Guagua National Colleges

Guagua, Pampanga

STRATEGIC MANAGEMENT PAPER

ON

Submitted by:
Catacutan, Kiara Layne D.
Kong, Vanny Rose T.
Mendoza, Lenard Renz C.
Montemayor, Jann Marielle V.
Navarra, Andria B.
Santos, Abigail M.
Suarez, Aira Cleonel C.
Submitted to:
Mr. Jhojhie G. Capati
Strategic Management Professor

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Table of Contents
I. INTRODUCTION......................................................................................................................................................... 3
Short Background of the Company ..................................................................................................................................... 3
Nature of Business/Products/Services ................................................................................................................................ 3
Current Revenue Size and Profit ......................................................................................................................................... 4
Major Markets Served ......................................................................................................................................................... 4
Number of Employees ........................................................................................................................................................ 4
Other Relevant Basic Information ...................................................................................................................................... 4
II. STRATEGIC POSTURE ......................................................................................................................................... 5
Strategic Objectives ............................................................................................................................................................ 5
Vision .................................................................................................................................................................................. 5
Mission................................................................................................................................................................................ 5
Values ................................................................................................................................................................................. 5
III. EXTERNAL ENVIRONMENT............................................................................................................................... 6
A. General Environment .................................................................................................................................................. 6
Demographic ................................................................................................................................................................... 6
Socio-Cultural ................................................................................................................................................................. 6
Technology ..................................................................................................................................................................... 7
Political ........................................................................................................................................................................... 7
Economic ........................................................................................................................................................................ 7
B. Competitive Environment ........................................................................................................................................... 8
Threats of New Entrants – LOW .................................................................................................................................... 8
Bargaining Power of Customers – LOW ........................................................................................................................ 8
Rivalry among Competing Firms – HIGH ...................................................................................................................... 8
Bargaining Power of Suppliers – MODERATE ............................................................................................................. 8
Potential Development of Substitute Products – LOW................................................................................................... 9
IV. INTERNAL ENVIRONMENT OF THE FIRM .................................................................................................. 10
A. Value-Chain Analysis ............................................................................................................................................... 10
Discussion and Analysis of Primary Activities ............................................................................................................. 10
Discussion and Analysis of Support Activities ............................................................................................................. 11
B. Resource Based View of the Firm ............................................................................................................................ 12
C. Financial Performance .............................................................................................................................................. 13
V. SWOT ANALYSIS ..................................................................................................................................................... 14
VI. PROBLEMS FOUND IN SITUATION ANALYSIS ........................................................................................... 15
VII. RECOMMENDATIONS ........................................................................................................................................ 15

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 I. INTRODUCTION

Short Background of the Company

Anahata Nada or beautiful people is a beauty parlor in the heart of Guagua. Located in Plaza Burgos,
Guagua, Pampanga, it launched in 2009, successfully expanding during one year to double its size and treatment
rooms, whose passion for beauty and entrepreneurial flair has ensured its successful launch. Since its soft launch
9 years ago. The main aim of the company was to create a convenient destination where all the beauty and
grooming requirements of today's busy lifestyles could be met in one single visit. Through this achievement, the
salon has already established a very loyal customer base that uses its services exclusively.

Nature of Business/Products/Services
Anahata Nada offers a wide range of treatments. It is considered an upscale full-service beauty salon.
Services are provided by competent beauticians and hairdressers.
The salon also offers a full retail that complements the services menu. Services included provide high-end
cosmetics, creams, hair and nail care products and other beauty products.

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Current Revenue Size and Profit
On Holiday and Peak Seasons, Anahata Nada can reach up to 20,000 Pesos a day. But in an ordinary day, it
can reach up to 5,000 Pesos.

Major Markets Served

Today, Anahata Nada is one of the best salon and spa in the heart of Guagua, Pampanga. They have over 3
Suppliers. The main target group of clientele comprises the residents of the Guagua area. Since the salon offers a full
range of services for both genders. With their exemplary services, the salon Provides professional, innovative beauty
services and products based on personality and particular needs to enhance individual uniqueness.

Number of Employees
Anahata Nada houses 10 employees. With its competent employees, Anahata Nada is serving its valued
customers through its effective customer service program and competitive price scheme.

Other Relevant Basic Information

The owner attempted 3 times to open another branch but failed, because of the lack of employees. She can’t
find any employees that she will be entrusting to manage the said branch. That’s why she decided to focus in the
original branch here in the heart of Guagua, Pampanga.

