Professional Documents
Culture Documents
CHAPTER I
INTRODUCTION
A. Company Background
IMG is one of the few companies of its kind in the industry today, created
individuals and families who are typically overlooked by the financial services
industry. IMG recognizes the need for widespread financial education, particularly
among middle income individuals and families who could readily benefit from
exposure to the latest financial concepts and solutions. Unlike many companies
that target only wealthy clients, IMG is dedicated to teaching everyday people how
to plan their financial futures and work toward their goals no matter what their
income. Driven by its mission to help people around the world achieve financial
introduce simple financial concepts to help clients understand how to put their
money to work more effectively to move toward their goals. While many other
financial services companies have a "one size fits all" attitude with little or no
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product choice, International Marketing Group advocates the power of choice. IMG
has agreements with several of the leading companies in the financial services
products and services to choose from so they can find the ones that best fit their
needs. And as clients' needs change, IMG's diverse product selection can grow
with them.
IMG is one of the biggest and fastest growing financial distribution companies
in the US, Canada, Taiwan, Hongkong, Philippines and going worldwide. Main
Offices are located primarily in Makati, Davao, Cebu, and other small offices
Our research methodology required compiling of facts and data gathered thru
and provided by employees interviewed over the duration of the research. The
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way of thinking and how they work. IMG has also provided a website to allow
months namely April and May. The information used in the study is limited to data
applications and services. The relevant range of the research covers the company
branch stationed in the Philippines, with the viewpoint of the main office in Makati
city. Other branches residing outside the country will not be included in the
research. The study will cover only the industry of IMG’s main source of income
Research reveals that the company has issues regarding its liquidity, profitability
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CHAPTER II
EXTERNAL ANALYSIS
A. Economic Situation
The Economy of the Philippines is the 29th largest in the world, according
to 2016 International Monetary Fund statistics, and is also one of the emerging
markets. The Philippines economy grew an annual 6.3 percent in the December
the previous three months and above market consensus. It is the highest growth
since the fourth quarter of last year, as all sectors of the economy showed an
rate while government expenditure remained robust. For full year of 2015, the
GDP Growth came in at 5.8 percent, slowing from a 6.1 percent expansion in
2014
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Figure 1
The
estimate determined that by the year 2050, the Philippines is expected to be the
14th largest economy in the world. According to the HSBC, in the same time
frame, the Philippines is expected to become the fourth largest economy in Asia
The economy of the Philippines has been growing at a steady rate and is
government legislation to enhance investment and private sector job growth, the
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While the economic situation of the Philippines is strong and stable, it still
faces the problems that many industrialized nations face, namely wealth disparity
and corruption. There are also growth disparities. While some regions see great
strides in economic development and wealth, others are still below the poverty
line.
from 0.9 percent in February and in line with market consensus. A faster
cost of housing and utilities. Core consumer prices rose 1.5 percent from a year
earlier in March, the same pace as in the preceding month. On a monthly basis,
consumer prices rose 0.1 percent, following a 0.3 percent drop in February.
Inflation Rate in Philippines averaged 8.67 percent from 1958 until 2016,
reaching an all time high of 62.80 percent in September of 1984 and a record low
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Figure 2
B. Socio-Cultural Forces
The insurance official said that the slow growth of insurance penetration
in the country may also be due to a cultural factor. We Filipinos are not long-term
thinkers. There might be some cultural that are more long-term planners.
necessity, saying they do not fully appreciate and understand the benefits of
insurance. This is why the Philippines has a low insurance penetration which
currently stands at 1.7% even if it has a large population of over 100 million. The
country's penetration rate currently stands at 1.7%, below the average which is
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3% in the Asean region. But despite it having one of the lowest penetration rates
in the Asean region, industry players are optimistic on the growth potential of the
Philippine insurance sector. Insurers said better prospects for the sector are
and the relaxed bancassurance rules. A rise in premium income and revenue for
this year has been expected in the industry. Data from the Insurance
Commission showed the life insurance sector reported that its premium income
in 2014 went down 7% to P158.7 billion from P171.2 billion in 2013. The whole
billion last year, down 4.63% from P198.13 billion in 2013, official data also
C. Demographic
April 14, 2016, based on the latest United Nations estimates. The
the Philippines is 343 per Km2 (888 people per mi2).The total land area is
298,192 Km2 (115,133 sq. miles). 44.9 % of the population is urban (45,842,660
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Figure 3
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Thousand in the first quarter of 2016 from 39779 Thousand in the fourth quarter
1986 until 2016, reaching an all-time high of 40047 Thousand in the first quarter
of 2016 and a record low of 18567 Thousand in the second quarter of 1986.
