TABLE OF CONTENTS

I. VIEWPOINT ................................................................................................................................................. 2
II. TIME CONTEXT .......................................................................................................................................... 2
III. STATEMENT OF THE PROBLEM ......................................................................................................... 2
IV. STATEMENT OF OBJECTIVES ............................................................................................................. 2
V. TOOLS FOR ANALYSIS ............................................................................................................................. 2
A. Ratio Analysis ........................................................................................................................................... 2
1. Activity Ratio ........................................................................................................................................ 2
2. Profitability Ratio .................................................................................................................................. 4
3. Coverage Ratio ...................................................................................................................................... 8
4. Liquidity Ratio ...................................................................................................................................... 9
B. Horizontal Analysis ................................................................................................................................. 10
C. Vertical Analysis ..................................................................................................................................... 10
D. Trend Analysis ........................................................................................................................................ 11
VI. AREAS OF CONSIDERATION ............................................................................................................. 12
A. STRENGTHS .......................................................................................................................................... 12
B. WEAKNESSES ....................................................................................................................................... 14
C. OPPORTUNITIES .................................................................................................................................. 15
D. THREATS ............................................................................................................................................... 18
VII. ASSUMPTIONS ..................................................................................................................................... 20
VIII. ALTERNATIVE COURSE OF ACTIONS AND ANALYSIS .............................................................. 21
IX. DECISION MATRIX TOOLS ................................................................................................................ 27
A. Competitive Profile Matrix (CPM) .......................................................................................................... 27
B. External Factor Evaluation Matrix (EFE) ................................................................................................ 29
C. Internal Factor Evaluation Matrix (IFE) .................................................................................................. 31
D. TOWS Matrix .......................................................................................................................................... 32
E. SPACE Matrix ......................................................................................................................................... 36
F. BCG Matrix ............................................................................................................................................. 40
G. IE Matrix ................................................................................................................................................. 41
H. Grand Strategy Matrix ............................................................................................................................. 43
Summary of Matching Tools Matrices ........................................................................................................ 44
X. CONCLUSION ............................................................................................................................................ 49
XI. RECOMMENDATION ........................................................................................................................... 50
XII. GENERAL PLAN OF ACTION ............................................................................................................. 51
XIII. PROJECTED STATEMENT .................................................................................................................. 52

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I. VIEWPOINT

Francisco A. Segovia, President and CEO of Swift Foods Inc.

II. TIME CONTEXT

2013-2017

III. STATEMENT OF THE PROBLEM

The company has a low liquidity ratio that reflects their struggle in paying
off their current liabilities.

IV. STATEMENT OF OBJECTIVES

To increase liquidity ratio and improve performance of the company.

V. TOOLS FOR ANALYSIS

A. Ratio Analysis

1. Activity Ratio
The activity ratio measures the speed with which various accounts

are converted into sales or cash. Activity ratios indicate how well the assets

of the company are managed.

 The inventory turnover ratio is summarized below:

Year Inventory Turnover Ratio Inventory Ratio in Days

2017 133.44 2.69
2016 35.77 10.20
2015 34.13 10.69
2014 49.19 7.46
2013 46.17 7.91

The table above shows that in 2017, Swift Foods, Inc. has an

inventory turnover ratio of 133.44 and an inventory turnover ratio of 35.77

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 in 2016. The company produced a high inventory turnover ratio in 2017

because of the increased sales of the company to its HRI customers.

 The average collection period of Swift Foods, Inc. is illustrated

below:

Year Average Collection Period

2017 34.24
2016 32.13
2015 29.65
2014 13.77
2013 65.29

The table shows that in 2017, Swift Foods, Inc. has an average collection

period of 34.24 days which is longer than the collection period of 32.13 days in

2016. Comparing the average collection period of the company in 2013 and

2017, the company has improved its collection of accounts receivables.

 The average payment period of Swift Foods, Inc. is illustrated

below:

Year Average Payment Period

2017 237.30
2016 194.50
2015 262.26
2014 147.17
2013 140.01

The table shows that the average payment period of Swift Foods, Inc. in

2017 is higher than its 2016 average payment period. The increase in the

average payment period is attributable to the 6.12% increase in the purchases of

the company.

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  The asset turnover ratio of Swift Foods, Inc. is shown below:

Year Asset Turnover Ratio

2017 0.31
2016 0.24
2015 0.25
2014 0.41
2013 0.50

As seen from the table above, Swift Foods, Inc. has a decreasing asset

turnover ratio from 2013 to 2016. The asset turnover ratio in 2017 increased by

29.16% due to the increase of sales of the company to its HRI customers.

2. Profitability Ratio
Profitability ratios are financial metrics used by analysts and

investors to measure and evaluate the ability of a company to generate

income (profit) relative to revenue, balance sheet assets, operating costs, and

shareholders’ equity during a specific period of time. They show how well

a company utilizes its assets to produce profit and value to shareholders.

 Gross Profit Margin

This ratio looks at how well a company controls the cost of

its inventory and the manufacturing of its products and subsequently

pass on the costs to its customers. The larger the gross profit margin,

the better for the company. Swift Foods Inc. is positively improving

from 2016 to 2017 having 1.49% increase.

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 Year Gross Profit Margin

2013 6.88%

2014 0.88%

2015 11.52%

2016 10.3%

2017 11.79%

 Operating Profit Margin

The operating profit margin ratio is a measure of overall

operating efficiency, incorporating all of the expenses of ordinary,

daily business activity. The only positive operating profit margin is

in 2016 when there is an existence of the rent income of ₱ 774,000.

Year Operating Profit Margin

2013 (36.15%)

2014 (12.11%)

2015 (8.24%)

2016 .91%

2017 (7.05%)

 Net Profit Margin

The net profit margin shows how much of each sales peso

shows up as net income after all expenses are paid. Swift Foods Inc.

for the five consecutive years shows of a Swift foods Inc.’s failure

with respect to their earnings on sales.

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 Year Net Profit Margin

2013 (63%)

2014 (10.30%)

2015 (8%)

2016 (1.94%)

2017 (19.89%)

 Earnings per share

Earnings per share is also a calculation that shows how

profitable a company is on a shareholder basis. Data below shows of

a series of low percentage which shows that Swift Foods Inc. is not

profitable for the 5 consecutive years, it has no profits to distribute

to its shareholders.

Year EPS

2013 (₱ 0.030)

2014 (₱ 0.003)

2015 (₱ 0.0021)

2016 (₱ 0.0005)

2017 (₱ 0.0062)

 Return on assets

It measures the amount of profit earned relative to the firm's

level of investment in total assets. The return on assets ratio is related

to the asset management category of financial ratios. The data below

shows that company is poor at managing its investment in assets and

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 using them to generate profit since it thus had very low percentage

in return on assets or return on investment.

Year ROA

2013 (34.79%)

2014 (4.08%)

2015 (8.97%)

2016 (0.48%)

2017 (6.48%)

 Return on Common Equity

It measures the return on the money the investors have put

into the company. It is the ratio potential investors look at when

deciding whether or not to invest in the company. Swift Foods Inc.

record is fair because of its low (negative) percentage through the

five consecutive years shows that they are not efficient in the usage

of the investors’ money and it will affect negatively on how the

potential investors will see them.

Year ROE

2013 (101%)

2014 (12.98%)

2015 (5.99%)

2016 (1.37%)

2017 (21.71%)

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3. Coverage Ratio
Debt Ratio
2017 2016 2015 2014 2013
Total Liabilities 121,778 117,095 114,527 104,836 103,872
Total Assets 173,627 180,129 183,901 152,967 158,248
0.70 0.65 0.62 0.69 0.66

The table above shows the debt ratio of .70 in 2017 compared to .65

in 2016. This implies that 70% of their assets are financed by debt. The

Company’s assets as of December 31, 2017 totaled to 173 million as

compared to 180 million as of December 31, 2016 due to decrease in cash

and inventories. Available cash on hand and in banks decreased by 69.80%

compared with last year due to payment of various taxes and trade suppliers.

