Strategic Management Final Presentation

Strategic Management Paper
on
Submitted to:
PROF. ELISEO AURELLADO
MMSTRAMA M08
Submitted by:
FRANCIS ROY C. PONIO
MBA Candidate
24 June 2015
1
Executive Summary 4
I. Introduction 6
II. Research Design and Methodology 8
1. Research Design
2. Scope and Limitation
III. Vision and Mission Statement Analysis 9
IV. External Analysis 12
1. Economic Performance and Forecast
2. Political and Government Aspects
3. Social Factors
4. Ecological/Technological Factors
V. Industry and Competitor Analysis 23
1. Industry and Market Profile
2. Porter’s Five Forces of Competitive Analysis
3. Competitive Profile Analysis
4. Competitive Business Analysis
5. External Factor Evaluation
6. Strategic Issues based on External Factors
VI. Internal Analysis 40
1. Management Review
2. McKinsey 7S Framework
3. Internal Factor Evaluation
4. Strategic Issues based on Internal Factors
VII. Strategy Formulation 57
1. SWOT Matrix
2. SPACE Matrix
3. Internal-External Matrix
4. GRAND Strategy Matrix
5. BCG Matrix
6. Summary of Strategies
7. Quantitative Strategic Planning Matrix
2
VIII. Strategic Objectives and Recommended Strategies 74
1. Strategic Objectives
2. Recommended Business Strategies
3. Other Recommended Intuitive Strategies
4. Financial Projections
IX. Departmental Actions and Functional Strategies 92
1. Strategy Map
2. Departmental Actions and Functional Strategies
X. Strategy Evaluation and Performance Metrics 97
1. Balanced Scorecard
2. Contingency Planning
XI. References 102

XII. Appendix 104
3
EXECUTIVE SUMMARY
BSP and Company Inc. was incorporated and registered with the Securities and Exchange
Commission in April 1993. With more than more than twenty (20) years in the construction
industry, the Company has completed numerous general engineering and general building
projects to the satisfaction of the Project Owners. The owner envisions:
The construction industry in the Philippines has been booming and helping boost the Philippine
economy – one of Asia’s fastest growing in the past two years. The Philippine construction
industry increased in value at a compound annual growth rate (CAGR) of 12.01% during the
review period (2009−2013)1. This growth was supported by public investments in the
infrastructure and residential markets, which are expected to be the main growth drivers over the
forecast period (2014−2018)2.
The overall responsiveness of BSPCI to its external environment is modest at a 2.45 EFE rating.
This is due to lack of financial solvency and capitalization of the organization to take advantage
of the emerging Public-Private-Partnership (PPP) trend for government projects and lack of
experience and expertise in Vertical Construction Works to take advantage of the growing BPO
sector and housing demand. Currently, BSPCI is ranked 46th among the locally-based
contractors3, thus an opportunity exists for BSPCI to further improve its ranking given the
relatively even market share among its primary competitors.
Internally, the organization’s strengths are providing the same quality of services that their
clients require at a lower price owing to its more than adequate operational execution,
experienced personnel, and strong management core. However, its IFE rating is only 2.40 due to
low equipment utilization, which leads to higher variable costs, low solvency and high employee
turnover rate. BSPCI can further improve its ranking by being able to establish more cost-
reduction controls through an effective supply chain management system. The organization can
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1-2 http://www.researchmoz.us
3 EMIS Company Database
4
also further improving its organizational depth through a better benefit package and an employee
motivation/empowerment program that will reduce its high turnover rates.
Market Penetration and Product (service) development strategies will be most appropriate
strategy for the company to achieve its strategic objective to be a strong market follower. Market
penetration strategies will be geared to take advantage of a robust construction market that hasn’t
matured by (1) launching an integrated marketing communications plan (2) identifying key
growth areas taking advantage of the company’s wide base of coverage and (3) strengthening
key client relationships that would enhance the company’s reputation within the industry.
Service and Organizational Development includes (1) Expanding the company’s core
competence to take advantage of the growing demands for non-horizontal works construction (2)
Improve the company’s utilization of its more significant assets: its heavy equipment and (3)
enhance internal organizational development through promoting employee motivation and
empowerment.
Other Intuitive Strategies includes Horizontal Integration and Financing through investment
activities to resolve solvency issues. Through these strategies, BSPCI’s vision to be one of the
leaders in the construction industry in terms of market share will be realized with revenues
reaching over Php 4B by 2020.
The recommended strategies, with proper coordination with the operations, technical and
corporate affairs will not only maintain the existing high efficiency and quality of service but
will also expand its competencies and coverage, taking advantage of the economic and industry
growth. Increase in revenues, better cost control and financing cost will allow BSPCI’s net
income to grow further to 190M this year to about 410M by 2020.
5
I. INTRODUCTION
BSP & COMPANY INC. was incorporated and registered with the Securities and Exchange
Commission in April 1993. Initially, the Company ventured into equipment leasing and
subsequently went into civil work contracts either as the main contractor or on some occasions,
subcontractor to principal contractors. As a company that primarily engages in the construction
industry, it is committed to deliver reliable and quality work while maintaining the principles of
transparency and openness, conducting business with integrity and fairness, and aspiring to the
highest standards of safety and health for its workers.
More than twenty-two (22) years later, the Company holds an “AAA” Contractor’s License, the
highest category given to a local general contractor by the Philippine Contractors Accreditation
Board. The Company is now also certified by international standards, holding an ISO 9001:2008
registration certificate. The company has completed a number of general engineering and general
engineering projects that has garnered satisfaction from its clients and the project owners.
BSPCI has achieved steady increased growth since 2004 and revenue peaked at 1.4B in 20134.
The company has completed significant government projects with DPWH, DepED and NHA as
well as establishing key business relationships with reputable clients such as Megaworld Inc.,
Empire East Holdings, SMDC, Energy Development Corporation and Greenfield Development
among others. The success of the company can be attributed to its roster of professional
engineers, skilled dedicated staff and management, complemented with a complete line of
equipment owned solely by the company.
BSPCI’s construction services include, but not limited to, the following:
• Land Development & Site Development
• Roads, Highway Pavements, Railways, Airports, Horizontal Structures & Bridges
• Commercial, Residential Buildings & Industrial Plants
• Irrigation & Flood Control
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42013 Audited Financial Statements (see Appendix)
6
• Dams, Reservoirs & Tunnelling
• Ports, Harbors & Offshore Engineering
• Sewage Treatment/Disposal Plants, Water Treatment Plants & Systems
• Trucking, Hauling & Equipment Rental
• Ready Mix Concrete
The company’s head office and Central Equipment Yard is located in Tunasan, Muntinlupa, with
satellite offices established in Cebu, Iloilo and Cagayan de Oro and a secondary equipment yard
in Tanauan. Ben-Azel S. Ponio is currently the president of BSPCI. The overall project
operations is headed by the SVP-Operations, Orlando L. Dimatatac and the day to day head
office operations is being overseen by its VP of Corporate Affairs, Ben-Azel C. Ponio, Jr. As of
the end of March 2015, the company has around 120 probationary and permanent employees and
over 1,000 project-based contractual employees.
7
II. RESEARCH DESIGN AND METHODOLOGY
2.1 Research Design
Macro-economic data used in the external analysis was gathered from the websites of various
government offices such as the Department of Public Works and Highways (DPWH) and the
Public Private Partnership Office (PPP). These government offices also have projections on
relative growth on infrastructure spending that was collaborated by projections from independent
official dependent assistance agencies such as the Japan International Cooperation Agency
(JICA).
Industry data was gathered from the research done by reputable investment consultants such as
EMIS-Intelligence and BMI Research. This was supplemented from industry news from the
websites of respected media outlets such as Philippine Daily Inquirer, Bloomberg and Business
World.
To be able to assess BSPCI’s performance relative to its competitors, audited financial

statements were obtained from both BSPCI as well as its key competitors from the Securities and
Exchange Commission.
To provide a complete internal assessment of the company, interviews were conducted with the
key Management and Department Heads of the organization, including the President, SVP-
Operations, VP-Corporate Affairs, AVP-Technical Services, AVP-Equipment Management
Group, HR Head and the Project Directors for each satellite office. Their first-hand knowledge of
and opinion provided insight to the company’s internal environment.
2.2 Scope and Limitation
This paper will be limited to BSPCI’s construction ventures within the Philippines. The paper
will focus on how the company can compete in the Philippine construction industry and will no
longer delve into the feasibility of construction projects outside the country. The paper will also
concentrate primarily on primary construction services and will not include related industries
such as construction design, real-estate development and operations and maintenance (O&M)
programs.
8
BSPCI’s performance relative to its key competitors is only limited to cost/expense structure and
tax management, which can be derived from the aforementioned Audited Financial Statements.
Due to the sensitivity of information that can result in unethical business practices, the results of
Critical Success Factors from BSPCI’s key competitors could not be obtained.
Due to the timing of the submission of this paper, the Audited Financial Statements obtained
were from the period of 2011-2013. The submitted financial statements for 2014 were obtained
directly from the company but the certification from an independent auditor have not been
released as of this writing. The 2015 financial projections are projected assuming the firm is
status quo on its strategy. The strategies recommended in this paper will affected the company’s
projected financials starting 2016.
III. MISSION AND VISION STATEMENTS OF THE COMPANY
Vision Statement and Evaluation
BSPCI Vision Statement is “To be one of the leading construction firms in 2020 or simply put:
“Top 20 in 2020.”
Vision Statement Evaluation
9
Mission Statement Analysis and Evaluation
The mission statement of BSPCI is: “We Build and Serve Par Excellence.”
Mission Statement Evaluation
Recommendations
Recommended Vision
“BSP & Company is not just a construction company. We are a dedicated team striving to not
only be the leaders on our industry but to bring growth to our community by taking up any
challenge in the infrastructure industry, bringing value in order to assist our clients in making
their own visions become a reality and being a role model for other upcoming companies in the
similar sector.”
The new vision now clearly indicates the role and nature of business of the company; it also
indicates the market it currently competes in and a clear, concise objective, in line with the
company’s internal quality policy and objectives.
10
The new vision is attainable and should not be time-bound, as the objective is to bring the asset
of value and raising it for the industry as a whole, with a purpose to continually influence growth
within the industry and serve as an inspiration to its peers.
Recommended Mission
“BSP & Company, Inc. is a leader in providing value-added construction services to our
customers by creating a successful partnership with them throughout the construction process.
Our pledge is to establish lasting relationships with our customers by exceeding their
expectations by gaining their trust through exceptional performance and to serve with character
and purpose that brings honor to God.”
The mission clearly emphasizes on its predecessor by bringing value-added services as the
means of gaining excellence and to establish lasting relationships with its customers as the means
of providing service. The mission also has a clearer definition of its nature of business and who
the target market is; it also brings a philosophy of service excellence not only to its
customers/stakeholders but also as a means to bring honor to God. The last statement personifies
the lasting legacy the President wants for the company, given his Christian background, which is
to eventually a God-serving company and organization.
11
IV. EXTERNAL FACTORS THAT HAVE RELEVANCE AND MAJOR IMPACT ON
CONSTRUCTION INDUSTRY AND BSP AND COMPANY:
4.1 Economic Performance and Forecast
1. Projected 6% 2015-2016 GDP. Consistent 5% increase in GDP for the next 5 years
(OPPORTUNITY)
A projected acceleration of growth in the Philippines in 2015 reflects accelerated

reconstruction efforts according to the World Bank, adding that domestic consumption in the
Philippines would remain robust, supported by remittances, which grew 7.4 percent from a
year ago. By 2016, economic growth is projected to grow by 6.3 percent.5
The Philippine construction industry in particular increased in value at a compound annual

growth rate (CAGR) of 12.01% during from 2009-2013. This growth was supported by
public investments in the infrastructure and residential markets, which are expected to be the
main growth drivers over the period of 2014−2018 and is projected to record a forecast-
period CAGR of 9.90%6. The comparatively young and educated workforce, increased
domestic demand, comparatively young workforce, rich natural resources, good business
environment and high foreign exchange reserve is likely to drive the economy to sustained
growth during the same forecast period.
Relevance:
The robust economic projections, coupled with their main drivers whose emphasis is on
expansion of infrastructure, provide a very optimistic outlook for the construction industry.
In addition, Business process outsourcing, public-private partnership (PPP) initiatives will
also drive industry expansion, leading to the construction of more residential properties,
roads, bridges, offices and power plants.
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5 http://www.adb.org
6 http://www.researchmoz.us/construction-in-the-philippines-key-trends-and-opportunities-to-2018-report.html
12
2. Increased Government Budget for infrastructure projects (OPPORTUNITY).
The Department of Public Works and Highways (DPWH) has recently released its budget for
the year 2015 amounting to a total of Php 273.9B, roughly 43% increase from the year 20157
(see table below):
Table: 2011-2015 DPWH Infrastructure Program Capital Outlays

Source: www.dpwh.gov.ph
In a recently conducted planning session of DPWH management, Secretary of Public Works

and Highways Rogelio L. Singson said that priorities shall include paving all remaining
gravel and earth roads of the national road network in the country.
Relevance:
With this statement to complete pavement of all national roads and assuming the same
budget increase from this year to 2016, it is very likely that the budget would increase to up
to Php 400B. This, coupled with the much-improved state of the department in fighting
corruption, presents an upward trend for the construction industry as a whole.
3. Steady Increase in Private Infrastructure Projects (OPPORTUNITY):
Data from the Philippine Contractor’s Association (PCA) showed that at current prices, the
gross value of private sector construction projects grew by 16.3 percent to $25.613 billion (or
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7 http://www.dpwh.gov.ph
13
P1.137 trillion) last year, bringing the total, including public sector activities, to $31.889
billion, or about P1.42 trillion. At constant prices, the gross value in construction for both
the public and private sectors grew by 10 percent to $14.455 billion, which was equivalent to
P641.8 billion.8 “It is expected that in the coming quarters or years, there will be a sustained
increase in residential construction projects in a bid to revive the country’s housing market
and meet demand from the growing population,” the report stated.
Relevance:
Given the concern within the construction industry on the direction and emphasis of the
Philippine government on infrastructure development beyond 2016, the growth and increased
demand within the private sector can be a steadying factor in assuring the continuous growth
within the industry. BSPCI should therefore maintain and expand business relationships with
reputable clients within the real estate development, commercial and power sectors to retain
and increase its current market share.
4. Emergence of Public-Private-Partnership Program (OPPORTUNITY):

A public–private partnership (PPP) is a government service or private business venture which
is funded and operated through a partnership of government and one or more private sector
companies. PPP involves a contract between a public sector authority and a private party, in
which the private party provides a public service or project and assumes substantial financial,
technical and operational risk in the project. In projects that are aimed at creating public
goods like in the infrastructure sector, the government may provide a capital subsidy in the
form of a one-time grant, so as to make it more attractive to the private investors. In some
other cases, the government may support the project by providing revenue subsidies,
including tax breaks or by removing guaranteed annual revenues for a fixed time period.
The Philippine Public-Private Partnership Program was forged as a flagship program for
development under the Aquino Administration by amending certain sections of Executive
Order No. 8, which reorganized and renamed the Build-Operate and Transfer Center to the
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8 http://www.inquirer.net
14
Public-Private Partnership Center of the Philippines and transferred its attachment from the
Department of Trade and Industry (DTI) to the National Economic and Development
Authority (NEDA), and for other purposes.
Currently there are 15 PPP projects approved by NEDA that have not been awarded to a total
amount of Php 580.79B with another 25 projects in the pipeline9
Relevance:
Given the PPP framework, only a select few construction companies have the financial and
organizational capacity to undertake projects selected under this program. However,
construction companies may synergize to establish a joint venture/consortium that will pool
their resources and get qualified to participate and undertake such projects. In fact, BSPCI
has already achieved this by forming a joint venture with VT Lao Construction in
successfully winning and undertaking the PPP (PSIP-II), Contract Package E in Region X
and CARAGA worth Php 1.6B10
5. Continuous Growth in the BPO Sector (OPPORTUNITY)
The Philippines is the world’s largest center for Business Process Outsourcing or BPO sector,
also dubbed as the “sunshine industry” of the country. Over one million Filipinos are
employed by the BPO and related IT sectors, with projections that it can generate up to about
$55 billion by 2020 or roughly 11 percent of the country’s GDP11. The underlying and
important effect is the estimated 1.5 million new jobs that potentially can be created courtesy
of the industry. As a matter of fact, the positive growth from the BPO sector was one of the
reasons why credit ratings agencies have maintained the stable outlook for the Philippines
regardless of the political outlook after 2016.
Relevance:
The emergence and continued growth of BPO has positive transmission effects for the
construction industry in particular, where rapid growth in demand for commercial floor space
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9 http://www.ppp.gov.ph
10 http://www.deped.gov.ph
11 http://www.bloomberg.com
15
further fuels the need for rapid infrastructure growth. The development new office parks has
expanded beyond the usual urban centers in Metro Manila and CALABARZON area to
Metro Cebu, Metro Davao, Iloilo and Cagayan De Oro. BSPCI has benefitted from this
development by being successfully awarded the Iloilo BPO-2, which is the construction of
two 6-storey BPO buildings worth around Php265M.12
4.2 Political and Government Aspects
6. Effect of ASEAN Integration (OPPORTUNITY)

Set to happen in 2015, 11 member-states of the Association of the South East Asian Nations
(ASEAN) will gather to form The ASEAN Economic Community (AEC). The AEC is an
ASEAN initiative that will create a single market where goods, capital and skilled labor will
be allowed to move freely across borders within the participating 11 ASEAN countries,
including the Philippines13.
Following AEC’s vision to build a single market that will give way to a freer flow of capital
across borders and faster movement of goods, services, and skilled labor. The integration will
also mean elimination of tariffs on goods and services, which would lead to a higher
disposable income thereby equipping customers with more money to spend. Furthermore,
the single market will allow businesses based abroad to set up headquarters in the Philippines
for expansion, thus the need for more office, industrial, and residential space to accommodate
these businesses.
Relevance:
To accommodate future demands in operations facilities, new growth areas in Metro Manila
and Cebu would be maximized, as well as the need to speed up developments of potential
growth areas that include Iloilo, Cagayan de Oro, General Santos City, and Angeles City and
San Fernando that are both located in Pampanga. The apparent need for more business
spaces will bolster the construction industry. Companies with a relatively good market
position such as BSPCI could use this increased demand to its advantage.
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12 BSPCI Company Profile

13 http://www.asean.org
16
7. Effect of incoming DPWH Secretary
Generally, it is accepted that one of the weak factors in ensuring the effectiveness of DPWH
infrastructure developmental projects is corruption, which has been a reputation of the
department in the past. Under the guidance of DPWH Secretary Rogelio L. Singson, the
department laid down his “DPWH Transformation Framework,” with the following
objectives: “(1) transform the organization and its employees; (2) simplify/innovate to reduce
corruption and improve efficiency; and, (3) optimize resources”14. The resulting positive
effect has restored confidence within the department and may indirectly be the reason for the
steep increase in budget allocated for infrastructure development. This also has increased the
growing sentiment within the construction industry that Secretary Singson would retain his
position beyond the 2016 presidency and if not, that the reforms he had paved way for the
department would be sustained by the incoming Secretary.
Relevance:
BSPCI did not participate as a general contractor in any DPWH projects before the Singson
regime; as of 2014, roughly half of the company’s revenue are from DPWH projects. The
good working relationship also stems from the shared policies of “right quality, right costs
and right people”. The level of participation by the company with DPWH-implemented
projects could be affected by the continuity of the renewed direction of the department by the
succeeding secretary.
4.3 Social Factors
1. Social re-development of Metro Manila (OPPORTUNITY)

