Strama Okay Na QSPM

Introduction
COMPANY BACKGROUND
A.
The Philippine Agriculture Sector

The agriculture in the country has remained to be one of the major contributors to
economic growth of many countries in the Asia-Pacific region. More than 70% of the countrys
population is dependent on agriculture. Despite the low priority that this sector has been given in
the past in terms of budgetary resources, it continuously provided income and livelihood to
millions of farmers and their dependents. This attaches the high priority of transforming
agriculture into a modern, dynamic and competitive sector. A sustained expansion of the
national economy requires growth in the agricultural sector in the country.
B.
Nature of Business
Agrinurture started as a trader of post-harvest agricultural machineries, which aimed to
help improve the productivity and income of rural Filipino farmers. The company was formerly
recognized as Mabuhay 2000 Enterprises, Inc. and eventually diversified into various agrocommercial businesses and became one of the countrys top fresh mango exporters to world
markets.
AgriNurture serves the fresh needs of the leading retail & key institutional accounts in
the country, and also supplies of home grown fruits such as banana, sweet pineapple and
papaya to consumers in the Greater China Region, Japan, Korea, and the Middle Eastern,
European, and North American Regions. The company engages in manufacturing and
distribution of fruit beverages and puree, dried fruit snacks, processed fruit mix, frozen fruits &
vegetables, dairy and rice products.
AgriNurture, Inc. | 1
C.
Company Structure
AgriNurture consists of six divisions in order to perform and produce good quality
agricultural products. These are: Farming, Export, Local Distribution, Foreign Trading, Retail,
and Others.
For the Farming/Farm Management Group:
The farming group engages in commodity such as rice and corn and high value crops
production, joint venture farming and contract growing. Agricultural goods produced by the
Farming Group are supplied to the Distribution and Export Groups. Aside from fruit and
vegetable production, the Farming Group is also engaged in the distribution of farm inputs such
as seeds, fertilizers, pesticides, as well as greenhouses and equipment.
For the Export Group:

The Companys Export Group is in charge of looking for markets abroad as well as
sourcing the best quality produce possible to satisfy its growing number of clients. It is
considered to be the top dollar earner of ANI by exporting all kinds of fruits, vegetables and
other agro products but its main export products are fresh banana, fresh mango and coconut
water.
For the Local Distribution Group:
ANI distributes agricultural products under the FCA (Fresh Choice Always) brand. They
supply fresh vegetables as in-house brands of various supermarkets.
The Distribution Group intends to boost revenues through new and innovative
distribution methods such as direct selling approach to address consumers and institutional
buyers need for fresh produce amidst problems on lack of proper storage. ANI also intends to
take its distribution to a global level. It aims to enter the Australian, European and US markets.
For the Foreign Trading Group:
As for international distribution, this activity has been undertaken by ANI with the support
of Hansung Agro Products Corp., and Sunshine Supplies International Co., Ltd. ANI together
with these companies sell and distribute agricultural and other commodities in Hong Kong,
Macau, China, Japan, Korea, Australia and Europe.
For the Retail Group:

The establishment of the Retail Group completes ANIs strategy of integrating Retail and
Franchise into its portfolio of services in line with its vision of becoming a global leader in
providing nutrition from farm to plate.
The direct and indirect subsidiaries of the company under the retail group are: a) The Big
Chill, Inc. and b) Heppy Corp. AgriNurture, Inc. owns 80% of the outstanding capital stock of
The Big Chill, Inc., while wholly owns Heppy Corp.
Foreign Subsidiaries
In line with the plan for the global re-organization of the ANI Group of companies for
more streamlined and efficient operations, a number of foreign subsidiaries have been
established. The Company is currently in the process of implementing the previously approved
global re-organization in accordance with the following plan and goal:
At present, the subsidiaries in the ANI Group of Companies are in the process of
amending their Articles of Incorporation in line with the foregoing global re-organization plan.
FIGURE 1. AgriNurture, Inc. Global Re-Organization Plan, 2013
D.
Vision, Mission, and Values

AgriNurture Inc. envisions being a leader globally in providing nourishment from farm to
plate. It has different objectives such as:

(a)
supplying quality but affordable goods and services,
(b)
applying modern technologies to innovate operations and productivity,
(c)
enhance stakeholders value;
(d)
promote advocacies for environmental and social upliftment and;
(e)
foster national pride.
The company also has corporate values and philosophies which are:
(a)
integrity being honest and fair in every course of action and not compromising
ethical business practices,
(b)
teamwork communicating, trusting and respecting each and every individual,
(c)
care for people respecting, coaching and giving recognition to each other.
Chapter II
STATEMENT OF THE PROBLEM

A.
Background of the Study

AgriNurture, Inc. mainly focuses its operations through the local and international
production and distribution of Cavendish bananas, Carabao mangoes, coconut water and other
products such as rice grains, pineapple, papaya, etc. allocated for its other sub-products.
Others; 10%
Coconut; 20%
Cavendish Banana; 50%
Carabao Mango; 20%
In view of these facts, the researchers settled for the prime revenue drivers as the focus
of the paper with all the relevant data from these products, as well as other material data such
as the actual and forecasted rates of the GDP, inflation and the like.
B.
Purpose of the Study

The purpose of this study is to develop a strategy for AgriNurture, Inc. in order to
improve, compete and forecast the possible outcomes that the company could embark on with
their future needs despite the threats that are expected to arise in the future. The purpose of the
study is to answer the following questions:
1. What causes the constant decrease in the net profit despite the big share of
increasing revenues? bakit hindi macover up yung net income losses
The researchers chose the company based on the following factors: a) the availability
and willingness of the company to share its information such as financial statements and
company background and; b) the significance of the products the company offers to its
customers.
C. Scope and Limitation
The scope of this paper mainly focuses on AgriNurture Inc. and its Subsidiaries. This
business line permits the production and processing of different agricultural products. This
process overall starts from farming, manufacturing, and distribution down to retail and franchise
division until the export group. The paper emphasizes on the companys prime revenue drivers
Cavendish bananas, Carabao mangoes, and coconuts, and the components that have a
substantial effect on its revenues. This will be discussed further in the Industry Analysis section.
Recommendations and solutions are taken in consideration of the revenue management of the
company and the strategies of international companies that could help the company raise its
revenues.
The amount of the data to the financial performance of the players is limited to the
audited financial statements from 2009 to 2013 of AgriNurture Inc. accessed and utilized
through the latest available financial reports submitted by the company in the Securities and
Exchange Commission. Information was gathered through interviews and connections to the
company. The Vice President of the companys farming sector, Mr. Larry Pangilinan instituted
the researchers to the head of exports, Ms. Liza Guinto who both provided the researchers with
the internal information necessary for the research. The proponents also gathered information
from: a) print materials from the San Beda College library; b) government websites such as
NEDA, PSA and NSO; c) international websites such as FAO, Trading Economics and World
Bank, and; d) the companys website.
Chapter III
CAUSES OF THE PROBLEM

A.
Industry and Competitor Analysis
a.
The Philippine Agricultural Sector

Philippines has a total area of 13 million hectares devoted to agricultural crops making it
an agricultural country. It is divided into 4 parts which is the food crops, food grains and nonfood crops. 31% is occupied by food grains, 52% is utilized by the food crops, on the other hand
17% were used for non-food crops.
b.
Agricultural Economic Sector

The countrys agricultural sector comprises of livestock and crop produce. The NEDA
aims for a competitive agriculture and fisheries sector as it plays an important role in the
countrys development: from 2004 to 2010, agriculture and fisheries contributed an average of
18.4 percent to GDP and the sector grew at an average rate of 2.6 percent annually
(Millennium Development Goals, 2013). The 2013 agricultural performance report provided by
the Bureau of Agricultural Statistics (BAS) shows that the current agricultural industry of the
country is valued at 1.3 trillion pesos with a growth rate of 1.15 percent. Looking forward, the
NEDA development plant for 2010 to 2016 is to achieve a stable macro environment of the
country by reducing a deficit-to-GDP ratio from 3.7 to 2.0 percent by 2016 (Development
Matrices, 2011).
Source: National Statistics Office
Agriculture
2.89
1.15
2012
2013
Agriculture posted a 1.15 percent
growth in 2013. Subsectors registered on output gains but increase in crop production was
minimal. Livestock, poultry and fisheries also contributed to the improved performance of the
sector. The gross output in agricultures was valued at P1.5 trillion, which is equal to 3.51
percent increase from the 2012 earnings.
Crops
4.15
0.09
2012
2013
Production in the crops subsector
inched up by 0.09 percent. Crops contributed

51.05 percent on the total agricultural output.
Palay production grew by 2.26 percent while

corn declined by 0.40 percent. Tobacco, onion, mango and cassava had the higher outputs that
was recorded. While coconut, sugarcane, banana, coffee, abaca, peanut and calamansi had
lower output levels was noted from those products. The subsector grossed P814.7 billion at
current prices. This was 2.13 percent higher than last years record.
Farmgate Prices
2.5
2012
2013
-1.56
On the average, farmgate prices went up by 2.33 percent during the reference
period.Crops subsector registered an average price gain of 2.04 percent. On the other hand
livestock had higher average price increment of 6.94 percent. Poultry sector increased prices by
an average of 0.10 percent. While fisheries subsector prices increased by an average of 1.53
percent.
The Philippine Banana Industry

The Philippines production area of banana ranked as the third largest in the world at
415,000 hectares in 2004 or about 8.5% of the total world area. It ranked second to India which
has 680,000 hectares.
The Philippines is the second largest
exporter of bananas after Ecuador, with some

2.6m tonnes exported in 2012. That same year the exports from the Philippines made up 98%
of the Asian banana trade. Two thirds of the exported volumes were shipped to Japan, China
and South Korea.
Banana is the leading fruit grown in the Philippines and a consistent top dollar earner.
The Philippine prospect for bananas in the domestic and foreign market is still promising:
Cavendish and banana chips for export.
Others; 6%
Lakatan; 6%
Saba; 18%
Cavendish; 70%
Figure 3.5. Banana: Percent distribution of production by variety,

Philippines, July September 2014
The banana industry in the Philippines is surrounded by a number of issues which

include agrarian reform, labor rights violations, environmental degradation, sustainable
development and food security.The root cause of these issues are the practices and manner by
which international companies have managed the banana industry. The price determination of
bananas for export has remained under the control of the big institutional buyers, despite the
growing liberalization of the industry.
Relevance
The main banana export variety of AgriNurture, In. is Cavendish and its main production
area is in Mindanao. The Export Group sources its supply from small independent growers and
from established corporate plantations to consolidate as much supply as it can to satisfy its
clients in China, Korea, Middle East and Russia. The requirement of the ANI Export Group is
currently in the range of 25-50 forty-foot containers a week.
The Philippine Mango Industry

Based on the Bureau of Agricultural Statistics data, Philippines is the 7 th largest mango
producer in the world. It reached 771.4 thousand metric tons in which 95% is domestically
consumed.It has an established domestic market and has bright opportunities for the
international market both in fresh or processed forms.
Majority of the mango processors are small and medium enterprises (SMEs). Small
farmers own about 73% of the total area planted to mangoes while 24% operate farm sizes
between 3 to 9.99 hectares. Those 10 hectares and above constitutes only 3%. Based on
management contract with the farmers,
sprayers (contractors)
undertake cultivation
management including the well-known Philippine mango. Mangoes are sold to wholesale
markets, processors, wet retail markets, supermarkets and exporters. Manila, Cebu and Davao
are the major cities that serve as the key trading centers for mangoes that are sold in the local
market.
Piko; 3%
Others; 18%
Carabao; 79%
Figure 3.4. Mango: Percent distribution of production by variety,