While decrease in total asset is apparent, the total liabilities on the other

hand increased. This is due to the increase in income tax payable. The net

effect in the debt ratio of these changes increase its risk in paying its

liabilities.

Debt to Equity Ratio

2017 2016 2015 2014 2013
Total Liabilities 121,778 117,095 114,527 104,836 103,872
Total Equity 51,849 63,034 63,927 48,131 54,376
2.35 1.86 1.79 2.18 1.91

The debt to equity ratio of SFI being 2.35 indicates that SFI uses

debt more to finance its assets relative to the value of its equity. With

this, it can be analyzed that SFI may not be able to generate enough cash

to satisfy its debt obligations which affects other aspects in its key

performance measures.

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4. Liquidity Ratio
Liquidity ratio indicates the ability of a company to pay off both its current

liabilities as they become due as well their non-current liabilities as they

become current.

• Swift Foods, Inc.’s liquidity has a current ratio of the following:

YEAR CURRENT RATIO

2017 0.25
2016 0.57
2015 0.61
2014 0.64
2013 0.73

It can be inferred from the above illustration that Swift Foods,

Inc. has a decreasing current ratio within the given five-year timeframe.

• Swift Foods, Inc. has a quick ratio of:

YEAR QUICK RATIO

2017 0.21
2016 0.51
2015 0.55
2014 0.60
2013 0.65

It can be deduced from the table above that Swift Foods, Inc. has

a decreasing quick assets ratio in the past five years.

• There was a significant decrease of P 22,623,000 or 69.80% in cash and

cash equivalents from 2016 to 2017. The decrease can be attributed to the

cash equivalents amounting to P 11,088,000 at 2016 which has been fully

exhausted by the company in 2017. The decrease can also be attributed to

the decrease in cash on hand and in banks amounted to P 11,535,000 in

2017.

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 • There has been a decrease of 0.74% in the current liabilities of Swift

Foods, Inc. from 2016 to 2017. The current liabilities of the company are

composed of trade payables, provisions, nontrade payables, and accrued

liabilities. 41% of the current liabilities in 2017 is attributable to the

provisions of the company. The provisions are made in the financial

statements for cases where the management believes that the Company may

eventually be obligated to settled.

B. Horizontal Analysis
HORIZONTAL ANALYSIS (Balance Sheet)
2017 vs 2016 2016 vs 2015 2015 vs 2014 2014 vs 2013
Total Current Assets -56% -16% 8% -11%
Total Noncurrent Assets 12% 3% 25% 0%
Total Current Liabilities -1% 2% 2% 1%
Total Noncurrent Liabilities 11% 3% 23% 1%
Total Equity -18% -1% 33% -11%

HORIZONTAL ANALYSIS (Income Statement)

2017 vs 2016 2016 vs 2015 2015 vs 2014 2014 vs 2013
Total Revenue 27% -7% -21% -24%
Cost of Goods Sold 25% -6% -29% -19%
General and Administrative 24% -2% 8% -87%
Expenses
Selling and Marketing Expenses 35% -10% 24% -52%
Other Income (Loss) -146% -9238% -104% 886%
Income Before Income Tax -1683% -110% -41% -89%
Provision for Income Tax 314% 851% 404% -80%
Net Income (Loss) 1207% -78% -39% -89%
Other Comprehensive Income(Loss) -316% -100% 0% -100%
Total Comprehensive Income (Loss) 1153% -106% -353% -88%
C. Vertical Analysis
VERTICAL ANALYSIS (Balance Sheet)
2017 vs 2016 2016 vs 2015 2015 vs 2014 2014 vs 2013
Total Current Assets 31% 29% 26% 23%
Total Noncurrent Assets 69% 71% 74% 77%
Total Assets 100% 100% 100% 100%
Total Current Liabilities 43% 45% 39% 39%
Total Noncurrent Liabilities 23% 24% 25% 26%

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 Total Equity 34% 31% 36% 35%
Total Liabilities and Equity 100% 100% 100% 100%

VERTICAL ANALYSIS (Income Statement)

2017 vs 2016 2016 vs 2015 2015 vs 2014 2014 vs 2013
Total Revenue 100% 100% 100% 100%
Cost of Goods Sold 93% 99% 89% 90%
General and Administrative Expenses -74% -12% -17% -18%
Selling and Marketing Expenses -2% -1% -2% -2%
Other Income 0% 2% 0% 10%
Income Before Income Tax -69% -10% -8% 1%
Provision for Income Tax 0% 0% 0% -3%
Net Loss -69% -10% -8% -2%
Other Comprehensive Income(Loss) 3% 0% 41% 0%
Total Comprehensive Income (Loss) -66% -10% 33% -2%

D. Trend Analysis
TREND ANALYSIS (Balance Sheet)
2017 2016 2015 2014 2013
Total Current Assets 36% 82% 97% 89% 100%
Total Noncurrent Assets 144% 129% 125% 100% 100%
Total Current Liabilities 104% 105% 103% 101% 100%
Total Noncurrent Liabilities 143% 128% 125% 101% 100%
Total Equity 95% 116% 118% 89% 100%

TREND ANALYSIS (Income Statement)

2017 2016 2015 2014 2013
Total Revenue 71% 56% 60% 76% 100%
Cost of Goods Sold 67% 54% 58% 81% 100%
General and Administrative Expenses 16% 13% 14% 13% 100%
Selling and Marketing Expenses 71% 53% 59% 48% 100%
Other Income -1569% 3410% -37% 986% 100%
Income Before Income Tax 11% -1% 7% 11% 100%
Provision for Income Tax 4032% 973% 102% 20% 100%
Net Loss 20% 2% 7% 11% 100%
Other Comprehensive Income(Loss) 3% -1% 797% 0% 100%
Total Comprehensive Income (Loss) 21% 2% -30% 12% 100%

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 VI. AREAS OF CONSIDERATION

STRENGTH
 Good customer relation
 Not dependent to limited suppliers
 Regular cash planning
 Qualified Contract Growers
 High standards of bio-security
measures
WEAKNESS
 Very minimal market share
 Weak marketing strategy
 No research and development plan
 Poor brand recall
 Weak ability to meet short-term
and long-term obligation

OPPORTUNITIES THREATS
 Rise of health conscious  Volatility of chicken selling price
consumers  Changes in the cost and supply of
 Increasing demand in chicken feeds
meat  Increasing competition in the
 Establishment of new business poultry industry
line  Bird Flu
 Ascending production of major  Substitute goods
raw material
 Social media advertisement

A. STRENGTHS

Good Customer Relation

The Company manages credit risk by transacting only with a few recognized and

creditworthy customers with whom it has already firmly established a good business

relationship. It is the Company’s policy that all customers who wish to contract on credit terms

are subjected to credit verification procedures. In addition, receivable balances are monitored

on an ongoing basis with the result that the Company’s exposure to bad debt is not significant.

The Company controls credit risk through strict monitoring procedures and regular

coordination with customers.

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Not dependent to limited suppliers

Raw materials are available when needed. The Company is not dependent upon one or

a limited number of suppliers for essential raw materials and there are no existing supply

contracts. The principal suppliers of the Company for its major raw materials are DBJ Feeds,

Rizal Poultry, Tierwelt Enterpire, EJV Enterprises, Supervet International, and Rising G,

among others. This gives the company the opportunity to choose between high-quality and

reliable suppliers.