In January 2015, The NEDA Board has approved the "Roadmap for Transport Infrastructure
Development for Metro Manila and Its Surrounding Areas." The study, done by Japan
International Cooperation Agency (JICA) in close coordination with DPWH, DOTC, Metro
Manila Development Authority (MMDA), and other relevant agencies, cited strategies to
reduce traffic congestion significantly before it impacts the lower-income group who will be
hardest hit when congestion worsens by 203015.
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14 http://www.dpwh.gov.ph 15 http://www.jica.co.jp
17
The roadmap emphasizes the need to establish better north-south connectivity and mass
transits. This forms the "Dream Plan" to have a modern, affordable, and a well-coordinated
and integrated transport system for Metro Manila by 2030. The roadmap also recommends
planned and guided urban expansion to adjoining provinces through an integrated public
transport, affordable housing for low income groups, retrofitting of existing urban areas in
integration with public transport, expanding multi-modal public transport network, and
strengthening traffic management systems.
The Philippine National Economic Development Authority-Investment Coordination
Committee (NEDA-ICC) approved five public-private partnership (PPP) projects and two
other projects. These projects are the PHP374.5B Makati-Pasay-Taguig Mass Transit System
Loop, PHP177.22B North-South Railway Project, PHP19.33B Motor Vehicle Inspections
System Project, PHP1.16B Civil Registry System-Information Technology Project Phase II
and the Expansion of Tarlac-Pangasinan-La Union Expressway (cost undetermined). The
other two projects are the Bureau of Fire Protection Capability Building Programme Phase II
project of the Department of Interior and Local Government and the PHP13.89B LRT Line 2
West Extension of the Department of Transportation and Communications16
2. Housing Demand (OPPORTUNITY):

Despite strong economic growth in the past three quarters, the national housing backlog is
still estimated at 3.9 million units this year and is expected to further swell to seven million
by 2030.17 “To support this goal, the Housing and Land Use Regulatory Board (HLURB) has
set a target to construct 1 million housing units by 2016, and also announced the construction
of over 300 condominium projects in Metro Manila, most of which will be allocated to the
mid-market segment. Meanwhile, residential sales will become stronger among the high-end
market and foreigners, as they are more prone to leasing and renting property,” the PCA
added.
The government will need to tap shelter agencies like the Housing and Urban Development
Coordination Council (HUDCC), the Housing and Land Use Regulatory Board (HLURB),
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16 http://www.bworldonline.com
17 http://www.inquirer.net
18
Pag-ibig, the Home Guaranty Corporation, and the National Home Mortgage Finance
Corporation to reduce the housing backlog by 50% with an annual target of 350,000 housing
units. To achieve this, the administration highlighted the need for more PPP programs to use
the underutilized government lands.
3. Increased Tourism Demand (OPPORTUNITY):

In December 2014, the DOTC and the Civil Aviation Authority of the Philippines invited
bids from interested parties for six regional airport projects worth Php116.23B. The contracts
are for the financing, design, construction, operation and maintenance of the airports for 30
years and will be developed under the aforementioned PPP program. In addition, The Asian
Development Bank (ADB) approved an USD75M loan for the expansion and renovation of
Mactan-Cebu International Airport in the Philippines in early February 201518. The aim for
all these projects is to improve passenger traffic and support inclusive growth. These recent
developments suggests that further momentum is building in the tourism industry, and
highlights opportunities presented by growth in this particular sector.
Relevance:
The continued emergence of PPP has made long-term social development plans to address
traffic, housing and transportation demands now feasible. While large-scale market players
within the industry like BSPCI could be able to participate by utilizing the aforementioned
joint venture framework, the company should increase efforts to increase capitalization in
order to participate in more than one PPP-based project simultaneously.
4. Reconstruction Efforts due to recent calamities (OPPORTUNITY)

Recognizing the importance of a quick start to the recovery process, the Government
prepared in December 2013 the “Reconstruction Assistance on Yolanda (RAY), a strategic
plan to guide recovery and reconstruction in the affected areas.”19 RAY provides a
preliminary assessment of damages, loss, and needs covering infrastructure,
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18 http://www.bworldonline.com
19 http://www.worldbank.org
19
economic, social, and government. It also provides a framework for implementation,
including budget estimates for the 2014 reconstruction program.
The 2014 national budget includes PHP 20B for a Rehabilitation and Reconstruction
Program to address damage caused by Yolanda and other disasters, and another PHP 80B for
reconstruction from standby funds approved under the budget law. These multi-year
contracts, includes maintenance and rehabilitation of roads and bridges and may include
emergency reconstruction on a long term performance-based maintenance framework. This
is emphasis to RAY’s adherence to a pro-active and sustainable effort of not only
reconstructing affected areas from past typhoons but also to prepare and implement better
quality standards for infrastructure to sustain future calamities.
Relevance:
These efforts should continue to provide a strong tailwind for construction activity
throughout 2015, which contributes to what analysts forecast as a real growth for the
construction industry of 9.4 %20. This is a marked opportunity for growth in the construction
industry, especially with firms that are compliant to International Standards (e.g. ISO). In
fact, the framework provided by RAY has transcended to the private sector, from which
BSPCI was able to take advantage and secure four typhoon-proofing contracts with the
Energy Development Corporation’s Leyte Geothermal Business Unit (LGBU).
4.4 Ecological/Technological Factors
Land development and construction have a direct impact on the environment wherein land
conversion from agricultural to urban and residential greatly reduces the ability of the land to
produce food and other resources for the society. Because of this, sustainable land
development is becoming more important in the construction industry. The World Wildlife
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20 http://www.bmiresearch.com
20
Fund (WWF) and Ayala Land, Inc. (ALI) developed an ALI Sustainability Framework21 to
“chart, monitor, and report the company’s progress in sustainable land development”. The
increasing awareness about environmental impact of construction activities will eventually
affect the way residential and commercial developments are built.
In 2006, the Philippine Green Building Council (PHILGBC) was formed as a national non-
profit organization through the alliance of building and construction industry leaders from the
private and public sector. This organization was formed to ensure an ecologically and
economically sustainable industry and resulted to a local green building rating system that is
now called Building for Ecologically Responsive Design Excellence (BERDE). The BERDE
scheme is envisioned as the future benchmark for all property developers in the country.
The demand for quality, economy, and completion time are the major considerations for all
construction projects that usually dictate the choice of technology. The traditional
construction material currently being used for construction projects is the concrete hollow
blocks (CHB). In order for the Philippine construction industry to remain competitive
especially with the upcoming ASEAN integration, technological advancements should be
considered more than ever compared to the usual conventional methods.
Relevance:
The construction industry in the Philippines is currently leaning toward ecologically and
technologically advanced materials in response to these developments, the most trending
being pre-fabricated structures envisioned as “the better alternative to concrete hollow blocks
(CHB)”. This technology could be used in exterior and interior wall applications in building
construction as well as perimeter fencing and other horizontal-based concrete structures.
Installation time wall is shorter and the product is smoother compared to conventional
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21 http://wwf.panda.org/who_we_are/wwf_offices/philippines
21
materials and does not need additional plastering (only the joints require additional concrete).
The product also serve as good insulators that result to less energy consumption and
dissipates noise better. Currently in the Philippines, only 10% are using prefabricated
building material in housing and other general construction works22.
This factor would be a great benefit to BSPCI wherein this factor that may be perceived as a
threat could be changed into an opportunity while addressing a weakness within the
organization. This would be further detailed as one of the proposed intuitive strategies.
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22Ganiron, T. U. Jr. “Investigation on the use of pleko ceiling board for heat insulator and sound proofing material applications.”
International Journal of Advanced Science and Technology, vol. 65, (2014), pp. 23- 32
22
V. INDUSTRY AND COMPETITOR ANALYSIS
5.1 Industry and Market Profile
Even though the Philippine construction industry is composed of 955 market players, it is
dominated by large scale industries accounting 92.3% of total industry revenues with top 10
players already representing less than half of the market share. After the tenth largest player,
market share is considered widely distributed as the remaining 315 large scale market players
account for the remaining 49.8% of the market22.
Classification No. of 2012 Market Revenue Average

players Sales Contribution Contribution Revenue
Micro 33.0 45.1 3.3% 0.0% 1.4
Small 177.0 1,613.5 17.8% 0.6% 9.1
Medium 460.0 20,585.1 46.2% 7.1% 44.8
Large 325.0 265,675.2 32.7% 92.3% 817.5
Total 995.0 287,918.8 100.0% 100.0% 289.4
Note: RA 9178 scale categories were used: Micro = sales of up to PHP3m; Small = sales of up to
PHP15m; Medium = sales of up to PHP100m; Large = sales exceeding PHP100m
Source: EMIS Business Intelligence
Industry: Heavy and Civil Engineering Construction

PHP in millions
Rank Company 2012 Market
Sales share
1 Metro Pacific Investments Corporation 36,475.0 12.7%
2 Makati Development Corporation 17,344.2 6.0%
3 DM Consunji Inc 16,513.0 5.7%
4 Eei Corporation 13,745.0 4.8%
5 Daelim Philippines Inc 8,432.2 2.9%
6 Megawide Construction Corporation 8,204.8 2.8%
7 Ddt Konstract Inc 7,450.5 2.6%
8 Monolith Construction and 5,081.6 1.8%
9 Aboitiz Construction Group Inc 4,712.0 1.6%
10 Datem Inc 4,206.2 1.5%
Top 10 (10 companies) 122,164.4 42.4%
40 J.E. Manalo and Company, Inc. 1,111.0 0.4%
45 Metro Stonerich Corporation 1,023.4 0.4%
46 BSP and Company, Inc. 959.9 0.3%
56 CM Pancho Construction, Inc. 808.9 0.3%
Selected competitors (4 companies) 3,903.2 1.4%
Others (981 companies) 161,851.2 56.2%
Total (995 companies) 287,918.8 100.0%
__________
22 EMIS Business Intelligence Database
23
5.2 PORTER’S FIVE FORCES COMPETITIVE ANALYSIS
BSPCI is a large scale enterprise belonging to an industry worth PHP288B as of 2012 with top
market players accounting almost half of the market share. BSPCI contributes revenue of
slightly below a billion but these represents only a market share of 0.4% due to the wide
distribution. Given this, BSPCI is still on the high side in terms of its ranking among large scale
companies registering 46th out of a total of 995 players as of 2012.
Threat of Competition – STRONG
Competitive rivalry is intense due to the numerous large-scale players in the construction
industry, industry growth, the bidding format of most procuring agencies and high exit barriers.
It is recognized that the Philippine construction industry is, in the main, confined to competition
from established local companies. This is particularly so in the sectors of Non-residential
Building and Infrastructure because the construction industry operates differently to other
industrial or economic sectors.
Despite of this, there are 315 large-scale players that vie for half of the market share not being
owned by the top corporations and this particular share is very competitive amongst the existing
firms. With the system of awarding tenders to the lowest bidder, the competition increases
manifold. Also, in segments of non-residence, infrastructure etc., onus is on the established firm
to meet the standards as laid won by the government.
The construction-industry, especially on horizontal-works, is very capital intensive. In order to

stay competitive, companies like BSPCI needs to continuously expand and improve its
equipment lineup as opposed to renting. The sub sequential preventive and corrective
maintenance is also a critical factor to the company’s success and requires a large revolving fund
in consumables alone such as fuel and spare parts. Given the annual depreciative value, it will
be difficult to exit the industry without incurring significant losses.
.Threat of New Entrants – WEAK
As previously illustrated, almost 99% of the market is dominated by the top 10 and other large
scale players that make up 50% of the industry. The large disparity is due to the same significant
investment required to establish and maintain a competitive construction firm. A top 10
24
construction company is likely to allocate an average of Php 2B yearly on CAPEX. BSPCI on the
other hand has pegged around Php500M for the year 2015. In addition, the required manpower
resources, plant and equipment, health and safety procedures and various insurances to be in place
together with an established track record to be able to even bid for work in this industry. The
prospects of a potential participant to capture market share will primarily be on their ability to
reduce the cost key construction supplies while maintaining a reasonable quality and service.
Bargaining Power of Suppliers – MEDIUM
Prices of raw materials such as steel and cement are correlated with world prices. Local cement
and steel prices are being monitored but not being controlled by the DTI. Current raw materials
prices have stabilized. Competition in the raw materials are stiff due to the numerous raw material
providers and construction contractors. For example, The demand for reasonably priced hollow
blocks are assumed to be growing at 10.5% and construction materials 5.4% which supports the
argument that demand is good.
Overall, bargaining power of suppliers is moderate due to the numerous suppliers tempered by the
lack of substitute to these key inputs.
Bargaining Power of Buyers/Customers – STRONG
The concept of bargaining in the construction industry is limited because the said industry is based
on system if bidding which states that for a particular project various contractors and construction
managers bid for that same project keeping in view their expenses and profits. As previously
mentioned, private or public clients normally devotes the project to lowest bidder.
It is also worth noting that the construction industry is primarily a business-to-business (B2B)
market, B2B buyers are more demanding. They have a responsibility to make the right decision
when purchasing on behalf of their companies. They take less risks and therefore need quality to
be absolutely right. They have the expertise to recognise a bad offering when they see one. They
are used to getting what they want. They are often paying more than they would as a consumer
25
and therefore expect more in return. They are likely to regard themselves as interacting with the
product or service supplied to them, rather than playing the role of passive recipient. Most
construction service firms would then have to adjust in order to meet the target audience’s needs.
However, B2B buyers are more predictable than their consumer counterparts. This means that
good quality market intelligence and close attention the client would allow a company to anticipate
and adjust to expectations/demands it have.
Another point to be considered are the government procurement guidelines, which are now more
stringent in determining qualified bidders for construction services. Certain revenue and track
record guidelines are strictly being observed to determine a contractors classifications through the
Philippine Contractor’s Accreditation Borad (PCAB) and compliance to International Standards
(ISO). In a way, government agencies have the power to segment and filter the list of potential
contractors depending on the Guidelines or Requirements for Bidding that will be released for a
particular project.
Overall, the bargaining power is considered strong due to these factors.
Potential for Substitutes- WEAK
Site-based infrastructure construction activities are firmly entrenched in applying the traditional
method of construction, since it would be a huge undertaking to qualify a new technology or
methodology with the current standards. Although the future may see an increase in the
prefabrication of buildings or other factory-based building techniques, the same cannot be treated
as a substitute very easily as compromising on the quality of the materials being used that will be
used. Developers do not wish to risk affecting the foundation of their structures, which may likely
to collapse, should a cheaper yet substandard material or method would be used.
Overall, the threat of potential for substitutes is considered weak due to no established substitutes
for major raw materials and construction services.
26
5.3 COMPETITIVE PROFILE ANALYSIS
BSPCI is a large scale enterprise belonging to an industry worth PHP288B as of 2012 with top
market players accounting almost half of the market share. BSPCI contributes revenue of
slightly below a billion but these represents only a market share of 0.4% due to the wide
distribution. Given this, BSPCI is still on the high side in terms of its ranking among large scale
companies registering 46th out of a total of 995 players as of 201223.
The choice of competitors was limited to three – JE Manalo Corporation, Metro Stonerich and
CM Pancho Corporation. These companies were chosen on the basis of the similarity of core
competencies and common clientele; in the case of Metro Stonerich, it was chosen as a
benchmark for Vertical Structures Construction and the similar returns in cumulative Sales and
Market Share.
Key competitors of BSPCI
Competitor # 1 JE Manalo Corporation24
The Company was registered with the Securities and Exchange Commission (SEC) on 26
December, 1969 primarily to engage in the business of general contractors and builders such as
construction, building and repair of roads, bridges, piers, dams, houses, warehouses, government
and private buildings, factories, and other edifications needed and necessary in the ordinary
course of human life and for this purpose, to manufacture, fabricate, import and export, deal in,
buy and sell and distribute construction materials and equipment and other articles and shall be
necessary of expedient in conducting and attaining these primary purposes.
Their office is located at P.Bernal St. corner C. Raymundo Ave., Rosario, Pasig City.
Competitor #2 Metro Stonerich Corporation25
The Company was incorporated and registered with SEC on 2 November 1999 which started
commercial operations in year 2000 and is engaged in the business of construction and real estate
__________
24 http://www.jemanalo.com
25 http://www.metrostonerich.com
27
development. MSC has revenues of over Php 1B and has completed over 100 general
construction, interior fit-out, renovation and civil work projects nationwide ranging from houses
and condominiums to super malls, office buildings, schools, and store outlets. Among its
significant projects are the Robinson’s Malls, high-rise buildings such as Senta Tower
Condominiums, Texas Instruments Sub-Structure and Super Structure (Test and Assembly
Building) in Clark Pampanga; Lyceum of the Philippines and the University in Gen. Trias
Cavite. Although its projects are more focused on Building and other Vertical projects, its
cumulative sales and market value are the most closely related to BSPCI.
Their office is located at 85 Timog Ave., Brgy South Triangle, Quezon City.
Competitor #3 CM Pancho Corporation26
The Company was registered with SEC on October 1975 primarily to engage the business of
general builders and contractors, either alone or jointly with any other companies or persons
“such as the buildings, barracks, piers, including roads, bridges, warehouse, factories, edification
of every description, electric, and plumbing works, and sewerage works, and to carry all business
incidental thereto.”
Their office is located at 341 P. Angeles St. San Jose Baliuag, Bulacan.
CRITICAL SUCCCESS FACTORS
CSF # 1 Adequate Capitalization
Capitalization can be measured by the equity value in its balance sheet and through a leverage
ratio (debt to assets ratio). Higher debt would limit future borrowings or attract capital to fund
future projects. Large capital is also needed to be able to expand equipment lineup and to secure
bulk purchase (lock-in) agreements with major suppliers (i.e. cement, steel, diesel, etc.) on more
favourable unit rates and terms.
Importance Weight: 15%
__________
23 http://www.cmpancho.com
28
CSF # 2 Price Competitiveness
Government Procurement Guidelines requires all projects to be subject to bidding, which means
that the lowest bid proposal would most likely be awarded the project. Unless a bid proposal is
technically deficient, the lowest declared bid usually ends up undertaking the project. Clients in
the private sector, though not bound to the same guidelines, will normally award projects to the
lowest bidder. Unless a contract to be awarded is a design and build contract, the specifications
and bill of materials are the same for every bidder, which means it boils down to effective and
accurate cost assumptions, with an eye on providing efficient execution, in arriving with the
lowest bid proposal.
CSF # 3 Equipment Lineup and Management
It is of paramount importance not only to own but to have a significant amount of heavy
equipment in order to efficiently execute a project, especially on Horizontal Works where a large
scope is dependent on equipment utilization. Not only would a good equipment base but a
contractor in a better position to submit the lowest bid proposal but having a high standard of
equipment quality and management will ensure timely and most effective execution.
CSF # 4 Operational Execution
An awarded construction project is based on the aforementioned lowest bid proposal, which is a
cost estimate based on information gathered through the bid tender documents, preliminary site
inspection and scope of works and specifications. Having an experienced operations
management group is key to ensuring that the execution of the project is within the allotted
budget, primarily dictated by the awarded contract price. Since most clients award a project on a
lumpsum contract basis, the operations group should be able to effectively manage operational
costs without compromising quality and timeliness in order to generate profit for the project.
29
CSF #5 Quality Control
All government agencies and most clients in the private sector employ the services of a third-
party Construction Management Group to oversee the execution of a project and to ensure that
the works accomplished are within the defined technical specifications. Since the CMG needs to
protect the interests of the client, strict adherence to these specifications must be observed or the
contractor will not be paid based on accomplished works. Moreover, compliance to International
Standards like ISO is now a requirement to be even qualified to bid for large construction
projects. All of these points to better quality control, not only for project execution but other
support groups like Engineering, Warehousing, Human Resources, etc.
CSF # 6 Technical Qualifications and Accreditations
One of the reasons why the Threat of New Entrants on Porter’s Five Forces Analysis is low is
due to a well-defined multi-tiered qualification requirements for contractors. The Philippine
Contractors Accreditation Board (PCAB) serves as the regulating body for these qualifications
and no contractor can be allowed to undertake construction projects without a PCAB License,
much like an individual is not allowed to operate a vehicle without a driver’s license. The
license classification and registration particulars are based on the technical, financial and
operational expertise of the contractor and gives ratings from “D” to “AAA”, the highest
classification being given to a contractor. Most government agencies have adapted this method
on top of the general procurement guidelines to ensure that “qualified bidders” will only be
considered based on the said merits. PCAB license renewal is every year and the agency
reserves the right to downgrade, or even revoke a license if a contractor does not meet the said
requirements. Most of the large private clients have also instituted a third-party accreditation
agency that will screen and determine eligibility of a contractor based on the same parameters.
30
CSF # 7 Customer Relations
Most large-scale construction contracts are limited to government agencies and the big players of
the private real estate development, health, energy and utilities industry so it’s not hard to know
and find who the potential clients are. However, it is important to maintain good customer
relations with these clients during the bid tender, project execution and post execution process.
Establishing the sentiment from clients that they are “well-taken cared of” will greatly help
business development efforts by accessing their network through referrals and recommendations.
Adversely, not taking care of the same client base can severely affect future business as word
gets out easily in the construction industry of any missteps in managing client relations.
BSPCI CSF Ratings
CSF#1 BSPCI’s Capitalization (2)
BSPCI’s debt to assets ratio of 0.73 which is higher than the industry average of 0.4527
CSF#2 BSPCI’s Price Competitiveness (2)
BSPCI has an annual success rate in bidding at 30%. While it could not be determined what the
success rate of its competitors, especially since it is rare that its competitors participate in the
same project bidding as BSPCI, the sentiment in the industry is that the average bidding success
rate of contractors in the same category is pegged at 15-20%.
CSF#3 BSPCI’s Equipment Lineup and Management (2)
BSPCI boasts of key partnerships with the leading Heavy Equipment dealers in the country (i.e.
Maxima, Monark, Civic and Good Morning). However year-end report for 2014 shows that
equipment is only utilizing around 74% of its capacity
__________
31
CSF#4 BSPCI’s Operational Execution (3)
BSPCI has completed almost 90% if its projects on-time including changes in schedule due to
Variation Orders. However, the under-utilization of Equipment Management prevents the
company to gain more profitability to augment its effective cost management.
CSF#5 Quality Control (3)
BSPCI has a cumulative track record of less than 10% of works completed that was subjected to
punchlisting. In addition, BSPCI has been ISO 9001:2008 compliant since 2009 and External
Audits have resulted in 0 non-conformances since 2012.
CSF#6 BSPCI’s Technical Qualifications and Accreditations (3)
With an AAA rating, Large B classification for Roads, Highways, Bridges, General Building and
Irrigation/Flood Control and ISO certification, BSPCI is fully qualified to participate in large-
scale government and private projects. However, it is limited to 480M and 300M with regards to
building and bridging projects respectively for government projects due to the procurement
regulation of 50% value of completed projects.
CSF#7 Customer Relations (2)
Although BSPCI has been successful in the retention of around 80% of its existing clients, the
customer relations aspect has been primarily limited to the President’s strong ties to industry
leaders and various government agencies due to his prior experience in CDCP/PNCC. The
Business Development and Project Management Levels need improvement in improving
relations to their respective counterparts.
32
5.4 COMPETITIVE BUSINESS ANALYSIS
Comparative analysis - Cost and expense structure (FY13)