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 II. STRATEGIC POSTURE
Strategic Objectives
The Anahata Nada’s ultimate objective is to continue its successful growth in terms of clientele base, expansion,
brand awareness, rating of services and become a top Salon in the area and ultimately-in Pampanga. The client's
satisfaction is a major motive that pushes the company to keep up with all innovations, new products and services to
ultimately dominate the market and achieve an impeccable reputation in the market.

Vision

Be the best value in the Salon Industry. Provide outstanding service and excellent care of our guests
through the promotion of healthy hair and body.

Mission

To provide professional beauty services and products that will help customers reach that unique look at
competitive prices. Anahata Nada also aims to create a unique position in the salon industry, and become a
brand known for exceptional beauty and skill.

Values

 Act with respect

 Perform services confidently

 Work hard to achieve common goals

 Focus on customer satisfaction

 Remain attentive and courteous

 Take responsibility

 Commit to self-improvement

 Seek knowledge to improve techniques

 Maintain a positive attitude

 Display Honor and Integrity

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 III. EXTERNAL ENVIRONMENT

A. General Environment
Demographic
The people who are most likely to use the service, their focus is the demography. This is good from the
marketing standpoint because it means the Anahata Nada does not waste money trying to get people that don’t
have any interest to use the service. Demography provide very specific information about different populations
because once the company has the population data, the company can make or provide a well-developed strategy
because if the potential customers in the data population are students and young workers, they might do a strategy
like having a student promo services and extending the business working hours in a day.

Population Census of Guagua

Year Pop. ±% p.a. Year Pop. ±% p.a.

1903 15,151 — 1980 72,609 +2.13%
1918 15,962 +0.35% 1990 88,290 +1.97%
1939 22,331 +1.61% 1995 95,363 +1.45%
1948 34,738 +5.03% 2000 96,858 +0.33%
1960 40,126 +1.21% 2007 104,284 +1.02%
1970 58,270 +3.80% 2010 111,199 +2.36%
1975 65,336 +2.32% 2015 117,430 +1.04%

Source: Philippine Statistics Authority[3][5][6][7]

Socio-Cultural
Social attitudes, beliefs, customs, traditions, values and practices are valued by the Anahata Nada in a major
way. During Christmas season they always have Christmas promos like for example Hair Rebonding with free hair
cut with an original price of 2,500 pesos which also depends on the length of your hair, then during Christmas season
it will become 1,500 pesos any length of the hair. Beliefs on the other hand for like example ladies in our generation
patronized that our hair is our crowning glory that’s why they pamper it with good treatments not just hair and not just
ladies, guys also go to salon to have their hair cut, hair color, and any pampering activities that they can feel good. In
our generation online marketing is the trend. Internet marketing, or online marketing, refers to advertising and
marketing efforts that use the Web and email to drive direct sales via electronic commerce, in addition to sales leads
from Web sites or emails. Internet marketing and online advertising efforts are typically used in conjunction with
traditional types of advertising like radio, television, newspapers and magazines. Internet marketing can also be broken
down into more specialized areas such as Web marketing, email marketing and social media marketing: Web marketing
includes e-commerce Web sites, affiliate marketing Web sites, promotional or informative Web sites, online
advertising on search engines, and organic search engine results via search engine optimization (SEO). Email
marketing involves both advertising and promotional marketing efforts via e-mail messages to current and prospective
customers. Social media marketing involves both.

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Technology
- “Technological trends include not only the glamorous invention that revolutionizes our lives, but also
the gradual painstaking improvements in methods, in materials, in design, in application, unemployment, and the
transportation and commercial base. They diffusion into new industries and efficiency" (John Argenti).
Technology is the high key of the Anahata Nada because they use a wide range of equipment to render a
high quality service. Technology influences Anahata Nada in so many ways. Technology downsides are they are
rapidly changing especially with electronics, these changes might affect the processing methods, materials, and
the way they render service.

Political
In order to run a business, it is very important to follow the rules and the regulations of our government
that includes also the tax and policies concerning the utilization of natural resources. Political is quite dramatic
because it is also subject to revolutionary changes. That’s why the manager of the Anahata Nada is always updated
about the upcoming legislations because it might affect their activities so they can make a plan ahead how to
adjust with it.