Philippines.
Figure 4
Employment rate
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D. Technology
consumers’ lives is increasing rapidly and insurers' insatiable desire for more
data to make better decisions and to reflect risk accurately while simultaneously
multiple industries, and these models can inform the insurance industry’s
attempts. While at first glance, insurance may not appear to align with many of
the current market uses, taking a closer look at the interactions between insurers
where opportunities for APIs exist, and–in fact–are succeeding. Looking though
this lens, both public and private APIs can provide value in four distinct ways:
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Aquino III last August 15, 2013, amended the 38-year old Presidential Decree
An increase in the paid-up capital requirements for both life and non-life
the following minimum net worth requirements have been imposed which will
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Figure 5
between a bank and an insurance firm where the latter can sell its insurance
products to the bank’s clients without requiring the bank to have equity ownership
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Finance Secretary Cesar Purisima said the new Insurance Code will pave
the way for a stronger insurance sector that can better compete with foreign
counterparts. This will also help the insurance industry become a key link in
savings mobilisation and capital market development and making insurance more
The amended law also gives a fixed six-year term to the Insurance Commissioner.
Regulatory updates
No. 2014-15 dated 15 May 2014 was imposed by the Insurance Commission
which have taken effect starting 31 May 2014 as duly approved by the Secretary
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Filipino Workers (OFWs) to provide some form of financial relief in the event of an
accident.
The Regulator
of Finance.
contracts for the provision of future payments or services including life, pension,
brokers, adjusters, actuaries, and trustees for charitable uses must be licensed.
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Control approvals
of any domestic insurer without giving 20 days’ prior written notice to the
domestic insurer of its intention to acquire control, and without obtaining the prior
and policies of the domestic insurer, and is presumed to exist when one person
owns, controls or holds, 40 per cent or more of the voting shares of the domestic
insurer.
against these types of losses. Not only premiums are affected by unexpected
must respond, and respond swiftly, to their policyholders and this means more
than just paying out claims. Internal and external adjusters are assigned, third
party restoration and repairs firms must be retained and policyholders must be
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reassured that they will be taken care of. Resources in the area of the loss become
scarce because of high demand and additional resources must be brought in from
far away areas, unaffected by the event, and this costs the insurer more dollars
than expected. This also holds true for large, non-catastrophic losses.
Typhoon Rammasun, locally known as Glenda, was the first typhoon to hit
the Philippines this year, following eight months after super typhoon Haiyan.
winds of 157 kph (98 mph), typhoon Rammasun made landfall in the province of
Sorsogon on July 15, late afternoon local time, and headed toward Manila.
reported dead, over 118,000 houses were damaged, of which nearly 29,000 were
totally destroyed while over 89,000 were partially damaged. The cost of damages
reached over PHP10.46 billion (US$243 million), 85% of which accounted for
agricultural damage.
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around Metro Manila and in areas to the north and south of the capital in Central
Conclusion
Due to the current legal requirement to increase capital and the recent
typhoons and floods) resulting in the rise of reinsurance spend, the challenges that
companies look for ways to effectively manage their risks and improve bottom line.
Analytics capabilities are becoming more prevalent within the market to assist
management, actuarial, rating agency advisory and risk and capital strategy
expertise.
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CHAPTER III
INDUSTRY ANALYSIS
that are related in terms of their primary business activities. In modern economies,
there are dozens of different industry classifications, which are typically grouped
Return on Investment
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INSURANCE INDUSTRY
The insurance industry in the Philippines, composed of the life and non-life
of 65.80% year-on-year in terms of net income during the third quarter of this
year, mainly due to the increase in underwriting and investment income. Based
on the preliminary data on the quarterly reports submitted by both the life and
non-life insurance companies. Much of the credit to the continued growth of the
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Figure 6
Industry Performance
lC Commissioner Dooc said that "This year, the insurance industry shall
surpass its highest premium production of P198.1 billion total premium recorded
in2013. The year 2015 promises to be the best year ever for the insurance
combined premium income of P240 billion despite a slight decrease in last year's
performance during the first three quarters, our target is still achievable if both
the life and non-life sectors will have a strong finish during the fourth quarter but
- Size
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B. Industry Trends
The country’s life insurance sector ended 2015 on a high note with the
Emmanuel Dooc expected 2015 to be a record year for the industry after a
industry generated over P172.4 billion in total premium income, up 29.7 percent
In 2013, the combined premiums from life and non-life insurance sectors
reached an all-time high of P198.1 billion while total premiums dipped 4.63
Industry net income, however, steadily increased in the past two years,
Over the past years, new players entered the industry, reflecting.