Regular cash planning

Liquidity risk is the risk that the Company will not be able to meet its obligations when

they fall under normal and stress circumstances. To limit this risk, the Company manages its

liquid funds through cash planning on a monthly and weekly basis. The Company uses

historical figures and experiences and forecasts from its collections and disbursements, as well

as projections based on the annual business plan. Likewise, the Company places excess funds

in short-term cash investments. The Company also enters into restructuring agreements with

creditor banks, as the need arises.

Qualified contract growers and high standards of bio-measures

Under SFI’s contract growing arrangements, contract growers provide the following

services: housing for the birds that meets SFI’s requirement and broiler specifications; labor

for day-to-day operations of the farm; and overhead costs such as water, electricity and fuel.

The contract also requires the farmer to comply with the vaccination programs and to provide

bio-security measures specified by SFI.

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 B. WEAKNESSES

Very Minimal Market Share

In 2017, Swift Foods Inc. had only 13.95% of market share and 1.43 of market growth.

This shows that the company is having a hard time in the competition with the other dressed

chicken company.

Weak Marketing Strategy

The Swift Foods Inc. have a weak marketing strategy because they currently have no

promotional advertisement in their product. They also have a minimal market share at 13.95%

and 1.43 income contribution in market growth. That resulted to poor competitiveness of the

company.

No Research and Development Plan

The company currently do not have product research and development and also in its

prior years. They state no future plans in their Plan Operation. The company is in the process

of improving the performance of its contract growers to sustain financial viability.

Poor Brand Recall

The company have poor brand recall. There is no proper advertisement shown to

potential customers during the introduction of Sariwanok dressed chicken in the market.

Weak Ability to meet its short-term and long-term obligations

The company have weak ability to meet its short-term and long-term obligations due to its

provisions. The assets also decrease with the current ratio of 0.2517:1 against last year current

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ratio of 0.5703:1. The cash and cash equivalents in summary decreases by 69.80% due to its

payment of various taxes and trade supplies.

C. OPPORTUNITIES

Rise of Health Conscious Consumers

Nowadays, food consumers are into nutritious foods and products that will satisfy their

health needs. They are becoming more conscious with their health that they avoid unhealthy

foods. According to grocery shopper trends, 90% of consumers believe the food they eat at

home is healthier. With the fact that people have strong desire to eat food at home because it is

healthier, a food manufacturer like Swift Foods Inc. face the opportunity to be usually chosen

by consumers because of their health needs.

Increasing Demand in Chicken Meat

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 Consumers demand to chicken meat is because with the rampant increase of food

retailers, restaurants, stores serving it and also with the fact that it is the cheapest form of animal

protein. Also as you can see in the figure below, in the early 1970's, a pound of beef was about

2.5 times more expensive than a pound of chicken, and this figure trended upward over time.

Today, beef is over 4 times more expensive than chicken. It shows that the increased efficiency

of chicken production, resulting in lower relative chicken prices, has led to an increase in

chicken consumption and reduction in beef demand.

Establishment of New Business Line

It is an opportunity for Swift Foods Inc. to engage into many consumers by having a

ready-to-go store like chooks to go and Andoks chicken. With the fact that it is also supported

by many consumers because of its convenience, it is also healthy.

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Ascending Production of Raw Material

Raw materials can be explained as substance or material used in the manufacturing or

primary production of goods. The raw materials used by Swift Foods Inc. are use in various

processes and also prior to being used in the manufacturing process.

Social Media Advertisement

According to Social Media Examiner, about 96% of marketers are currently

participating in social media marketing that is why social media is a great advertisement

method for Swift Foods Inc. with also that fact that it is one of the most cost-efficient digital

marketing methods used to syndicate content and increase business’ visibility. Implementing a

social media strategy will greatly increase brand recognition since it will be engaging with a

broad audience of consumers.

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 D. THREATS

Volatility of chicken selling price

- One proof according to the Philippine Statistics Authority the table below shows the

volatility of chicken selling price in Metro Manila for 3 years

- The annual average retail price for fully dressed chicken in Metro Manila was recorded

at P132.58 per kilogram. It decreased by 0.70 percent compared with last year’s retail

price. Correspondingly, the highest retail price for 2015 was recorded in the month of

July at P135.77 per kilogram. The lowest price was reported in April at P124.28 per

kilogram.

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 - Its monthly change in price implies a threat on how Swift Foods Inc. can adapt to the

rapid change in its price

Increasing competition in poultry industry

- According to the Philippine Inquirer business section the Philippines has well-attained

self-sufficiency in poultry, a prolific producer of poultry products. About 800 million

broilers are produced annually and in spite of rising population, the country’s supply

continues to meet consumer demands. Even restaurants and those who are in the food

business have steady flow.

- Bounty Fresh and Magnolia are the largest players in the industry.

Changes in the cost and supply of feed

- Since corn is the primary element in the feeds, data from the Philippine Statistics

Authority showed the country’s corn production this quarter declining by 3.76 percent

to 2.18 million metric tons from 1.33 million MT in the same period last year as farmers

shift to planting other crafts, thus create a threat to the poultry industries.

Substitute goods

- According to the study the demand for broiler meat is considered as the dependent

variable because it is affected by the consumer’s income, its own price, the price of the

relative goods-pork and beef. Income of the consumer directly affects the demand for

chicken meat. Higher income of the consumer increases the demand for the said

commodity. The price of the substitute goods (pork and beef) also influences the

demand for chicken meat. As the price of pork and beef increases, consumers tend to

increase their demand for chicken meat that has the cheaper price relative to pork and

beef. Price, on the other hand, is inversely related to demand for chicken meat since

higher price discourages buyers to choose and consume a certain product, according to

the Law of Demand (McConnell and Brue, 2002).

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Bird Flu

- For example, the H5 bird flu virus that hit the Philippines last 2017 causes 80 to 100

percent mortality in the poultry industry. Test specimens confirmed the presence of

highly pathogenic avian influenza (HPAI) subtype H5 in the town of San Agustin in

San Luis, Pampanga, killing 37,000 birds covering six farms particularly poultry, quail

and ducks.

- This threat can be prevented by a high standard biosecurity measures but really

contagious in the poultry produce when infected

VII. ASSUMPTIONS
 The sales of the company shall increase by 3.5% based on the increase of

demand of dressed chicken in MIMAROPA.

 Majority of sales of Swift Foods, Inc. within five years shall be from its HRI

customers.

 The sales return and discounts shall be 2% of the current sales of the company.

 The change in fair value of agricultural produce shall increase by 5% annually.

 The general and administrative expenses shall increase by 7% annually.

 The selling and marketing expenses shall increase by 5% annually.

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  The changes in the components of other income (loss) are the following: there

will be no additional provision for probable loss within five years; fair value

change on investment properties shall increase by 1.5% annually; 1% increase

on its rent income annually; and the interest income is retained.

VIII. ALTERNATIVE COURSE OF ACTIONS AND ANALYSIS

ACA NO. 1: Sale of Investment Property

ADVANTAGES

A. Immediate cash flow and additional source of fund

Once the sale of investment property is made, cash will flow in to the

company. This means additional fund can be generated and can be used by the

company for its current operations and to utilize it for the financial issues it’s

currently facing.

B. Improved Liquidity Ratio

The liquidity ratio of the company in 2017 is 0.25 compared to 2016’s

ratio which is 0.57. The declining result of this ratio reflects company’s struggle

to pay current liabilities. Managing the cash of the business by selling off its

non-current asset to generate cash accordingly affect the liquidity ratio. Once

sold, cash inflow will occur, current asset will increase thus, making adjustment

in the liquidity ratio that will present better performance of the company.