Economic
The Philippines is one of the largest markets in Southeast Asia with an estimated 103 million people and ruled
by a presidential democratic republic. With the 12th largest population and the 30th largest economy, there is certainly
scope for development, as it has grown from being an agriculture-based to services-based economy in the early 21st-
century. In comparison to its neighbors like Indonesia, Malaysia, and Thailand, Philippines have failed to meet
expectations in terms of the volume of FDI. However, recent economic resurgence brought about by strong and
consistent economic growth since 2010, new anti-corruption measures and credit rating upgrades have improved their
international reputation and created a new impetus for attracting FDI’s into the country.
Economic refers to the nature and direction of the economy. It has a lot of factors that have a massive
impact on business firms. As we all know economic and business has a close relationship with each other, they
connect or link together. Anahata Nada considers the general state of the economy, interest rates, economic cycle,
inflations, monetary policy, fiscal or annual policy, balance of payments, employment, and of course the pricing
decisions. Anahata Nada always assesses the local situation concerning the economic base and future of the region
and the effects of its outlook for wages, income, employment, transportation, and commercial base. The world of
Economy is critical, they change every now and then and for that, Anahata Nada would like to go with the trend
of the economy at present.
The economy of the Philippines has been continuously growing, but with it grows too, the economy of
other countries. The economic crisis has surely affected the financial status and buying power of the consumers.
Decision to buy or not, what to do with their money and whatnot is greatly affected by these changes. The
company’s target market is the general public, with the data collected and stated above, we can say that this is
good news, thus, an opportunity for the company.

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 B. Competitive Environment
Threats of New Entrants – LOW

Anahata Nada, Options, Artista Salon, David’s Salon, Contradiction, L.A. Fix Salon, and Legacy Salon
are amongst the top key players in the game. The entry of new competitors would be very low because it is very
hard to enter into this line of business since the former companies have already established a good reputation in
the society. Also, consumers prefer an established company over a new one especially if it is not in a large scale
business.

Bargaining Power of Customers – LOW

It is evident that the general public is the target market of the company. The bargaining powers of the
latter are very low. A good subject to support this statement is that the price of the commodities offered by the
company is very inexpensive. Anahata Nada offers affordable and quality service, other than that, they are giving
out numerous promotions, discounts, and the like for the consumers to have and enjoy.

Rivalry among Competing Firms – HIGH

As aforementioned in the preceding chapters, it is well established that the rivalry among the competitors
in this field of business is very high. Though Anahata Nada is branded as one of the leading beauty salon in the
town of Guagua, we cannot ignore the fact that Options and Artista Salon is still the leading beauty salon in
Guagua and both salons are doing very well in their fields. They are both competitive and upgrading.

Bargaining Power of Suppliers – MODERATE

Developing good ties with their suppliers, the company is not prone to suppliers haggling with regards to
their product offers. With these all said, the bargaining power of their suppliers is only moderate and will only
affect the profitability and productivity of the company if Anahata Nada will not contain such shortcomings.
Options is the leading competitor of Anahata Nada since their location is just the same. Bargaining with suppliers
could be at a strong factor if Options would try to buy the suppliers of Anahata Nada.

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Potential Development of Substitute Products – LOW
Anahata Nada offers a wide variety of services and mainly composes of hair care, nail care, and massage.
The development of substitute products does not affect the company much because Anahata Nada is very flexible
when it comes to adapting to sudden changes in the new trends being introduced in the market. Since most service
are not exclusive to only one salon, the possibility of one company having a monopoly of hat certain service is
very vague, though feasible, it still doesn’t affect the firm much.

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 IV. INTERNAL ENVIRONMENT OF THE FIRM

A. Value-Chain Analysis

Discussion and Analysis of Primary Activities

Inbound Outbound
Logistics Operation Logistics Marketing Service

 Store  Maintain the  Give the  Advertising  Hair – cuts, re-

purchased cleanliness of the availed service our services bond, Brazilian
products salon. to the through social treatment,
 Inventory  Always check the customer. media. keratin
treatment, color,
Control, expiration of the  Giving promos
hair spa,
Stockroom cosmetics/products. during peak shampoo, hot oil,
 Employee seasons and conditioning,
behaviors should holidays. curling, hair
always lead to  Activities extension.
customer associated with  Nails –
satisfaction. getting manicure,
 Operating hours: customers to pedicure, nail
9am to 7pm (time avail our art.
varies upon the services.  Skin Care –
completion of the facial cleaning,
wax, massage,
service)
foot spa,
morocco mask,
argan mask
 Non-Surgical
Cosmetics –
eyebrow tattoo,
eyelash
extensions.