JEMCO MSC BSPCI CMPI
Sales 100.0% 100.0% 100.0% 100.0%

Project Costs (87.6%) (80.0%) (83.9%) (84.6%)
Operating Expenses (5.7%) (12.7%) (7.6%) (11.2%)
Operating margin 6.8% 7.3% 8.5% 4.1%
EBITDA margin 9.3% 9.5% 18.8% 10.2%
Note: (1) Operating and EBITDA margin excludes other income and expenses (2) EBITDA margin is computed by adding
depreciation to the operating margin.
Source: SEC filed audited financial statements
Cost and expense structure: Vertical analysis on the companies’ income statement shows that
BSPCI leads its peer for an efficient operation which costs and expenses accounting 91.5% of
total revenues resulting to an 8.5% operating margin.
EBITDA, which is a measure of CASH operating income reflects that BSPCI widely
outperforms its peers.
Comparative analysis - Derived tax rates (FY13)

Prevailing tax rates 30.0% 30.0% 30.0% 30.0%

Derived tax rates 29.9% 30.0% 29.1% 36.5%
Note: (1) Derived tax rates is computed by dividing actual corporate tax expense with earnings before tax. (Income tax / Income
before taxes)
Source: SEC filed audited financial statements
Tax Management: Corporate tax are computed 30% of earnings before tax. But these earnings
are based on the definition of accrual accounting supported by the international accounting
standards for statutory reporting purposes and may not represent the definition of taxable income
recognized by our bureau of internal revenue (BIR).
The taxable income recognized by BIR also came from the statutory reported figures adjusted
with items that are considered taxable and non-taxable (tax shield items). Deriving the actual tax
expenses (supported by BIR recognized calculation) to the earnings before tax (supported by the
33
statutory reporting standards) would reflect a company’s tax management. An effective tax
management would be true if the resulting derived tax rate is below 30%.
From the table above, it shows that BSPCI employs the most efficient tax programs with a 29.1%
tax rate. While BSPCI leads its peers, the company should look for more ways to take advantage
of tax-shield expenditures. It should target at least a derived tax rate of 25%. This may not be
much in terms of absolute amounts but this should help the company maximize its profitability.
5.5 EXTERNAL FACTOR EVALUATION
External Factor Evaluation (EFE) Matrix summarizes and evaluates various external factors
including environmental and competitive factors facilitate strategy formulation. (David, 2009).
There are many factors that affect BSPCI but a set of priority factors that has the greatest impact
to the company’s success were selected and importance is given based on its potential impact to
its bottom line.
Opportunities and BSPCI’s responsiveness
O1 - Projected 6% 2015-2016 GDP. Consistent 5% increase in GDP for the next 5 years
Rating 2 – BSPCI has a satisfactory rating for this opportunity provided that it maintains its
eligibility and technical qualifications without suffering any setbacks in customer relations. That
being said, the organization may not be able to capitalize on the forecasted economic growth if it
doesn’t make a sustained effort to improve Market Penetration and be more cognizant of the
particular projects that fit its core competence (Service Development).
Weight: 5% is given; while the overall economic forecast is favourable for the construction
industry and the organization, more focus should be given in government allocation and investor
interest in infrastructure projects.
34
O2 – Increased government budget for infrastructure projects for 2015
Rating 3 – BSPCI is in a good position to capitalize on the increase in budget for DPWH alone
due to the good working relationship with the department, given the amount of projects the
organization currently undertakes, regardless of who the Secretary would be in 2016.
Weight: 10% is given due to the current emphasis of the government on infrastructure
development as reflected by the steep increase in budget allocation for DPWH alone.
O3 – Steady increase in private infrastructure projects
Rating 2 – BSPCI has established key business relationships with the most reputable private
organizations in the real estate development and commercial industry. However, it lacks
presence with the key players in other key industries such as transportation, utilities and power.
Weight: 12.5% is given due to the same emphasis and possible dependence of the construction
industry on the private sector in infrastructure development post 2016 as noted in External
Analysis.
O4 - Emergence of Public-Private-Partnership Program
Rating 2 – As part of the large scale construction players, BSPCI has the technical qualifications
to participate in PPP-based projects. However, BSPCI lacks the capitalization and organizational
strength to qualify and undertake these projects alone unlike the top ten construction companies.
It relies on strategic partnerships or joint ventures with other companies to be able to participate.
Weight: 10% is given due to majority of government-implemented agencies adapting this

framework.
O5 - Continuous Growth in the BPO Sector
Rating 2 – BSPCI’s core competence is on Horizontal Works even though the organization is
qualified to undertake on large-scale Vertical projects. Since the growth in the BPO sector
35
almost directly translate to an increase in opportunities in building construction, BSPCI needs to
strengthen its technical and operational competence in Vertical projects to fully take advantage
of this opportunity.
Weight: 5% is given due to the vertical segments low “market share” in relation to other project
classifications making up BSPCI’s total revenue.
O6 – Effect of ASEAN Integration
Rating 3 – BSPCI is in a good position to take advantage of the ASEAN integration from a
coverage standpoint since it has established satellite offices in the potential of growth areas in
Metro Cebu, Iloilo, and Cagayan de Oro. The potential drawback is the threat of new entrants
from other ASEAN countries, who may introduce innovations that can compete with the current
pricing of BSPCI.
Weight: 10% is given in the immediate effect on the region once the economic integration
deadline occurs at the end of 2015.
O7 – Effect of Incoming DPWH Secretary
Rating 3 – BSPCI has a good working relationship with DPWH since 2011 and almost 50% of
the organization’s revenue came from contracts awarded by this department. Moreover, the
transformational framework established for the department will ensure any attempts to collude or
manipulate any DPWH projects bid on the National level can be immediately flagged and
corrected, regardless of the next secretary would be.
Weight of 2.5% was given due to the relative inconsequential effect of the incumbent secretary
to the agency reforms already set in place.
O8 – Social Re-development of Metro Manila
Rating 2 – BSPCI is only limited to horizontal/civil works and drainage projects as its core
competence, which is not emphasized based on the projects currently in the pipeline. The
36
projects involving the transportation sector requires advanced technical resources that BSPCI has
minimal expertise and experience in.
Weight: 5% is given due to the long gestation period from which BSPCI could implement
organizational strategies to address this weakness.
O9 - Housing Demand
Rating 2 – In addition to its lack of experience with Vertical projects, BSPCI almost has no
personality and prior experience/relations to the established players on the Housing industry
(NHA, Habitat and other NGOs). However, its good relationship with key private commercial
and real estate developers will allow BSPCI to be relevant on the private sector.
Weight: 10% is given due to the urgency to address housing backlog, which will correlate to an
increase in spending on this sector.
O10 - Reconstruction Efforts due to recent calamities
Rating 2 – BSPCI is in a good position to participate in any reconstruction project that will be
implemented by DPWH and players from the private sector but is in a poor position to
participate in any projects that will be implemented by other Government Agencies or NGOs.
Weight: 5% is given due to the relatively low budget allocation compared to new infrastructure
projects.
O11 – Technological and Ecological Advancements
Rating 2 – BSPCI lacks the innovation and technological experience to keep pace with the
advancements in technology. Fortunately, it has good working relations with its material
suppliers that do take advantage of innovations. BSPCI is a member and has been compliant to
the standards of PHILGBC and BERDE since 2011 in efforts to improve its technical eligibility
37
and qualifications. BSPCI has also invested in Modular Formworks technology for its current
PSIP-II (PPP based) project with the Department of Education (DepED) in an effort to maximize
logistical efficiency. BSPCI should look into efforts of having its own pre-fabricated material
capacity to be at pace with industry leaders like MDC and DMCI, who currently has this
capacity.
Weight: 10% due to the increased awareness of the construction industry to adapt with more
technologically and ecologically efficient systems to maintain competitiveness in the wake of the
upcoming ASEAN integration.
THREATS and BSPCI’s Responsiveness
T1 – Lack of Qualified Personnel
Rating 2 – BSPCI’s strong management core and well-established ISO-standard systems in

Project Works implementation allows the organization to remain competitive and provide quality
service despite the lack of stability within the lower ranks. However, internal organizational
development in terms of creating a “winning professional culture” cannot be realized if the
employees do not find a sense of fulfilment.
Weight: 5% is given due to the emphasis required is internal and in relation to organizational
development and cultivating a more positive culture within BSPCI
T2 - Strong Rivalry of competition
Rating 3 – BSPCI has a relatively good track record in Pricing Competitiveness, Operational
Execution and Quality Control, which not only bears the greatest weight among the critical
success factors, but are also the factors from which information from competitors are most
accessible.
Weight: 10% is given due to the nature of all public and private procurement policies, which
require bidding.
38
EFE Matrix
Importance Firm's Weighted

External Factor Weight Rating Score
O1 - Projected GDP of more than 6% 5.0% 2 0.1
O2 - Increased government budget for infrastructure projects for
2015 10.0% 3 0.3
O3- Steady increase in private infrastructure projects 12.5% 3 0.375
O4 - Emergence of Public-Private-Partnership Program 10.0% 2 0.2
O5 - Continuous Growth in the BPO Sector 5.0% 2 0.1
O6 – Effect of ASEAN Integration 10.0% 3 0.3
O7 - Effect of Incoming DPWH Secretary 2.5% 3 0.075
O8- Social Re-development of Metro Manila 5.0% 2 0.1
O10 - Housing Demand 10.0% 2 0.2
O11 - Reconstruction Efforts due to recent calamities 5.0% 2 0.1
O11 – Technological/Ecological Advancements 10.0% 2 0.2
T1 – Lack of Qualified Personnel 5.0% 2 0.1
T2 - Strong Rivalry of competition 10.0% 3 0.3
TOTAL 100.0% 2.45
5.6 STRATEGIC ISSUE BASED ON EXTERNAL FACTORS
A major opportunity the company should take advantage of is the emphasis on infrastructure
development, particularly for Government and PPP-based projects. Strengthening of the
company’s capitalization and development of organizational expertise are key steps in putting
BSPCI in a better position compared to its major competitors.
BSPCI should also look into being more cost-efficient with regards to its project operation costs
and tax management to further augment the value provided by its competitive pricing. This will
also put the company in a position to generate more profits and maximize efficiency, which will
have an indirect effect on customer service and relations.
39
VI. INTERNAL ANALYSIS
6.1 MANAGEMENT REVIEW
It is practice of the BSPCI to ensure the establishment of annual key initiatives that include
quality objectives in line with the company’s mission and vision, communicated to all levels of
the organization for the use in establishing each function’s and employees annual key
objectives28. The company could further improve the communication of its objectives through
its vision given the deficiencies of the company’s vision (see vision analysis).
There is a top to bottom decision structure in BSPCI. Major decisions are made by the top
management given the recommendations and information provided by the respective
Department Heads and Project Directors and Project Managers. Lower level managers get
involved in the decision making process through business planning sessions in line with the
company’s quarterly profit and loss (P&L) review involving all levels of management. Action
points from and departmental goals from the meeting are delegated to specific departments and
managers, which are held accountable through their performance appraisals, which are also
being conducted quarterly for managers to have the opportunity to direct the behavior of the
employee towards the execution of the company’s objectives.
Human Resource Motivational Factors

All new employees shall undergo an employee orientation within the first week of employment.
The HR and Admin Department shall conduct the new employee orientation. The new employee
orientation shall include introduction to the company profile, company policies and procedures,
an introduction to the different department of the company and how his/her job is related in the
achievement of the company’s vision and mission. The orientation shall also include a checklist
of items covered with the employee’s signature when such orientation is completed.
The company’s retention strategy involves an employee motivation and empowerment program.
__________
28 BSPCI 2014 2nd Management Review
40
A training needs analysis is being conducted yearly, which results in an annual training plan that
is being cascaded through all levels of the organization based on the individual employee’s
needs analysis. All training sessions involves classroom and workshop format with job
mentoring and coaching. High potential employees are also recognized through service
excellence awards; an annual Most Outstanding Employee Award is also being given.
FINANCIAL REVIEW
Revenue Growth29
Revenues (in Php millions)
2,000.00
1,500.00
1,000.00
500.00
-
2012 Actual 2013 Actual 2014 Actual 2015 Projected
Revenue Operation (project) Costs Gross Income
BSPCI has experienced a steady growth over the past several years but the growth trend has been
decreasing over the past three years, taking into consideration the 2015 projection assuming that
the company remains status quo in its strategy implementation. It appears that the company is
not fully taking advantage of a bullish industry over the same period of time and risks losing its
current market share if no changes would be instituted to its current strategy.
From an industry perspective, the cost and expense structure focuses more on the company’s
employment of an efficient operation which is measured by the level of costs and expenses it
employs on a particular level of activity which is then measured through sales revenue.
__________
29 see Appendix: BSPCI Financial Statements
41
` 30
BSPCI’s superior margin is based from efficient operations and management of operational
project costs. However, from a revenue growth perspective, the slowdown is more pronounced
in the current market state of the construction industry, with JEMCO clearly taking advantage of
the rapid market growth to further establish and increase their market share.
From the owner’s perspective, more focus is being given to the amount of return received on a
particular amount invested. This cover the issue on efficient operations but will add factors such
as leverage and asset utilization that will ultimately determine how profitable a business is as far
as the owner is concerned. Leverage contributes to profitability because the more funds that can
be sourced from the company’s own contribution, the ability to create an asset base with risks
distributed to other investors. Asset utilization also contributes to profitability because it now
shows on how much revenue can be generate on a particular level of investment, which is critical
for a horizontal-works inclined company as BSPCI who invests significantly on heavy
equipment.
Viability on an Owner's Perspective

Leverage 2.3 1.5 3.7 2.5

Asset Turnover 1.1 0.5 0.9 0.6
Profitability 4.7% 4.4% 6.6% 3.8%
Return on Equity 11.6% 3.3% 21.7% 6.1%
__________
30 see Appendix: Competitor Financial Statements
42
Although BSPCI has a higher ROE compared to its competitors, this is primarily caused by a
higher leverage due to increased borrowing over the previous year, specifically for the PPP-
based DepED project. The company should improve on its asset turnover, mainly by getting a
more efficient equipment utilization system, which in turn would increase productivity in project
works accomplishment, the main basis for realizing uncollected revenue.
FINANCIAL RATIO ANALYSIS