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C. Positive Subsequent Effects to Other Key Performance Measures

Improvement of the liquidity ratio by generating cash through selling of

investment property will allow the business to pay-off thoroughly its current as

well as non-current debts.

DISADVANTAGES

A. An Additional Source of Income is forgiven

The biggest benefit of owning a rental property is that the renters will

provide you with a direct income flow in the case of selling the property, fixed

return is sacrificed for immediate cash.

B. Loss of Gain from Property Value Growth

Since you own the property, you stand to gain from an increase in the

property value over time due to changing demands in the area, even if the

property doesn’t undergo any changes. Selling of owned property will effect to

loss of probable gain due to value growth

C. Bad Image to Third Parties

If you have an investment property, you can also use the existing

equity in the property to get another loan or to purchase another investment

property. Selling of estate, an investor loses its financial leverage and use of

the property for collateral.

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ACA NO. 2: Issuance of Bonds Payable

ADVANTAGES

A. Immediate cash flow and additional source of fund

For the company to pursue their strategy to improve its situation and

position in the industry, they need additional cash for this. Issuing convertible

bonds can provide immediate cash for Swift Foods Inc. that can be used for

future expenditures and undertaking. Issuance of bonds can provide additional

fund for the company.

B. Reduced interest payment

Another advantage of convertible bonds is that one of its features is that

it has lesser interest rate than straight bonds. With lesser interest payments, the

company's times interest earned ratio can be affected and can contribute to the

company's ability to pay contractual interest payment.

C. Possible conversion to stock

Once the convertible bond is converted, the bond liability will be

extinguished and will be converted to shares. With this, then number of shares

of the company will increase and will affect its capital structure, debt ratio as

well as its debt to equity ratio.

D. Tax deductible

Another positive effect of issuing convertible bonds rather than equity

is the tax deduction of interest, which lowers the cost of capital for a company.

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DISADVANTAGE

A. Additional expense as interest

In issuing convertible bonds with lower coupon rates, there will be an

additional fixed expense which will create additional expense account which is

interest expense in the company’s computation of profits.

B. Possible Stock Dilution

When convertible bonds are converted to equity by bondholders, a

significant stock dilution could occur, which may result in substantial reduction

in shareholders' value per share. Thus, if a company wants to issue stock through

a secondary offering in the future, it may not be able to raise as much capital

due to stock dilution from convertible bonds.

C. Possible shifting of voting power

Financing with convertible securities runs the risk of diluting not only

the EPS of the company's common stock, but also the control of the company.

If a large part of the issue is purchased by one buyer, typically an investment

banker or insurance company, conversion may shift the voting control of the

company away from its original owners and toward the converters. This

potential is not a significant problem for large companies with millions of

stockholders, but it is a very real consideration for smaller companies, or those

that have just gone public.

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D. Possible effect in ability to finance operations

Heavy use of debt will adversely affect a company's ability to finance

operations in times of economic stress. Furthermore, in such times investors are

increasingly concerned with the security of their investments, and they may

refuse to advance funds to the company except on the basis of well¬-secured

loans. A company that finances with convertible debt during good times to the

point where its debt/assets ratio is at the upper limits for its industry simply may

not be able to get financing at all during times of stress. Thus, corporate

treasurers like to maintain some "reserve borrowing capacity". This restrains

their use of debt financing during normal times.

ACA NO. 3: Establishing a store of ready-to-go chicken

ADVANTAGES

A. Increased income potential

People nowadays wants healthy foods which are already cooked so

establishing a ready-to-go chicken store will utilize different target markets with

different demographic and purchasing needs because it is convenient.

Consumers now have more number of partially cooked foods available for

immediate consumption. Entering into new business line may generate an

increase in sales.

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B. Improve customer retention

With the product of Swift Foods Inc. which is fresh chicken meat,

establishing a ready-to-go chicken store will improve customer retention by

product diversity. It is useful for consumers in various conditions, especially for

those who are facing physical deformities, or are in the situation where cooking

is not possible.

C. Availing franchise of the ready-to-go chicken store

With the high demand of ready cooked chicken, many businessmen will

invest and avail a franchise of the store.

DISADVANTAGES

A. Competitors

Offering same products to target market will create high competition

with well-established ready-to-go chicken store such as Andoks, Chooks to Go,

Baliwag etc.

B. Loss of control

Entering into new business line as part of business expansion will cause

to establish different branch stores in different location. As the business grows,

there can be a disadvantage as to delegation of duties or dividing of workloads

which may lead to loss of control.

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 C. Increase in capital requirements

Establishing ready-to-go chicken requires more investment, increase in

labor force, and acquisition of additional facilities and equipment to be used in

business operation.

IX. DECISION MATRIX TOOLS

MATCHING TOOLS

Formulating strategy is a crucial step because you need to assess all the factors

that could affect the long - range plans for the effective management of

environmental opportunities and threats, in line with the corporate strengths and

weaknesses. This chapter will use various matrices to test and determine the

significance of all key factors which may affect the strategy decision of Swift

Foods, Inc.

A. Competitive Profile Matrix (CPM)

Magnolia Chicken, Monterey, Bounty Fresh Chicken are one of the most

renowned quality chicken meat product in the market under San Miguel Foods, Inc.

and Bounty Fresh Food Inc. They are considered as the major competitors of Swift

Foods, Inc. In order to analyze and compare the SFI from its major competitors,

Competitive profile Matrix (CPM) will be used.

CPM presented in the table below enumerated the necessary critical success

factors necessary for competitor analysis. Brand Reputation and Product Quality

obtained the highest weight since currently the competition in the market of well-

known brands whose reputations are founded by the quality of the products offered.

The market share obtained the second highest weight because it is an indicator of

27 | P a g e
 how well the company is doing in relation to its competitors. Next is the pricing

competitiveness, since this factor is necessary in attracting customers. Production

capacity and market advertising obtained the same weight, followed by distribution

channel and then research and development spending.

CRITICAL WEIGHT SWIFT FOODS, SAN MIGUEL BOUNTY FRESH

SUCCESS INC. FOODS, INC. FOOD, INC.
FACTORS Rating Weighted Rating Weighted Rating Weighted
Score Score Score
Brand 0.15 1 0.15 4 0.60 3 0.45
Reputation
Product Quality 0.15 4 0.60 4 0.60 4 0.60
Market Share 0.14 1 0.14 4 0.56 3 0.42
Price 0.13 3 0.39 3 0.39 3 0.39
Competitiveness
Production 0.12 3 0.36 4 0.48 4 0.48
Capacity
Market 0.12 1 0.12 3 0.36 4 0.48
Advertising
Distribution 0.10 2 0.20 4 0.40 4 0.40
Channel
Research and 0.09 1 0.09 4 0.36 3 0.27
Development
Spending
TOTAL 1.00 2.05 3.75 3.49

Table 4.1 Competitive Profile Matrix

The weights given to the critical success factors enumerated above range

from 0.00 which indicates not important to 1.00 which indicates solely important.

The ratings, on the other hand, denote the following: 4 means that the factor is a

major strength of the company; 3 is a minor strength; 2 is a minor weakness; and 1

is a major weakness. The total weighted score of 2.50 signifies an average weighted

score which means that if the total weighted score falls below 2.50, then the

business is considered in weak marketing position, and if such total is higher than

2.50, then the business is in strong marketing position. The summary of rubrics for

ratings is illustrated below.