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Discussion and Analysis of Support Activities

General Human Resource Technology Procurement

Administration Management
 This includes  The committed workforce is  Anahata Nada is  The firm is
departments like considered a key attribute in very well-known maintained and
management, the company’s success and for use of managed by the
finance, legal, etc., growth over the years. technology, not owner and the firm
which are required Anahata Nada’s employees only for salon and makes sure that all
spa related
to keep the are motivated through procurement
processes (to
company’s stores generous benefits and ensure consistency
undergo a process
operational. incentives. The salon is in providing for acquisition and
Anahata Nada is known for taking care of its professional beauty all the best are
well-designed and workforce, a key reason for services and acquired for the
pleasing salon are a low turnover of products) but to firm.
complemented employees, which indicates connect to its
with good great human resource customers. The best
customer service management thing about
provided by the Anahata Nada if
dedicated you’re a customer
and you’re waiting
employees.
for your turn you
can browse the
internet since
Anahata Nada
provides free and
unlimited access to
WiFi.

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 B. Resource Based View of the Firm
After and evaluation of external market and the making of industry-level decisions, internal strengths and
weaknesses need to be considered. The firm’s distinctive competences are built from tangible and intangible
assets, and organizational capabilities. The tangible assets are easiest to identify as they include financial
resources, raw materials, and production facilities. Anahata Nada purchases only the highest quality for hair
treatments etc. The firm has improved its marketing ability and upgraded its supply chain that turns basic resource
to an advantage for meeting customer expectations in providing professional beauty services and products.
Anahata Nada’s unique strategy of key locations helps it to attract customers. This promotes Anahata Nada
brand image. This makes customers familiar with the service quality and products that Anahata Nada is offering.
The intangible resources are the brand name, reputation, knowledge, experience, etc. Anahata Nada means
beautiful people since Ms. Hannah (Anahata Nada’s owner) considered all people beautiful. Anahata Nada’s
brand name has elements of uniqueness and differentiation that are essential to create positive associations in the
minds of the customers and it is recognizable in most places around Guagua, Pampanga.
Anahata Nada being one of the salon and spa to have the lowest rate for employee turnover also has a high
employee satisfaction quota. Anahata Nada has a reputation for being a good socially responsible firm that makes
customer loyalty increases. Since it is managed by the owner the firm employs only those whom they see the
fittest and the best for a certain job. The firm employs experienced people to provide the best possible services.

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C. Financial Performance

Anahata Nada Salon

Income Statement
For the Year Ended December 31, 2016

2016 2017 2018

Sales 2,250,000.00 2,362,500.00 2,480,625.00
Direct Cost of Sales 675,000.00 708,750.00 744,187.50
Gross Margin 1,575,000.00 1,653,750.00 1,736,437.50
Gross Margin % 0.7 0.7 0.7
Expenses:
Payroll 659,640.00 672,832.80 686,289.46
Markerting & Other Expenses 1,250.00 937.50 702.50
Depreciation 16,000.00 16,000.00 16,000.00
Utilities 183,600.00 192,780.00 202,419.00
Rent 50,000.00 50,000.00 50,000.00
Supplies 15,000.00 15,000.00 15,000.00
Total Operating Expense 925,490.00 947,550.30 970,410.96
Profit Before Interest and Taxes 649,510.00 706,199.70 766,026.54
Less: Taxes 194,853.00 211,859.91 229,807.96
Net Profit ₱454,657.00 ₱494,339.79 ₱536,218.58

Anahata Nada Salon

Statement of Financial Position
For the Year Ended December 31,2017

2015 2016 2017

ASSETS
Current Assets
Cash ₱150,000.00 ₱153,000.00 ₱156,060.00
Other Current Assets 30,000.00 30,600.00 31,212.00
Total Current Assets 180,000.00 183,600.00 187,272.00

Non-Current Assets
Long-term Assets 175,500.00 179,010.00 182,590.20
Total Non-Current Assets 175,500.00 179,010.00 182,590.20
Total Assets ₱355,500.00 ₱362,610.00 ₱369,862.20

LIABILITIES AND CAPITAL

Current Liabilities
Accounts Payable 120,500.00 122,910.00 125,368.20
Total Liabilities

Capital
Ronquillo, Capital 235,000.00 239,700.00 244,494.00
Total Liabilities and Owner's Equity ₱355,500.00 ₱362,610.00 ₱369,862.20

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 V. SWOT ANALYSIS

 Advantages of Strengths Weaknesses

proposition?  Lack of competitive
 Capabilities?  Individual staff  Individual strength?
 Competitive  Specialist offering personalities  Reputation, presence
advantages? complementary  Lack of experience and reach?
 USP's (unique selling services  Non-licensed  Financials?
points)?  Complete Services employees  Own known
 Resources, Assets,  Unique haircutting  No sufficient staff vulnerabilities?
People? techniques  Too many  Timescales deadlines
 Experience,  Location competitors and pressures?
knowledge, data?  Beauty Products  Reliability of data,
 reach, distribution, Support plan predictability?
awareness?  Business Hours  Moral, commitment,
 Innovative aspects?  Employee Benefits leadership?
 Location and
geographical?