Insurance Commissioner Emmanuel Dooc said profitability was not the issue for
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the industry in general, but rather the growth in premiums for both life and non-
Figure 8
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Being ranked 58, competition will be tougher for IMG. Given that the
industry is still growing, IMG will need a deeper strategy to overtake its
competitors.
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C. Industry Problem
segments.
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to entry have been lowered. New players that have the ability to
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G. OPERATIONAL/PRODUCTION
I. Process
IMG mainly works as an insurance brokerage firm. It recruits and trains its
members to be brokers or agents. The members are then sent out and left to
Brokers act on behalf of their clients and provide advice in the interests of
their clients. Sometimes an insurance broker will act as agent of an insurer, but
A broker will help you identify your individual and/or business risks to help
you decide what to insure, and how to manage those risks in other ways.
Insurance brokers can give you technical advice that can be very useful if
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Brokers are aware of the terms and conditions, benefits and exclusions
and costs of a wide range of competing insurance policies, so they can help you
Brokers can help arrange and place the cover with the chosen insurer
and can often provide advice on how to make the most of your insurance budget.
II. Capacity
company or the total market could write based on excess (unused) capital—that
IMG’s capacity on its product and services are as limited as its business
partners. IMG shows no problem in the number of agents and brokers they
provide. IMG increases its manpower every day to supply its labour force.
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III. Quality
With more than 10 years in the insurance industry, IMG makes sure to
company listens well to the customers and adjusts their gear to conclude a
Figure 18
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IV. Technology
and clients. IMG has shown a large network over the internet, as its members
created blogs, videos, surveys and various types of online reviews made by both
affiliates and external parties. IMG also provides a website for ease of access
and as a way to market its services online. Members are granted their very own
online accounts where they are able to manage their resources and documents
IMG’s top employees, advisers, and its very own owners handle all financial
internal processes are felt inside by everyone inside the company. Surveys are
handed out by its members to external parties and used to evaluate their
services. IMG makes sure to read reviews published about them and tries to
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H. FINANCIAL PERFORMANCE
PROFITABILITY RATIOS
using its assets to generate earnings. From 2012 to 2013 return of net sales to
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increased by 17%. Management efficiency in using the asset is almost the same
on 2014.
Gross profit margin – is a ratio that measures how much of every peso of
revenues is left over after paying direct cost. IMG’s gross profit margin is almost
consistent, in 2013 it drops by 3% but eventually after a year they can recover at
least 1%x
of a company's revenue is left over after paying all of its expenses. IMG gross
margin is almost half of its income but it is not enough to cover its operating
and it is computed by dividing net income to net sales. As seen in the graph IMG
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LIQUIDITY RATIOS
Current Ratio – is a ratio that measures a firm's ability to pay off its short-term
liabilities with its current assets. IMGs asset are efficient enough to cover its
liability.
evaluate the ability of a company to efficiently issue credit to its customers and
collect funds from them in a timely manner. The accounts receivable collected
per year was 8 times but it decreases to 5 times per year starting 2013
they can be able to collect is receivables. IMG are able to collect their average
accounts receivable within 72-75 days from 45 days, due the decrease in its
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LEVERAGE RATIO
Debt Ratio – is defined as the ratio of total – long-term and short-term – debt to
proportion of a company's assets that are financed by debt. IMGs total debt
exceeds total asset in 2014.Meaning that the company tends to use loans to pay
equity. The D/E ratio indicates how much debt a company is using to finance its
ratio shows that IMG tends to use loans and payables to finance its equity.