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 Ratings Weights
major weakness 1 Not Important 0.00
minor weakness 2
minor strength 3 Solely 1.00
major strength 4 Important

Table 4.2 Rubrics/ Pointers for Rating

From the result portrayed in Competitive Profile Matrix, it is evident that

most of critical success factors were at low ratings which lead to 2.05. The result

signifies that Swift Foods, Inc. is in weak marketing position and has low

competitiveness compared to the two firms namely San Miguel Foods, Inc. and

Bounty Fresh Food, Inc.

B. External Factor Evaluation Matrix (EFE)

Using External Factor Evaluation Matrix (EFE Matrix), it will show and

assess how effectively SFI responds to the external opportunities and threats. The

key factors enumerated in the table below were weighted and rated based on their

importance in the society and degree of response of SFI towards these factors.

KEY EXTERNAL FACTORS Weight Rating Weighted

Score
Opportunities
1 Rise of health conscious consumers 0.09 2 0.18

2 Increasing demand in chicken meat 0.12 3 0.35

3 Establishment of new business line 0.11 1 0.11

4 Social media advertisement 0.10 2 0.20

5 Ascending production of major raw 0.10 2 0.19
material
Threats
1 Volatility of chicken selling price 0.10 2 0.20
2 Increasing competition in poultry 0.12 3 0.35
industry
3 Changes in the cost and supply of feed 0.08 2 0.16

4 Substitute goods 0.09 2 0.18

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5 Bird Flu 0.10 3 0.30
Totals 1.00 2.22

Table 4.5 External Factors Evaluation Matrix (EFE)

The weights given to the key external factors enumerated above range from

0.00 which indicates not important to 1.00 which indicates solely important. The

ratings, on the other hand, denote the following: 4 means that the company has

superior response towards the key external factors; 3 denote above average

response; 2 denote average response; and 1 denotes poor response. The summary

for rubrics or pointers of rating and weight is illustrated on the following page.

Ratings Weights

poor response 1 Not Important 0.00

average response 2

above average 3 Solely Important 1.00

response
superior response 4

Table 4.6 Rubrics/ Pointers for Rating

It is clearly shown in the EFE Matrix that Swift Foods, Inc. responds poorly

to its key external opportunity factors, while it is somehow prepared for SFI to meet

the threats especially the first and last threat enumerated in EFE Matrix table.

Moreover, the total weighted score amounted to 2.22 which indicate that SFI

current strategies are neither effective nor ineffective in exploiting opportunities or

defending against threats. SFI should develop its strategy and concentrate more on

how to take advantage the opportunities.

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C. Internal Factor Evaluation Matrix (IFE)

Using Internal Factor Evaluation Matrix (IFE Matrix), it will show and

assess what are competitive advantages and disadvantages of SFI as reflected in

key internal strength and weakness factors. The key factors enumerated in the table

below were weighted and rated based on their importance in the society and degree

of response of SFI towards these factors.

KEY INTERNAL FACTORS Weight Rating Weighted

Score
Strengths
1 Good customer relation 0.15 3 0.45
2 Not dependent to to limited suppliers 0.10 4 0.40

3 Regular cash planning 0.04 3 0.12

4 Qualified contract growers 0.06 4 0.24
5 High standard of bio-security measures 0.02 3 0.06
Weaknesses
1 Very minimal market share 0.18 1 0.18
2 Weak marketing strategy 0.17 1 0.17
3 No research and development plan 0.05 2 0.10

4 Poor brand recall 0.19 1 0.19

5 Weak ability to meet short-term and 0.04 2 0.08
long-term obligation
TOTAL 1.00 1.99

Table 4.10 Internal Factors Evaluation Matrix (IFE)

The weights given to the critical success factors enumerated above range

from 0.00 which indicates not important to 1.00 which indicates solely important.

The ratings, on the other hand, denote the following: 4 means that the factor is a

major strength of the company; 3 is a minor strength; 2 is a minor weakness; and 1

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 is a major weakness. The summary of rubrics for ratings is illustrated on the

following page.

Ratings Weights

major weakness 1 Not Important 0.00

minor weakness 2

minor strength 3 Solely 1.00

Important
major strength 4

Table 4.11 Rubrics/ Pointers for Rating

The rating ranges in 4.00 indicate the best and strong internal position, 2.50

indicate average value, while 1.00 suggests worst internal position. It is clearly

shown in the IFE Matrix obtaining a total weighted score of 1.99 indicating that

Swift Foods, Inc. possessed weak internal position.

D. TOWS Matrix

Prior to the initial investigation determining the internal and external factors

enumerated in SWOT analysis, TOWS matrix evaluates specific strategies to

address the results of such factors in SWOT. This matrix interconnects the internal

aspects with the external aspect as presented in the table below.

STRENGHTHS WEAKNESSES
1 Good customer relation 1 Very minimal market
share
2 Not dependent to to limited 2 Weak marketing strategy
suppliers
3 Regular cash planning 3 No research and
development plan
4 Qualified contract growers 4 Poor brand recall
5 High standard of bio-security 5 Weak ability to meet
measures short-term and long-term
obligation
OPPORTUNITIES SO STRATEGIES WO STRATEGIES

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1 Rise of health For the improvement of Swift
conscious Foods Inc. customer relations it
consumers will focus on the health of its
consumers while providing a
fresh chicken meat that is high
quality and less fat while
considering its budget on the
recent cash planning. Using its
high standard biosecurity
measures it will give the
consumer the relief on the
consumption of the poultry
produce.
2 Increasing demand As demand increases supplier
in chicken meat and contract growers
relationship has to do with it
follow ups and maximization of
the service they produce will be
needed for the company not to
be left out in the industry as
demand increases.
3 Establishment of Utilization of the Swift's
new business line produce capacity
and so with the flavoring the
high quality fresh chicken from
the inquiries of the consumers
will use social media and web
for the consumer to be involve in
the establishment of the new
business line.
4 Social media Since the growth in the use of
advertisement social media is an excellent
opportunity at low costs to touch
the interest of the consumer it
would be better to enter this type
of promotion while
communicating with the
suppliers and contact growers
for the Swift Foods Inc. will
As the rise health
conscious
consumers is in existence
in the opportunity the
Swift Foods Inc. will then
conquer the market on
focusing on the researches
and developments about
on how to improve the
quality of chicken
produce for it to be
healthy and meet the
health satisfaction of the
consumers.
Establishment of new
business line and
promotions on the social
medias of the current
poultry produce and then
new flavors of chicken
will help to turn the
weakness in the
marketing strategy, very
minimal market share and
no brand recall into
strengths while keeping in
mind still the health of the
consumers for long term
advancement on the
marketing aspects.
Maximizing the current
poultry productions by
strategically use of every
piece of assets own, no
dull
time in the production so
to meet the obligations of
the company while going
with the increase in
demand in
white meat.
33 | P a g e
 "walk the talk"in their
promotion.
5 Ascending Having more and more
production of major enhancement on the bio-
raw material seccurity measures and good
relations to the suppliers and
contact growers while keeping
in mind the continnues growth in
the production of the major raw
material.
THREATS ST STRATEGIES
1 Volatility of chicken Rapid change in selling price is
selling price manageable as long as the
company will take good care
of its consumer good
relationship and satisfying their
needs then their taste in the
consumption of white meat
keeping their loyalty to the Swift
Foods Inc. will help the Swift
Foods Inc. to cope with the
volatility of chicken selling
price.
2 Increasing Competition is healthy to Swift
competition in Foods if they will continue and
poultry industry utilize the service of the
suppliers and help the contact
growers to improve their service
having in mind how to be unique
and inculcate impact to the
consumers.
3 Changes in the cost Since suppliers of the Swift is
and supply of feed not limited and it does have a
qualified contract gowers in case
of change in cost and supply of
feeds can be maintained by
good communication and
relations in keeping their service
adaptable to any changes in the
feeds.
WT STRATEGIES
Offering periodical
discounts if bulk puchase
and for long-term
consumers to cope with
the change in selling price
the attractive the
marketing strategy the
higher the possibility of
gain incase of change in
selling price.
Swift Foods will have
new ideas and
basis on research and
development using the
existence of the
competition in the
industry. Then plan a
strategy in marketing
aspect that will go beyond
the competitors strategy
after studying their
strategy.
Having in control in the
feeds since there is an
owned warehouse for it,
research on quality of
feeds that goes with the
necessity of quantity in
the production of poultry
produce that will also
directly affect the white
meat quality and its
marketing aspect by the
feeds the was fed on them.
34 | P a g e
4 Substitute goods Continuation on cultivating the Use the brand image and
customer relations by improving improvement of the
the white meat qualty of the produce
quality that will reassures them while having the
of its longterm health benefits consumer to know the
and also discounts on them with improvement together
their loyalty to the brand as long with the long-term health
as the discounts is manageable benefits in the
through continues budget consumption.
planning.
5 Bird Flu Contract growers so with the
Swift Foods will prevent it by
taking more into the biosecurity
measures like keeping the chicks
and chickens indoors, security in
their food intake for wild birds
not to infect the chicks and
chickens and also bio-clean
environment for the poultry
produce.