 Market developments? Opportunities Threats

 Competitors'  Environmental
vulnerabilities?  Expansion  Competitors effects?
 Industry or lifestyle  Good Reputation  Employee’s  IT developments?
trends?  Introduction of relocation  Competitor intentions
 Technology innovate services  Recession - various?
development and and products  Vandalism  Market demand?
innovation?  Community changes  New technologies,
 Suddenly increase
 Global influences?  Good location services, ideas?
of product’s prices
 New markets, vertical,
horizontal?
 Niche target markets?
 Geographical, export,
import?

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 VI. PROBLEMS FOUND IN SITUATION ANALYSIS

Getting New Clients

Because of the growing competition of salons here in Guagua. Anahata Nada is having a hard time get
new clients. Customers tend to choose those high-end salons that already proved their name in the industry.
Client Retention
It is much easier to get a new client than to retain one. You need to make sure that you are not taking your
client for granted. Some customers are not satisfied with the services that you offer resulting for them to find
another salon that will fulfill their wants.
High Staff Turnover
Hiring new staff nowadays that is willing to work in a salon is not that easy anymore. Because we all
know that it needs a lot of hard work and patience.
Staying Competitive
Beauty salons have to be always on trend. They can’t be left out when it comes to the services that their
competitors offer.
Customer Complaints
Sometimes, there are customers that are not satisfied with the service they received. It is unfortunate but
unavoidable.

VII. RECOMMENDATIONS
Getting New Clients
 Introduce a solid loyalty program
A great loyalty program can win the hearts of your potential clients. A great loyalty
program can be simple, schedule 3 haircuts, get one half off. Or avail 2 major services to get a
20% discount. Rewarding your clients with a point system.

 Advertising
Advertising needs to form part of your strategy but be aware that it is the most expensive
way to try and build your business. Be careful to strike a balance between ‘image building’ and
advertising that really generates new clients.

 Use social media heavily

Social media is a free and powerful advertising tool. Create a lasting impression on your
followers. Share your work on Facebook, Instagram, and Snapchat. Got a new haircut style? Share
an image on your social media platform and watch the engagement grow. This is a great way to
stay in front of your customers and reach an untapped pool of new clients.

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Client Retention
 Set customer expectations
By setting expectations early and a tad lower than you can provide, you can eliminate
uncertainty as to the level of service you need to offer to ensure your clients are happy.
 Be the expert
No matter what industry you occupy, if you can be the expert in your particular field, you
will likely retain more customers. Becoming your customers’ trusted advisor will build customer
loyalty and reduce customer churn.
 Build trust through relationships
As the age old saying goes, you do business with people you trust. Trust is essential in
business, and building relationships with clients will garner that trust.
High Staff Turnover
 Hire the right people
The best way to ensure employees don’t leave you is to make sure you are hiring the right
employees to begin with. Define the role clearly – both to yourself and to the candidates.

 Make opportunities for development and growth

If you aren’t developing your employees, then you aren’t investing in them. And, if you
aren’t investing in them, why should they stay with you?
 Recognize and reward employees
Show your employees they are valued and appreciated by offering them real-time
recognition that celebrates their successes and their efforts.
Staying Competitive
 Target your actions at competitors
Look for how your competitors are locked in, and attack them in ways they cannot
respond. Never miss an opportunity to ruin your competitor’s day.
 Prioritizing customer needs
Instead of focusing your energy on outdoing the competition, invest in becoming a
customer-centric organization. This way, you will boost buyer loyalty and easily defend against
aggressive suppliers or vendors intent on stealing your clients.
 Planning long-term
Without competitors, most firms get lost in the day-to-day exercise of maintaining their
business. As other companies join the market, you will need to start challenging yourself to
accomplish more.

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Customer Complaints
 Acknowledge the problem
Let the customer know you hear what he or she is saying. If you or your company made a
mistake, admit it.
 Offer a solution
Know what you can and cannot do within your company’s guidelines. When offering a
solution, be courteous and respectful. Let the customer know you are willing to take ownership
of the issue, even if it was out of your control.

 Don’t be passive-aggressive
Just say you’re sorry. Even the customer is being unreasonable, apologize outright and
ask how you might help resolve the issue.

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