Philippines, July September 2014
The world demand for mangoes are increasing particularly in temperate countries.
According to a major exporter, the strengths of the Philippine mangoes are the year-round
production, superiority in taste of Carabao, a major variety cultivated and geographical
adjacency when exporting to East Asia.Fresh mango exports ranked 3 rd among the exported
fruits of the country. Japan and Hong Kong are the major export destinations, the transshipment
point to China, whose respective shares are 52.9% and 35.7% in value term.
Relevance
ANI exports Carabao mangoes. The Export Group sources its mangoes from all over the
Philippines via a network of growers and suppliers who have been in the mango business for
decades. The Export Group also taps the various mango contract growers of ANI who avail of
the inputs loan provided by the Farming Group. These mango growers follow the strict mango
production system prescribed by the Government to comply with good agricultural practices as
well as the pesticide spraying protocol. By adhering to these strict standards, ANIs mango
exports can be accepted by any stringent market abroad. The Export Group manages all the
processes involved in exporting mango with the help of Hansung Agro Products Corp. as the
processing and packing facility with Vapor Heat Treatment capability.
The Philippine Coconut Industry

The coconut industry by any measure is a majorindustry in agriculture. It has been a
consistent contributor to the Phillippine economy. It accounts for 5.97% on the average the
countrys gross value added (GVA) and 1.14% of the gross national product. Coconut products
are included on the top five net foreign exchange earners, averaging at least US$760 million
annually. Moreover, the industry has a 59% share in world coconut exports.
On the contrary of the good performance of the sector, the coconut sector of the country
is in crisis due to the poor productivity, unstable prices, under-utilization of coconut farms,
under-employment and inadequate industrialization. Poverty among the coconut farmers and
farm workers has been widespread as stated earlier. There are about 90% of the 3.4 million
farmers who live below the poverty line.
Relevence
Coconut water is one of the most sensational among ANI products in the market today
for both local and export. This product is exported by the ANI Export Group to USA, Canada,
Australia, New Zealand and the Middle East. The facility used for processing and packing for
coconut water export is owned by M2000 IMEX Co., Inc.
c.
Industry and Market Segments

Performance of Philippine Agriculture
Gross output in agriculture was valued at P1.5 trillion at current prices in 2013. In
relation to the gross earnings during the reference period it increased by 3.51 percent growth
due to the increases in both production and prices across subsectors.
I.
Value of Production
Mango
Banana
Coconut
120.89
102.89
108.13
116.63
88.83
18.60
2011
19.52
2012
81.33
19.35
2013
*in trillion pesos

FIGURE 3.6 Value of Production in Agriculture at Constant Prices,
Philippines, January - December, 2011 2013
In 2013, gross output in agriculture was valued at P1.5 trillion at current prices.
The increases in both production and prices across subsectors resulted in the 3.51 percent
growth in gross earnings during the reference period. P1.87 billion at current prices and posted
a 2.13 percent increment from last years level was the gross of the crop subsector.
Gross value of coconut production decreased
by 8.44 percent because of lower
production and prices during the reference period. This year, a 5.77 percent contraction was
registered because of lower volume of output. Better prices contributed to the 7.86 percent gain
in gross earnings from banana during the year.
II.
Volume of Production
Mango
Banana
15.86
15.24
8.65
0.82
0.77
2011
15.34
9.23
9.17
0.79
Coconut
2012
2013
*in trillion pesos
FIGURE 3.7. Volume of Production in Agriculture,

In 2013, agricultural production increased by 1.15 percent. The crops subsector with
a 51.05 percent share in the total agricultural output increased by 0.09 percent over the year
ago level.
Coconut production decreased by 3.26 percent during the reference period. This was
due to the reduction of the area harvested in the provinces which was affected by the Typhoon
Pablo, namely, Davao Oriental, Davao del Norte, Compostela Valley, Agusan del Sur and
Surigao del Sur. The other typhoons Labuyo and Santi contributed on the short fall in Aurora
and Yolanda in Leyte, Eastern Samar, Samar and Aklan. Cutting and replanting of less
productive trees were noted in Oriental Mindoro. Shifting to rubber cultivation was reported in
Basilan. Lesser harvesting as a result of low prices of copra was noted in Surigao del Norte. In
Batangas, trees affected by scale insects were cut.
Banana production decreased by 6.29 percent. Trees toppled down by Typhoon Pablo
in Davao Region, Caraga and Central Visayas had not yet fully recovered. Labuyo and Santi
which hit CAR, Cagayan Valley and Central Luzon and Typhoon Yolanda affected the Visayas
regions and the reported closure of Soriano Farm in Agusan del Norte also contributed to the
negative performance of banana.
Major Global Contributors to the Industry

Output (in million tonnes)
29.7
5.1
4.8
3.9
er
oo
n
6.1
am
7.3
8.0
In
do
ne
si
a
9.2
Ec
ua
do
r
hi
na
10.7
In
di
a
11.1
Source: Food and Agriculture Organization of the United Nations

FIGURE 3.8. Top Banana Producers in the World, 2013

15.19
4.35
1.25
0.89
0.85
0.80
N
ig
er
ia
1.82
il
ta
n
1.89
B
ra
z
2.13
Pa
ki
s
Th
ai
la
nd
2.60
In
di
a
d.

FIGURE 3.9. Top Mango Producers in the World, 2013

18.30
15.35
11.93
1.01
0.61
Pa
pu
a
N
ew
1.10
nd
1.20
ui
ne
a
1.31
Th
ai
la
2.20
Sr
iL
an
ka
In
di
a
In
do
ne
si
a
2.82

FIGURE 3.10. Top Coconut Producers in the World, 2013
e.
Analysis of Macro-Environment Components
General Economic Conditions and Global Factors

According to the National Statistical Coordination Board (NSCB), the latest gross
national income growth rate of the country is at 7.8 percent based on the fourth quarter of 2013,
however decreased by 0.3 percent from the third quarter of 2013 (StatWatch,2014).
In addition, the National Economic Development Authority (NEDA), reported that over
the years, the countrys growth rate in the second half of 2010 was at 6.7 percent but had a slow
increase over the years with a 7.6 percent growth rate recorded in 2012 (Socioeconomic
report, 2012). During 2010, NEDA reports that the some of the indicators that led to a steady
growth rate over the years 2010 to 2012 were fuelled by upgrades in infrastructure and capital
stock and expanding social safety nets as well as strong domestic demand, sustained growth
in overseas Filipino remittances, and low inflation (2012). As shown above, the growth rate
indicates a slow but increasing rate.
Gross National Income

(Growth Rate)1
Gross Domestic Product
(Growth Rate)1
Exports2
Latest
7.8
Year Ago
6.4
Previous
8.1
4th Qtr 2013
4th Qtr 2012
3rd Qtr 2013
6.5
7.1
6.9
4th Qtr, 2013
4th Qtr, 2012
3rd Qtr, 2013
USD 4,599 million USD 3,971 million

USD 5,233 million USD 5,208 million
USD 4,294 million

Nov 2013
USD 4,824 million
Nov 2013
Nov 2012
Oct 2013
4.2
4.2
4.1
Jan 2014
Jan 2013
Dec 2013
3.2
3.2
3.2
(Jan 2014)
Jan 2013
Dec 2013
17.9%
19.0 %
19.2%
Oct 2013
Oct 2012
Jul 2013
6.5%
6.8 %
7.3%
Oct 2013
Oct 2012
Jul 2013
Dec 2013
Imports2
Headline inflation rate
Core Inflation Rate
Underemployment rate3
Unemployment Rate3
Dec 2012
1 Taken from National Statistical Coordination Board;

2 Taken from the National Statistics Office;
3 Taken from Bangko Sentral ng Pilipinas
Table 3.1. Economic indicators in the Philippines, 2012 2013
The Natural Environment

The Philippines is considered to be a tropical rainforest with different natural resources
such as forests, fertile lands and seas (NSCB, 2011). Below are the statistics regarding the
environment situation of the Philippines from the United Nations Statistics Division:
Total area (sq km)
Agricultural land (sq km)
Arable land (% of agricultural land)
Permanent crops (% of agricultural land)
Permanent meadows and pastures (% of agricultural
land)
Change in agricultural land since 1990 (%)
Forest area (sq meter)
Change in forest area since 1990 (%)
300,000
121,000
454
43
12
9
77,198
18
TABLE 3.2. Statistics on Philippine Environment, 2011
One of the projects developed by the Department of Environment and Natural

Resources (DENR) is to manage and distribute lands: management and disposition of
alienable and disposable lands of the public domain and other lands outside the responsibilities
of other government agencies, such as reclaimed areas and other areas not needed for or are
not being utilized for the purpose for which they are established. The latest issued progress on
is that currently, a total of 176,091 patents were issued covering 94,021 hectares. These
consist of: (a) agricultural areas (CARP-funded) 115,631 patents (92,146 ha); (b) residential
areas 58,486 patents (1,430 ha); and (c) commercial and industrial areas 1,974 patents
(445 ha) (DENR, 2011).
The environment of the country is affected by several changes in its climate, and due to
global warming, especially with the recent hit typhoon Yolanda, a category 5 typhoon has been
alarming. According to the PAGASA report, there is reduction in rainfall in most parts of the
country during the summer (MAM) season. However, rainfall increase is likely during the
southwest monsoon (JJA) season until the transition (SON) season in most areas of Luzon and
Visayas, and also, during the northeast monsoon (DJF) season, particularly, in provinces/areas
characterized as Type II climate in 2020 and 2050. There is however, generally decreasing trend
in rainfall in Mindanao, especially by 2050 (PAGASA, 2011).
Population Demographics
Population Growth Rate
1.99
1.96
1.93
1.9
1.87
1.81
2008
2009
2010
2011
2012
2013
Source: National Statistics Coordination Board

FIGURE 3.11. Philippine Population Growth Rate (%)
The Philippine population is currently at 92.34 million (as of May 2010) from 88.55
million from August 2007 (NSO, 2013). Based on the statistics released by the National
Statistics Office, the population is expected to rise: the Philippine population would continue to
grow, increasing 76.5 million, as of the latest population census conducted in May 2000, to
141.7 million in 2040, according to the Medium Series of the 2000 Census-based population
projections. This means that 65 million people would be added to the nation's population
between 2000 and 2040, which is a span of 40 years, even if the average annual growth rate is
projected to drastically decline from 2.34 percent during the 1990-2000 period to around 1.0
percent during the 2030-2040 period. The population is projected to grow by 1.95 percent in the
2005-2010 period, from 85.3 million in 2005 to 94.0 million in 2010 (NSO, 2006).
f.
Supply Chain
FIGURE 3.12. The Agricultural Food System Supply Chain
The agri-food system includes farmers and a diverse range of firms, including backwardlinked input suppliers and forward-linked intermediaries, processors, traders, wholesalers and
retailers. The main activities for direct supply chain entities are as follows:
Input supply. This includes the production and distribution of material inputs such as
fertilizer, seeds, packaging, etc. utilized in the primary production, processing and/or
trade of the focal commodity.
Farm production. This stage is concerned with primary agriculture production and ends
with the sale of a raw commodity at the farm gate. These transactions may occur literally
at the farm gate or at some other point where the farmer hands over ownership of the
product to the next supply chain participant. Depending on the crop, some type of
primary processing (such as the shelling or bagging of dry grain) may take place at the
farm level.
Processing. The processing stage involves the transformation of agriculture raw
materials into one or more finished goods through drying, canning, freezing, or
Enabling Environment Domestic and International many other methods. Raw
commodities, of course, are also traded and distributed and thus this stage may not
apply to every crop.
Domestic and international logistics. The logistics stage is concerned with the
delivery of marketed commodities to their final market destination.
Conditioning the entire supply chain are the domestic and international enabling
environments. From a domestic perspective this includes: fiscal and financial sector policies,
pricing and investment incentives and institutions, the regulatory and legal framework etc. From
an international perspective, the enabling environment includes international trade regulations
and agreements, other international protocols, and the policies/regulations of nations and
trading blocs with whom the focal supply chain sources and sells inputs or products.
Supply chains are more complex, with many participants, with product, finance and
information flows often traversing large geographical/international areas and with distinct intraand interseasonal dimensions. Supply chains may also be divided into an array of sub-supply
chains, traversing the farm-to-fork continuum (i.e. production to consumption) for specific
commodities (or closely associated commodities). It is therefore important to focus on key
supply chain participants, flows, and transaction points, and to identify appropriate levels of
analysis.
C.
Market Segments and Trends
Gross Domestic Product (%)