FINANCIAL RATIOS 2010 2011 2012 2013
Profitability Ratios
Return on Assets
(ROA) 7.82% 6.61% 8.04% 7.93%
Return on Equity
(ROE) 24.33% 23.52% 24.89% 21.29%
Return on Sales
(ROS) 6% 6% 7% 7%
Gross Profit Margin 11% 11% 10% 10%
Operating Profit
Margin 6% 6% 7% 7%
EBITDA Margin 11.00% 19.00%
Liquidity Ratios
Current Ratio 1.21 1.26 1.46 1.85
Quick ratio 1.20 1.26 1.23 1.55
Leverage Ratios
0.72 0.68 0.63 0.73
Debt to total assets
2.56 2.10 1.68 2.74
Debt to equity
Efficiency Ratios
Accounts Receivable
Turnover 2.69 2.35 2.32 1.62
Current asset turnover 1.40 1.47 1.29 0.96
Fixed-asset turnover 5.03 5.93 7.92 10.48
Asset Turnover 1.10 1.18 1.11 0.88
Growth Trend Ratios
Revenue Trend -5% 18% 14% -3%
43
Total Operating
Revenue Trend -5% 18% 14% -3%
Operating Income
Trend 106% 115% 129% 101%
Net Income Trend 12% 17% 33% 3%
On Profitability:
BSPCI, like most large scale construction companies in the country, has benefitted from a
growing economy largely focused on infrastructure development. However, the natural growth
on ROI relative to the increased revenue has not been realized. While the company has been
able to maintain its usual excellent project operational execution, proper utilization of the
company’s heavy equipment, a major component of its assets, have been slipping, which
explains the marginal increase in Return of Assets. Likewise, the Return on Equity has not
experienced the consistent growth expected relative to the Revenue generated by the company.
On Liquidity:
BSPCI has been slightly better in liquidity at 1.44 compared to its competitors who average at
1.32. This behavior is common among large scale contractors who constantly needs cashflow in
order to keep its payment obligations to mainly suppliers and subcontractors.
On Solvency:
BSPCI has been highly leveraged compared to the construction industry. Almost 75% of the
company’s assets are being funded via debt compared to its competitors, who averages at 54%.
This has increased the company’s financing cost and has significantly reduced profits. Higher
debt will also limit the company’s ability to fund its expansion and strategies.
On Efficiency:
The decreasing turnover is an indicator that the company is not fully utilizing the investments
made on assets, particularly with equipment utilization relative to the revenue generated. The
Current Accounts turnover, specifically the Accounts Receivable turnover, has been decreasing
and is lower compared to the average turnover of its competitors at 2.45. This indicates that the
44
company should take a closer look into its collection policies in order to ensure the timely
collection of outstanding billed accomplishment reports to its clients.
On Growth Trends:
As confirmed with the negative growth trend over the past year, BSPCI clearly is not being
aggressive enough with its Marketing Penetration strategy to fully take advantage of the growing
construction industry.
BIDDING
BSPCI Project Bidding

50
No. of Projects
40
30
20
10
0
2012 2013 2014 2015
Bidded 35 40 38 46
Won 8 13 12 14
BSPCI has consistently been awarded approximately 30% of the total projects it participating,
whether it’s under the Revised Procurement Act of open bidding for government projects or
closed bidding for most private projects. This is a relatively high percentage compared to the
industry average of around 20-22% as recently reported by the PCA.31 Since most construction
projects are being awarded on the merit of the lowest bid proposal, the company’s high winning
percentage relative to its competitors can be attributed to an effective price costing system
adapted by its Technical Services Department that focuses on efficient and timely project
operational execution.
__________
31 Interview with PCA Executive Director Manolito P. Madrasto
45
QUALITY POLICY
As an organization that complies with ISO 9001:2008 standard for construction services, BSPCI
adapts a Quality Policy that is engaged in the various construction services and is committed to
comply with all the requirements of their clients and to ensure satisfaction and long term
business relationships. To implement this policy the following principles are being implemented:
- On time delivery of projects

- Compliance with local and international standards appropriate to the industry.
- Periodically review the performance of the Quality Management System as inputs to
continual improvement.
- Maintain zero customer complaints.
- Ensure availability of resources needed for the business.
The quality policy is the guideline from which the organization’s quality management system is
derived. The eventual goal is to assist BSPCI in establishing and improving its quality
management system along with improving its processes of in order to enhance performance.
6.2 MCKINSEY 7S FRAMEWORK
Strategy
Established in 1993, BSP & Company Incorporated was initially a company that plied its trade in
equipment leasing. Subsequently, the company ventured into civil work contracts through
strategic subcontracting partnerships with its more established peers, that evolved into joint
ventures that gradually established the companies credibility and reputation as a cost-efficient,
value-oriented construction services firm. In the year 1999, the company was able to successfully
take over the construction works of Southern Tagalog Arterial Road (also known as the STAR
Tollway or CALABARZON Expressway), a construction of a 10-km highway that includes four
bridges, from Manifold Construction and complete the project on time. This did not only pave
the way for the company to establish its “AAA” contractors rating from PCAB but firmly
46
established itself as a competent and well-organized firm, capable of bringing the same value at a
much lower cost or bringing more value through efficient execution for the same cost.
Evaluation: Effective
Capitalizing on its effective pricing and execution and now armed with the highest category
being given to a local contractor by PCAB, BSPCI has been steadily increasing both revenue and
market share, allowing the company to hit Php 1B revenue by 2008 and establishing itself as a
large-scale player in the industry. The aforementioned efficient operational execution and
overall service value is aligned with its values of building and serving par excellence.
Shared Values
Based from its mission statement, the company espouses these core values: Value, Excellence,
and service. The mission statement is simple and straightforward: to provide the best value in
service to the satisfaction of its customers.
Evaluation: Needs Improvement

Shared values needs improvement since they are not clearly reflected on the company’s mission
and vision statement but rather is evidenced in the corporate culture and the general work ethic
that was instilled by the president. To realize the company’s mission and vision statements, the
company demands and inspires dedication to each individual’s task; the top management and key
department heads exemplify this dedication that is initially viewed as compliance but eventually
becomes an inspiration down the line and even to rank-and-file.
47
Structure
PRESIDENT/CHAIRMAN
TECHNICAL CORP.
OPERATIONS
SERVICES AFFAIRS
EQUIPMENT OPERATIONS ESTIMATING ACCOUNTING BUSINESS HUMAN

SAFETY
MANAGEMEN CENTER AND BILLING / FINANCE DEVELOPMEN RESOURCES
PROJECT
MONITORING
The Company’s organization structure is mainly hierarchical with a functional structure. The
division of labor is grouped by the main activity or function that needs to be performed in the
organization. The major department or the “bread and butter” department is Project Operations,
which is subdivided among the company’s satellite offices. The Equipment Management Group
is a separate department but is still under the Project Operations umbrella. The Technical
Services Group is the department that is responsible for both project bid proposals and
maintenance of actual project budgets that originates once a bid proposal has been accepted and
the project eventually awarded. Accounting, finance, human resources and business development
are all under the corporate affairs group, who is responsible for the day-to-day operations within
the head office.
Evaluation: Adequate
The structure clearly defines the function of each department with the flow of responsibility
based from the chain of command. However, the company is too centralized and decision-
making almost always falls under the top management, especially with the President.
Systems
As discussed earlier in this chapter under Management Review, BSPCI top management reviews
the effectiveness of the Quality Management System and its continual improvement on a semi-
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annual basis through Internal Quality Audit(s) and its related processes. This aims to provide a
systematic discussion of the QMS and to provide management with the necessary tools for
making any relevant changes to the essential to achieve the organization’s goals.
Evaluation: Helpful
Systems are being used to plan strategies and implement them. In the area of implementation,
performance of goals are being monitored systematically mainly, employees are being appaised
and appropriately rewarded in line with their individual goals and objectives based on their job
descriptions in a performance-based management scheme.
Style
BSPCI exemplifies performance through output, with each individual being subjected for
appraisals at least 4 times a year. The purpose is not only to closely monitor an employee’s
performance but to immediately provide recognition and reward to individuals going above and
beyond what is asked of them. In addition, top management’s leadership style is one of leading
by example; no one puts more work than the President and the Department/Project heads, which
serves as an inspiration and an imprimatur to the people working for them.
Evaluation: Needs Improvement

A work-life balance has to be injected within the company culture as not everyone can emulate
the values and ethics that top management shows. This is evidenced by an attrition rate upwards
of 20%, mainly in the junior management and rank-and-file levels. Further evaluation should
also be given on the company’s current salary-level scale as having employee continuity is key
to ensuring future strategy implementations would remain effective.
Staff
As mentioned, employee growth is maintained by a motivation and empowerment program. A
training needs analysis is being conducted yearly, which results in an annual training plan that is
being cascaded through all levels of the organization based on the individual employee’s needs
analysis. All employee orientations include introduction to the company profile, company
policies and procedures, an introduction to the different department of the company and how
49
his/her job is related in the achievement of the company’s vision and mission. Individual needs
assessment for his/her professional growth are also being conducted during the Performance
Appraisal, conducted quarterly.
Evaluation: Adequate
Development plans for each individual are aligned to the skills needed for the company to
achieve its departmental and overall objectives. The periodic review of the individual’s
professional growth allows the manager to assign the relevant training, coaching or mentoring
program needed to close the skill gap of the employee. This enables the employee to provide
meaningful contribution in attaining the goals of the organization.
Skills
Each employee is being given the necessary individual training to further develop their
respective skillset in line to make a meaningful contribution to his/her department. In addition,
the hands-on approach culture the company has promoted also allows each employee to also
learn based on their superior(s) experience, which is practical for the company since the
construction industry is very applications-based.
Evaluation: Good
The company embraces the two main indicators of success that the President views: Character
and Competence. Each employee has the necessary tools to gain his/her competence in their
respective skillset and the result has been no major customer complaints since the company has
been ISO-compliant since 2008.
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6.3 INTERNAL FACTOR EVALUATION
STRENGTHS:
Operational Execution
Rating 3 – BSPCI has been able to accomplish the prescribed scope of works within or even
ahead of the defined construction schedule on over 90% of their awarded projects. Moreover,
BSPCI has been able to operate within or below the projected budget at around 85% of their
awarded projects. This is due to proper planning during pre-construction, and strict adherence to
project cost and quality as prescribed by the client’s Construction Management Group. This
allows the organization to not only improve existing client relations through satisfactory
performance but to also collect progress billings on time to maintain cash flow.
An Importance Weight of 15% has been given as all clients require timely execution of
construction projects as part of their commitments to their stakeholders, especially given the
relatively large budget afforded to infrastructure development.
Competitive Pricing
Rating 3 – BSPCI’s experienced Engineering team, headed by the president who has over 40
years of experience in Engineering and Project Management, has been able to provide
competitive pricing, especially for civil-based works, where customers can achieve the same
quality of works per cubic meter at a lower unit cost. The key to maximizing the value for the
customers is being able to determine the maximum efficiency rate of every major type of heavy
equipment. BSPCI also has an extensive equipment lineup, which gives them the benefit of
avoiding mark-ups should a certain type of equipment was to be rented or outsourced.
Importance Weight of 15% is given since the primary metric of awarding projects on both public
and private construction projects is total price of the bid proposal.
Wide Range of Coverage

Rating 3 – As of 2014, BSPCI has established satellite offices in Batangas, Pampanga, Cebu,
Iloilo and Cagayan de Oro, allowing the organization to undertake projects all three major
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regions of the country. BSPCI has also established key partnerships and joint ventures with
other reputable contractors, particularly in Davao and ARMM, which allow them to penetrate
those markets where most other competitors are unable to do so.
Importance Weight of 5% is given due to the impact of the aforementioned growth in the BPO
sector, which will significantly affect areas outside of Metro Manila (see External Analysis).
However, the impact is dependent on how the organization effectively identifies and penetrates
these markets.
Good Quality
Rating 3 – BSPCI has been ISO 9001:2008 compliant since 2008, which is one of the reasons
why the organization is able to achieve project execution to the satisfaction of its customers.
Moreover, it is part of the organization’s mission statement to provide service and quality par
excellence to their customers.
Importance Weight of 10% is given due to the quality standards the company must uphold not
only internally to comply with management and ISO standards but also with its clients through
their Construction Management Group (CMG). Accomplishment billings and eventual turnover
of the project will not be granted without concurrence from the client CMG.
Strong Management
Rating 4 – BSPCI top management, starting from its president, has been critical to the growth
and continued success of the organization. The top management, from the Vice President of
Operations to the all Department Heads and Project Managers, have been with the organization
for at least 10 years and through the years have been able to adapt and eventually synergize.
There is also a sense of loyalty and ownership of each key individual’s responsibility, which
allows each one to go above and beyond what is asked when the situation calls for it.
Importance Weight of 10% is given since good leadership, management and first line supervision
fosters positive client relationship with client involvement, initiates proper project team
chemistry, adaptability to changes and a sense of ownership.
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WEAKNESSES:
Poor Equipment Utilization

Rating 2 – BSPCI has only been utilizing 74% of its projected capacity. This has been due to
lack of preventive maintenance and lack of responsiveness from both the project site and the
central Equipment Management group to correct the concern on time. Not only does this
prevents savings in project execution, but it also forces the organization to purchase new
equipment to meet project demands even if the current lineup should be capable of handling the
workload with proper management.
Importance Weight of 10% is given due to the factors identified in the company’s financial
analysis. The underutilization of the company’s primary asset compared to its competitors is
affecting its ability to fully take advantage of the growing construction market.
Less Solvency
Rating 1 - BSPCI as of end of 2013 is highly leveraged with 73% of its assets being funded by
debt. The debt increase alone more than doubled from 2012 of around Php 543M to Php 1.12B,
148M of which was used to acquire new equipment and around 332M used for cash flow. Part
of the steep increase is due to the recently awarded PPP-based Public School Infrastructure
Program, Phase II (PSIP-II) contract from which BSPCI won’t be compensated until completion
and turnover of the project on October 2015.
Importance Weight of 10% is given due to the relatively high leverage figure of the company
relative to its competitors and the possibility for the economic landscape to change once the new
president assumes office in 2016.
Lack of Marketing Promotional Campaign
Rating 1 – BSPCI has been dependent on participating in public and private bidding for
infrastructure projects and the only marketing material being used is the Company Profile, which
is largely a requirement for any bidding or accreditation process. The organization’s website has
53
not been updated since 2012 and is hardly visible in any keyword searches using popular search
engines such as Google or Yahoo. The organization also does not take advantage of construction
trade shows and forums that usually happens once every quarter and does not have any
promotional campaign.
Importance Weight of 5% is given since this weakness has not given a significant adverse effect
to the company’s revenue yet. However, the company needs to address this weakness in order to
effectively pursue Market Penetration strategies.
Lack of Supply Chain Management
Rating 2 – Being involved in a procurement system wherein services are being awarded to the
lowest-bidding contractor has a trickle-down effect to BSPCI’s relationships with its suppliers
and subcontractors, two of the major factors of their supply chain. Rather than defining client
value, integrating their activities with the whole scope of works and managing costs
collaboratively, BSPCI just goes for the lowest offer. While the organization recognizes and
establishes key supplier/subcontractor relationships, there is no continuity as there will always be
a competitor who always comes in with a better price.
Importance Weight given is 10%; eventhough the current industry practice is that the companies
may only be linked by contracts that have been procured on lowest price against fixed
specifications, The benefits for end-users and project clients include a more responsive industry
delivering facilities that better meet user needs, delivered to time and cost with minimum defects.
This in turn creates higher customer satisfaction levels and an improved reputation for the
company.
High Employee Turnover Rate
Rating 1 – While there is stability on top management, the same cannot be said to middle and
Junior management all the way to rank and file. BSPCI experiences an annual employee
turnover rate of over 20%. Historically, the organization does not provide the same level of
54
compensation afforded by its competitors, which results to the organization being viewed as a
“stepping stone” for young professionals to gain experience before transitioning to a better
paying opportunities.
Importance Weight of 5% is given as the strong leadership from top management helps offset the
lack of continuity in the lower management levels.
Lack of Innovation/Weak R&D
Rating 1 – Most of BSPCI’s key personnel, especially on the operations group are from the
“old-school” way of executing construction works and have a disdain to new methods and
technologies that other competitors may be more open to invest time and resources with. The
sentiment of “re-inventing the wheel” is not being received very well since most of these people
have been used to performing things the same way for such a long time. New technologies and
innovations are only being incorporated if they are a requirement from the client.
Importance Weight of 15% is given; while infrastructure development in the country has not
been as technologically inclined yet, the instituted BERDE scheme being envisioned as the
future benchmark for all property developers in the country, as well as the upcoming ASEAN
integration (see External Analysis) should heighten the urgency of the company to be more
technologically competent.
IFE MATRIX:
Importance Firm's Weighted

INTERNAL FACTOR Weight Rating Score
Strengths
Operational Execution 15.0% 3 0.45
Competitive Pricing 15.0% 3 0.45
Wide Range of Coverage 5.0% 3 0.15
55
Good Quality 10.0% 3 0.3
Strong Management 10.0% 4 0.4
Weaknesses
Poor Equipment Management 10.0% 2 0.2
Less Solvency 10.0% 1 0.10
Lack of Supply Chain Management 10.0% 2 0.2
High Employee Turnover 5.0% 1 0.05
Lack of Innovation/R&D 5.0% 1 0.05
Lack of Marketing/Promotional Campaign 5.0% 1 0.05
TOTAL 100.0% 2.4
6.4 STRATEGIC ISSUES BASED ON INTERNAL FACTORS
BSPCI delivers the same quality of services that their clients require at a lower price owing to its
more than adequate operational execution, experienced personnel, and strong management core.
However, its focus in building equipment lineup without proper management has led to a lower
degree of financial flexibility. Moreover, the lack of proper supply chain management prevents
the firm from maximizing profitability that can be used to make its salary and benefits package
more appealing for lower management to rank and file employees. BSPCI should establish a
better support core to key management personnel by better employee retention to not only allow
a more open-minded approach to more efficient project execution but also to allow more
continuity that will ensure the sustainability of the organization especially when its key
personnel are ready to retire. BSPCI should also look into increasing its capital base and rely
less on short term debt to finance its operations, lower financing costs and improve long term
viability.
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VII. STRATEGY FORMULATION
The information gathered through the CPM, EFE and IFE matrices will be used to develop
strategies for BSPCI. SWOT Matrix, SPACE, Internal-External (IE) matrix, Grand Strategy,
Summary of Strategies and Quantitative Strategic Planning Matrix (QSPM) will be utilized in
strategy formulation.
7.1 SWOT Matrix: This matrix helps develop four types of strategies: Strengths –
Opportunities, Weakness- Opportunities, Strength-Threats and Weaknesses-Threats.
Strengths Weaknesses
Operational Execution Poor Equipment Management
Competitive Pricing Less Solvency
SWOT MATRIX Wide Range of Coverage Lack of Supply Chain Management
Good Quality High Employee Turnover
Strong Management Lack of Innovation/R&D
Lack of Promotional Campaign
Opportunities SO Strategies WO Strategies
Projected GDP of more than 6% in 2016, S1-S4, O1 - Increase Market Penetration efforts, W2, O1 - Seek additional cash flow from investing
Consistent 5% increase in GDP for the next highlighting competitive advantages of price, quality and activities W5, O1 - Establish Integrated Marketing
25 years wide area of coverage while consumer spending power is Communications (IMC) campaign to increase visibility of
high organization
Gov’t budget for infrastructure projects for S2, O2 - Increase participation in government (esp. W2, O2 - Focus participation in non-BOT government
2015 is Php 300B, will increase to 400B in DPWH) bidding projects, which has less captitalization requirements
2016 on DPWH alone
Increase in Infrastructure Projects S1-S4, O3 - Increase Market Penetration efforts, W5, O3 - Establish Integrated Marketing Communications
highlighting competitive advantages of price, quality and (IMC) campaign to increase visibility of organization
wide area of coverage while consumer spending power is
high
Emergence of Public-Private-Partnership S2, O4 - Increase participation in bidding for PPP projects W2, O4 - Establish partnerships with other contractors or
Program financial institutions to increase capitalization to meet
PPP requirements
Effect of ASEAN Integration S2, O5 - Venture to bidding for international projects W1&W5, O5 - Seek and incorporate for
within ASEAN community technological/innovtive advantage from construction
practices of other ASEAN members
Continuous Growth in the BPO Sector S3, O6 - Establish BPO client base in growth areas (Cebu, W6, O6 - Increase promotional efforts to create
Iloilo, Cagayan De Oro) organization's awareness in BPO industry
Housing Demand S1-S4, O7 - Increase participation in both public and W4, O7 - Offer housing incentive based on years of service
private Housing projects W6, O7 - Implement promotional campaign to specifically
create awareness of organizatoin with private housing
developers
Ecological/Technological Advancements S4, O8 -Establish high BERDE-rating to increase viability W3, O8 - Establish strategic partnerships / horizontal
to participate in PHILGBC-required projects intergration with key suppliers and subcontractors to
allow synergy of resources to adapt with Ecological
Advancements
Reconstruction Efforts due to recent calamitie S3, O9 - Participte in reconstruction projects from Gov't W6, O9 - Increase promotional efforts to create
or NGO's that are in Eastern Visayas and Bicol regions organization's awareness within NGO's and other
benefactors for socialized housing
Threats ST Strategies WT Strategies

