c h a s e H a b it s
To create a viable 'trade story' to make products available in downline
channels
To explore less cash-outlay products that will be a more viable selling
proposition for downline channels
To establish and reinforce brand presence and superiority in the VisMin
areas
O n P o s it io n in g - R e s p o n s ib le & S u p e r io r M a n u fa c t u r e r
To clearly differentiate Sarap from competitors
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To promote Saraps 'Vitality' campaign amongst consumers to create the

awareness on 'good for you' products
1 2 .2 M a r k e t P e n e t r a t io n
By employing this strategy, the Sarap packaged soups retail business in the
Philippines should be more aggressive since the market has taken on a new
frontier. Competition is made tougher with substitute products trying to eat
up into the packaged soups territory. This can be done by reassessing the
current marketing efforts being done and by being more creative and
coming up with more hardworking and brilliant marketing techniques that
will arrest the possible decline in the category.
As identified in the course of this paper, increasing penetration into soupy

dishes is a potentially big thing since currently, packaged soups is only at
12% of all soupy dishes. By bringing this to 20% in the next 5 years, it can
bring tremendous incremental growth.
1 2 .3 M a r k e t S e g m e n t a t io n
F i g u r e 1 7 : C o o k in g A id s P e n e t r a t io n in D iffe r e n t D is h T y p e s
OTHERS
SAUTEED 7%
11%
FRIED
31%
SINIGANG
6%
The PENETRATION of packaged

SOUPY SAUCY
soups 25% 20%
into Soupy dishes is just 12%
Source: Project Sarap
The market is currently segmented by dish preparation. For the bouillion, it

is geared to penetrate the soupy dish market since there still a huge
potential and it simply means making MSG users shift to packaged soups.
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1 2 .4 S t r a t e g ic P o s it io n in g
In terms of strategic position, Sarap would want to maintain its strong product
quality. By being A Womans Best Friend, it has become a well loved brand
because of its product quality. Sales distribution is half of what makes Sarap a
success. Saraps market share is a good indicator of how well distributeded Sarap
cooking aids are. It shows the market likes the taste, ease of use and convenience
of Sarap products.
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13 Action Plans & Programs

To achieve the strategic position for the brand Sarap, there has to be a
couple of activities implemented, most of which pertain to housekeeping
and the organization as a whole to realize Saraps vision to the most
preferred cooking aids brand.
C o m p le t Team
Activities io n D a t e E x p e c te d O u tp u t R e s p o n s ib le
A trademark that will
Activate a platform that will
differentiate and
differentiate and establish brand Q1
1 distinguish Sarap Brand Team
superiority for Sarap across all 2007
from all other
categories
cooking aids
Certified 'good for
Implement 'My Choice' logos in all
Q3 you' products with Supply Chain
2 SKU's as an indication of 'good for
2007 new look Teams
you' certification
(packaging)
An all year-round Corporate
Promote 'Vitality' as a company- Q1 obtrusive ATL & BTL Development
3
wide campaign 2008 campaign that will & Brand
characterize Sarap Team
"Best for Sabaw"
Reinforce the superiority of
Q2 campaign with
4 packaged soups in perfect broth Brand Team
2007 specific soupy dishes
creation
being promoted
A nationwide
relevance building
campaign that will
Create the awareness for Sarap
allow consumers to
Meaty Seasoning Mix by doing a
Q1 acknowledge and
5 massive campaign that includes Brand Team
2007 appreciate Sarap's
activities that will induce heavy
KMSM powdered
trial
flavoring for use in
all their sauteeing
needs
Brand Team
Improve portfolio of products for Q2 Lower cash outlay
6 & Supply
downline trade channels 2007 products
Chain
Increase in direct
Develop trade story for downline Q3 coverage of
7 Sales Team
channels 2007 downline trade
channels
Position the Sarap
Learn about the varying cultures
Q3 brand in a way that Brand &
8 that characterize Visayas and
2007 the VisMin people Sales Team
Mindanao
may relate to it
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14 Strategy Evaluation & Control

To measure the effectivity and success of the strategies put in place, certain
evaluation and control measures are to be used to monitor implementation
and progress.
1 4 .1 B a la n c e d S c o r e c a r d
The Balanced Scorecard will serve as a quick reference with regards to the
implementation of the aforementioned strategies; this shall enable decision-
makers to rationalize on which strategies are working best and which need
more time or fail to deliver expected results. Hence, with this knowledge,
they are in a better position to direct the company.
1 4 .1 .1 Financial Persp ective
Financial Perspective
G o a ls M e a s u re s C u rre n t T a rg e ts
Grow by 10%
Php 1.7 year-on-year
1 Net Sales 2005 Net Sales
billion from 2006-
2009
GP % vs. Net Gross Profit Gross Profit at
2 Gross Profit
Sales at 48% 53%
Grow from
Income
3 Net Income 15% 15% to 20%
Statement
by 2010
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1 4 .1 .2 C ustom er Persp ective
Customer Perspective
92% for
Packaged
Vol & Val % Shr
90% market soups &
1 Market Share - Global Market
share Increasing
Research
Shares for
Flavorings
Vol & Val % Shr
55 % shares Increasing to
Regional and Vol & Val
2 & net sales 60% shares &
Marketing Sales - Global
value net sales value
Market Research
Numeric In-
Downline Stock
55% channel Increase by
3 Channels Distribution -
shares 20%
Shares Global Market
Research
Lead position
nd amongst all
2 position
Brand Health cooking aids
4 Positive Image among
Check brands as
cooking aids
indicative of
favorability
1 4 .1 .3 In tern al B u sin ess P ersp ective
Internal Business Perspective