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EFFICIENCY RATIO
Current Asset turnover – that indicates how efficiently a firm is using its current
Fixed Asset Turnovers –This ratio specifically measures how able a company
is to generate net sales from fixed-asset investments. Ratio shows that the
company has made a large investment in fixed assets, with a time delay before
the new assets start generating revenues starting from 2012 and has slowly
company’s sales or revenues generated relative to the value of its assets. The
Asset Turnover ratio can often be used as an indicator of the efficiency with
which a company is deploying its assets in generating revenue. Shows that the
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Horizontal Analysis
period of time. Based on the percentage given, IMGs commission income every
year increase but direct cost and operating expense increases more than the
the 30million loan from a bank with a 7% interest per annum. Resulting to a net
loss
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Vertical Analysis
all of the amounts for a given year are converted into percentages of a key
percentage of direct cost is higher than its income by 51.03% and it cannot cover
operating expense plus the interest expense of a 30million loan from a bank
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Current Assets
Cash 26,865,538 24,140,680 16,149,842
Accounts receivable 11,196,314 10,445,470 8,405,166
Creditable Withholding Tax 27,892,864 23,701,674 19,957,348
Other Current Assets 1,261,169 1,253,039 1,473,389
Total Current Assets 67,215,885 59,540,863 45,985,745
Non-Current Assets
Property and equipment-net 45,989,657 46,169,889 46,199,857
Deferred Tax asset 4,772,677 2,237,691 1,474,857
Other Non-Current Assets 4,586,088 4,234,318 2,228,707
Total Non-Current Asset 55,348,422 52,641,898 49,903,421
Total Assets 122,564,307 112,182,761 95,889,166
Current Liabilities
Accounts Payable and accrued expenses 92,337,044 74,743,210 53,806,504
Current portion of notes payable 1,648,340 1,350,132 1,247,863
Total Current Liabilities 93,985,384 76,093,342 55,054,367
Non-current liabilities
Non-current portion of notes payable 29,562,085 31,210,425 32,560,557
Total liabilities 123,547,469 107,303,767 87,614,924
Equity
Share Capital 5,000,000 5,000,000 5,000,000
Cumulative earnings -5,983,162 -121,006 3,273,572
-983,162 4,878,994 8,273,572
TOTAL LIABILITIES AND SHAREHOLDERS
EQUITY 122,564,307 112,182,761 95,888,496
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Assets
Current Assets Horizontal Analysis
Cash 166.35% 149.48% 100.00%
Accounts receivable 133.21% 124.27% 100.00%
Creditable Withholding Tax 139.76% 118.76% 100.00%
Other Current Assets 85.60% 85.04% 100.00%
Total Current Assets 146.17% 129.48% 100.00%
Non-Current Assets
Property and equipment-net 99.55% 99.94% 100.00%
Deferred Tax asset 323.60% 151.72% 100.00%
Other Non-Current Assets 205.77% 189.99% 100.00%
Total Non-Current Asset 110.91% 105.49% 100.00%
Total Assets 127.82% 116.99% 100.00%
Current Liabilities
Accounts Payable and accrued expenses 171.61% 138.91% 100.00%
Current portion of notes payable 132.09% 108.20% 100.00%
Total Current Liabilities 170.71% 138.21% 100.00%
Non-current liabilities
Non-current portion of notes payable 90.79% 95.85% 100.00%
Total liabilities 141.01% 122.47% 100.00%
Equity
Share Capital 100.00% 100.00% 100.00%
Cumulative earnings -182.77% -3.70% 100.00%
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period of time. Analysis shows that IMG has a problem of a sudden increase in
liabilities and its equity being negatively affected due to net losses.
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Assets
Current Assets Vertical Analysis
Cash 21.92% 21.52% 16.84%
Accounts receivable 9.14% 9.31% 8.77%
Creditable Withholding Tax 22.76% 21.13% 20.81%
Other Current Assets 1.03% 1.12% 1.54%
Total Current Assets 54.84% 53.07% 47.96%
Non-Current Assets
Property and equipment-net 37.52% 41.16% 48.18%
Deferred Tax asset 3.89% 1.99% 1.54%
Other Non-Current Assets 3.74% 3.77% 2.32%
Total Non-Current Asset 45.16% 46.93% 52.04%
Total Assets 100.00% 100.00% 100.00%
Current Liabilities
Accounts Payable and accrued expenses 75.34% 66.63% 56.11%
Current portion of notes payable 1.34% 1.20% 1.30%
Total Current Liabilities 76.68% 67.83% 57.41%
Non-current liabilities
Non-current portion of notes payable 24.12% 27.82% 33.96%
Total liabilities 100.80% 95.65% 91.37%
Equity
Share Capital 4.08% 4.46% 5.21%
Cumulative earnings -4.88% -0.11% 3.41%
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for each of the three major categories of accounts (assets, liabilities and equities)
percentage than its assets, are steadily increasing and retained earnings
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2014
performances in each category. The analysis shows that IMG has been able to
meet and maintain acceptable amounts in certain areas, but it also shows that
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CHAPTER V
Strategy Formulation
Opportunities
1. Continuously 0.20 3 0.6 Due to the increase in net income
improving of the insurance industry, the future
economy looks good for IMG
2. Increasing no. 0.15 4 0.6 This should provide IMG with
of Market plenty of clients and members to
increase the company’s strength as
a whole
3. Availability of 0.1 3 0.3 IMG provides online sites and apps
Technology to cater the needs of its members
and clients alike. This shows the
company is flexible to its
technology
Threats
1. Growing 0.2 3 0.6 Competitors are showing rapid
competitors growth combined with the
emergence of new insurance
companies puts IMG in a tough
position
2. Regulatory 0.15 2 0.3 Increasing minimum paid-in capital
intervention and various amendments in the
insurance code may weaken the
company
3. Natural 0.05 2 0.1 Natural calamities may increase
Calamities insurance company liability.