Inflation (%)
6.8
4.6
3.7
7.2
6.2
6.4
4.4
4.1
3.2
3.0
2011
2012
2013
2014E
2015E
Source: Asian Development Bank
FIGURE 3.13. Economic Forecasts (% per year),

Philippines, 2011 2015E
Robust growth in the first half of 2014 was fueled by private consumption and investment
coupled with a recovery in exports. Growth is seen quickening in 2015, though earlier forecasts
for both this year and next are trimmed to take into account a slowdown in government
spending and the steady tightening of monetary policy. Inflation will be slightly above the earlier
projections (ADB, 2014).
Slightly stronger growth is projected through the rest of this year and in 2015 on
expectations that post-typhoon reconstruction accelerates, government fiscal disbursement
improves,
and
exports
benefit
from
brighter
prospects
in
the
major
industrial
economies.However, unexpectedly low government spending coupled with higher inflation and
associated monetary tightening prompt revised forecasts trimmed to 6.2% for this year and
6.4% for 2015 (ADB, 2014).
D.
Pricing
Mango
Banana
Coconut
25.41
23.6
23.71
13.49
11.72
11.19
7.93
5.6
2011
2012
5.3
2013
*in Philippine Peso

FIGURE 3.14. Weighted Average Farmgate Prices in Agriculture,
Farmgate prices increased by an average of 2.33 percent in 2013. In the crops

subsector, prices made a changed its course from last years decline to an average gain of 2.04
percent this year.
Abig price gain was noted for banana at 15.10 percent. This was traced to the high
demand from buyers for bananas as fresh fruit for immediate consumption and for processing. It
is because of the high demand buyers for bananas as fresh fruit for immediate consumption and
for processing. Coconut price was down by 5.36 percent due to the low buying price for copra.
These were attributed to the decreasing world market prices of these commodities. Price of
mango went down by 6.69 percent because of increase in production.
E.
Distribution Channel
AgriNurture, Inc. and Its Subsidiaries
O c e a n B i o c h e m is t r y R e s e a r c h T e c h n o l o g F y r u it i l i c i o u s C o m o n a y , In cF i. r s t C l a s s A g r i c u l t u r e C o r p o r a t i o n H e p p y C o r p .
F r e s h a n d G r e e n P a l a w a n A g r i v e n t u r e s , InM c 2 . 0 0 0 IM E X C o ., In c . L u c k y F r u i t a n d V e g e t a b l e s P r o d u c t , In c . T h e B i g C h i l , In c .
F a r m v i l e F a r m i n g C o ., In c .
C o c o T r o p i c , In c . F r e s h a n d G r e e n H a r v e s t A g r i c u lt u r a l C o r p o r a t i o n
B e i d a h u a n g ( P h i l s .) A g r o In d u s t r i a D e v e l o p m e n t
H a n S u n g A g ro P ro d u c ts , C o rp .
B e s t C h o ic e H a r v e s t A g r ic u lt u r a l C o r p o r a t io n
G o o d s a n d N u t r i t i o n f o r A l , In c .
W a n t a ix in g G r o u p C o r p o r a t io n
Q u a li s L o g i s t i c s a n d T r a n s p o r t S e r v i c e s , In c .
S u n s h i n e S u p p l i e s C o ., L t d .
FIGURE 3.15. Distribution Channel of AgriNurture, Inc. and Its Subsidiaries
F.
Porters Five Forces of Competitive Analysis

The economic structure of an industry is not an accident. Its complexities are the result
of long-term social trends and economic forces. But its effects on the management are
immediate because it determines the competitive rules and strategies that likely to be used.
The diagram below shows the five forces formulated by Michael Porter that are widely
used to assess the structure of an industry:
FIGURE 3.16. The Five Forces Model of Competition
The overall five forces show that the competition in the agricultural industry is strong.
Below is the summary of how strong, moderate or weak the five competitive forces are in the
industry:
FIGURE 3.17. Competitive Forces Affecting the Agricultural Industry in the Philippines
a.
Factors affecting Strength of Rivalry

The diagram below describes the factors that strengthen or weaken this competitive
force. Overall, the rivalry among competing sellers is strong.

Competing sellers are active in making fresh moves to improve their market
standing and business performance.
Agricultural production and distribution is characterized by a high degree of competitive
rivalry. Efforts to develop branded or specialized products are quickly and effectively
copied, and meaningful differentiation is difficult to achieve. The competitive rivalry plays
out most clearly in bidding for productive resources. Here, producers typically bid most of
their long-term potential profitability into the price of fixed assets such as farmland. As a
result, rivalry has a very detrimental impact on individual profitability in the sector.
However, it also encourages firms to be extremely efficient and productive as cost
competition is the most likely source of competitive advantage.
Buyer demand is growing slowly
The buyer demand is growing slowly because the demand grows in line with population
growth. There is a growing buyer demand because buyers rely on these producers in
order to survive. Buyers are unable or unwilling to cut out of their budgets regardless of
their financial situation. Also, buyers tend to demand these products at a relatively
constant level, regardless of their price.
Buyer costs to switch brands are low.
Buyer costs to switch brands are low because the competitors products are similar in
terms of features and usage of the product. All the more, because of similarities of
features and usage, it is important to develop brand loyalty through brand differentiation.
b.
Factors affecting Threat of Entry

The diagram of the competitors as shown below describes the strengths and weakness
affecting the threat of potential entrants. Overall, the threat of new entrants is weak.
The pool of entry candidates is small.
There is difficulty in entering into the current industry primarily because the amount of
capital needed for new entrants is quite sizeable and the gross profit margins are very
limited (leading to small returns). Current players that possess a competitive advantage in
the market are big domestic companies, although there are other multinational
competitors such as Dole, who are able to compete because of their large resources.
Entry barriers are high.
Entry barriers are high because of high capital requirements such as the acquisition of
lands and the strong brand image of existing players. Current players in the industry have
somehow gained customer loyalty and brand preference.
As per an internal basis with AgriNuture, Inc., with over a decade of experience in
handling fresh fruits and vegetables and gaining many years worth of learning in product
innovation, the company has attained product acceptance in major world markets such as
Hong Kong and China. It has catapulted ANI into being one of the top exporters of
mangoes from the Philippines. The Company is even now among the few, accredited by
the China government to export mangoes to their country.
Buyer demand is growing slowly or is stagnant.
Demand for agricultural products is growing slowly primarily because these serve as
inputs to crop production, which tends to grow in line with population growth.
Industry members will strongly contest the efforts of new entrants to gain a market
foothold.
The ability of the existing players to contest new entrants is strong because of their
significant size and developed brand equity with customers.
c.
Factors affecting Competition from Substitutes

The diagram below shows the following factors affecting how strong or weak of threat of
substitutes in the industry. The competitive force of substitutes is weak. There are three factors
that make the competitive force of substitutes weak.
Good substitutes are not readily available or dont exist.
There are currently no cost-effective substitutes for the crops offered in the agricultural
sector because they offer crops that have been grown under strict systems that maximizes
the quality of crops produced.
Substitutes are higher priced relative to the performance they deliver.
The current substitutes for agricultural products are food supplements and other vitamins
which clearly are priced higher than the current commodities provided by the agricultural
sector. The effect of these substitutes is also not yet proven to be more effective than the
natural and organic products offered by the industry.
End users have high cost in switching to substitutes.
End users have high cost in switching to substitutes because these substitutes may not
offer the same quality of products. Although some end users can produce it themselves,
the production cost will be quite costly considering the high capital required and nonpossession of the benefit of scale and access to competitive raw material sourcing.
d.
Factors affecting Bargaining Power of Suppliers

The diagram below describes the factors that strengthen or weaken this competitive
force. Overall, the bargaining power of suppliers is strong. The following are the factors that
make the bargaining power of suppliers strong.
Industry members incur high costs in switching their purchases to alternative
suppliers.
Industry members typically incorporate alternative fertilizers when the price of the main
raw material is high but there are limits because the nutrient factors of the substitutes are
different. However, industry players will source from established reputable traders (either
local or international traders) to ensure both quality and delivery of their raw materials.
Needed inputs are short in supply (which gives suppliers more leverage in setting
prices).
For instance, the current instability in the supply of fertilizer products and the concomitant
surge of its prices with the industry members purchasing the products in bulk through a
consortium (i.e, so they can contract an entire vessel). Suppliers have high bargaining
power during supply imbalances because they can dictate the price of the raw material.
There are a few suppliers of a particular input.
Ferilizers and pesticides are limited because there are licences required before their
production and distribution of these products according to the Fertilizer and Pesticide
Authority (FPA), making the bargaining power of suppliers much stronger.
e.
Factors affecting Bargaining Power of Buyers
Overall, the bargaining power of buyers is strong. The current buyers of the companys
products are retailers and distributors wherein the products are sold to the end consumers. The
following are the factors that make the bargaining power of buyers strong:
Buyer switching costs to competing brands or substitute products are low.
Buyer switching costs to competing brands or substitutes are low because competing
brands offer products that provide the same features or enhancements. Industry players
can easily switch from one brand to another without having to worry about how much cost
they would incur.
Large volume of purchases by buyers is important to sellers.
Agricultural farms harvest large quantities of their products at specific times of the year.
Thus, large volume of purchases are important so that the inventories they maintain would
be consumed before peak seasons or before demand decreases.
Buyers are large and can demand concessions when purchasing large quantities.
Agricultural farms buy the pesticides and fertilizers in large quantities because of the large
inventory they maintain. All the more, these buyers can exert a great degree of influence
on the pricing and delivery of goods from AgriNurture and its competitors.
Some buyers are a threat to integrate backward into the business of sellers.
Buyers can be a potential threat because of the resources that the country offers. When
the prices of crops become expensive, buyers can resort to producing the raw materials
needed or making the crops themselves.
G.
External Assessment
The following are the Opportunities and Threats of AgriNurture, Inc. and its significant
weights. The ratings on the external factors are identified to have either a poor response
(Rating: 1); average response (Rating: 2); an above average response (Rating: 3); or a superior
response (Rating: 4).
OPPORTUNITIES
O1. Increased awareness to further develop strategies in the banana industry.
Rating 2:
AgriNurture, Inc., despite its strong position in its current sector continues to
partake in several symposiums that would help them give focus on various strategies to further
boost the banana industry. As the banana industry being one of the major economic driver in the
country and ANI, symposiums and seminars will help the industry leaders and company to
improve its strategies in scientifically developing crops and its growing market demand and to
save it from diseases as well.
O2. AgriNurture Inc. adds pineapple as the new fruit product for export.
Rating 4:
AgriNurture Inc. is looking at expanding its export product line with pineapple
as it eyes additional offerings to markets in Russia, China and the Middle East.Considering the
country as a top exporter of pineapples with one of the best qualities around the world, the
company proves its excellent capacity on the selection of new products it will offer and introduce
in the market.
O3. Increased global opportunities due to the ASEAN Integration in 2015
Rating 4:
Most ASEAN countries are engaged in agriculture, producing and exporting
similar varieties of fruits and vegetables. The challenge for ANI is to be a better-known brand
and company in the global markets than its ASEAN counterparts, ensuring that only quality
products from the Philippines reach the market.
O4.
Productivity is expected to grow according to the National Economic and
Development Authority.
Rating 2:
According to the Philippine Development Plan 2011 prepared by the National
Economic and Development Authority, productivity is expected to rise in the following years. As
a result, AgriNurture may have an increase in percentage of sales and a reduce cost of sales
due to the reported decrease of harvest loses of bananas and mangoes in the country.
O5.
Expected 6.4% increase in the 2015 GDP growth rate.