Lack of Qualified Personnel S5, T1 - Establish "mentorship program" between W4, T1 - Provide better employee compenstaion and
qualified personnel and senior management partner, benefits package to attract more qualified personnel to
specifically on technical services or operations the organization
department
Strong Rivalry of competition S1 & S2, T2 - Update cost scheme incorporating data from W4, T2 - Provide better employee compensation and
recently concluded projects to make pricing more benefits package to prevent piracy to competitors
competitive
57
Market Penetration Strategies:
S1-S4, O1, O3 - Increase promotional/campaigning efforts, highlighting competitive advantages

of price, quality and wide area of coverage while consumer spending power is high
S2, O2 - Increase participation in government (esp. DPWH) bidding
W2, O2 - Focus participation in non-BOT government projects, which has less captitalization
requirements
W5, O3 - Establish Integrated Marketing Communications (IMC) campaign to increase visibility

of organization
S2, O4 - Increase participation in bidding for PPP projects
S2, O5 - Venture to bidding for international projects within ASEAN community
S1-S4, O7 - Increase participation in both public and private Housing projects
S3, O9 - Participate in reconstruction projects from Gov't or NGO's that are in Eastern Visayas
and Bicol regions
W6, O9 - Increase promotional efforts to create organization's awareness within NGO's and other
benefactors for socialized housing
W2, O2 - Focus participation in non-BOT government projects, which has less captitalization
requirements
S3, O6 - Establish BPO client base in growth areas (Cebu, Iloilo, Cagayan De Oro)
Product (Service) Development Strategies:
S4, O8 - Establish high BERDE-rating to increase viability to participate in PHILGBC-required

projects
S1 & S2, T2 - Update cost scheme incorporating data from recently concluded projects to make
pricing more competitive
58
S5, T1 - Establish "mentorship program" between qualified personnel and senior management
partner, specifically on technical services or operations department
Integration Strategies:
W1&W5, O5 - Seek and incorporate for technological/innovative advantage from construction

practices of other ASEAN members
W3, O8 - Establish strategic partnerships / horizontal integration with key suppliers and
subcontractors to allow synergy of resources to adapt with Ecological Advancements
Other Strategies:
W2, O1 - Seek additional cash flow from investing activities
W4, T1 - Provide better employee compensation and benefits package to attract more qualified
personnel to the organization
W4, O7 – Offer employee housing incentive based on years of service
7.2 SPACE MATRIX
The Strategic Position and Action Evaluation (SPACE) matrix allows for the organization to
choose the most appropriate set of strategies. The four possible sets of strategies in the SPACE
Matrix can be conservative, aggressive, defensive or competitive strategy. As an input, internal
factors pertaining to financial strength and competitive advantage are selected along with
external factors pertaining to environmental stability and industry strength.
A. Financial Strength (FS) Ratings: For FS use +1 (worst) to +7 (best)
As stated in the IFE, BSPCI is highly leveraged, which could affect the organizations cashflow
in the future, and is therefore rated at +2. However the organizations aggressiveness in financing
59
activities has brought about better liquidity (+6), working capital (+5) and cash flow (+4)
compared to its competitors at least for the short term.
Liquidity (Current Ratio of BSPCI is 2.12:1): +6
Working Capital (BSPCI has over 412M in working capital for FY 2013): +5
Leverage (BSPCI has leverage ratio of .73:1): +2
Cash Flow (BSPCI has cash balance of 293M for FY 2013): +2
(See Appendices: BSPCI 2013 audited financial statements)
B. Industry Strength (IS) Ratings: For IS use +1 (worst) to +6 (best)
Optimism on the country’s sustained economic growth, together with a pronounced focus in
infrastructure projects are the primary reasons for the construction industry with more
opportunities. With the exception of being in a weak position to take advantage of the
emergence of PPP (+2), partly due to its current leverage situation, BSPCI’s price
competitiveness and wide range of area (see IFE) allows the organization to be in a good position
especially with participating in Government Projects, particularly with the Department of Public
Works and Highways (DPWH).
GDP Growth (Phl annual estimated growth is 5-6% over next 5-10 years): +5
Government Allocation for Infrastructure Projects (BSPCI has good relationship with DPWH):
+6
Emergence of Public-Private-Partnership (PPP): +2
ASEAN Integration (BSPCI has coverage in growth areas to be affected most by ASEAN): +5
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C. Environmental/Stability Position (SP) Ratings: For ES use -1 (best) to -6 (worst)
Despite the recent setbacks experienced by the current administration, there has been generally
positive effect, especially with good governance (-3), that has promoted confidence in the
Philippines and subsequently produced a good economic forecast for the foreseeable future.
BSPCI has thrived on these developments as the organizational integrity has allowed more
opportunities to participate, especially with government projects, than it was able to during the
previous administration. The organization is generally well-positioned to maintain and exceed
its current market share and industry standing due to its competitive pricing (-3) and observance
and maintenance of the strict technical regulations and qualifications (-3). The aforementioned
qualifications, specifically for contractors in the “AAA” level, also puts BSPCI at an advantage
since the steep requirements prevent new entrants from easily gaining entry to this level (-3, see
also Five forces).
Prices of Competitors: -3
Observance to Technical Regulations and Qualifications: -3
Political Stability and Good Governance: -3
Barriers of Entry to Market: -3
D. Competitive Advantage (CA) Ratings: For CA use -1 (best) to -6 (worst):
BSPCI’s competitive pricing (-2), good quality that observes international standards (-2) and
efficient operational execution (-3) have been the primary reasons for the organizations steady
growth over the past 10 years. BSPCI has also been able to successfully expand its area of
coverage to most of Visayas and Mindanao (-2) that puts the organization in an advantage to
penetrate other markets compared to its competitors. The organization needs to not only expand
its equipment lineup but to improve its equipment preventive and corrective maintenance (-5) to
become more competitive.
Quality (BSPCI has been ISO Compliant since 2008): -2
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Operational Execution: -3
Strategic location (BSPCI has wide coverage of satellite offices): -2
Competitive Pricing: -2
Equipment Lineup and Management: -5
SPACE MATRIX for BSP and Company Inc.
FINANCIAL STRENGTH (FS) RATINGS
Liquidity (Current Ratio of BSPCI is 2.12:1) 6
Working Capital (BSPCI has over 412M in working capital for 5

FY 2013)
Leverage (BSPCI has leverage ratio of .73:1 compared to 2

industry ave of .45:1)
Cash Flow (BSPCI has cash balance of 293M for FY 2013) 4
Total 17
Average 4.25
INDUSTRY STRENGTH (IS)
GDP Growth (Phl annual estimated growth is 5-6% over next 5- 5

10 years)
Government Allocation for Infrastructure Projects 6
Emergence of Public-Private-Partnership (PPP) 2
ASEAN Integration 5
Total 18
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Average 4.5
ENVIRONMENTAL STABILITY (ES)
Prices of Competitors -3
Observance to Technical Regulations and Qualifications -3
Political Stability and Good Governance -3
Barriers of Entry to Market -3
Total -12
Average -3
COMPETITIVE ADVANTAGE (CA)
Quality (BSPCI has been ISO Compliant since 2008) -2
Operational Execution -3
Strategic location (BSPCI has wide coverage of satellite offices) -2
Competitive Pricing -2
Equipment Lineup and Management -5
Total -14
Average -3.5
CONCLUSION
X - Axis (CA average + IS average) 1.0
Y- Axis (ES average + FS average) 1.25
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FS
Conservative 9 Aggressive
8
7
6
5
4
3
2 (1.0, 1.25)
1
CA IS
-7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7
-1
-2
-3
-4
-5
-6
-7
-8
Defensive -9 Competitive
ES
Based from this particular strategic management tool, the company belongs in the aggressive
quadrant; recommended strategies include pursue market penetration, product development,
related diversification and integration strategies.
7.3 INTERNAL-EXTERNAL MATRIX
The internal-external matrix assigns positions to the organization in a nine cell display based on
its IFE and EFE scores. If the firm falls in cell 1, 2 and 4, grow and build strategies are
recommended. Hold and Maintain strategies are advised for firms falling in cells 3, 5 and 7.
Organizations should consider harvest or divest strategies if they fall in cells 6, 8 and 9.
TOTAL IFE RATING: 2.40
Strong Average Weak

3.0 to 4.0 2.0 to 2.99 1.0 to 1.99
High I II III
TOTAL EFE 3.0 to 4.0
RATING:
2.45 Medium IV V VI
2.0 to 2.99
Low VII VIII IX
1.0 to 1.99
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Based on the IE matrix, BSPCI falls under cell 5. Hold and maintain strategies are recommended
under this group. Intensive strategies such as market penetration and product development can
also be implemented.
7.4 GRAND STRATEGY MATRIX
Using the grand strategy matrix, organizations are grouped into four quadrants depending on the
organization’s competitive position (BSPCI compared to its primary competitors) and the
industry’s growth (Construction Industry compared to Economic Growth).
MARKET GROWTH: RAPID (Industry Growth exceeds GDP Growth)
As earlier stated, the economic projections for the Philippines is optimistic for the next 5-10
years, with the GDP expected to grow at around 6% on the same period (see EFE). The
construction industry, one of fastest-growing in the country, experienced a boom in the first
quarter of 2014, generating jobs and enhancing the growth of other industries. The Philippine
Statistics Authority (PSA) reported that new construction projects, as indicated by approved
building permits, reached 29,468 in the first quarter of 2014, up 20.8% from 24,000 in same
period in 2013. The continued growth peaked towards the end of 2014, with a massive real
expansion of 20.5% year-on-year (y-o-y).32 Reconstruction efforts stemming from the after-
effects of Typhoon Yolanda in late 2013 should continue to provide a strong tailwind for
construction activity throughout 2015 and industry is forecasted to experience real growth of
9.4% for this period.
COMPETITIVE POSITION: Moderately to Strongly Competitive
BSPCI has key advantages over its competitors brought about by competitive pricing, efficient
operational execution and strong quality control. The organization also has established
relationships with key government agencies, particularly the DPWH, something that has not been
accomplished 5 years ago and positions them to take advantage of the focused allocation on
__________
32 http://www.bmiresearch.com
65
infrastructure projects. However, BSPCI’s high financial leverage, mediocre to poor equipment
management and lack of organizational depth puts the organization at a disadvantage on these
areas as well.
Based on these, BSPCI falls under the first quadrant in the grand strategy matrix. Under this
quadrant, continued concentration on current markets and products/services (market
development, market penetration, product development) are considered as appropriate strategies.
Integration is also possible if the organization has excessive resources, which in BSPCI’s case
may not be applicable since due to the aforementioned leverage situation (see IFE). BSPCI can
also consider product development in the form of diversification of its services, wherein a focus
on improving its competence for vertical projects and assimilation to technological innovations
(see EFE) thereby expanding its core competence base.
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7.5 BOSTON CONSULTING GROUP (BCG) MATRIX
The BCG Matrix allows multidivisional organizations to manage its portfolio of business by
examine relative share position and growth rate of each division and graphically portrays
differences among these divisions. Since BSPCI is not a multidivisional organization, this
strategy can be exercised among different products (construction services) offered by the
organization. The BCG Matrix will be created based on the three major construction works
being practiced by BSPCI: Horizontal Works (roads, highways and bridges), Vertical Works
(buildings and industrial plants) and Other Works (land and site development, irrigation, flood
control and water supply).
RELATIVE MARKET SHARE POSITION

1.0 .50 0.0
+20
H V
INDUSTRY SALES
GROWTH RATE
0 STARS (II) QUESTION MARKS (I)
-20 CASH COWS (III) DOGS (IV)
QUESTION MARKS
The industry for vertical construction works is currently at the high-growth segment due to the
emergence and continuous growth of the BPO sector and the rise of housing demand,
particularly for socialized housing and relocation of typhoon victims with Reconstruction
Assistance on Yolanda (RAY) as an example (see EFE). However, BSPCI has a relatively low
market-share on this sector of 19% due to lack of its personnel’s expertise and general
experience. The organization currently holds a “Large B” PCAB Registration Particular for
Buildings and Industrial Plants, which means it can participate in the largest vertical works
projects. Product development (specifically project and service development) is the most logical
67
strategy to be applied, with a focus on organizational development to equip BSPCI’s key
personnel with the tools and knowledge to maintain the same operational efficiency with vertical
project execution.
STARS
Horizontal Works projects have been the primary beneficiary of the highest government
allocation for infrastructure development with Php 170.4B or 62% of the total Php 273.9B
budget for DPWH for 2015. BSPCI’s good working relationship with the department resulted in
horizontal projects awarded amounting to 52% of the organizations 2014 revenue. And with the
department projecting to budget up to Php 400B for 2016, it’s a clear strategy to pursue
aggressive Market Penetration by participating in as many project biddings as possible, taking
advantage of the organizations competitive pricing and wide area of coverage. Alternative
strategies can be pursued in horizontal integration in the form of Joint Ventures with other
construction firms rather than acquisition with an eye of keeping a strong cash flow, especially
given the organization’s current high financial leverage.
CASH COWS
BSPCI was able to consistently increase its overall market share before attaining its “AAA”
rating by participating as subcontractor then eventually general contractor with land and site
development projects bidded out by notable private clients such as Empire East Holdings, Antel
Holdings, Landco Development Corporation and Greenfield Development Corporation. The
organization has been able to maintain a respectable market share of 29% and while the real
estate development market is forecasted to grow at least through 2016, the competition is more
fierce compared to government bidding as technical qualifications and experience are not as
stingy. Product Development in terms of improving equipment management will further
augment the organization’s already competitive pricing in order to maintain its current market
share at least for the short term.
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7.6 SUMARY OF STRATEGIES
SPACE IE GRAND BCG TOTAL

STRATEGY OPTIONS
Forward Integration x x 2
Backward Integration x x 2
Horizontal Integration x x 2
Market Development x x x 3
Market Penetration x x x x 4
Product Development x x x x 4
Related Diversification x x x 3
Unrelated Diversification x 1
Retrenchment 0
Divestiture 0
Liquidation x 1
Market Penetration
The suggested market penetration strategy will involve a more aggressive pursuit and
participation of public and private bidding for various infrastructure projects, taking advantage of
the organization’s competitive advantages in pricing and wide area of coverage. The strategy
involves increasing the workforce of the Business Development department with technically
competent personnel with prior experience in the construction industry. It also requires
increasing the workforce of the Technical Services (Engineering) Department to adequately
handle the additional load with respect to estimating and costing formal bid price proposals. The
target is to double the average participation in project bidding.
Product Development
Since BSPCI is a construction services firm, the strategic focus on Product Development is an
internal effort to introduce new systems or improve current processes to achieve three objectives:
fiscal strength and cost discipline, efficient asset (equipment) utilization, and promoting
organizational growth. The objective is to implement a more proactive and efficient Equipment
Management system that will promote maximum equipment efficiency, one of the organizations
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weaknesses, which will then drive down cost of operating activities, and to develop technically
competent and highly motivated personnel particularly from junior management to rank-and-file,
which is another weakness in the organization.
Related Diversification
In an effort to expand BSCPCI’s core competence from just horizontal works, which will
augment the previous strategy of Market Penetration, this strategy involves developing a new
project works process specifically for vertical construction, which is adaptable to incorporate
technological and ecological advancements in anticipation for future compliance. This strategy
will also require organizational development of existing Project Managers to improve their
competency levels with respect to vertical construction. This strategy also suggests creating an
R&D segment under the Engineering Department that will take into consideration new
innovations that can further improve the value of construction services currently being provided.
7.7 QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
The Quantitative Strategic Planning Matrix is a tool to determine the relative attractiveness of
feasible alternative actions. Based from the summary of strategies, market penetration, product
(service) development, horizontal integration and related diversification are strategies to
consider.
70
QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
Market Penetration Product Development Related Diversification
KEY FACTORS
WEIGHT AS TAS AS TAS AS TAS
Opportunities
Projected GDP of more than 6% 5% 4 0.2 2 0.1 3 0.15
Increased government budget for infrastructure
projects for 2015 10% 4 0.4 2 0.2 3 0.3
Steady increase in private infrastructure projects 12.5% 4 0.5 2 0.25 3 0.375
Emergence of Public-Private-Partnership Program 10% 3 0.3 2 0.2 1 0.1
Continuous Growth in the BPO Sector 5% 4 0.2 2 0.1 3 0.15
Effect of ASEAN Integration 10% 3 0.3 2 0.2 4 0.4
Effect of Incoming DPWH Secretary 2.5% 3 0.075 1 0.025 2 0.05
Social Re-development of Metro Manila 5% 2 0.1 3 0.15 1 0.05
Housing Demand 10% 3 0.3 1 0.1 2 0.2
Reconstruction Efforts due to recent calamities 5% 3 0.15 1 0.05 2 0.1
Technological/Ecological Advancements 10% 1 0.1 3 0.3 2 0.2
Threats:
Lack of Qualified Personnel 5% 0 0 2 0.1 1 0.05
Strong Rivalry of competition 10% 1 0.1 3 0.3 2 0.2
Strengths:
Operational Execution/Project Management 15% 1 0.15 2 0.3 3 0.45
Competitive Pricing 10% 4 0.4 2 0.2 3 0.3
Wide Area of Coverage 5% 4 0.2 2 0.1 3 0.15
Good Quality 15% 3 0.45 2 0.3 1 0.15
Strong Management 10% 3 0.3 1 0.1 2 0.2
Weaknesses: 0 0 0
Poor Equipment Management 10% 1 0.1 3 0.3 2 0.2
High Leverage 15% 0 0 2 0.3 1 0.15
Lack of Supply Chain Management 5% 1 0.05 3 0.15 2 0.1
High Employee Turnover 5% 2 0.1 3 0.15 1 0.05
Lack of Innovation/R&D 5% 1 0.05 3 0.15 2 0.1
Lack of Marketing/Promotional Campaign 5% 4 0.2 3 0.15 2 0.1
Total Weight 100%
SUM TOTAL ATTRACTIVENESS SCORE 4.725 4.275 4.275
On Opportunities:
Market penetration is effective when the market shares of major competitors are declining while
total industry sales have been increasing.33 Thus, market penetration is highly applicable for the
opportunities of the increase in infrastructure projects both public (due to higher allocation of
budget for infrastructure) and private (due to steady economic growth projections and continuous
__________
33 Strategic Management 14th Edition (David)
71
growth of BPO industry). This strategy is also applicable to the increased focus/funding on
reconstruction efforts due to recent calamities as this market is relatively new with no established
players yet.
Product (service) development is viewed as most effective for the emergence of PPP and the
upcoming ASEAN integration. The PPP framework is most beneficial to organizations that have
fiscal strength and efficient project execution, both of which can be improved by internal efforts
to develop more effective processes with technically proficient and experienced personnel, as
well as sound financial management.
Diversification, particularly a focus on developing more expertise and experience in Vertical