TOTAL 1 2.50
Scores: 4 (Superior response), 3 (Above average response), 2 (Average response), 1
(Poor response)
EFAS MATRIX
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International Marketing Group rated 2.50 out of 5. This means that the
company’s response is average and that it responded very well to one threat,
Overall, the company is showing its awareness to both factors and responds
accordingly.
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INTERNAL STRATEGIC
FACTORS WEIGHT RATING WEIGHTED AVE. COMMENTS
Strengths
their adaptability
to situations
1. Flexibility of system and proved favourable
its agents 0.11 4.00 0.44 to the company
diversification used
by the company
2. Versatility in the financial gave them some
industry 0.05 3.00 0.15 financial leverage
Focusing on
clients satisfaction
makes their
3. Quality Products and arsenal formidable
Services 0.10 4.00 0.40 in the industry
Hardworking and
4.Passion and dedication of persistent in their
its employees and members 0.10 4.00 0.40 business
Weaknesses
1. Increasing admin. May proved fatal if
Expenses and debt 0.27 1.00 0.27 kept unchecked
Liability exceeds
the company’s
2. Liquidity and insolvency 0.15 1.00 0.15 assets
Inevitable number
of agents are
4. Declining of existing backing out due to
agents 0.07 2.00 0.14 wrong mind-sets.
1.00 2.10
IFAS MATRIX
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Judging by the score, IMG is struggling in its financial stability due to its increasing
expenses. The company must maximize its strength to offset its weaknesses. As of now
we could say that the company’s expenses are growing faster than its revenues and it
has been neglected resulting into the company’s net loss. The company must address its
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CPM Matrix
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IMG scores lower than the other three insurance brokers. Financial
stability for IMG rates 2 while BDO, Intertrade and Marsh scores 4 due to
becoming the top 3 insurance brokers in the Philippines. Service quality and
public image is the same among the four companies based on the customer’s
loyalty and satisfaction. Geographical location are same among the four
companies because they are all in the trade and financial heart of the
Philippines, the Makati city and taguig city. Strategic partnership and alliance
are also present in IMG, in fact it has some of the strongest partners in the
regarding its people inside. Also there research and development has its plans
Marsh are generous regarding benefits to its customer that’s why IMG only
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IE MATRIX
With the score of 2.5(EFE) and 2.1 (IFE) the point falls in the middle, signalling
that the company should Hold and Maintain its current position in the industry.
product development.
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CHAPTER VI
Strategy Implementation
A. Recommendations
the company’s internal and external factors, we have presented the following
recommendations:
By doing so, the company will be able to hold out during the long run
and avoid being burdened by their expenses. This also allows them to
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B. Objectives
We, the group researchers, uses the following objectives to guide us in our
strategy.
I. Short Run:
3. Increase workforce
2. Company expansion
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Expected Output:
Details:
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Estimated Budget:
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Expected Output: By doing so will increase brand awareness and open new
services.
Increase revenue by 8%
Details:
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ESTIMATED BUDGET:
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Expected Output:
insurance and
funeral services:
(St. Peters, La
funeraria Paz,
etc.)
Estimated budget:
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Expected Output:
of potential
customers
- Giving groceries
for top 50
hardworking
Estimated Budget:
Total P828,000
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Expected Output: Decrease long term payables by 34% and interest expense
by 58%.
additional Department
investment of 30
of the year.
- 10 million goes to
and 20 million to
short term
payables
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