Rating 1:A slightly stronger economic growth is projected through the rest of this year and
in 2015 on the expectation that post-typhoon reconstruction accelerate, government fiscal

disbursement improves, and exports benefit from brighter prospects in the major industrial
economies.The progressing economy of the country may result to a higher GDP for the coming
months. As a result, this may improve the companys stability and revenue and may open
different opportunity like expansion in the ASEAN countries.
THREATS
T1.
Cocolisap infestation damaging the coconut production.

Rating 2:
On the other hand, ANI, with its vast experience, valuable linkages, and wide
geographical presence is able to manage this type of risk by adopting modern pest control
systems and Good Agricultural Practices such as crop rotation and the use of a mixture of
organic fertilizers. In practice, ANI sources its supply requirements from farms and buying
stations located in different provinces and regions of the country. This way, no widespread
infestation would drastically weaken ANIs supply chain at any time. Also, ANIs strategic
nationwide locations allow its farm production and trading activities to easily shift bulk of its key
operations from one region to another should the need arise.
T2.
Decreasing area of production affecting satisfaction of demands for exports
Rating 3:
ANI produces its vegetables and fruits (especially mangoes) from various
sources, ranging from small farmers to big producers. Currently, a minimal part of ANIs internal
supply requirement is provided for by its farming subsidiary, Best Choice Harvest. As a policy,
volume and quality is the main consideration in the sourcing of all the products handled by ANI.
However, the risk of supply shortage poses significant threat to the continuity of business
operations and ultimately to the image of the Company.
T3.
Increased government intervention due to allegations of AgriNurture, Inc.s CEO

with Vice President Binay
Rating 1:
ANI, an agricultural company was one of the biggest stock decliner (2014)
after the companys top executive, Antonio Tiu was linked to the allegation with Vice President
Binay. As a result to the companys loss, ANI may have a negative impact on its investors and
customers
.
T4.
Increasing intensity of competition due to ASEAN Market Integration in 2015

Rating 2:
While the ASEAN integration is expected to level the playing field among
industries in the region, it is also expected that Philippine firms should brace for an intense
competition with their ASEAN counterparts. An intense competition will therefore raise the bar
for innovation, quality and productivity, which will enable businesses to compete head on with
other players.
a.
External Factor Evaluation Matrix
Opportunities & Threats

O1. Increased awareness to further develop strategies
in the banana industry.
Weight
Rating
Weighted Score
14%
0.28
O2. AgriNurture Inc. adds pineapple as their new fruit

product for export.
15%
0.60
O3. Increased global opportunities due to the ASEAN

Integration in 2015
11%
0.44
O4. Productivity is expected to grow according to the

National Economic and Development Authority
10%
0.20
O5. Expected 6.4% increase in the 2015 GDP growth

rate.
8%
0.08
T1. Cocolisap infestation damaging the coconut

production.
10%
0.20
T2. Decreasing area of production affecting the

satisfaction of demand for exports
11%
0.33
T3. Increased government intervention due to

allegations of AgriNurture, Inc.s CEO with Vice
President Binay
9%
0.09
T4. Increasing intensity of competition due to ASEAN

Market Integration in 2015.
12%
0.24
TOTAL
100%
2.46
TABLE 3.3. The External Factor Evaluation Matrix
b.
Strategic Issues Based on External Factors

The highest point in opportunities given by the researchers is about Agriurtures new
export product line with pineapple. It can help raise the revenue of ANI, as it eyes additional
offerings to markets in Russia, China and the Middle East. Considering the country as a top
exporter of pineapples with one of the best qualities around the world, the company can sustain
its position in the export market. The highest possible threat is the increasing intensity of
competition due to the ASEAN Market Integration. The local market will be greatly affected due
to the entrants of foreign market and the less government intervention in the country.
Breakdown of Cost of Sales
Breakdown Operating Expenses
Profitability Ratios
2013
2012
2011
2010
2009
Gross Profit
Sales
Total
578,355,822
2,926,429,244
19.76%
385,222,207
2,329,946,985
16.53%
519,031,385
2,253,760,239
23.03%
270,707,544
1,585,011,759
17.08%
151,715,938
1,017,682,209
14.91%
Operating Profit
Sales
Total
100,401,423
2,926,429,244
3.43%
28,851,405
2,329,946,985
1.24%
320,613,502
2,253,760,239
14.23%
151,380,584
1,585,011,759
9.55%
56,881,536
1,017,682,209
5.59%
22,446,181
2,926,429,244
0.77%
-145,010,551
2,329,946,985
-6.22%
216,101,374
2,253,760,239
9.59%
638,722,288
1,585,011,759
40.30%
35,689,968
1,017,682,209
3.51%
22,446,181
4,788,820,066
0.47%
-145,010,551
4,893,061,512
-2.96%
216,101,374
3,761,036,914
5.75%
638,722,288
2,424,243,615
26.35%
35,689,968
769,904,504
4.64%
22,446,181
2,284,815,700
0.98%
-145,010,551
3,488,441,765
-4.16%
216,101,374
2,315,690,680
9.33%
638,722,288
1,585,192,634
40.29%
35,689,968
546,301,771
6.53%
22,446,181
361,903,281
2,284,815,700
0.85%
-145,010,551
417,902,857
3,488,441,765
-3.71%
216,101,374
535,949,483
2,315,690,680
7.58%
638,722,288
252,388,988
3,488,441,765
17.07%
35,689,968
733,215
546,301,771
6.52%
A. Gross Profit Margin
Gross P rofit
Sales
B. Operating Profit
Operating Profit
Sales
C. Net Profit Margin
Net Income
Sales
Net Income
Sales
Total
D. Net Return on Sales
Net Income
Total Assets
Net Income
Total Assets
Total
E. Return on Stockholders Equity
Net Income
Total Shareholders Equity
Net Income
Total
F. Return on Invested Capital
Net Income
Long Term Debt + Equity
Net Income
Long Term Debt
Equity
Total
TABLE 3.3.Profitability Ratios for Years 2009 to 2013 (in PHP)
Based on Table 3.3, the company is overall profitable, generating sufficient income from the
fiscal years 2009 to 2013. Its sales increased from Php1,017,682,209 in 2009 to
Php2,926,429,244 in 2013. However, the increase in sales in itself does not tell the overall
performance in the company since based on its ratios, there is a remote decline in terms of its
profitability, especially in the year 2012. From the gross profit margin ratio, the decline from
23.03% in 2011 to 16.53% in 2012 shows a decrease of 6.5% and such decline can be
attributed to the increase of cost of sales of the company during the year (see Appendix).
Liquidity Ratios
2013
2012
2011
2010
2009
A. Current Ratio
Current Assets
Current Liabilities
Current Assets
Current Liabilites
Total
2,708,069,905
2,142,101,085
126.42%
2,514,667,150
986,716,890
254.85%
1,744,170,488
909,396,751
191.79%
1,091,260,798
586,661,993
186.01%
604,168,994
222,869,518
271.09%
B. Net Working Capital

Current Assets
2,708,069,905
2,514,667,150
1,744,170,488
1,091,260,798 604,168,994
Current Liabilities
2,142,101,085
986,716,890
909,396,751
586,661,993 222,869,518
Total
565,968,820
1,527,950,260
834,773,737
504,598,805 381,299,476
In addition, the operating profit margin ratio of 2012 declined to 1.24% because of the increase
in expenses and other costs attributed, that the sales generated for the year is not enough to
increase the level of operating profit margin for 2012. Furthermore, in terms of its return on
stockholders equity, there is a heavy decrease by 12.99% from 2011 to 2012. The decline in
2012s profitability ratios is substantially high which can however, be improved with serious
conservation in the latter years considering the slight recovery that it has made by 2.19% in
2013.
TABLE 3.4 Liquidity Ratios for Years 2009 to 2013 (in PHP)
2013
Leverage Ratios
2012
2011
2010
2009
A. Debt to Asset Ratio
Total Liabilities
Total Assets
Total Liabilities
Total Assets
Total
2,504,004,366
4,788,820,066
52.29%
1,404,619,747
4,893,061,512
28.71%
1,445,346,234
3,761,036,914
38.43%
839,050,981
2,424,243,615
34.61%
223,602,733
769,904,504
29.04%
361,903,281
2,284,815,700
13.67%
417,902,857
3,488,441,765
10.70%
535,949,483
2,315,690,680
18.79%
252,388,988
1,585,192,634
13.73%
733,215
546,301,771
0.13%
2,504,004,366
2,284,815,700
109.59%
1,404,619,747
3,488,441,765
40.26%
1,445,346,234
2,315,690,680
62.42%
839,050,981
2,424,243,615
34.61%
223,602,733
546,301,771
40.93%
B. Long Term Debt to Capital Ratio
LongTerm Debt
Long Term Debt + Equity
Long Term Debt
Total
C. Debt to Equity Ratio
Total Debt
Total Equity
Total Debt
Total
D. Long Term Debt to Equity Ratio
Long Term Debt

Total Equity
Long Term Debt
361,903,281
417,902,857
535,949,483
252,388,988
733,215
Total Shareholders Equity 2,284,815,700 3,488,441,765 2,315,690,680 2,424,243,615 546,301,771
Total
15.84%
11.98%
23.14%
10.41%
0.13%
Table 3.4 shows the two important liquidity ratios: the current ratio and the working capital ratio.
Overall, the company is liquid and the company has sufficient funds to pay short term debts and
other current liabilities. In this situation, there was a significant drop from 254.85% in 2012 to
126.42% in 2013. This is primarily caused by the increase in current liabilities from 2012 to
2013, Php 986,716,890 and Php 2,142,101,085 respectively. This could be considered a threat
to the companys liquidity since the decrease was too much and could pose as a warning that
eventually, current liabilities would outweigh current assets.
TABLE 3.5. Leverage Ratios for Years 2009 to 2013 (in PHP)
2013
Activity Ratios
2012
2011
2010
2009
A. Days of Inventory
Inventory
Cost of Goods Sold
365
Inventory
Cost of Goods Sold
Total (in days)
B. Inventory Turnover
28,456,368
2,348,073,422
4.42
134,863,797
1,944,724,778
25.31
155,442,289
1,734,728,854
32.71
77,536,576
1,314,304,215
21.53
37,749,478
865,966,271
15.91
2,348,073,422
28,456,368
82.51
1,944,724,778
134,863,797
14.42
1,734,728,854
155,442,289
11.16
1,314,304,215
77,536,576
16.95
865,966,271
37,749,478
22.94
Cost of Goods Sold