Works, will be able to fully take advantage of the consistent demand for housing. In addition,
the opportunities brought about by the BPO industry and reconstruction efforts can also be taken
advantaged of since construction efforts are mostly vertical works in nature.
On Threats:
Product development is the most suited strategy to avoid the threats brought about by
technological and ecological advancements. With a better processes and a more competent
organization, particularly in project management, BSPCI can be more adaptable to future
standards and regulations brought about by these advancements. Having a more adaptable
system in project works with personnel equipped with the technical experience and expertise will
allow the organization to seamlessly incorporate and even take advantage of innovations in
major construction supplies and project execution that would make it more competitive moving
forward.
Weaker housing prices and intensive competitive rivalry can be best responded by market
penetration. BSPCI already has a competitive pricing edge and can reinforce this by being more
aware and then aggressively pursuing infrastructure projects up for bidding. By doing so, the
organization can promote its reputation as “bringing more value for your peso” to a broader
market.
72
On Strengths:
As mentioned previously, market penetration is best suited to take advantage of BSPCI’s

competitive pricing. In addition, with the increasing visibility of the construction industry as one
of the primary drivers of the Philippine economy, promoting a high quality standard as one the
organization’s key attributes through this strategy will also be beneficial. Having a wide area of
coverage will also augment market penetration efforts as the geographical limitations are less
pronounced with BSPCI compared to its competitors.
Diversification is best suited to take advantage of BSPCI’s Project Execution since the
organization’s efficient processes in project management will allow it to adequately handle the
risks involved in being more exposed to non-horizontal works. This strategy can also utilize the
BSPCI’s pricing and wide area advantages by presenting more project opportunities the
organization can competitively be involved with.
While Product Development requires a need to strengthen the whole systems and organization
from top to bottom in order to be more adaptable and build new core competences, the strong
management team will allow the organization to maintain its growth while administering
organizational and systems change from within.
On Weaknesses:
Most of BSPCI’s weaknesses are based on the need to improve the current systems and
organizational culture… better systems + better people = improved organization. Currently,
BSPCI’s ISO Certification only involves Construction Works and not Equipment Management
Group, which explains the efficiency of project works and a strong management team, but also
the need to improve and develop a more comprehensive process that will enable the most
efficient equipment utilization possible. Also, having a better organizational development
initiative will allow BSPCI to not only retain more of its junior personnel but be able to instil a
renewed sense of ownership and entitlement that will allow the organization to be ready to
implement the envisioned growth plan. A focused effort in promoting organizational growth by
developing technically competent and highly motivated personnel from the bottom up will
ensure the sustainability of BSPCI’s growth in order to achieve its vision.
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VIII. STRATEGIC OBJECTIVES AND RECOMMENDED STRATEGIES
8.1 STRATEGIC OBJECTIVES
The strategic short to mid-term objective of BSPCI can be adapted from its current vision
statement, which is to be the one of the leading construction firms in 2020 – Top 20 in 2020.
From the market analysis, there is a considerable gap between the top 10 construction firms and
the other large scale players (11 to 50). The three competing companies identified (JE Manalo,
Metro Stonerich and CM Pancho) have competencies in different segments of the market.
JEMCO has the most similar competencies, which is horizontal works but is more focused in site
development projects such as Ports and Harbor Construction and Bridge and Road constriction.
Metro Stonerich’s competencies is with Vertical Works, focused in various mid to high rise
buildings, factories and other vertical structures. CM Pancho’s competencies are with water line
and irrigation systems but have significant experience in road and bridge construction as well.
As mentioned, the large disparity between the market leaders and other large scale players makes
it unlikely for players like BSPCI to aim for the market leader position within a three year
horizon. However, given that the market followers identified have almost identical position
relative to total market share, BSPCI can best succeed in being a significant player among the
other large scale players. Aiming to fulfil this objective is both a challenging and rewarding goal
as having a market share above 1.0% will result in revenues above Php 3B or a 91% revenue
growth over a 3-5 year period. This will also establish BSPCI as among the top 15 projected
construction companies, surpassing the current vision established.
8.2 RECOMMENDED BUSINESS STRATEGIES
Market Penetration Strategies
BSPCI shall use Integrated Marketing Communication (IMC) to build company awareness. IMC
is a marketing communication plan that combines a variety of communications discipline to
provide clarity, consistency and maximum impact through seamless integration of discrete
messages build brand/company awareness. A mix of market communication modes will be used.
Industry is B2B-oriented so typical product promotion such as radio/television advertising is not

particularly applicable. B2B marketing is “about meeting the needs of other businesses, though
74
ultimately the demand for the products made by these businesses is likely to be driven by
consumers”34. This simply means that business-to-business buyers are more demanding. These
customers have a responsibility to make the right decision when purchasing on behalf of their
companies, therefore they take less risks, have the expertise to recognize a bad offering and are
used to getting what they want. However, B2B buyers are more predictable than their consumer
counterparts. This means that good quality market intelligence and close attention to target
markets’ particular needs will be beneficial for the company and would put the company in a
strong marketing position.
Development of quick-reference company brochure, which is customized depending on

audience, is important. This marketing collateral should immediately focus on the customer
value for money that BSPCI is known for and should have iterations depending whether the
target audience is from procurement, design or engineering background. The brochure should be
concise enough to drive home the Value-Add proposition without losing the interest of the
audience. Once the attention has been achieved, the potential customer would then ask for a
more detailed company profile.
The existing company profile should be improved citing the following major sections: Company
Introduction and Mission/Vision Statement, General Information (it is important to highlight the
major classifications the company qualifies on) and Organizational Chart, Milestone Projects and
List of Clientele, which should be arranged according to revenue, not chronologically, and
finally the financial “highlights”, specifically Balance Sheet, Income Statement and Cashflow
statements only.
The company website should be a mirror-image of the company profile at the very least and
needs to be updated quarterly to keep the audience appraised on the recent project
accomplishments with their corresponding revenue. The website’s search ability in terms of
keywords such as “construction company”, “triple-A contractor”, “accredited construction firms”
and “recommended contractors” have to be established to improve the visibility of the company.
__________
34 http://www.b2binternational.com
75
Market Penetration efforts should be made in identifying key growth areas identified in the EFE,
like NGO’s actively participating in short and long term reconstruction efforts for example. The
Business Development Department should have key account representatives for the existing
client base both with key developers and contractors in private sector and Department agencies
such as DPWH, NHA, DOTC, NIA, etc.in order to improve client relations, thus resulting into
referrals and recommendations to other potential customers.
The construction industry is not a large community, especially on a large scale level. Major
trade forums, such as Philconstruct, developer and designer seminars and contractor/developer
conferences such as the PCA monthly contractor’s conference can easily be identified. BSPCI
should increase participation and allocate funds for sponsorship, which in turn will provide a
platform for the company to showcase its core competencies and strengths to amplify its value-
add proposition.
The proposed strategy will require highly qualified technical sales team, with both experience in
the construction industry and B2B marketing to ensure relationship-building particularly with
key customers. Continuous exposure to trainings, workshops, and seminars for the business’
employees will be incorporated as part of the company’s existing Training Needs Analysis and
Annual Training Program in order equip the team with the necessary technical competency and
customer relation skills needed in this environment.
Market Penetration Strategy Map:
Person/ KPI
Specific Strategic Time Budget
Promotion Department (Expected
Objectives Activities Frame Allocation
Involved Outcome)
20% increase
Marketing Development of Business
Brochure 3 months 15,000/month in company
Communications Company Brouchure Development
revenue
Business 20% increase

Improvement of Company
3 months Development 20,000/month in company
Company Profile Profile
revenue
76
Audio Visual Audio Visual
4 months Development 25,000/quarter in company
Presentation Presentation
revenue
Contractor Business 20% increase

Sponsorship during
and Development 50,000/semi- in company
Contractor/Developer Continuous
Develooper annualy revenue
Forums
Forums

Website Improvement Internet 4 months Development 10,000/annually in company
revenue
Customer Business 20% increase

Relations Market Saturation Visitation Continuous Development 10,000/month in company
Improvement revenue

Continuous visitation
Visitation Ongoing Development 15,000/month in company
with existing clients
revenue
Human 10% increase

Improvement of Resources in company
Organizational
Technical Business 6 months 100,000 expenses =
Development
Development Staff salaries and
benefits
Impact of Market penetration strategy
BSPCI will generate a 20% increase in revenue, and increase its share from Vertical works by
40% by establishing this proposed strategy due to the increased visibility of the organization,
especially with private developments for mid to high rise condominiums and BPO centres and
non-profit organizations focused on socialized housing. The corresponding costs in both
marketing and workforce improvement are geared to intensify the organization’s involvement in
project bidding and promotion of its services to existing and new clients. This workforce
increase will be primarily utilized in business development and technical services as part of its
business development expansion.
77
Recommended Service Development Strategies
Establish Activity-Based Costing for Equipment Management Group (EMG)
BSPCI’s core competence is on civil works, which is equipment-intensive. Having owned 90%
of the equipment being deployed, the company has a competitive advantage as internal rental
rates can pegged at a lower rate compared to companies that rent out equipment externally.
However, the company currently does not have an equipment projection as part of the annual
budget. Equipment budget normally gets derived from historical data (costs incurred from the
previous year + fixed percentage). While the equipment budget allocation is based on actual
costs from the previous year, it is not an accurate projection on the actual costs that may incur
during the current year. Project management is monitored on an accomplishment vs budget
approach so Project managers get too consumed in hitting projected revenue targets per
accomplishment report that proper allocation of resources and cost discipline are getting
overlooked. Having a lack of a working budget, particularly in equipment prevents such
discipline to be observed.
Activity based costing (ABC) assigns equipment overhead costs to products in a more logical
manner than the traditional approach of simply allocating costs on the basis of machine hours.
ABC first “assigns costs to the activities that are the real cause of the overhead, then assigns the
cost of those activities only to the product/service that are actually demanding the activities,”35 in
BSPCI’s case, all heavy equipment-related budgeting would be on the basis of per-project level
rather than getting the total overhead costs based on historical data.
__________
35 Garrison, Noreen, Brewer: Managerial Accounting, 14th Edition
78
COST ELEMENTS FLEXIBLE BUDGET ORIGINAL BUDGET*
VARIABLE FIXED COST ITEM
PHP 2M/mo Repair/Maintenance 24,000,000 29,116,751

PHP 41.014/liter DM: Fuel 82,027,986 75,967,200
PHP 101/liter DM: Oil and Lubricants 4,557,110 6,151,900
PHP 52/hour DL: Equipment Operators 9,765,236 12,215,463
PHP 45/hour DL: Truck Drivers 8,450,685 10,342,534
PHP 43/hour DL: Maintenance 8,075,099 10,895,426
11,272,113 Indirect Labor 11,272,113 11,272,113
60,096,963 Derpiciation 60,096,963 60,096,963
2,374,201 Insurance 2,374,201 2,374,201
8,294,866 Others 8,294,866 8,294,866
TOTAL 218,914,259 226,727,417

* Original 2015 budget is based on actual 2014 expense + fixed percentage
Impact
Having a better understanding of equipment cost derivation and proper budgeting based on
activity costing would lead to better budget allocation for equipment utilization. And since the
budgets would be monitored on a project-level basis, this initiative will demand better cost
discipline and monitoring from the Project Operations and Technical Services Group. The
resulting effect could decrease total operational costs by 5-10%.
Organizational Development through Employee Motivation/Ownership
It should be considered that management understands that employee performance is tied directly
to how vested they feel to the company they work for. A profit-sharing program for every
completed project that generated income can be a powerful incentive for employees to work
harder for the company and gain a sense of satisfaction from knowing that not only will they get
a cut of the profits, but also instil a sense of ownership that their performance is tied to the
success of the company. According to experts in human resources organizations focused on
employee benefits, the objective of a profit sharing plan "is to foster employee identification with
the organization's success."36 Moreover, the added productivity may increase the overall
financial performance of the company.
__________
36 http://www.worldatwork.org
79
The preferred choice is a cash profit sharing plan, wherein an employee's predetermined share of
the profits is paid directly in cash or check, and those bonuses are taxed as a part of an
employee's overall wages. Top Management will have a lot more leeway to establish the rules
for their program and to determine who's eligible and how much they are paid out of the profits.
This plan also typically appeals to a younger-skewing workforce, most likely from rank-and-file
to junior management levels, and thus would somehow address the glaring concern of High
Turnover rate within the company.
While the immediate or long-term impact of this strategy could not be quantified in terms of
revenue, income, market share or other growth-level indicators, the true value of this initiative is
not only to encourage employees to remain in the company, but to promote motivation and
empowerment within each individual that BSPCI promotes their best interests and they are a key
ingredient to the company’s success moving forward.
8.3 OTHER RECOMMENDED INTUITIVE STRATEGIES
Horizontal Integration
BSPCI’s current core competence is on Horizontal Works projects, among of which include
roads, highways, bridges, land and site development, irrigation, and flood control and water-line
projects. The objective is to take advantage of the organization’s civil work-centric operations
group and extensive equipment lineup to gain a competitive advantage in pricing and overall
execution.
Unfortunately, the organization has a less-than-stellar achievement in vertical-works such as

Buildings, Warehouse Facilities, or any works that are more labor and material intensive.
Moreover, most of BSPCI’s key personnel, especially on the operations group are from the “old-
school” way of executing construction works and have a disdain to new methods and
technologies that other competitors may be more open to invest time and resources with. The
sentiment of “re-inventing the wheel” is not being received very well since most of these people
have been used to performing things the same way for such a long time (see Internal Analysis).
80
A viable strategy to both take advantage of the growing opportunity in technological
advancements, especially in the pre-fabricated material market, and to strengthen a glaring
weakness within the organization of BSP and Company, is to adapt Horizontal Integration with
current pre-fabricated concrete suppliers/contractors. This will enable the organization to
diversify its services, gain additional market share as well as synergize with the current
technological and manufacturing expertise of the pre-fabricated concrete supplier/contractor.
An example is EASYHOMES, INC. EHI offers innovative alternative building systems that aim
to create more value for clients, through innovation, process efficiency and product
improvements. “To date, EHI has 18 registered patents with the Intellectual Property Office
(IPO). Its Primary Line of Business is the construction and manufacturing of prefabricated
concrete structures, with a plant facility of 10,000 sqm manufacturing facility in Bamban, Tarlac
and a 1,000 sqm manufacturing facility in Talisay, Cebu –Q3 2014 - these amounts to 10,000
linear meters standard fence manufactured per month.”37 From the start of their official sales
operations in early 2010, EHI has completed 75km of fencing works and established business
relationships with prominent real estate developers and reputable construction firms.
With competitive pricing and more efficient installation that provides significant cost reductions
to the clients, EHI’s pre-fabricated concrete solutions are becoming the more preferred and
viable alternative to CHB.
Impact:
The Horizontal Integration Strategy is to establish EasyHomes, Inc. as an exclusive pre-

fabricated supplier and R&D arm of BSP & Company Inc. BSPCI will now have the ability to
extend its traditional strengths from its core competencies into Vertical Works, allowing the
organization to be further aggressive in this market and take advantage of the growing BPO
Industry as well as participate in socialized housing efforts not only for government agencies but
NGO’s for disaster-relief and relocation efforts.
__________
37 http://www.easyhomes.ph
81
Finance Strategies
Seeking additional cashflow from investing activities – creating an IPO.
This will increase the company's capitalization in anticipation for the expected increase in
awarded projects while reducing the dependency for short term debt. Though not specifically tied
to any strategy, capital raising activities is an integral part to implement changes in the
organization. A major competitive disadvantage of BSPCI currently is its highly leveraged
financial situation compared to its competitors. The company’s dependence in short to medium
term debt to finance long term investments, though not having an adverse effect, has hindered its
ability to support and finance large scale projects, especially under the PPP-framework. Doing an
IPO will raise equity to fund its capital intensive market penetration strategies. This will also
align its debt to assets ratio with the industry. A dividend policy of 50M pesos annually will be
paid starting 2017.
Equity Impact of Strategy:
The strategy will provide additional 140M in equity to the company on top of its 400M equity
base. It was assumed to calculate for the paid in capital and capital stock that the selling price is
at P2 for a P1 par value.
Capital Stock: Actual 2014 Projected 2015 Projected 2016 Projected 2017 Projected 2018
Beginning Balance 90 90 90 190 190
Issuance of Shares - - 100 - -
Ending Balance 90 90 190 190 190
Additional Paid in
10 10 210 210 210
Capital
Cumulative earnings 232.7 322.2 156.9 182.4 232.7
Dividends -50 -50
Cumulative earnings
232.7 322.2 156.9 132.4 182.7
ending balance
Total equity 322.7 412.2 556.9 532.4 582.7
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8.4 FINANCIAL PROJECTIONS
Basis and Assumptions
2014 Financial Statements are unaudited given the timing of this paper in relation to the
availability of 2014 Audited Financial Statements. 2015 Financial Statements are projected
assuming the firm is status quo on its strategy; strategies recommended will be implemented
starting 2016.
Industry and Revenue Assumptions:
• Market size will grow 10%. This is the projected annual growth rate for the construction
industry for the next 5 years (see EFE).
• Rapid increase in Housing Demand and the continuous growth of the BPO industry (see
EFE) will contribute to a 10% increase in Vertical Works projects for bidding.
• Base figure will be 2014 sales and applying historical Compounded Annual Growth Rate
(CAGR). This assumes that sales will not go down given the improvement in economic
factors and continued industry growth (see EFE).
Expense Assumptions
• Projected Cost of Operations will follow the ratio of 2014 (70%) and includes 2.75%
forecasted inflation rate as of 202038
• Salaries will increase at a rate of 9.75% per annum. This projected increase is based on
the Towers Watson 2013-14 Asia-Pacific Salary Budget Planning Report of 7% plus the
forecasted inflation rate.
• Percentage increase in salary-related accounts such as employee benefits and premiums
(i.e. SSS, Philhealth, Pag-ibig) is at 4% based on historical increase of these items from
2010-2013 (see Appendix).
• Forecasted inflation rate is considered in projecting future fixed costs.
• Other expenses will remain constant.
• Corporate tax rate is at 30% of net income.
__________
38 http://www.tradingeconomics.com/philippines/forecast
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PROJECTED FINANCIALS (HOLD AND MAINTAIN):
The following income statement projections are given below based on the assumptions given and
if the organization were to remain status quo on its strategy implementation:
INCOME STATEMENT 2016 Projected 2017 Projected 2018 Projected 2019 Projected
Revenue 1,690,942,765.16 1,741,671,048.12 1,793,921,179.56 1,847,738,814.95
Operation (project) Costs 1,212,735,696.46 1,249,117,767.35 1,286,591,300.37 1,325,189,039.39
Gross Income 478,207,068.70 492,553,280.76 507,329,879.19 522,549,775.56
Operating Expenses
Salaries and Wages 57,034,151.14 62,594,980.88 68,697,991.52 75,396,045.69
Other Employee Benefits 12,384,970.65 12,880,369.47 13,395,584.25 13,931,407.62
Other Fixed Costs 33,934,274.13 34,867,466.66 35,826,322.00 36,811,545.85
Other Expenses 95,091,633.14 95,091,633.14 95,091,633.14 95,091,633.14
Total Operating Expenses 198,445,029.06 205,434,450.16 213,011,530.91 221,230,632.30
Net Income Before Tax 279,762,039.64 287,118,830.60 294,318,348.28 301,319,143.26
Income Tax 83,928,611.89 86,135,649.18 88,295,504.48 90,395,742.98
TOTAL COMPREHENSIVE INCOME 195,833,427.75 200,983,181.42 206,022,843.80 210,923,400.28
INCOME EFFECTS FROM MARKET PENETRATION AND DIVERSIFICATION