Implementation
GoodHousekee 40% of all
of 'My Choice' >50% of all
1 ping of product SKU's in
logo in all SKU's in 2007
portfolio 2007
products
Numeric In-
Improve Stock
Increase by
2 Product Distribution - 64
20%
Portfolio Global Market
Research
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1 4 .1 .4 In n o vatio n & Learn in g P ersp ective
Innovation & Learning Perspective

Brand Platform ATP (Advance
1
Activation Tracking
Awareness Awareness
Program) -
Vitality levels of 80% levels of 90%
2 Brand
Campaign
Communication
Vol & Val % Shr
55 % shares Increasing to
Regional and Vol & Val
3 & net sales 60% shares &
Marketing Sales - Global
value net sales value
Market Research
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15 Strategy Map
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16 Projected Financial Statements (BE SURE TO

ATTACH THE ACTUAL PROJECTED 3-YEAR
FINANCIAL STATEMENTS)
The following projected 3-year financial statements are based from derived
historical performance of Sarap packaged soups taking into account the overall
impact and evaluation of strategies.
The assumptions and the impact of which on certain components of the financial
projections are stipulated below:
3 - Y e a r P r o je c tio n o f S ta te m e n ts o f I n c o m e
The projected income statement shows that Sarap packaged soups retail business
strategy is more on a defense as earlier stated with all of the action plans that
have been formulated. Currently, 55% of all packaged soups sales are known to be
used for soups. With a 12% penetration in soups, this can be valued at Php
961,419,085. Increasing penetration of packaged soups in soupy dishes to 20%
would mean that the 55% contribution of soupy dishes would increase to 67% by
2010 and this can be valued at Php 1,602,365,141. Other usage of packaged soups
will continue to contribute to the business but would be less acknowledging that
there would be shifting to flavorings especially for sauted dishes.
Since the main source of growth would be on the 1-2 campaigns that will be
implemented per year, the growth is assumed to be 7.33% year-on-year from
2006 to 2009. 2010 growth would be less as this would be the time to shift to a
new strategy already. Also, in 2010, the company shall do a bit of clean-up as well
before changing directions and plans. SKU rationalization, assessment of structure,
and the like will be done to equip the brand better for the next challenge.
In general, what can be gleaned from the projections is that it is healthy. As in any
business, cost reduction is a continuing activity. This is brought about by the
efficiency in regional sourcing wherein cost of sales was lessened and gross
margins improved. Operating expenses is kept within standard, having learned
from and experienced negative income in 2004 due to very high operating expense
and not so good top line. In the projections, operating expense is kept within the
norm of 70-75% levels. Good projections for non-operating income and expenses
were also included given that the same level of interest expense will be availed and
the strengthening of the peso will continue.
79
S a ra p
3 - Y e a r P r o j e c t io n o f B a la n c e S h e e ts
The financial position that Sarap is projected to have in the balance sheet shows
that about 60% or majority of the current assets would be cash, cash equivalents
and trade receivables and a significant 28% would be provision for healthy stocks
of inventory since manufactured goods of Sarap packaged soups would still be
coming from Thailand, except for the Chicken variant which is produced locally.
The valuation method used for inventory is weighted average cost. Prepaid
expenses and other current assets are valued at 11% since this is a matter of
policy for necessary warehousing costs, and the like. Total current assets account
for 70% of total assets. The remaining 30% total assets are long-term assets.
Property plant and equipment account for only a little over 60%, reduced
significantly from 90% levels in 2003. This is primarily because all operations had
been moved and will be maintained within the Paco, Manila vicinity for the next 5
years and logistics had been well-managed. Deferred income tax is a significant
long-term asset contributing about 20% primarily because Sarap is a good tax
payer. A provision for other assets that also benefit the company is valued at 10%.
Similarly, majority of what finances the assets comes from current liabilities
accounting for about 90%, of which, trade and other payables account for a
significant 60%. Borrowings within the 5-year projection are reduced because the
strategy that will be employed is to use the companys retained earnings by
funnelling it back to the company. Stockholders will be given a good deal that will
allow them to enjoy their earnings on the 6th year.
3 - Y e a r P r o j e c t io n o f S t a t e m e n t s o f C a s h F lo w s
C a s h fr o m O p e r a t in g A c t iv it ie s
The day to day expenses of the organization are reflected in this portion, the
following major components are as follows:
After the net income, all of the non-cash expenses are added back such as
depreciation and amortization, provision for adjustments in property, plant and
equipment and gains on disposals of assets.
Allowances for spoils are also provided for as packaged soups remain to be a
food commodity that under certain circumstances might not be best for
consumption (i.e. direct sunlight, etc.).
Given that Sarap is also challenged with the new organizational structure,
provision for restructuring is also budgeted for generously.
80
S a ra p
As earlier mentioned, the strengthening of the peso will bring in forex gains.
Interest income is less in lieu of interest expense, due to more borrowings.
Increase in receivables is due to more sales.
Increase in inventory is due to increase in stock cover.
C a s h fr o m I n v e s t in g A c t iv it ie s
For the succeeding years, there would also be several capital expenditures and
acquisitions that would impact the business, such as:
Additional property and equipment for increased capacity.
Disposal of old and for replacement property and equipment.
Restructuring costs incurred by the business.
C a s h fr o m F in a n c in g A c t iv it ie s
Financing pertains to the loans and repayment of cash borrowed by the business.
In the 5-year projection, it shows that:
Notes payables will be paid year-on-year.
Work level 3s and above of the local management team will be rewarded with
a good share-based compensation plan.
For the next 5 years, the task for packaged soups is a matter of brilliant basics.
The category being on a defense mode shall be quite aggressive and swift with its
moves well-hinged on the findings on this strategic management paper.
81