Inventory
Cost of Goods Sold
Inventory
Total (times)
C. Average Collection Period
Receivables
Total Sales
365
Receivables
715,241,065
900,652,472
715,816,762
352,329,640
296,969,099
Total Sales
2,926,429,244
2,329,946,985
2,253,760,239
1,585,011,759
1,017,682,209
Total (in days)
89.21
141.09
115.93
81.14
106.51
Table 3.5 shows the different leverage ratios of the company. The significant increase in the
companys debt-to-equity and debt-to-asset ratio shows that the company is taking risks. In addition,
it could be considered as a risk for investors since the company had a substantial drop in 2012 with
only a slight recovery in 2013 based on its profitability performance (in terms of net income from
years 2009 to 2013 and generating sales for the past five years). In addition, the increase of debt
and other financing needs of the company can be attributed to adding new investments and
expansion that the company is undertaking.
TABLE 3.6. Activity Ratios for Years 2009 to 2013 (in PHP)
Table 3.6 shows the different activity ratios for years 2009 to 2013. The companys
inventory turnover is relatively low particularly in years 2009 to 2013, which is a good indicator
because inventory is moving fast to be sold during the years business operations. In addition, the
companys receivable turnover is significantly high, making the companys collection period much
longer, generating lower cash collection during the year.
J.
Internal Assessment
The following are the Strengths and Weaknesses of ANI and its significant weights. The
ratings on the factors are identified as a major weakness (Rating: 1); minor weakness (Rating:
2); a minor strength (Rating: 3); or a major strength (Rating: 4).
STRENGTHS
S1.
The sole company in the Philippines consumer staples industry adopting farm-toplate business model.
Rating 3:
ANI is the sole company in the Philippine consumer staples industry adopting
a farm-to-plate business model. They have the Farming Group, the Export Group, the
Distribution Group, the Foreign Trading Group and the Retail Group that completes its strategy
of integrating its portfolio of services in line with its vision of becoming a global leader in
providing nutrition from farm to plate. This factor adds to the competitive advantage of ANI in
terms of maximizing its products through its subsidiaries.
S2.
Complete and strategic integration of operations.

Rating 3:
ANI relies on its now fully integrated operations as a strategic advantage over
its competitors in the industry whether local or foreign. Utilizing a zero-waste approach in its
operations. The foregoing operation of ANI significantly accelerates its drive to control supply
chain and thereby ensure supply and product quality, and also reduce the risks in developing
their own farms. This factor adds to the competitive advantage of ANI in terms of maximizing its
production through its subsidiaries.
S3.
Greenergy Holdings, Inc.s acquisition of 26% of AgriNurture, Inc.s stock.

Rating 4:
Greenergys idea in buying ANI was to diversify the portfolio of ANI to other
green or agricultural projects. ANI has diversified into various agro-commercial businesses,
specifically focusing on the export trading of fresh Philippine carabao mango, cavendish banana
and pineapple. With Greenergy in the picture, ANI can expand and enhance its operation
through operating with more technological resources.
S4.
International and Domestic Accreditations.

Rating 3:
Having various accreditation locally and internationally, ANI establish a
reputation in which their products will be trusted when it comes to producing good export quality
products that can make consumers and distributors.
S5.
Strong strategic partnerships in the industry

Rating 3:
AgriNurture Inc.s core business has a significant and direct impact on the
livelihood of Filipino farmers and households, in addition to contributing directly to agricultural

development and food security. In the process, the Company has forged numerous strategic
alliances with government agencies, business organizations, universities, NGOs, and local and
international media that were built over years of integrity and trust.
S6.
AgriNurture Inc. expands banana farm in Indonesia

Rating 4: ANI has already acquired 3,000 hectares of which is allotted for the production
of 40 metric tons per hectare of Cavendish banana. The company has been focusing on
expanding its plantation as the company expects high growth to continue in markets outside the
Philippines. With AgriNurtures expansion, the company may boost its productivity and increase
its income through increase in export sales. These networks and alliances may provide ANI the
capability to mobilize resources promptly and at a bigger scale when market opportunities arise.
WEAKNESSES
W1. Diversified business model leads to the mismanagement of some subsidiaries.
Rating 2:
AgriNurture may face uncertainties with their operations due to operational
risk involving inadequate or failure internal processes and systems of the parent company as
well as its subsidiaries.
W2. Incapability of dividend declaration
Rating 2:
Declaring dividends show that a company is stable. Investors look at a
consistent dividend payout as a sign of the company's stability. When a company has been able
to pay the same dividend over a long period of time, it gives investors more confidence when
investing in that company. As a result, ANIs incapability of declaring dividends may result to
various negative effects to the investors and stakeholders.
W3. Continual leasehold of farmlands for agricultural production

Rating 1:
With ANIs lease holding various land in producing agricultural products, may
create an impact to its investors. It may also create unnecessary expenses that ANI can save if
they start purchasing their own land.
W4. Excessive costs of production
Rating 1: ANI has been unnecessarily spending expenses in which they can save by
reducing it and invest in other commodities like buying new and high technological products
which can boost productivity and lessen salary expenses.
a.
Internal Factor Evaluation Matrix
Strengths & Weaknesses
Weight
Rating
Weighted Score
S1.Distinctive farm-to-plate business model in the

local market.
11%
0.30
S2. Complete and strategic integration of operations.
8%
0.24
S3. Greenergy Holdings, Inc.s acquisition of 26% of

AgriNurture, Inc.s stock.
6%
0.24
S4.International and Domestic Accreditations.
7%
0.21
S5. Strong strategic partnerships in the industry
9%
0.27
S6. Expansion of banana farm in Indonesia
10%
0.40
W1. Diversified business model leads to the

mismanagement of some subsidiaries
4%
0.08
W2. Incapability of dividend declaration
4%
0.08
W3. Continual leasehold of lands for agricultural

production
10%
0.10
W5. Excessive cost of sales and services.
18%
0.36
W6. Excessive operating expenses.
13%
0.26
TOTAL
100%
2.54
TABLE 3.4. The Internal Factor Evaluation Matrix
b.
Strategic Issues Based on Internal Factors
The internal factors stated above are based from its Annual Reports and some articles
over the internet and the newspaper. It is evident that ANI uses its resources effectively and
efficiently when it comes to its farm-to-plate business model. As the Philippine agricultural
sector opens it into a more accessible market through ASEAN integration and increasing
exports, ANI has been aggressively improving its product by penetrating different products in
their export market.
Chapter IV
DECISIONS CRITERIA AND ALTERNATIVE SOLUTIONS

A.
The SWOT Matrix

The researchers used the SWOT Analysis in analyzing AgriNurtures strengths and
weaknesses, opportunities and threats that they are currently facing, in order to formulate
strategies that would focus their strengths to minimize the threats they carry, and take the
greatest possible advantage of opportunities available towards them.
STRENGTHS S
WEAKNESSES W
S1. Distinctive farm-to-plate

business model in the local
market.
W1. Diversified business model

leads to the mismanagement of
some subsidiaries.
S2. Complete and strategic

integration of operations.
W2. Incapability
declaration.
S3. Greenergy Holdings, Inc.s

acquisition
of
26%
of
AgriNurture, Inc.s stocks.
W3. Continual leasehold of lands

for agricultural production.
S4. Foreign
accreditations.
W4. Excessive cost of sales and

services.
and
domestic
S5. Strong strategic partnerships

in the industry.
W5.
Excessive
expenses.
of
dividend
operating
S6. Expansion of banana farm in

Indonesia.
OPPORTUNITIES O
SO STRATEGIES
WO STRATEGIES
O1. Increased awareness to

further develop strategies in the
banana industry.
SO1. Further expansion of

distribution channels to include
public markets. (S1, S3, S4, S5,
S6, O1, O2)
WO1. Intensive utilization of

wholly owned farmlands to
mitigate the supply risks
inherent in purchasing from
third parties. (W3, W4, O3, O4)
O2. AgriNurture Inc. adds

pineapple as the new fruit
product for export.
SO2.
Increase
advertising
expenditures to rapidly increase
consumer awareness towards
the brand. (S3, S6, O1, O3, O4)
WO2. Acquisition of existing fruit

and vegetable plantations. (W3,
W4, O1, O4)
SO3. Maximize the existing

competitive strengths such as its
nationwide
supply
and
distribution network by further
development of current products
(S2, S3, S4, S5, O1, O4)
WO3. Establish strong business

partners that have significant
skills and/or resources that could
help the companys efficiency
towards production. (W1, W2,
W3, W4, O1, O3, O4)
SO4. Product mixing through

the infiltration most of its
production on the coconut
industry. (S2, S3, S4, S5, O3,
O4)
WO5. Renegotiation of contracts

through
stricter
bidding
regulations. (W4, W5, O1, O3)
THREATS T
ST STRATEGIES
WT STRATEGIES
T1.
Cocolisap
infestation
damaging coconut production.
ST1. Modification of product line

to meet broader range of
customer needs that are unique
to the market and cannot easily
be duplicated. (S2, S3, S5, T4)
WT1.
Intensive
large-scale
contract growing on the top
selling vegetable and fruit
varieties. (W1, W2, T4)
T2.
Decreasing
area
of
production that may affect the
satisfaction of demand for
exports.
ST2. Research and development

of current products based on the
preferences of the different
exporting countries. (S3, T4)
WT2. Reduction of incompetent

and unprofitable local and
international
units
of
the
business. (W1, W4, T1, T2, T3)
T3.
Increased
government
intervention due to allegations of
AgriNurture, Inc.s CEO with Vice
President Jejomar Binay.
ST3. Acquisition or at least

increased control of fertilizer and
pesticide suppliers. (S2, S3, T1)
WT3. Increase investments in

machineries and other high-end
equipment that would boost the
production and decrease labor
costs. (W3, W4, T2, T4)
O3.
Increased
global
opportunities due to the ASEAN
Integration in 2015.
O4. Productivity is expected to

grow according to the National
Economic and Development
Authority.
O5. Expected 6.4% increase in
the 2015 GDP growth rate.
WT4. Right sizing through layoff workers with redundant

roles in the organization. (W1,
W5, T2, T3)
T4. Increasing intensity of

competition due to ASEAN
TABLE 4.1. The SWOT Matrix
B.
The Strategic Position and Action Evaluation Matrix

The researchers used the SPACE matrix to evaluate the different variables and assign
scores considering how important they are for the situation of the company and analyze the four
different areas that represent four quadrants in a graphic. Through this, the researchers were
able to situate the company in one of these four quadrants and give a suggestion. According to
the results of the SPACE matrix, the company should perform competitive strategies.
Internal Strategic Position

a.
Financial Strength (FS)

Financial Strength
Factors
Risks Involved in the Business
Debt-to-Equity Ratio
Leverage
Liquidity
Cash Flow Statement
Total
Rating
3
1
2
2
3
10
TABLE 4.2. Financial Strength Factors Summary
Risks Involved in the Business