STRATEGIES
• BSPCI will generate a 20% increase in revenue by increasing the bandwidth of its
Business Development Department, thereby doubling the participation and public and
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private infrastructure bidding and by establishing an Integrated Marketing
Communications (IMC) campaign that will increase the visibility of the organization,
especially with private developments for mid to high rise condominiums and BPO centres
and non-profit organizations focused on socialized housing.
• Operation costs (assumed without service development) will increase relative to revenue
growth.
Income Targets from Market Penetration and Diversification Strategies
INCOME STATEMENT 2014 Actual 2015 Projected 2016 Projected 2017 Projected
Revenue 1,593,875,733.02 1,641,692,005.01 2,019,281,166.16 2,483,715,834.38
Gross Income 480,729,415.84 464,278,707.48 289,171,159.40 355,680,526.06
Revenue 1,593,875,733.02 3,054,970,476.29 3,757,613,685.83 4,621,864,833.58
Gross Income 480,729,415.84 437,487,047.06 538,109,067.88 661,874,153.49
EFFECTS OF ORGANIZATIONAL AND SERVICE DEVELOPMENT STRATEGIES:
• Operation Costs will reduce by 10% over the projected period due to improvements in
budgeting for Equipment Management and Preventive Maintenance Systems.
Income Targets from Market Penetration, Diversification and Service Development

Strategies:
Revenue 1,593,875,733.02 1,641,692,005.01 2,019,281,166.16 2,483,715,834.38
Gross Income 480,729,415.84 464,278,707.48 430,116,984.80 529,043,891.30
Revenue 1,593,875,733.02 3,054,970,476.29 3,757,613,685.83 4,621,864,833.58
Gross Income 480,729,415.84 650,723,986.30 800,390,503.15 984,480,318.88
85
Expenses Incurred from Strategies
• Marketing and advertising will increase to Php 500K in 2015 with an annual increase of
10%. This is to fund market development and penetration strategies to intensify the
organization’s involvement in project bidding and promotion of its services to existing
and new clients.
• Workforce growth from 2016 to 2020 in anticipation of projected revenue increase will
amount to a 10% annual increase in total salaries. This increase in employees is relative
to the anticipated increase in awarded projects. In addition, additional workforce will be
required for business development and technical services as part of its business
development expansion.
• Profit Sharing scheme will result in 3% increase in Other Employee Benefits relative to
projected gross income.
• Projected Annual Budget for Training and Development increased to 500K annual
starting 2016. Budget increase will include allocation for Organizational Change
Management consultant(s).
Operating Expenses Incurred:
Operating Expenses
Other Expenses 95,091,633.14 95,091,633.14 96,091,633.14 96,141,633.14
Operating Expenses
Other Expenses 95,091,633.14 96,191,633.14 96,241,633.14 96,291,633.14
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BALANCE SHEET ASSUMPTIONS:
• Accounts Receivable will grow in proportion to revenue. Accounts Receivable turnover

ratio of 2:1 is applied to projected revenue39
• Inventories were projected using Inventory Turnover ratio of 26:1 applied to projected
project costs40
• Other current assets, including cash, are projected using vertical analysis percentage
relative to projected revenue.
• Total investment in construction equipment and other service and support equipment will
increase by 15% to support the projected revenue increase from awarded projects.
• Property and Equipment are net of Accumulated Depreciation
• Current Liabilities are projected using vertical analysis percentage relative to projected
operating cost.
Income Tax payable is projected using historical rate against projected Income Tax.
• Subscribed capital stock balance of Php 90M is maintained until 2020.
• Financing Activities (debt, under Trade Payables) is the balancing figure to match assets
with liabilities plus equity.
Changes in Equity due to Financing Strategy
• IPO will proceed in 2016 and will generate Php 140M in funds. It was assumed to
calculate for the Paid in capital and capital stock that the selling price is at P2 for a P1 par
value.
• To compensate shareholders, a dividend policy of 50M per year will be implemented
starting 2017.
87
PROJECTED BALANCE SHEET:
BALANCE SHEET 2015 PROJECTED 2016 PROJECTED 2017 PROJECTED

ASSETS
CURRENT ASSETS
CASH 377,589,161.15 464,434,668.22 571,254,641.91
ACCOUNTS RECEIVABLE 820,846,002.51 1,009,640,583.08 1,241,857,917.19
ADVANCES 213,419,960.65 262,506,551.60 322,883,058.47
OTHER CURRENT ASSETS 44,325,684.14 54,520,591.49 67,060,327.53
INVENTORIES 45,285,126.83 61,121,699.28 75,179,690.12
TOTAL CURRENT ASSETS 1,501,465,935.27 1,852,224,093.67 2,278,235,635.21
NON-CURRENT ASSETS
NET PROPERTY & EQUIPMENT 189,543,372.04 217,974,877.84 250,671,109.52
TOTAL ASSETS 1,691,009,307.31 2,070,198,971.51 2,528,906,744.73
CURRENT LIABILITIES
TRADE PAYABLES AND
OTHER CURRENT LIABILITIES 588,706,648.77 674,582,090.68 857,335,971.54
ACCOUNTS PAYABLE - OTHER 91,487,778.57 71,304,056.49 94,147,552.67
INCOME TAX PAYABLE 8,168,551.66 6,366,433.62 8,406,031.49
TOTAL CURRENT LIABILITIES 688,362,979.00 752,252,580.79 959,889,555.69
NON-CURRENT LIABILITIES
LOANS PAYABLE 45,643,066.69 131,316,684.43 151,313,756.42
ACCRUED EXPENSES 84,550,465.37 103,509,948.58 126,445,337.24
130,193,532.06 234,826,633.01 277,759,093.66
TOTAL LIABILITIES 818,556,511.05 987,079,213.80 1,237,648,649.35
STOCKHOLDER'S EQUITY
SUBSCRIBED CAPITAL STOCK 90,000,000.00 210,000,000.00 210,000,000.00
NET INCOME 190,599,538.69 148,550,117.69 196,140,734.72
RETAINED EARNINGS 591,853,257.56 724,569,640.03 885,117,360.66
872,452,796.25 1,083,119,757.72 1,291,258,095.38
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY 1,691,009,307.31 2,070,198,971.51 2,528,906,744.73
*Projected Balance Sheet for 2015 assumes no new strategic intervention
88
BALANCE SHEET 2018 PROJECTED 2019 PROJECTED 2020 PROJECTED
ASSETS
CURRENT ASSETS
CASH 702,643,209.55 864,251,147.74 1,063,028,911.72
ACCOUNTS RECEIVABLE 1,527,485,238.14 1,878,806,842.92 2,310,932,416.79
ADVANCES 397,146,161.92 488,489,779.16 600,842,428.36
OTHER CURRENT ASSETS 82,484,202.86 101,455,569.52 124,790,350.51
INVENTORIES 92,471,018.85 113,739,353.18 139,899,404.41
TOTAL CURRENT ASSETS 2,802,229,831.31 3,446,742,692.52 4,239,493,511.79
NON-CURRENT ASSETS
NET PROPERTY & EQUIPMENT 288,271,775.95 331,512,542.34 381,239,423.69
TOTAL ASSETS 3,090,501,607.26 3,778,255,234.85 4,620,732,935.48
CURRENT LIABILITIES
TRADE PAYABLES AND
OTHER CURRENT LIABILITIES 1,082,123,244.99 1,358,611,591.34 1,698,692,257.35
ACCOUNTS PAYABLE - OTHER 122,169,841.41 156,570,923.41 198,830,726.45
INCOME TAX PAYABLE 10,908,021.55 13,979,546.73 17,752,743.43
TOTAL CURRENT LIABILITIES 1,215,201,107.96 1,529,162,061.48 1,915,275,727.23
NON-CURRENT LIABILITIES
LOANS PAYABLE 174,579,353.46 201,601,655.67 232,933,353.56
ACCRUED EXPENSES 154,525,080.36 188,912,761.74 231,036,646.77
329,104,433.82 390,514,417.41 463,970,000.33
TOTAL LIABILITIES 1,544,305,541.78 1,919,676,478.89 2,379,245,727.56
STOCKHOLDER'S EQUITY
SUBSCRIBED CAPITAL STOCK 210,000,000.00 210,000,000.00 210,000,000.00
NET INCOME 254,520,502.93 326,189,423.76 414,230,680.10
RETAINED EARNINGS 1,081,675,562.54 1,322,389,332.20 1,617,256,527.42
1,546,196,065.48 1,858,578,755.96 2,241,487,207.52
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY 3,090,501,607.26 3,778,255,234.85 4,620,732,935.08
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PROJECTED FINANCIAL RATIOS
FINANCIAL 2014 2015 2016 2017 2018 2019 2020

RATIOS Actual Projected Projected Projected Projected Projected Projected
Profitability
Return on
10.93% 16.10% 10.25% 11.08% 11.77% 12.33% 12.81%
Assets (ROA)
Return on
22.29% 31.21% 19.59% 21.70% 23.52% 25.07% 26.40%
Equity (ROE)
Return on
9% 17% 11% 11% 12% 12% 13%
Sales (ROS)
Gross Profit
19% 28% 21% 21% 21% 21% 21%
Margin
Liquidity
Current Ratio 1.85 2.18 2.46 2.37 2.31 2.25 2.21
Quick ratio 1.55 1.74 1.96 1.89 1.84 1.79 1.76
Leverage
Debt to total
0.73 0.48 0.48 0.49 0.50 0.51 0.51
assets
Debt to equity 2.74 0.94 0.91 0.96 1.00 1.03 1.06
Efficiency
Accounts
Receivable 2x 2x 2x 2x 2x 2x 2x
Turnover
Current asset
1x 1x 1x 1x 1x 1x 1x
turnover
Fixed-asset
10.48 8.66 9.26 9.91 10.60 11.33 12.12
turnover
Asset Turnover 0.88 0.97 0.98 0.98 0.99 0.99 1.00
Through the market penetration and diversification strategies, sales will grow consistently by
23% over the forecast period. The revenues gained from these strategies will offset the expenses
incurred to strengthen the Business Development Department and launch an integrated
90
marketing communications program over the same period. Though the Net income is projected
to decrease by 22% in 2016 due to the additional expenses, the income in 2017 is projected to
surpass 2015 totals by 5% eventually leading to an average of 27% over the forecast period.
Solvency of the company will drastically improve to a healthier 50% debt to asset ratio. Proceeds
of the planned IPO will be used to reduce the loans of the company. This will be a prudent
measure given the adverse economic impact due to the political uncertainty after 2016.
Balance sheet management can also be more prudent by having a more aggressive collection
policy, which can be aided by having a larger workforce in the Business Development Unit as
part of the Market Penetration strategy. It is also advisable to set more favourable rates, stretch
credit terms or even enter into bulk order (lock-in) agreements with current suppliers, especially
for the key materials (i.e. cement, steel, diesel), taking advantage of the consistently sizeable
orders being given by the organization.
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IX. DEPARTMENTAL PROGRAMS
9.1 STRATEGY MAP
A strategy map is a “visual representation of the cause and effect relationship among the
components of an organization’s strategy.”41
Long Term Share Holder Value

Financial
Perspective
Improved Capitalization Growth in Net Income Revenues from New Customers
"to provide value-added construction services to establish lasting relationships to our customers by creating a
successful partnership throughout the construction process, exceeding their expectations and gaining their
trust through exceptional performance"
Customer
Drive competitiveness through aggressive promotion to existing and new markets
Perspective
Operations Mgmt Customer Mgmt Innovation Regulatory
Improve Equipment Increase penetration in Provide alternative Be BERDE-Compliant

Utilization public and private infra construction methods
Internal
Perspective Zero customer complaints Ongoing compliance to
Expand core competencies
regulatory requirements
Penetrate BPO and
Synergize with key Housing Markets
suppliers /subcons
Tap existing clients for
referrals
To establish a competent workforce with solid character and purpose-driven to the mission and
objectives of the organization
Human Capital Information Capital Organizational Capital
Learning and Acquire, retain and Utilization of electronic- Establish competency

Growth develop highly-motivated based Document Control based on customer focus
Perspective employees with character Centre and team-oriented culture
Framework to reward
employees based on
contribution to company's
mission and vision
__________
41 Galbraith, Jay. “Designing Organizations: an executive briefing on strategy, structure and process.” 1st ed. 1995
92
9.2 DEPARTMENTAL ACTIONS AND FUNCTIONAL STRATEGIES
The implementation of the market penetration and development strategies will rely on division
and their functional programs and action plans.
Business Development
Business Development will spearhead all Market Penetration efforts. An Integrated Marketing
Plan will be developed that will emphasize in obtaining market intelligence and close attention to
the clients particular needs and the generation of the corresponding marketing collaterals
(brochures, profile, website, A/V presentation) would put the company in a strong marketing
position. The Department will then focus penetration efforts in key growth areas identified; the
objective being to utilize the company’s wide coverage to make penetration efforts more
efficient. Close coordination between the department representatives from the various satellite
offices and the head office will facilitate the identification and prioritization depending on time,
budgetary and complexity requirements of potential projects to be bid out or negotiated.
The target audience would be new real estate and commercial development players brought
about by the continuing expansion of the BPO industry and the expected influx of foreign
investors brought about by the upcoming ASEAN integration. The communication’s objective is
to promote awareness or the ability to identify BSPCI as a value-oriented firm within the
construction industry. Numerous events, such as Philconstruct, developer and designer seminars
and contractor/developer conferences such as the PCA monthly contractor’s conference can be
utilized as a platform for the company to showcase its core competencies and strengths to
amplify its value-add proposition.
Related diversification from the company’s core competence in Horizontal Works is required to
increase revenue and market share. The department needs to “bridge the gap” between the
technical and operational aspects of potential projects not within the company’s core
competence, therefore giving the opportunity to not only provide a competitive bid proposal but
also to provide operations a clear road map and methodology to execute the project to the
company’s usual efficient levels. The additional experience in learning new methods and
applications will make the organization more competent and adaptable, thus providing more
room for growth.
93
Customer Relations
Business Development, in coordination with the Project Directors and Managers, are responsible
for maintaining zero customer complaints as outlined in the company’s quality policy. The
department will assign key account representatives for the existing client base both with key
developers and contractors in private sector and Department agencies such as DPWH, NHA,
DOTC, NIA, etc.in order to maintain and further improve client relations. The representatives
should have the technical background to properly disseminate information relating to project
accomplishment, construction schedules and other project key performance indicators, as well as
the interpersonal skills to communicate these data with transparency and tact to the respective
owner’s representative and construction management. Not only will this facilitate timely and
efficient collection, it will also result into referrals and recommendations to other potential
customers.
Technical
The Technical Services Department is tasked to maintain the company’s reputation in being
price-competitive and monitor compliance of the Project Operations in relation to the defined
project budget. In addition, the department should also look into ways to expand the company’s
core competence base in efforts to diversify the construction services it currently offers.
The department will develop a research and development arm to look into innovation of the
existing construction methodology by looking into alternatives in key construction materials and
efficiently maintain compliance with regulatory requirements.
Operations
Being the lifeblood of the organization, the Operations Department, will establish an Equipment
Management representative for each key project area (Metro Manila, Southern Luzon, Iloilo,
Cebu and Cagayan De Oro). The representative is tasked with not only preventive and corrective
maintenance of the equipment, but will also monitor and ensure efficient equipment utilization.
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The representative will coordinate with the Technical Services Department to align the most
efficient tasks for each equipment and assign a budget/cost based on the activity and output per
relevant unit measure over the course of the whole project. The objective is to ensure timely
execution in accordance with the company’s quality policy and to efficiently manage utilization
costs by adapting the activity based cost scheme with each equipment’s actual operation.
The Department’s Head Office arm, called the Operations Center (OPS-CEN), will continue to
provide logistical and quality control support in order for on time delivery of key materials and
other project resources. In addition, the department will spearhead the feasibility study of
integrating alternatives to concrete materials through pre-fabricated technology. OPS-CEN will
coordinate with Technical Services regarding the feasibility and possible adaption of these
innovative methods on the existing construction methodologies being applied.
Corporate Affairs/Finance
Finance will spearhead the IPO strategy and will coordinate with the underwriters to raise the
needed capital to fund new projects and lower the existing leverage status. Finance will target
total proceeds of Php200M. If the IPO is well received, the remaining capital requirement can be
sourced via a re-launch of the stocks. If not, the remaining capital raising can be either deferred
until market conditions improve or it can be funded via debt. To compensate its existing and new
stockholders, a dividend policy of 50M annually starting 2017.
Finance will use the proceeds of the IPO not only to fund expansion of the company’s fixed
assets such as heavy equipment in anticipation of the increase in projects but also to pay off its
short term debt. Success in lowering its leverage will be measured by its improving debt to
asset ratio which will move from .73 to .50 by as early as 2016.
Human Resources
Human resources will need to hire and train at least 10 additional personnel to augment the
Business Development and Technical Services for the Market Penetration and R&D efforts. The
95
department will be responsible for properly analyzing the competence and character of potential
hires, as well as implementation of the applicable training based on the derived Annual Training
Program.
HR will also review the performance appraisal system to include customer service to both new
and existing customers as a key performance indicator Business Development. The department
will also provide recommendations to top management in the allotted percentage of each
employee for the Profit Sharing Program and initiate the establishment of an electronic based
Document Control Center to improve handling and maintenance of the necessary forms and
documents required for ISO-compliance.
9.3 IMPLEMENTATION SCHEDULE
Schedule of Implementation
DEPTARTMENT
STRATEGIC PLANS 2015 2016 Status
IN-CHARGE
July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June
Ongoing (continuous)
Integrated Marketing Business
compliance starting
Communications campaign Development
Q4 2015
Business Revised Methodology