2014 Sarap Sample Strama

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2014 Sarap Sample Strama

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Ateneo Graduate School of Business

Submitted to Professor Hilda Teodoro

Submitted by Your Name

4.1 ECONOMIC FORCES 15

4.2 SOCIO-CULTURAL, DEMOGRAPHIC, AND ENVIRONMENTAL FORCES 15

4.2.2 People are Becoming More Health Conscious 23

4.3 TECHNOLOGICAL FORCES 21

4.3.1 Increasing use of the Internet 23

4.4 POLITICAL, GOVERNMENTAL & LEGAL FORCES 24

4.4.1 Political Instability 24

5.1.2. Lack of Differentiation Amongst Cooking Aids Brands 26

5.1.3. Versatility Proposition of Competitors 27

5.4.2 Yummy Philippines, Inc 39

7.3.3 M ARKET D ISTRIBUTION 49

7.3.4 C HANNEL P RIORITIES 49

7.3.6 Excellent Market Research Capability 51

9.1 THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) 61

9.2 STRATEGIC POSITION & ACTION EVALUATION MATRIX (SPACE) 62

9.5 GE MCKINSEY MATRIX 66

10 SUMMARY OF MATRICES & ANALYSIS 67

11 QUANTITATIVE STRATEGY PLANNING MATRIX 69

13 ACTION PLANS AND PROGRAMS 74

On product distribution, improving the Sarap portfolio to be able to cater to

On geographies, valuing the Visayas and Mindanao regions as a separate

On consumer purchasing habits, developing lower cash outlay products as

Simultaneously, other efforts on master brand activations and company-wide

Certification of all cooking aids as good for you products.

Sarap packaged soups are available in various retail channels nationwide -

2 Research Design & Methodology

Summary of Frameworks, Tools, Activities and Outputs

3 Vision & Mission

To be a Homemakers Best Friend.

Saraps vision is currently designed as a brand capsule where it is succinctly

With the help of our cooking aids, she is able to

With the help of our cooking aids, she is able to

Revised Vision and Mission Statements

By providing adequate training and a great professional working atmosphere

We are committed to continue studying and understanding evolving demands

It is our reason for being to provide our customers

3. Markets yes retail and wholesale markets nationwide

By providing adequate training and a great professional

We are committed to continue studying and

By providing adequate training and a great professional

The vision and mission should be cascaded to the employees of

4.1.1 OPPORTUNITY : Less but Frequent Purchases of Goods by

MSG ROOTS CUBES FLAVORINGS SINIGANG PACK SOUPS

VOLUME PER TRIP

Source: Global Market Research

4.1.2 THREAT: Decrease in Food Expenditure at the Expense of

Percent 100 100 100 100 100

Food 48.5 47.8 44.2 43.6 42.6

Food consumed at home 44.7 43.5 39.5 38.7 37.3

Transportation & Communication 5.4 4.7 5.6 6.8 7.4

Fuel, Light & Water 5.7 5.5 5.3 6.3 6.5

Education 3.0 3.7 3.7 4.2 4.0

Personal Care & effects 3.3 3.2 3.3 3.6 3.9

Other expenditures 1.9 1.7 3.0 2.9 2.9

Household operations 2.7 2.6 2.3 2.3 2.2

Miscellaneous Expenditure 3.4 3.6 3.4 3.3 3.7

Special Occasions 2.4 2.6 2.4 2.4 2.5

Taxes paid 1.4 1.4 2.5 2.1 2.2

Medical care 1.8 2.3 2.2 1.9 2.2

Tobacco 1.7 1.4 1.3 1.1 1.1

Alcoholic beverages 1.0 0.9 0.9 0.7 0.7