The companys financial condition may be adversely affected by any disruption in the
supply, or the price fluctuation of raw materials for its major products. The researchers gave the
business a rating of 3 since the disruption in the supply of ANIs products is significantly related
to the unpredictable weather conditions of the country. Additionally, price fluctuation of raw
materials is relative to the inflation rate, which is expected to grow by 4.1% in the following year
thus, increased production costs.
Debt-to-Equity Ratio
AgriNurtures debt-to-equity ratio scored 1, due to its drastic increase to 110% in 2013
from 40% in 2012. This generally means that the company has been aggressive in financing its
growth with debt and may outweigh the returns they could generate in the future.
Leverage
The significant increase in the companys leverage ratios shows that the company is
taking risks. In addition, it could be considered as a risk for business since the company had a
substantial drop in 2012 with only a slight recovery in 2013 based on its profitability performance
(in terms of net income from years 2009 to 2013 and generated sales for the past five years).
Liquidity
The overall liquidity ratios of the company show that it is currently liquid and has
sufficient funds to pay short-term debts and other current liabilities. However, there was a
significant drop from 255% in 2012 to 126% in 2013. This should be considered a threat to the
companys liquidity since the decrease was too much and could pose as a warning that
eventually, the current liabilities will outweigh the current assets.
Cash Flow Statement
The existing cash flow statement of the company led the researchers to a score of 2
because despite the continuous growth of the companys cash flows, the researchers have
concluded that such increases were primarily due to the large amount of loans and borrowings.
b.
Competitive Advantage (CA)

Competitive Advantage
Factors
Service and Product Quality
Product Life Cycle
Business Location
Customer Loyalty
Backward Integration
Total
Rating
-2
-3
-1
-2
-2
-10
TABLE 4.3. Competitive Advantage Factors Summary
Service and Product Quality

AgriNurture, Inc. has remained prominent throughout the years mainly because of the
good quality of the products they offer. It continuously undertakes research and development of
its products and technology to improve the quality and productivity of its products, which is
proved by the accreditations and recognitions presented to them by local and international
agencies.
Product Life Cycle
With the current developments that the company is undergoing, AgriNurture is
considered to be in the maturity stage of their product life cycle. Since majority of their products
are still offered in fresh conditions and are in fact, received well by the market, the company is
still left with opportunities to further expand their products into processed goods. With these
modifications in mind, they might have to endure the costs in order to maintain competitive
advantage.
Business Location
ANI implements a geographical diversification strategy where its operations are spread
across the country, depending on the existing season (wet or dry) to ensure continued
production and trading. The wide dispersal of the locations of farmlands throughout the country
enables ANI to spread the risk against weather disturbances, pest infestation, and man-made
and natural disasters.
Customer Loyalty
The company has attained product acceptance in major world markets such as the
Greater China Region, Middle East and North America. Customers from these areas
established good relations to the company, which allowed them to become one of the few
companies to export their products directly to these countries. Thus, demonstrates that
AgriNurture has gained tremendous customer loyalty over the years.
AgriNurture is currently engaging in backward integration in order to keep up with their

farm-to-plate business model. Their complete and strategic integration of operations is a good
indication that the company is strategizing to become the best in what they do. However, their
objectives may be too much for them to handle considering their current financial strength.
External Strategic Position

c.
Environmental Stability (ES)

Environmental Stability
Factors
Political Situation
ASEAN Market Integration 2015
Taxes and Regulatory Environment
Economic Growth
Rate of Inflation
Total
Rating
-5
-2
-2
-1
-2
-12
TABLE 4.4. Environmental Stability Factors Summary
Political Situation
The accusations toward AgriNurture, Inc. CEO, Mr. Antonio L. Tiu of being a dummy for
Vice President Jejomar Binay and the engagement of his companies in anomalous business
practices, led to the questioning of the companys financial conditions, and resulted to increased
government intervention such from the Securities and Exchange Commission.
ASEAN Market Integration 2015
Considering one of the main objectives of the ASEAN Integration in 2015 to create a
single market and production base by ensuring a free flow of goods, services, investment,
capital and skilled labor, AgriNurture, Inc. may in fact be one of the few agricultural businesses
that would benefit from it due to their exporting expertise. According to the Food and Agriculture
Organization of United Nations, the Philippines is also one of the top exporters and top
producers of the products that ANI offers, which may constitute a greater opportunity for the
business, rather than a threat.
Taxes and Regulatory Environment
The Companys operations are subject to various taxes, most of the revenues, which are
export and agro-related are VAT free but subject to income tax. Processed goods that are
exported are under Zero-Rated VAT Sales. In general, the Company attempts to pass higher
taxes to its consumers by raising the prices of its products in the event there is any additional
tax to be announced.
Economic Growth
The Philippine GDP is expected to grow to 6.4% in 2015 relative to the 6.2% growth in
2014. This is due to the slowdown of government spending. On the other hand, GDP growth
rate in 2014 is 6.2%, a percentage lower than 2013. Additionally, Asian Development Bank
forecast shows that the Philippine GDP will only improve by 2% in 2015. Despite the slowdown,
the economy is still considered as one of the fastest growing economies in the ASEAN
countries, which will drive the demand for more agricultural products.
Rate of Inflation
According to the Asian Development Bank, the inflation rate of the Philippines will
increase in 2014 by 1.4% relative to the inflation rate of 3.0% in 2013 and decrease by 0.3% in
2015. However, the decrease in the inflation rate in 2015 is not substantial enough to reduce the
costs incurred by the company.
d.
Industry Strength (IS)

Industry Strength
Factors
Demand and Supply Factors
Productivity
Rating
2
4
Ease of Entry into Market

Capital Intensity
Threat of Substitutes
Total
5
2
3
16
TABLE 4.5. Industry Strength Factors Summary
Demand and Supply Factors

The demand and supply for ANIs products may be affected by fluctuations in prices, as
determined by seasonality, weather, quality and farm productivity. The price changes that the
company makes in reaction to changes in economic fluctuations could affect the demand for the
companys products as well as the companys profit margins, product pricing and net income.
Productivity
The Company continuously undertakes research and development in products and
technology to improve the quality and productivity of its products while at the same time
ensuring their sustainability. Additionally, according to the Philippine National Economic and
Development Authority, the net profit-cost ratio of two of the major revenue drivers of the
company Cavendish bananas and Carabao mangoes are expected to grow by 0.40% and
0.25% in 2016 while the level of post harvest losses are to decline by 3% and 6%, respectively.
The productivity of the industry thus provides the company with an expected increase in
productivity as well.
Ease of Entry into Market
The entry barriers in the agricultural industry are high because of high capital
requirements such as the acquisition of lands and the strong brand image of existing players.
With AgriNurtures present condition, they already have the capital required and are now one of
the biggest players in the industry who have somehow gained customer loyalty.
Capital Intensity
AgriNurture Inc., being in the agricultural sector is a labor-intensive company. Workers

are more prioritized than the investments being made in the technological units they incur. Due
to this, they spend income more on their labor costs rather than the utilities they possess.
Threat of Substitutes
There are currently no cost-effective substitutes for the crops offered in the agricultural
sector because they offer crops that have been grown under strict systems.
The current substitutes for agricultural products are food supplements and other vitamins
that are clearly priced higher than the current commodities provided by the agricultural sector.
The effect of these substitutes is also not yet proven to be more effective than the natural ones.
End users have high cost in switching to substitutes because these substitutes may not
offer the same quality of products. Although some end users can produce it themselves, the
production cost will be quite costly considering the high capital required and non-possession of
the benefit of scale and access to competitive raw material sourcing.
Financial Strength
5
Conservative
Quadrant II
4
3
Aggressive
Quadrant I
2
1
Industry Strength
-5
-4
-3
-2
-1
-1
-2
Defensive
-3
Quadrant III
Competitive
-4
-5
Quadrant IV
AGRINURTURE INC.
Environmental Stability
FIGURE 4.3. The SPACE Matrix
C.
The Grand Strategy Matrix

The researchers used the Grand Strategy Matrix to distinguish the appropriate strategies
for an organization to consider using the companys market growth and competitive advantage.
Market Growth
Gross Domestic Product (%)

Inflation (%)
7.2
6.8
4.6
3.7
6.2
6.4
4.4
4.1
3.2
3.0
2011
2012
2013
2014E
2015E
FIGURE 4.2. Economic Forecasts (% per year),

Philippines, 2011 2015E
The Asian Development Bank (ADB) has decreased the growth outlook for the
Philippines, they supported their analysis by citing the following factors which are; a slowdown
in government spending, higher inflation and monetary tightening, all of which may dampen
economic activity. Asian Development Outlook 2014 lessened its growth forecasts on the
Philippine gross domestic product (GDP) to 6.2 percent from 6.4 percent this year and to 6.4
percent from 6.7 percent next year. ADB justified that the adjustments were due largely to a
slowdown in government spending, which grew 0.9 percent in the first half of 2014 compared
with 11.1 percent a year earlier.
As a diversified agro-commercial corporation, the Company does not know of any one
particular domestic competitor with the same (or similar) business model. The Company adopts
the farm-to-plate model, which to this date, has not yet been successfully replicated by any
other business entity. They have the Farming Group, the Export Group, the Distribution Group,
the Foreign Trading Group and the Retail Group that completes its strategy of integrating its
portfolio of services in line with its vision of becoming a global leader in providing nutrition from
farm to plate. There are nevertheless competitors under its divisions such as Dizon Farms for
the Farming Group. Other independent players like cooperatives farmers also play rivals of the
company.
Rapid Market Growth
Quadrant II
Market Development
Market Penetration
Product Development
Horizontal Integration
Divestiture
Liquidation
Weak Competitive Position
Quadrant I
Market Development
Market Penetration
Product Development
Forward Integration
Concentric Diversification
Strong Competitive Position
Quadrant III
Quadrant IV
Retrenchment
Horizontal Diversification
Conglomerate Diversification
Divestiture
Liquidation
Joint Ventures
AGRINURTURE INC.
Slow Market Growth

FIGURE 4.3. The Grand Matrix
D.
The Internal External Matrix
The Internal-External (IE) matrix is another strategic management tool used by the
researchers of this study in order to analyze the working conditions and strategic position the
company. The Internal External Matrix or short IE matrix is based on the analysis of internal and
external business factors which are combined into one suggestive model.
Through the final ratings of the IFE and EFE matrices shown in Chapter 3, the IE Matrix
suggests that the company hold and maintain their strategies. In this case, the tactical strategies
should focus on market penetration and product development.
TOTAL IFE RATING