Table 5.1 TOWS Matrix

To suffice the needs of the target market Swift Foods Inc. Will maintain and

enhance the strengths in relationships in its valuable customers, simultaneous help

for the contract growers and ensure the loyalty of the suppliers and all the prior

parties to overcome the threats and maximize the opportunities. High standard on

bio-security measures will have a massive impact on the overall operations of the

Swift Foods Inc. because health of the poultry produce is a vital into considerations

of marketing strategies and meeting its short to long term obligations. Threat in

high competition is manageable and will be soon be a strength since competition

signals strong consumer demand. It will provides validation for what the Swift

Foods Inc. Doing in its markets. In new markets, this is an opportunity to promote

an emerging trend in the consumption of white meat and health conscious

cunsumers and will help to get buyers and the media excited about your work goes

with the promotions.

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E. SPACE Matrix

To help Swift Company examine its decision before its proper execution, the

space matrix is used as the most appropriate tool. This matrix suggests strategies

that are suitable for the company. Included are the company’s financial strength

and competitive position for its internal strategic position, and environmental

stability and industry strength for its external strategic position. These different

factors were given numerical values of 6 or -1 as best, and 1 or -6 as worst,

depending on where the factors are located in the graph. The financial strength

factor will be represented as the positive Y-axis while the environmental stability

will be on its negative side. On the other hand, the industry strength factor will be

represented as the positive X-axis while the competitive position will be on its

negative side.

INTERNAL STRATEGIC POSITION

Financial Strength (FS) Value Competitive Advantage Value
(CA)
1 Return on Investment 4 1 Market Share -5
2 Liquidity 4 2 Control over Supplier -3
3 Solvency 4 3 Customer Preference -5
4 Cash Flows 6 4 Sound Supply Chain -2
5 Net Income 6 5 Brand/Image -5
Average 4.8 Average -4
EXTERNAL STRATEGIC POSITION
Environmental Stability Value Industry Strength (IS) Value
(ES)
1 Government -1 1 Growth Potential 2
Regulation
2 Demand Elasticity -3 2 Profit Potential 3
3 Barriers to Entry -5 3 Financial Stability 3
4 Competitive Pressure -6 4 Resource Availability 2
5 Technological -2 5 Capacity Utilization 2
Changes
Average -3.4 Average 2.4
Y-AXIS 1.4 X-AXIS -1.6

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 Table 5.2 Strategic Position and Action Evaluation Matrix (SPACE)

Rating
Competitive Advantage -6 (worst) to -1 (best)

Industry Strength

Environmental Stability 1 (worst) to 6 (best)

Financial Strength

Table 5.3 Rubrics/ Pointers for Rating

Through the years, Swift Company has been struggling maintaining its

good standing regarding its financial position and performance. Its latest annual

report reflects depletion in some of its key performance measures such as its

liquidity ratio, solvency ratio and its return on sales resulted from its prior situation.

With low return on investment, liquidity ratio, solvency, they are weighted in 4’s

as well as negative cash flow and net income that were graded with 6’s. With this,

the average grade resulted to 4.8.

In terms of competitiveness, having only one operating branch in Palawan, it

has evidently a low market share position leading to low standing in terms of

customer preference and poor recall in their brand image which was rated with -

5’s. However, they weight averagely in terms of their control over supplier as well

as the supply chain which was graded with -3 and -2 respectively. With this, the

average grade resulted to -4.

In terms of its environmental stability, the industry is quite unsteady leading

to different factors to have some random grades. Because the business relates to

foods, there are apparent government regulations followed by the company which

it tends to comply with leading for its rate of -1. Along with this, the change in

technological aspect is covered by the production of the company which it was

37 | P a g e
graded in -2. The demand elasticity, rated in -3, is also in its usual effect. The reason

is that because agricultural products are food consumption and is one of the primary

concerns of consumers, the demand is inelastic such that it will stay the same or

may only have a minimal effect no matter how elastic the change in price may be.

However, barriers to entry and competitive pressure keeps the company from

growing which causes great burden to the industry that’s why these factors are rated

in the grade of -5’s and -6’s respectively. With this, the average grade resulted to -

3.4.

Lastly, the industry strength might give the business positivity in its strategic

position. If proper and competitive strategies will be applied, the position of the

business in its respective industry might change its negative course into a strong

potential growth. Increasing trend in the white meat due to increased awareness for

health and nutrition is apparent with growth potential rated in 2. By proper

implementation of strategies, profit potential may follow as well as financial

stability, both graded in 3’s. Resource availability is also reflected in their financial

report matching resource stability that’s why it is graded in 2 along with capacity

utilization. For this reason, the industry strength of the company has accumulated

an average of 2.2.

38 | P a g e
 Figure 5.1 Graphical Analyses under SPACE Matrix

After the averages have been accumulated from the 4 different factors

considered in this matrix, the X-axis and Y-axis values are then plotted. The values

coming from financial strength and environmental stability are added to get the X-

axis value while the Y-axis value consisting of the competitive position and

industry strengths are summed up together. X-axis resulted in an average of -0.1

while Y-axis resulted in an average of 0.1 and thus the point is located on

conservative side. The suggested strategies when a company is in this quadrant

where it is still in an attractive position but with low growth rate, lacks competitive

products and financial resources and has a critical factor in its competitiveness, the

company should protect its products and develop new one and also think of

possibility of penetration into the industry as well as to reduce costs.

39 | P a g e
F. BCG Matrix
Boston Consulting Group (BGC) Matrix may use in order to analyze and

assess how the SFI products and its brand perform in the market. Under this matrix,

it will examine the current position of SFI’s product with a brand name ‘Sariwanok’

according to its market share and the business market growth as well as to

determine the role of such product to profitability of the business.

The figure on the following page shows the current position of Swift Foods,

Inc. in industry.

Figure 5.2 Boston Consulting Group Matrix (BCG)

Since poultry industry is considered as being the most progressive

industry nowadays, but the company has low market shares among its

competitors amounting to 13.95%, SFI was deemed to be located on the

Question Marks quadrant. This quadrant indicates that product contribute to low

40 | P a g e
 market growth and share. The result also indicates that it consumes a lot of

money but bring a little in return.

Under BCG matrix, the strategies to be considered under the question

mark quadrant are market penetration, market development, and product

development.

