The Philippine Dairy Products Corporation in 1997: A company analysis and proposed strategies

The Philippine Dairy Products Corporation is a company classified under the dairy food manufacturing industry that seeks to satisfy the need and wants for bread and pastry filling and as ingredient for cooking and baling to enhance the qualities of the end product. Assessment of Industry indicated a low threat to entrants primarily due to high capital investments as well as economics of scale that entrants need to surmount. Existing Players in the industry exhibit high intensity of competition with each other as manifested in frequent technology transfer they engage in to enhance their product portfolio. This particular industry has a high substitutability level with existing products as well as new products coming in as a result of technology. Bargaining Powers of Buyers are high due to better education of the masses and the intense competition among industry players. Bargaining Power of Sellers is not high. The raw material is a commodity and sourcing out raw materials to many suppliers loosens their grip on the industry. The Strategic Group where the Philippine dairy Products Corporation belongs is with the full range of products in the product category and situated at the national level with its geographic scope. This groups the company with the likes of Kraft-GenFoods, New Zealand Creamery, Unilever, and RFM. Opportunities in the industry are the low bargaining power of suppliers, low threat of new entrants in the industry and emerging technologies. The macroenvironment presents an opportunity in the dining out segment of the market and the fact that convenience is becoming a factor in decision making when buying products. The Philippine Dairy Products Corporation is a joint venture of the San Miguel Group and the New Zealand Dairy Board which officially began in 1981 initially with just one butter-making machine in a secluded corner of then Magnolia Dairy Products Plant along Aurora Blvd. in Quezon City. From there, the company has spun off and grown to become one of the San Miguel Food Group’s main contributors. The main office is now situated at the SMPPI Bldg. beside the San Miguel Head Office Complex. Their production capacities are now housed in Trece Martires in Cavite which features a more than 4, 00 square meter state-of-the-art production facility. Value activities of the company include flexible manufacturing facilities, customization of products, and good formulation for Operations, cold chain distribution, 24 hour delivery, chiller support, and multi system of deliveries for Outbound logistics technical sales support for Marketing and Sales. Strengths of the company has been its credit worthiness as manifested by a current ration average of 1.416 five years and a solvency average of 1.56 for five years Customization of products that fits the exact requirements of a client and the salesmanship and technical expertise that the sales personnel share with the client. The company on the other hand, encounters weaknesses through high cost of production weak brand and portfolio management weak retail distribution system and maintaining the consistent quality of the company products. The personal values of the Top Management is perceived as paternalistic as exhibited by San Miguel culture, but with a touch of American Corporate Values that the Top Management has adapted as his own which have come from previous stints. The vision/mission of the Philippine Dairy Products Corporation is to be the premier food company in the Philippines enhance efforts by leveraging on our strengths in food to meet domestic leadership work for the interest of our mother company, The San Miguel Group and build together a dynamic organization improving competitive edge in products, services and technology. The objective for the year 1997 is the realize a Net Income from Operations increase by 20% versus last year and an aggregate market share of 29% for all products. The generic strategy of the company is overall cost leadership which will entail embarking on technological advancements, quality control management to improve products and implement out sourcing of raw materials to get the best prices for the best quality raw materials. The company competitive advantage is the ability to customize butter, margarine and cheese products to fit the client requirements salesmanship and technically trained sales personnel that regularly goes out in the field and transact with the clients and the company nationwide refrigerated storage and distribution. Based on the Position of a Competitive Advantage Life Cycle, the Philippine Dairy Products Corporation is on the second stage where they are still developing superior customer value