2.54
TOTAL
EFE
RATING
2.46
Strong
3.0 to 4.0
Average
2.0 to 2.99
Weak
1.0 to 1.99
High
3.0 to 4.0
II
III
Medium
2.0 to 2.99
IV
VI
Low
1.0 to 1.99
VII
VIII
IX
TABLE 4.6. The Internal External Matrix
E.
Summary of Strategies
The summary of strategies tallied the different possible strategies that the company may
practice in order to raise their revenue using the three strategy formulation tools utilized earlier
using the various information drawn from external and internal analysis of this research: (a)
Space Matrix; (b) Grand Strategy Matrix and; (c) IE Matrix.
TABLE 4.7. Summary of Recommended Strategies
F.
The Quantitative Strategic Planning Matrix
Summary of Strategies
Space
Grand
X
X
X
X
X
X
x
x
x
X
x
Strategy Options
IE
Total
Forward Integration
1
1
1
Market Penetration
x
2
Market Development
1
Product Development
x
2
1
1
1
Joint Venture
2
Retrenchment
0
Divestiture
0
Liquidation
0
The last stage of strategy formulation is decision stage. In this stage it is decided that
which way is most appropriate or which alternative strategy should be select. This stage
contains QSPM that is only tool for objective evaluation of alternative strategies. A quantitative
method used to collect data and prepare a matrix for strategic planning. It is based on identified
internal and external crucial success factors. That is only technique designed to determine the
relative attractiveness of feasible alternative action. This technique objectively indicates which
alternative strategies are best.
The QSPM uses input from Stage 1 analyses and matching results from Stage 2
analyses to decide objectively among alternative strategies. That is, the EFE Matrix, IFE Matrix,
and Competitive Profile Matrix that make up Stage 1,coupled with the TOWS Matrix, SPACE
Analysis, BCG Matrix, IE Matrix, and Grand Strategy Matrix that make up Stage 2, provide the
needed information for setting up the QSPM (Stage 3).
Strategic Alternatives
Right Sizing
Cost
Minimization
AS
TS
AS
TS
AS
TS
11%
0.44
0.33
0.44
S2. Complete and strategic

integration of operations.
0.32
0.08
0.24
S3. Greenergy Holdings, Inc.s

acquisition of 26% of
AgriNurture, Inc.s stocks
0.18
0.06
0.12
S4. Foreign and domestic

accreditations
0.14
0.07
S5. Strong strategic

partnerships in the industry
0.09
0.09
S6. Expansion of banana farm in

Indonesia
10
0.30
0.10
0.20
Weight
Product Mixing
Strengths
S1. Distinctive farm-to-plate
business model in the local
market.
W1. Diversified business model

leads to the mismanagement of
some subsidiaries
0.16
0.04
0.08
W2. Incapability of dividend

declaration
0.08
0.08
W3. Continual leasehold of

lands for agricultural production
10
0.40
0.20
0.20
W4.Excessive cost of sales and

services.
18
0.54
0.18
0.18
W5. Excessive operating costs.
13
0.39
0.13
0.13
Total
100%
3.15
1.20
1.75
Opportunities
O1. Increased awareness to
further develop strategies in the
banana industry.
14
0.56
0.14
0.28
O2. AgriNurture Inc. adds

pineapple as the new fruit
product for export.
15
0.45
0.45
0.30
O3. Increased global

opportunities due to the ASEAN
Integration in 2015
11
0.33
0.22
0.11
O4. Productivity is expected to

grow according to the National
Economic and Development
Authority
10
0.30
0.10
0.10
O5. Expected 6.4% increase in

the 2015 GDP growth rate.
0.16
0.08
0.08
10
0.30
0.10
0.10
Threats
T1. Cocolisap infestation
damaging the coconut
production.
T2. Decreasing area of

production affecting the
satisfaction of demand for
exports
11
0.33
0.11
T3. Increased government

intervention due to allegations
of AgriNurture, Inc.s CEO with
Vice President Binay
0.09
T4. Increasing intensity of

competition due to ASEAN
12
0.24
0.24
0.24
Total
100%
5.80
2.53
3.07
TABLE 4.8. The Quantitative Strategic Planning Matrix
Chapter V
Recommended Solution, Implementation and Justification

A.
Minimize cost of sales and operating expenses through right sizing and
renegotiation of contracts.
AgriNurture should decrease the rank and file labor force of the company to decrease the large
salaries and wages expenses that the company incurs.
Employees
Executives
Consultants
Farmers
Rank and File
Salaries Expense
REVENUES
2010
40
0
367
200
39,381,432
No. of Employees per Year

2011
2012
29
40
1
5
179
138
219
609
54,949,066
74,958,569
COMPARATIVE INCOME STATEMENT

2009
2010
2011
1,017,682,20
1,585,011,759
2,253,760,239
2013
41
6
133
697
118,806,718
2012
2,329,946,985
2013
2,926,429,244
270,707,544
(1,734,728,854
)
519,031,385
(1,944,724,778
)
385,222,207
(2,348,073,422
)
578,355,822
209,490
(95,043,892)
0
57,166,068
(176,493,028)
0
193,709,918
(368,970,035)
(23,157,766)
40,382,971
(386,846,271)
(9,907,502)
205,178,250
(678,704,301)
(4,428,348)
56,881,536
0
3,837,569
(20,340,457)
40,378,648
151,380,584
0
95,032
(16,687,620)
134,787,996
320,613,502
0
642,087
(49,950,841)
271,304,748
28,851,405
(183,937,350)
234,785
(35,564,234)
(190,415,394)
100,401,423
0
2,366,896
(56,554,415)
46,213,904
4,637,816
50,864
4,688,680
24,185,597
17,050,934
41,236,531
26,154,504
29,048,870
55,203,374
18,517,139
(63,921,982)
(45,404,843)
10,711,750
13,055,973
23,767,723
545,170,823
35,689,968
638,722,288
216,101,374
(145,010,551)
22,446,181
Cost of Sales
(865,966,271)
(1,314,304,215)
Gross Profit
151,715,938
Other operating income

Operating Expenses
Othe operating expenses
Operating Profit (Loss)
Losses on biological asset
Finance income
Finance costs
Income (Loss) before tax
Provision for income tax
Current
Deferred
Gain or change of fair
value of trademark
Net Income (Loss)
Upon analyzing the comparative financial performance of the company we have come up
to set a benchmark with regards to the number of employee that the company employed
specially in the rank and file section, we noticed that from 2010-2013 the number of the Rank
and File employee increase from 200 to 697 which create an adverse effect on the operating
expenses from 95M to 678.7M and having only a 3% effect of change in the revenue for 2012
and 26% in 2013 (please see horizontal analysis). As we analyze the extracted companys
comparative income statement below, if the company doesnt incurred a gain or change of fair
value of trademark the net income in year 2010 will be 93,551,465 (P638,722,288 less
545,170,823) employing only 200 rank and file employee, and if the year 2012 the company
doesnt incurred a loss of 183,937,350 in effect the company would have a net income of
38,926,799 employing 609 rank and file employee, as for this analysis we come up to lessen the
number of rank and file employee from 697 to 219 employee based on the 2011 financial
performance because of the fact that even though the company employing only 219 number of
rank and file employees still the company earned P216,101,374.
HORIZONTAL ANALYSIS
IN PERCENTAGE
2011
2012
42%
3%
32%
12%
92%
-26%
REVENUES
Cost of Sales
Gross Profit
2010
56%
52%
78%

Operating Expenses
27188%
86%
0%
239%
109%
0%
-79%
5%
-57%
408%
75%
-55%
166%
112%
-91%
248%
-98%
-18%
234%
576%
199%
101%
-63%
-29%
-170%
908%
59%
-124%
421%
33423%
779%
8%
70%
34%
-29%
-320%
-182%
-42%
-120%
-152%
1690%
-66%
-167%
-115%

Finance income
Finance costs
Current
Deferred
Gain or change of fair value of trademark
Net Income (Loss)
2013
26%
21%
50%
Using this analysis we come up with a 69% target decrease in the salaries and wages expenses
under the rank and file employees (please see below computation).
Number of Rank and File employee in 2013

Number of Rank and File employee in 2011
Decrease in Rank and File Employee
Number of Employee
In percentage Decrease
697
219
478
69%
The companys employees are mostly under the rank and file types comprising 77.08% of the
overall labor force, 70% of this are under contractual agreement while the 30% are regular
employees, relative to farmers who only comprise 17.46% of it. With this 69% target decrease in
the salaries and expense under rank and file employees it will lessen the companys expenses
from 118,806,718 to 85,052,062 creating a savings amounting to 33,754,656.
2013
Salaries, wages and other employee

benefits
13th Month Pay Savings
TOTAL
Share of the
Rank and File
employee
(77.08%)
118,806,71
8
91,576,218
Effect of
Change in
the Rank
and File
(69%)
69%
Target
decrease
28,388,628
90,418,090
5,366,028
33,754,656
5,366,028
85,052,062
Separation Pay Effect on the companys Operating Expenses

Decrease
in Rank
and File
Employe
e
Employee start in the year
2012
Employee start in the year
2013
TOTAL
390
88
Minimu
m Wage
Rate
Monthly
Salary
Yearly
Salary
11,226
11,226
429.0
0
429.0
0
478
Year of
Tenure
Separatio
n Pay
15,760,80
3
31,521,60
6
3,556,284
3,556,284
9,317,086
35,077,88
9
Source: Department of Labor and Employment
Note: AgriNurture is currently purchasing finished goods from independent farmers. The
companys purchases account is relatively high compared to the harvested agricultural produce.
In 2013, 90% of the cost of sales and services is allotted to the purchases account alone
meanwhile; only 8% is derived from the companys own resources. In order to reduce these
purchases the company should review the bidding process and further review the standard price
in the market versus company price. Based on our research we found out that the company can
lower their purchase cost up 17% in Carabao Mango, 12% in Cavendish Banana and 11% in
Coconut water.
IMPACT ON THE COMPANYS PERFORMANCE
Through minimizing the companys cost of sales and operating expenses in the course
of right sizing the impact will be felt in the second year for in the first year the company will
sacrifice to pay separation pay to those rank and file employees that will be discharge, the
company will sacrifice an amount of 4.9M or 22% decrease on net income, though this change
in the first year is negative it will be offset in the second year that will bring a 41.3M net income
with an increase of 23.8M or 137% increase on its net income. We recommend this strategy for
it has a greater impact on the companys financial performance.
AGRINURTURE INC. AND ITS SUBSIDIARIES
INCOME STATEMENT
IMPACT ON THE COMPANY'S PERFORMANCE
STRATEGY 1 (Cost Minimization)
REVENUES
Cost of Sales
Gross Profit
Operating Expenses
Finance income
Finance costs
Current
Deferred
Gain or change of fair value of
trademark
Net Income (Loss)
Change in Amount
Change in Percentage
B.
2nd Year
Effect of
Change
2,926,429,244
2013
1st Year Effect

of Change
2,926,429,244
(2,348,073,422
)
578,355,822
2,926,429,244
(2,348,073,422
)
578,355,822
(2,348,073,422)
205,178,250
(678,704,301)
(4,428,348)
205,178,250
(680,027,534)
(4,428,348)
205,178,250
(644,949,645)
(4,428,348)
100,401,423
0
2,366,896
(56,554,415)
46,213,904
99,078,190
0
2,366,896
(56,554,415)
44,890,671
134,156,079
0
2,366,896
(56,554,415)
79,968,560
10,711,750
13,055,973
23,767,723
14,365,015
13,055,973
27,420,988
25,589,939
13,055,973
38,645,912
22,446,181
17,469,683
(4,976,498)
-22%
41,322,648
23,852,965
137%
578,355,822
Increase sales revenue by increasing product volume through the use of various
techniques to fully utilize idle assets such as farmland.
The Group procures its vegetables and fruits (mangoes, banana, and coconut) from
various sources, ranging from small farmers to cooperatives and big producers. Through this,
suppliers hold great controls over the prices it offers to ANI at the same time.
In order to mitigate these risks, a significant portion of the investment proceeds shall be
devoted to the full utilization of its farmlands by cultivation of additional biological assets. ANI
intends to develop and operate no more than 2.5 hectares of productive farmland in different
areas that would significantly reduce or eliminate its dependence on third party sources for its
supplies and improve its ability to control its quality and prices. With the 2.5 hectares increase in
production the company can have an 8.28% increase in its revenue (see computation below).
At present, the land areas owned by ANIs farming division are as follows:
Location
Aggregate Area (In Has.)
Arayat, Pampanga
Magalang, Pampanga
Subic, Zambales
Pamapanga Tarlac
La Trinidad, Benguet
Sorsogon
Antipolo, Rizal
Total
% Increase per Hectares
20
10
7
50
34
6
10
137
13%
25%
36%
5%
7%
42%
25%
22%
Effect to revenue computation