G. IE Matrix
In determining the Internal-External Matrix, we need to analyze first the

External Factor Evaluation Matrix (EFE Matrix) and the Internal Factor Matrix

(IFE Matrix). EFE is used to evaluate the external position of the organization

or its strategic intents while IFE is used for evaluating major internal strengths

and internal weaknesses in functional areas of an organization or a business and

identifying relationships among those areas.

From previous chapter, the EFE Matrix shows the breakdown of the

weight and rating of each key external factor that resulted for determining the

weighted score in terms of external factors which is 2.22.

In addition, the IFE Matrix similar to the process of EFE Matrix shows

the breakdown of the weight and rating of each key internal factor that resulted

for determining the weighted score in terms of internal factors which is 1.99.

41 | P a g e
 Figure 5.3 Internal-External Matrix (IE)

Now in IE Matrix, we need the score from the EFE Matrix (2.140) which

is plotted on the y-axis and the IFE matrix (1.825) which is plotted on the x-axis

of the IE Matrix. Breakdown of weighted score presented on table below which

shows that 1.00 to 1.99 is considered low, 2.0 to 2.99 are considered medium,

and 3.00 to 4.00 are considered high. Also the table below shows the description

per quadrant. Quadrant I, II, and II suggest the grow and build strategy which

means that the strategies that the company must implement should focus on

market penetration, market development, product development and should also

considered backward, forward and horizontal integration. Quadrant IV, V, and

VI indicate hold and maintain strategy which means that the strategies of the

company should focus on market penetration and product development. On the

other hand, quadrant VII, VIII, and IX indicate harvest and exit strategy which
42 | P a g e
 means the costs for restoring the business are low so the strategy should focus

on revitalizing the business but in some situation or cases, destructive cost

management is a way to play to end game.

Legend Description Legend Description

3.00 - 4.00 High I, II,& III Grow and Build
2.0 - 2.99 Medium IV, V, & VI Hold and Maintain

1.00 - 1.99 Low VII, VIII, & IX Harvest and Divest

Table 5.4 Rubrics/ Pointers for Rating

With this having 2.22 on the y-axis and 1.99 in the x-axis, internal-

external matrix shows that Swift Foods, Inc. lays on the description under hold

and maintain. This means that SFI strategies should focus on market penetration

and product development.

H. Grand Strategy Matrix

Swift Foods, Inc. is a business operating in Palawan which sells live and

dressed or processed chicken. SFI has a weak competitive position in a fast

growing industry. Therefore, it is plotted on quadrant II in the grand strategy

matrix. The company must first conduct a thorough analysis and evaluation of

their existing approaches in the marketplace to determine the roots of their

ineffectiveness. The usual strategic options for firms or businesses in quadrant

II is intensive strategy. SFI could venture on product and market development.

It could also work on its market penetration. Another option for companies that

does not have any competitive advantage is to pursue horizontal integration.

The last strategic option is divestiture or liquidation of business which provides

fund to acquire other businesses.

43 | P a g e
 Figure 5.4 Grand Strategy Matrix

Summary of Matching Tools Matrices

From the previous section, matrices already been discussed and defined the appropriate

strategies after assessing the factors that greatly impact the Swift Foods, Inc. business

operation. The table on the following page will show the summary of suggested strategy of

each matrix.

STRATEGY TOWS SPACE BCG IE Grand TOTAL

Matrix Matrix Matrix Matrix Strategy
Matrix
Market Penetration      5

Market Development    3

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 Product Development      5

Horizontal Integration  1

Forward Integration 0
Backward Integration 0

Retrenchment 0

Divest 0
Liquidation 0
Unrelated 0
Diversification
Related 0
Diversification

Table 5.5 Summary of Suggested Strategy per Matrix

From the table presented above, TOWS and BCG suggest that the appropriate

strategies to apply are market penetration, market development and product

development. Two of the matrices, namely SPACE and IE matrix suggested market

penetration and product development only. Moreover, Grand Strategy

recommended market penetration, market development, product development and

horizontal integration as the appropriate strategies to apply.

Therefore, Swift Foods, Inc. strategies should focus on market penetration

and product development upon establishing strategies.

DECISION TOOLS

I. Quantitative Strategic Planning Matrix

After using various matrices upon assessing SFI’s position in the industry,

the company has formulated the Quantitative Strategic Planning Matrix using the

strategies including product development, market penetration and market

45 | P a g e
development which were suggested by five matrices in the previous section. Using

this matrix, it attempts to determine the best strategy that the company should focus

on by weighing it according to its attractiveness and relevance as to the decision.

The weights given to the critical success factors enumerated above range

from 0.00 which indicates not important to 1.00 which indicates solely important.

The ratings, on the other hand, denote the following: 4 means that the factor is a

most acceptable or highly attractive as to strategy decision; 3 is a probably

acceptable or reasonably attractive; 2 is a possibly acceptable or somewhat

attractive; 1 is not acceptable or not attractive; and 0 means it is not relevant and

the factor does not affect the choice being made at all. The summary of rubrics for

ratings is illustrated on the following page.

46 | P a g e
 KEY FACTORS WEIGHT MARKET PENETRATION PRODUCT DEVELOPMENT
Attractiveness Weighted Attractiveness Weighted
Score Attractiveness Score Attractiveness
Score Score
STRENGTHS
1 Good customer relation 0.15 4 0.60 3 0.45
2 Not dependent to to limited suppliers 0.10 3 0.30 3 0.30
3 Regular cash planning 0.04 3 0.12 4 0.16
4 Qualified contract growers 0.06 2 0.12 2 0.12
5 High standard of bio-security 0.02 3 0.06 3 0.06
measures
WEAKNESSES
1 Very minimal market share 0.18 4 0.72 2 0.36
2 Weak marketing strategy 0.17 4 0.68 2 0.34
3 No research and development plan 0.05 4 0.20 4 0.20
4 Poor brand recall 0.19 3 0.56 3 0.56
5 Weak ability to meet short-term and 0.04 2 0.08 3 0.12
long-term obligation
TOTAL 1.00
OPPORTUNITIES
1 Rise of health conscious consumers 0.09 3 0.27 3 0.27
2 Increasing demand in chicken meat 0.12 4 0.46 2 0.23
3 Establishment of new business line 0.11 4 0.45 4 0.45
4 Social media advertisement 0.10 4 0.41 2 0.20
5 Ascending production of major raw 0.10 2 0.19 2 0.19
material
THREATS
1 Volatility of chicken selling price 0.10 3 0.27 2 0.18
2 Increasing competition in poultry 0.12 2 0.23 3 0.35
industry
3 Changes in the cost and supply of 0.08 2 0.16 0 0.00
feed
47 | P a g e
4 Substitute goods 0.09 3 0.27 3 0.27
5 Bird Flu 0.10 2 0.20 2 0.20
TOTAL 1.00
TOTAL ATTRACTIVENESS 6.35 5.01

Table 5.6 Quantitative Strategic Planning Matrix (QSPM)

Ratings Weights

Most acceptable 4.00 Not Important 0.00

Probably acceptable 3.00

Possibly acceptable 2.00 Solely Important 1.00

Not acceptable 1.00

Not relevant 0

Table 5.7 Rubrics/ Pointers for Rating

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X. CONCLUSION

For the past years, Swift Foods, Inc. has continuously incurred losses as portrayed

in their financial statements. Through the financial ratio analysis, it was determined that

the company obtained a low liquidity ratio, poor management of assets as reflected in the

activity ratio, undesirable effect in the profitability ratio due to consistent net loss, and the

company has no ability of generating enough cash to satisfy its debt obligation as analyzed

in the coverage ratio. An analysis of which, the company’s primary problem that needs

initial resolution is their ability to pay off their short-term debt.

In line with this, we have come up with three alternative actions which are to invest

highly on selling of investment property of the company, issuance of convertible bonds,

and establishment of new business line such as ready-to-go chicken. These strategies would

help to resolve problems regarding the losses of the company. With these, SFI would be

able to generate cash and to have additional source of funds to finance the business

operation as well as to increase market share that will cause an increase in sales.

After analyzing those options, we have concluded that the first option given, which

is selling of investment property is the most appropriate initial course of action that should

be done. With that strategy, the company will can now address their problem with regards

to low liquidity ratio which will have an effect in improving their financial statements and

influence a good impact to other remaining financial ratios. The remaining two alternative

course of action will also be useful to the company in the future and can be implemented

assuming that they already solved their primary problem on liquidity ratio.

49 | P a g e
XI. RECOMMENDATION

For the liquidity ratio of Swift Foods Inc. to increase, the best option is to sell

their investment property to people who are willing to buy it so that they could generate

fund and resolve their pending case. If this would be successful, SFI will now focus on

another alternative course of action which is to issue convertible bonds to different

credible and reliable people. Because SFI is still in the development stage, they must

not still give dividends. Now, if SFI increased a lot of income, then they must declare

dividends and apply the another alternative course of action which is establishing a

ready-to-go chicken store.

50 | P a g e
 XII. GENERAL PLAN OF ACTION
ACTIVITIES PEOPLE DATE HOW MUCH?
INVOLVED
Board meeting with the following CEO, Chairman, Last week of
agenda: Board of January 2018
 Selling of Investment Property Directors
 Identify which investment
property to be sold
 Purpose of sale
Board meeting and presentation to the Board of 3rd week of
shareholders of the plans made: Directors and February
 Presentation and approval of Shareholders 2018
the proposed undertaking
 Sale of investment property
Notify stakeholders of the sale of Marketing 1st week of 5,000.00
investment property and get their Department March 2018
approval
Actual sale of investment property CEO, Chairman, 1st week of 50 000,000.00
 Signing of contracts to pass Board of April 2018
title Directors
 Payment of incidental costs
Transferring the proceeds of the sale to Treasury Last week of 50,000,000.00
increase the fund Department and April 2018
Accounting
Department
Evaluation of the financial status of Accounting and Every Year
the company Finance
Department

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 XIII. PROJECTED STATEMENT

PROJECTED STATEMENT OF FINANCIAL POSITION

2018 2019 2020 2021 2022

Assets
Current Assets
Cash and cash equivalents
110,398 79,765 78,392 73,796 71,223
Receivables
5,325 6,949 7,192 7,444 7,705
Inventories
393 589 619 649 682
Biological Assets
1,994 2,134 2,283 2,443 2,614
Other current assets
638 676 717 760 806
Total Current Assets
118,748 90,114 89,204 85,093 83,030
Noncurrent Assets
Investment properties
108,348 110,929 113,537 116,172 118,833
Property, plant and equipment
- - - - -
Other noncurrent assets
207 207 207 207 207
Total Noncurrent Assets
108,555 111,136 113,744 116,379 119,040
TOTAL ASSETS
227,303 201,250 202,948 201,472 202,070
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable and accrued liabilities
72,024 44,482 45,371 46,279 47,204
Total Current Liabilities
72,024 44,482 45,371 46,279 47,204
Noncurrent Liabilities
Deferred income tax liabilities
41,454 36,354 36,254 30,754 25,054
Retirement benefits liability
3,657 3,474 3,300 3,135 2,978
Other employee benefits
854 846 837 829 821
Total Noncurrent Liabilities
45,965 40,674 40,391 34,718 28,853

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TOTAL LIABILITIES
117,989 85,155 85,763 80,997 76,057

Equity
Capital stock
1,878,169 1,878,169 1,878,169 1,878,169 1,878,169
Capital in excess of par value
1,281,414 1,281,414 1,281,414 1,281,414 1,281,414
Retained Earnings (Deficit)
3,002,549 2,984,355 2,971,349 2,959,479 2,948,276
Revaluation increment on properties
transferred to investment property 19,406 19,406 19,406 19,406 19,406
Cost of preferred treasury shares - - - - -
110,982 110,982 110,982 110,982 110,982
Total Equity
109,314 116,094 117,185 120,475 126,012
TOTAL LIABILITIES AND EQUITY
227,303 201,250 202,948 201,472 202,070

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 PROJECTED STATEMENT OF COMPREHENSIVE INCOME

2018 2019 2020 2021 2022

REVENUE
Gross Sales
56,761 58,748 60,804 62,932 65,135
Less Sales Returns and Discounts
(1,135) (1,175) (1,216) (1,259) (1,303)
Net Sales
55,626 57,573 59,588 61,674 63,832
FV Change of Agriproduce
2,921 3,067 3,221 3,382 3,551

58,547 60,640 62,809 65,055 67,383

COST OF GOOD SOLD
52,221 54,048 55,940 57,898 59,924
GROSS INCOME
6,327 6,592 6,869 7,157 7,459
GENERAL AD ADMINISTRATIVE
EXPENSES (10,357) (11,081) (11,857) (12,687) (13,575)

SELLING AND MARKETING

EXPENSES (1,031) (1,083) (1,137) (1,194) (1,253)

OTHER INCOME (LOSS)

62,104 12,229 12,350 12,473 12,596
INCOME OR LOSS BEFORE INCOME
TAX 57,043 6,657 6,225 5,750 5,226

PROVISION FOR INCOME TAX

Current
336 353 370 378 385
Deferred
5,083 5,337 5,604 5,716 5,830

5,419 5,690 5,975 6,094 6,216

NET INCOME (LOSS)
51,624 967 250 (344) (990)
OTHER COMPREHENSIVE INCOME
(LOSS)
Not to be reclassified to profit or loss in the
subsequent periods:
Remeasurement gain (loss) on defined
benefit plan 72 76 80 84 88
Total Other Comprehensive Income (Loss)
72 76 80 84 88
TOTAL COMPREHENSIVE INCOME
(LOSS) (2,489) 2,373 6,670 11,301 9,991

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 PROJECTED STATEMENT OF CASH FLOW

2018 2019 2020 2021 2022

CASH FLOWS FROM OPERATING
ACTIVITIES
Income (Loss) Before Tax
57,043 6,657 6,225 5,750 5,226
Adjustments for:
Fair value change in properties - 2,550 - 2,581 - 2,608 - 5,270 - 2,635
Movement in retirement benefits liability and
other benefits 471 503 539 577 617
Unrealized foreign exchange gain (loss)
19 19 19 19 19
Operating loss before working capital
changes 54,983 4,598 4,175 1,076 3,227
Decrease (Increase) in
Receivables - 180 - 1,624 - 243 - 252 - 261
Inventory - 19 - 196 - 29 - 31 - 32
Biological Assets - 130 - 140 - 149 - 160 - 171
Other Current Assets - 36 - 38 - 41 - 43 - 46
Increase (decrease) in accounts payable and
other payables 1,412 - 27,543 890 907 926
Cash used in operations
56,030 - 24,943 4,602 1,498 3,643
Income Taxes paid, including creditable - 5,419 - 5,690 - 5,975 - 6,094 - 6,216
withholding tax
Net Cash Flows used in Operating Activities 50,611 -30,633 -1,373 - 4,596 - 2,573
CASH FLOWS FROM INVESTING
ACTIVITIES
Sale of Investment Property
50,000
NET INCREASE (DECREASE) IN CASH 100,611 - 30,633 - 1,373 - 4,596 - 2,573
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEG
9,787 110,398 79,765 78,392 73,796
CASH AND CASH EQUIVALENTS, END
110,398 79,765 78,392 73,796 71,223

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