REVENUES
Percentage
Change
2013
Own harvest
Purchase
outside
Total
Effect of change in
Revenue
292,642,924
22.00%
64,381,443
2,633,786,320
100.00%
2,633,786,320
2,926,429,244
2,698,167,763
Effect to cost of sales

2013
% Share in Revenue
Effect of change to COS
Own Harvest
64,381,443
80.20%
51,633,918
The 80.2% rate is from the vertical analysis which is the percentage share of cost of sales to its
revenue for the year 2013. Through its proper used of their idle farmland the company can
maximize their production and contribute an amount of 64.3M on its revenue and in effect
increase net profit of 4.5M or 20% the effect is minimal compare to Strategy 1 due to higher cost
of sales.
STRATEGY 2
(Utilization of Farmlands)
578,355,822
1st Year
Effect of
Change
2,990,810,687
(2,399,707,34
0)
591,103,347
205,178,250
(678,704,301)
(4,428,348)
205,178,250
(678,704,301)
(4,428,348)
205,178,250
(678,704,301)
(4,428,348)
100,401,423
0
2,366,896
(56,554,415)
46,213,904
113,148,948
0
2,366,896
(56,554,415)
58,961,429
113,148,948
0
2,366,896
(56,554,415)
58,961,429
10,711,750
13,055,973
23,767,723
0
22,446,181
18,867,657
13,055,973
31,923,630
0
27,037,799
4,591,618
20%
18,867,657
13,055,973
31,923,630
0
27,037,799
0
0%
2013
REVENUES
Cost of Sales
2,926,429,244
(2,348,073,422)
Gross Profit
Operating Expenses
Finance income
Finance costs
Current
Deferred
Gain or change of fair value of trademark
Net Income (Loss)
Change in Amount
Change in Percentage
C.
2nd Year
Effect of
Change
2,990,810,687
(2,399,707,340)
591,103,347
Increase sales revenue through product mixing.

AgriNurture Inc. should execute product mixing in order to increase revenues and be
more competitive in the ASEAN Market Integration.
Statistical evidence suggests that intra-subregional trade among SAFTA members is

rising slowly and steadily. As indicated in Table 1, South Asias intra-subregional trade share
increased from 2.7% in 1990 to 4.3% in 2011. Also, Figure 1 provides a comparative picture of
intra-subregional trade shares for the member states of SAARC (SAARC: South Asian
Association for Regional Cooperation), the Association of Southeast Asian Nations (ASEAN),
and ASEAN+3. It clearly shows that SAARC largely trails the other two in terms of subregional
integration. For example, in 2011, SAARCs intra-subregional trade was only 4.3%, whereas the
corresponding figures for ASEAN and ASEAN+3 were 26% and 39%, respectively. SAARCs
share is still very low when compared with corresponding figures from other regions, but the
positive trend is clear. As such, policymakers and business communities in South Asia have
become increasingly interested in economic integration in South Asia and the potential benefits
that may come along with it. (ADB, 2013)
Table 1: South Asias total trade within the sub region and with the world

AgriNurture, Inc. mainly focuses its operations through the local and international
production and distribution of Cavendish bananas, Carabao mangoes, coconut water and other
products.
Others; 10%
Coconut; 20%
Cavendish Banana; 50%
Carabao Mango; 20%
Figures 3.8 to 3.10 show that the Philippines are one of the top producers of bananas,
mangoes and coconuts in the world. However, the ASEAN Market Integration may pose a threat
to the demand of Cavendish bananas since neighboring ASEAN countries; especially Thailand
and Malaysia are regarded as two of the top contributors to the crops (banana and mango)
industry in the world and are considered to offer the same products at lower prices.
Thus, the company is now suggested to infiltrate most of its production on the coconut
industry since the Philippines is second largest producer of it in the world market with a lower
price advantage over other competitors. The effect of this ASEAN market integration in the
financial performance is minimal due to the fact that the intra-subregional trade share increased
from 2.7% in 1990 to 4.3% in 2011 which means for 10 years only 1.6% increase in the trade
share compare to the percentage change of cost of sales having an average of 29% and
considering also the vertical analysis of ANIs financial performance having an 82% average
percentage of cost of sales to revenue, whether the product mix create a positive impact on its
revenue the effect on the net profit is only minimal.
INCOME STATEMENT
HORIZONTAL ANALYSIS
IN PERCENTAGE
2009
REVENUES
Cost of Sales
Gross Profit
REVENUES
Cost of Sales
Gross Profit
2010
56%
52%
78%
2011
42%
32%
92%
2012
3%
12%
-26%
2013
Average
26%
32%
21%
29%
50%
49%

INCOME STATEMENT
VERTICAL ANALYSIS
IN PERCENTAGE
2009
2010
2011
2012
2013
Average
100.0%
100.0%
100.0%
100.0%
100.0%
100%
-85.1%
-82.9%
-77.0%
-83.5%
-80.2%
-82%
14.9%
17.1%
23.0%
16.5%
19.8%
18%
Chapter VI
BIBLIOGRAPHY
http://www.niccep.dti.gov.ph/cluster.php?code=9
http://www.oxfam.org.nz/sites/default/files/reports/Conditions%20in%20Philippine%20Banana
%20Plantations%20Exporting%20to%20New%20Zealand%20.pdf
http://pdf.usaid.gov/pdf_docs/PNADH939.pdf
http://www.congress.gov.ph/cpbo/images/PDF%20Attachments/CPBRD%20Policy%20Brief/02PB%20Coco%20Levy.pdf
http://ageconsearch.umn.edu/bitstream/10977/1/pb92on01.pdf
http://www.philmech.gov.ph/phindustry/banana.htm
Gamble, J., Thompson, A & Peteraf, M. (2012). Essentials of strategic management: The quest
for competitive advantage (3rd edition). New York, NY: McGraw-Hill.
http://www.investing.com/equities/agrinurture-financial-summary
http://www.heritage.org/index/country/philippines
http://www.niccep.dti.gov.ph/cluster.php?code=9
http://www.oxfam.org.nz/sites/default/files/reports/Conditions%20in%20Philippine%20Banana
%20Plantations%20Exporting%20to%20New%20Zealand%20(2).pdf
http://pdf.usaid.gov/pdf_docs/PNADH939.pdf
http://www.congress.gov.ph/cpbo/images/PDF%20Attachments/CPBRD%20Policy%20Brief/02PB%20Coco%20Levy.pdf
Philippine Development Plan, 2011-2016, 2011, National Economic Development Authority,
http://www.neda.gov.ph/wp-content/uploads/2013/10/pdprm2011-2016.pdf
http://www.thecountriesof.com/top-10-banana-producing-countries-in-the-world/
http://faostat.fao.org/site/291/default.aspx
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%20Economic%20Update%20March%202014.pdf
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http://www.adb.org/sites/default/files/publication/59685/ado2014update_1.pdf
Bangko Sentral ng Pilipinas (http://www.bsp.gov.ph)
Bureau of Local Government Finance (http://www.blgf.gov.ph)
Bureau of the Treasury (http://www.treasury.gov.ph)
http://www.agmrc.org/media/cms/ec722_c52b3fa397dbb.pdf
N.A. (2013). The Importance of Agriculture to the Philippine Economy. Hubpages. Retrieved
from http://pulse101.hubpages.com/hub/The-Importance-of-Agriculture-to-the-PhilippineEconomy
Habito, C., & Briones, R. (N.D). Philippine Agriculture over the Years: Performance, Policies and
Pitfalls.
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from
http://siteresources.worldbank.org/INTPHILIPPINES/Resources/Habito-word.pdf
Retrieved last September 23, 2014 from http://www.slideshare.net/gceyre/factors-affectingfarming
N.A.
(n.d.)
Factors
affecting
farming.
revisionworld.
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from
http://revisionworld.com/gcse-revision/geography/agriculture/factors-affecting-farming
Hofstrand,
Don.
(2008).
MarketingStrategies.
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http://www.agmrc.org/business_development/operating_a_business/marketing/articles/ma
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Philippine Statistics Authority. (1998). Performance of Philippine Agriculture. Retrieved last

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http://siteresources.worldbank.org/INTCOMRISMAN/Resources/RapidAgriculturalSupplyChainR
iskAssessmentConceptualFramework.pdf
Chapter VII
APPENDICES
Prof. Gary M. Galang

OIC Chair, Dept. Of Financial Management
College of Arts and Sciences
San Beda College
December 3, 2014
Dear Sir,
Subject: Appeal to Re-Defense
PAX!
We, the AgriNurture Inc. group, formed by Jackielyn S. Gallera, Paolo A. Gregorio,
Nia Jane S. Pineda, Sarah Lyn A. Sanchez, and Bianca Marie O. Villa, so humbly
request to undergo re-defense on the 24 th of January 2015 in completion of our Strategic
Management and Securities Analysis courses. In line with this, we are subscribing to pay
the respective fee required for this re-defense.
We are hoping for your positive response.
Thank you for your kind consideration and God bless.
In Saint Bede,
AgriNurture Inc. Group
Thru:
Jackielyn S. Gallera
Paolo A. Gregorio
Nia Jane S. Pineda
Sarah Lyn A. Sanchez

Bianca Marie O. Villa

Strama Okay Na QSPM

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Introduction

The Philippine Agriculture Sector

For the Export Group:

For the Retail Group:

FIGURE 1. AgriNurture, Inc. Global Re-Organization Plan, 2013

Vision, Mission, and Values

plate. It has different objectives such as:

supplying quality but affordable goods and services,

applying modern technologies to innovate operations and productivity,

enhance stakeholders value;

promote advocacies for environmental and social upliftment and;

foster national pride.

teamwork communicating, trusting and respecting each and every individual,

STATEMENT OF THE PROBLEM

Background of the Study

Carabao Mango; 20%

Purpose of the Study

CAUSES OF THE PROBLEM

Industry and Competitor Analysis

The Philippine Agricultural Sector

Agricultural Economic Sector

Source: National Statistics Office

Agriculture posted a 1.15 percent

Production in the crops subsector

inched up by 0.09 percent. Crops contributed

Source: National Statistics Office

Palay production grew by 2.26 percent while

The Philippine Banana Industry

The Philippines is the second largest

Source: National Statistics Office

exporter of bananas after Ecuador, with some

Figure 3.5. Banana: Percent distribution of production by variety,

The banana industry in the Philippines is surrounded by a number of issues which

The Philippine Mango Industry

Figure 3.4. Mango: Percent distribution of production by variety,

The Philippine Coconut Industry

Industry and Market Segments

*in trillion pesos

Gross value of coconut production decreased

by 8.44 percent because of lower

FIGURE 3.7. Volume of Production in Agriculture,

Major Global Contributors to the Industry

Source: Food and Agriculture Organization of the United Nations

Output (in million tonnes)

Source: Food and Agriculture Organization of the United Nations

Output (in million tonnes)

Source: Food and Agriculture Organization of the United Nations

Analysis of Macro-Environment Components

General Economic Conditions and Global Factors

Gross National Income

4th Qtr 2013

4th Qtr 2012

3rd Qtr 2013

4th Qtr, 2013

4th Qtr, 2012

3rd Qtr, 2013

USD 4,599 million USD 3,971 million

USD 4,294 million

1 Taken from National Statistical Coordination Board;

The Natural Environment

TABLE 3.2. Statistics on Philippine Environment, 2011

One of the projects developed by the Department of Environment and Natural