Diversification Strategies Development / to be presented during
Technical Services year-end meeting
Allocation of
Business
Establishment of Key Account additional Manpower
Development /
Representatives to be included in 2016
Human Resources
budget
Integration to be
Horizontal Integration of Concrete Technical Services
implemented by Q2
Supplier / Operations
2016
Revised Equipment
Implementation of Activity-Based
Operations / Budget for
Budgeting for Equipment
Technical Services implementation Q4
Utilization
2015
Finance / Top IPO to be publicly

Issuance of IPO
Managemnt released by Jan 2016
Electronic Document Control For ongoing

Human Resources
Center (e-DCC) compliance 2016
Approved sharing
Human Resources scheme to be
Profit-Sharing Program
/ Top Management implemented in 2016
budget
96
X. STRATEGY EVALUATION AND PERORMANCE METRICS
10.1 BALANCED SCORECARD
Balanced scorecard is an important strategy evaluation tool that allows firms to evaluate strategy
from a financial, customer knowledge, internal business processes and learning and growth.
Financial Perspective
Objectives Goals – Dashboard Responsibilities DACI
Meets expectation D – Driver
Alert A – Accountable
Below Expectation C – Consulted
I – Informed
Growth in Net Income (vs 2016: D – Operations
previous year) ● ≥ 10% A – Top Management
● 5-10% C – Corporate Affairs /
● <5% Technical Services
I – Business Development
2017:
● ≥23%
● 10-23%
● <10%
2018:
● ≥29%
● 13-29%
● <13%
Growth in Revenues (vs previous 2016: D – Business Development
year) ● ≥ 10% A – Top Management / Business
● 5-10% Development
● <5% C – Corp. Affairs /
Technical Services
2017: I – Operations
● ≥23%
● 10-23%
● <23%
2018:
● ≥23%
● 10-23%
● <10%
Improved Capitalization Debt to Assets D – Corp. Affairs / Operations
● ≤ 0.50 A – Top Management
● 0.50-0.60 C – Technical Services
● >0.60 I – Business Development
97
Customer Perspective:

I – Informed
Penetration of BPO, Housing and % increase in non-horizontal D – Business Development
other non-Horizontal Markets reveneue A – Business Development
2016: C – Technical Services/
● ≥ 10% Operations
● 5-10% I – Top Management
● <5%
2017:
● ≥ 13%
● 5-13%
● <5%
2018:
● ≥15%
● 5-15%
● <5%
Minimum Customer Complaints % of Customer Complaints D – Operations / Business
2016-2018: Development
● 0% A – Operations / Top
● 1-5% Management
● ≥ 5% C – Top Management
I – Technical Services
Increased Market Share Increase in Market Share D – Business Development
2016: A – Business Development /
● ≥ 1% Top Management
● 0-1% C – Corporate Affairs
● <0% I – Operations /Technical
Services
2017:
● ≥1.5%
● 0-1.5%
● <0%
2018:
● ≥2%
● 0.5-1.5%
● <0.5%
98
Increased New Referrals % of new referrals D – Business Development
2016: A – Business Development /
● ≥ 10% Top Management
● 5-10% C – Operations
● <5% I – Technical Services /
Corporate Affairs
2017:
● ≥12.5%
● 7-12.5%
● <7%
2018:
● ≥15%
● 8-15%
● <8%
Operations/Technical Perspective:

I – Informed
Improved Equipment Utilization % Equipment Utilization D – Operations / Technical
2016: Services
● ≥ 85% A – Operations /Top
● 75-85% Management
● <75% C – Corporate Affairs
I – Business Development
2017:
● ≥90%
● 80-90%
● <100%
2018:
● 100%
● 85-99%
● <85%
Integration of Key Supplier Integration of Supplier D – Operations / Business
Development
● on or before October 2015 A – Top Management
● between October 2015 and C – Technical Services
March 2016 I – Corporate Affairs
● after March 2016
99
Learning and Growth Perspective:

I – Informed
Improve Retention % Turnover Rate D – Human resources
● <15% A – Top Management
● 15-20% C – Corporate Affairs
● >20% I – Operations, Technical
Services, Business Development
Profit Sharing Program Implementation Date D – Human Resources
A – Top Management
● on or before January 2016 C – Corporate Affairs
● between January and June 2016 I – Operations, Technical
● after June 2016 Services, Business Development
E-DCC (Electronic Document Implementation Date D – Human Resources

Control Center) Implementation A – Top Management /
● on or before January 2016 Corporate Affairs
● between January and June 2016 C – Business Development
● after June 2016 I – Operations / Technical
Services
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10.2 CONTIGENCY PLANNING
Downside Potential Events
Key Concerns Action Plans
Economic Downturn after 2016 • Determine impact to industry growth
• Defer IPO to 2017 and re-prioritize new implementations until

2017
Significant decrease in • Determine the key agencies affected by budget decrease and
lessen exposure.
government infrastructure
• Re-allocate resources for BPO and other private markets
spending after 2016
Decline of BPO market • Re-allocate resources for PPP market
IPO will not be well received • Defer second tranche (40% of needed capital) until market
conditions improve or fund via debt
Integration Plans fall through • Enter long-term bulk-order agreements with key construction
suppliers
Upside Potential Events
Key Concerns Action Plans
Revenue from ASEAN integration • Determine countries contributing the most to revenue
higher than expected
• Re-allocate resources to penetrate related overseas markets
New Government fully • Secure Horizontal Integration strategies
implements BERDE-compliance
by 2016 • Place emphasis of BERDE-compliance in IMC efforts
- END OF PAPER –
101
XI. REFERENCES
1. David, Fred. Strategic Management: Concepts and Cases, 14th Edition, 2013
2. Kotler, Philip & Keller, Kevin. Marketing Management, 8th Edition
3. Garrison, Ray, Noreen, Eric & Brewer, Peter. Managerial Accounting, 14th Edition, 2014
4. Galbraith, Jay. “Designing Organizations: an executive briefing on strategy, structure and
process.” 1st ed. 1995
5. Securities and Exchange Commission Audited Financial Statements for BSP &
Company, Inc., JE Manalo Construction Corporation, Metro Stonerich Corporation and
CM Pancho Construction Corporation
6. Ponio, Ben-Azel S., President BSP & Company, Inc. April 2015
7. Ponio, Ben-Azel C. Jr., Vice President for Corporate Affairs, BSP & Company Inc., April
2015
8. Madrasto, Manolito P., Executive Director, Philippine Contractor’s Association, April
2015
9. www.bsp-co.com.ph
10. EMIS Company Intelligence Database
11. www.researchmoz.us
12. www.adb.org
13. www.dpwh.gov.ph
14. www.inquirer.net
15. www.ppp.gov.ph
16. www.deped.gov.ph
17. www.bloomberg.com
18. BSP & Company, Inc. Company Profile
19. www.asean.org
20. www.jica.co.jp
21. www.bworldonline.com
22. www.worldbank.org
23. wwf.panda.org
24. www.jemanalo.com
25. www.metrostonerich.com
102
26. www.cmpancho.com
27. www.b2binternational.com
28. www.worldatwork.org
29. www.easyhomes.ph
30. www.tradingeconomics.com
31. Towers Watson 2013-14 Asia-Pacific Salary Budget Planning Report
32. www.philpad.com
33. www.nwpc.dole.gov.ph
103
XII. APPENDICES:
PPP Pipeline Projects:
STATUS OF PPP PROJECTS (as of June, 2015)

FINALIZATION OF NEDA BOARD
PROJECT COST PROJECT APPROVAL CONTRACT
PROJECTS AGENCY BIDDING STAGE
(PHP) STRUCTURE AWARD
Daang Hari-SLEX Link Road Project 2.01 B DPWH COMPLETED COMPLETED COMPLETED COMPLETED
PPP for School Infrastructure 16.43 B DepEd COMPLETED COMPLETED COMPLETED COMPLETED
Project (PSIP) Phase I
NAIA Expressw ay (Phase II) Project 15.86 B DPWH COMPLETED COMPLETED COMPLETED COMPLETED
PPP for School Infrastructure 3.86 B DepEd COMPLETED COMPLETED COMPLETED COMPLETED
Project (PSIP) Phase II
Modernization of the Philippine 8.69 B DOH COMPLETED COMPLETED COMPLETED COMPLETED
Orthopedic Center
Automatic Fare Collection System 1.72 B DOTC COMPLETED COMPLETED COMPLETED COMPLETED
(AFCS)
Mactan-Cebu International Airport 17.52 B DOTC COMPLETED COMPLETED COMPLETED COMPLETED
Passenger Terminal Building
LRT Line 1 Cavite Extension and 64.9 B DOTC COMPLETED COMPLETED COMPLETED COMPLETED
O&M
Southw est Integrated Transport 2.50 B DOTC COMPLETED COMPLETED COMPLETED COMPLETED
System (ITS) Project
Cavite - Laguna (CALA) Expressw ay 55.51 B DPWH COMPLETED COMPLETED COMPLETED COMPLETED
Integrated Transport System - 4.00 B DOTC COMPLETED COMPLETED FOR BID SUBMISSION
South Terminal Project
Bulacan Bulk Water Supply Project 24.40 B MWSS COMPLETED COMPLETED FOR BID SUBMISSION
Operation & Maintenance of LRT No CAPEX DOTC COMPLETED COMPLETED FOR BID SUBMISSION
Line-2
Laguna Lakeshore Expressw ay 122.80 B DPWH COMPLETED COMPLETED FOR BID SUBMISSION
Dike Project
New Centennial Water Source- FOR REISSUANCE OF
INSTRUCTION TO
Kaliw a Dam Project 18.72 B MWSS COMPLETED COMPLETED
PROSPECTIVE
BIDDERS (ITPB)
BPO Growth Forecast:
104
Reconstruction Assistance on Yolanda (RAY) Estimated Recovery and Reconstruction
Needs*
105
Industry Size:
Peer Analysis - Concentration Analysis
Source: EMIS Company Database

Figures are in: Thousands, PHP
No. Companies/Year 2012 Sales Market Share

1 Metro Pacific Investments Corporation 36,475,000.00 12.67%
2 Makati Development Corporation 17,344,174.97 6.02%
3 DM Consunji Inc 16,512,952.79 5.74%
4 Eei Corporation 13,744,985.00 4.77%
5 Daelim Philippines Inc 8,432,199.48 2.93%
6 Megawide Construction Corporation 8,204,810.00 2.85%
7 Ddt Konstract Inc 7,450,528.16 2.59%
8 Monolith Construction & Development Corporation 5,081,591.79 1.76%
9 Aboitiz Construction Group Inc 4,712,015.79 1.64%
10 Datem Inc 4,206,182.96 1.46%
11 Shimizu Phil Contractors Inc 3,746,267.92 1.30%
12 New San Jose Builders Inc 3,468,080.70 1.20%
13 Hilmarc'S Construction Corporation 3,440,457.25 1.19%
14 Leighton Contractors Philippines Inc 3,039,778.71 1.06%
15 Smcc Philippines Inc 2,979,497.38 1.03%
16 Atlantic Gulf And Pacific Company Of Manila Inc 2,678,884.71 0.93%
17 China International Water And Electric Corporation 2,601,477.75 0.90%
18 Longridge Construction Inc 2,275,352.84 0.79%
19 China Construction And Electric Equipment Philippine Corporation 2,151,251.59 0.75%
20 Sta Clara IntL Corporation (Makati ) 2,102,582.75 0.73%
21 First Balfour Inc 2,059,032.63 0.72%
22 F F Cruz & Co Inc 2,029,368.22 0.70%
23 Toyo Construction Co Ltd. 1,814,772.47 0.63%
24 Cct Constructors Corporation 1,798,252.50 0.62%
25 Irvine Construction Corporation 1,772,392.49 0.62%
26 HRD Singapore Pte Ltd 1,691,399.40 0.59%
27 Asec Development And Construction Corporation 1,605,784.45 0.56%
28 Cavdealcavite Ideal International Construction And Development Corporation 1,430,710.49 0.50%
29 Metro Pacific Tollways Development Corporation 1,425,229.90 0.50%
30 Whiteport Inc 1,408,867.80 0.49%
31 Readycon Trading And Construction Corporation 1,362,505.67 0.47%
32 Taisei Philippine Construction Inc 1,268,321.66 0.44%
33 Ahnex Builders And Ready Mix Corporation 1,247,889.14 0.43%
34 Kajima Philippines Inc 1,235,757.65 0.43%
35 Ulticon Builders Inc 1,227,816.56 0.43%
36 Hr Construction Corporation 1,189,383.13 0.41%
37 Mgs Construction Inc 1,144,029.21 0.40%
38 Ce Construction Corporation 1,130,033.20 0.39%
39 East Asia Utilities Corporation 1,120,235.33 0.39%
40 Je Manalo & Company Inc 1,111,029.01 0.39%
41 Verdantpoint Development Corporation 1,086,535.06 0.38%
42 Will Decena And Associates Inc 1,064,273.96 0.37%
43 JV Angeles Construction Corporation 1,045,973.91 0.36%
44 Primary Structures Corporation 1,029,041.22 0.36%
45 Metro Stonerich Corporation 1,023,401.75 0.36%
46 Bsp & Company Inc. 959,913.53 0.33%
47 Donpin Corporation 951,755.79 0.33%
48 HiTone Construction And Development Corporation 948,626.35 0.33%
49 Sumisetsu Philippines Inc 947,201.12 0.33%
50 Technoserve Construction Company Inc 921,490.37 0.32%
106
51 Ag Araja Construction And Development Corp 888,713.60 0.31%
52 Millennium Erectors Corporation 853,499.42 0.30%
53 Meralco Industrial Engineering Services Corporation 836,712.41 0.29%
54 Mabuhay Conglomerate Asphalt Inc 834,307.69 0.29%
55 Advanced Foundation Construction Systems Corporation 813,296.35 0.28%
56 Cm Pancho Construction Inc 808,898.28 0.28%
57 Longyuan Construction Group Phils Corp 794,868.55 0.28%
58 Socor Construction Corporation 784,328.15 0.27%
59 Marcbilt Construction Inc 759,720.92 0.26%
60 International Solid Waste Integrated Management Specialists Inc 754,912.46 0.26%
61 E E Black Ltd 750,527.10 0.26%
62 Bf Corporation 734,659.72 0.26%
63 Spc Island Power Corporation 731,474.76 0.25%
64 Artbuilders Construction & Management Inc 724,595.28 0.25%
65 Legazpi Premium Development Corp 723,845.69 0.25%
66 Duros Development Corporation 678,084.32 0.24%
67 Geo Transport And Construction Inc 666,038.00 0.23%
68 Wtg Construction & Development Corporation 653,234.49 0.23%
69 Floridablanca Construction And Development Corporation 647,256.30 0.22%
70 Fodcfirst Orient Development & Construction Corp 638,561.61 0.22%
71 Cape East Philippines Inc 629,129.78 0.22%
72 Ragojos Heritage Construction Corporation 618,710.02 0.21%
73 Bauer Foundations Philippines Inc 604,453.60 0.21%
74 RG Simbulan And Partners Corp 603,539.57 0.21%
75 Liberty Telecoms Holding Incorporation 587,544.00 0.20%
76 Am Oreta And Co Inc 583,821.27 0.20%
77 Trans Asia Construction Dev'T Corp 580,048.63 0.20%
78 Hgiii Construction And Development Corporation 564,693.31 0.20%
79 Bf Metal Corporation 542,944.22 0.19%
80 Terp Asia Construction Corporation 542,668.96 0.19%
81 Highlands Prime Inc 538,424.00 0.19%
82 Rmd Kwikform Philippine Inc 534,948.55 0.19%
83 Pampanga Block Builders Inc 534,948.11 0.19%
84 Comm Builders And Technology Philippines Corp 519,952.33 0.18%
85 Betonbau Phil Inc 519,004.91 0.18%
86 Rs Developer Co Inc 508,884.20 0.18%
87 Build Erect Corporation 506,053.16 0.18%
88 Consolidated Building Maintenance Inc 503,155.94 0.17%
89 Monolithic Construction And Concrete Products Inc 497,960.26 0.17%
90 Mcconnell Dowell Philippines Inc 497,677.82 0.17%
91 SL Development Construction Corporation 487,549.97 0.17%
92 Mhi Technical Services Corporation 486,389.23 0.17%
93 10k Concrete Mix Specialist Inc 471,255.59 0.16%
94 Halrey Construction Inc 460,243.65 0.16%
95 Ciriaco Corp 457,621.29 0.16%
96 Agchem Construction And Development Corporation 450,363.99 0.16%
97 Lilai Construction And Development Corp 434,400.81 0.15%
98 Royal Crown Monarch Construction And Supplies Corporation 429,960.71 0.15%
99 Daruma Corporation 428,261.46 0.15%
100 Wcs Construction Inc 427,740.47 0.15%
107
BSPCI Financial Statements
PHP in millions FY08 FY09 FY10 FY11 FY12 FY13
Balance sheet
Cash 19.3 93.4 295.5 252.0 213.8 293.7
Receivables 395.1 358.9 323.2 421.9 414.0 890.9
Advances 73.6 143.7
Other current assets 0.9 0.8 3.0 2.6 43.9 81.8
Total current assets 415.3 453.1 621.7 676.5 745.3 1,409.9
Property & equipment - net 137.4 124.7 169.4 162.1 121.1 129.7
Deferred tax asset 2.1 2.7 3.7 4.9
Total noncurrent assets 139.5 127.3 173.1 166.9 121.1 129.7
Total assets 554.8 580.4 794.8 843.4 866.4 1,539.7
Trade payables and other liabilities 363.1 367.9 495.4 525.1 419.1 573.3
Accounts payable - others 70.8 115.9
Notes payable 3.0 5.0 19.9 10.3 2.2 60.4
Loans payable 5.0 -
Income tax payable - 0.1 0.4 0.5 18.4 12.7
Total current liabilities 371.1 373.1 515.7 535.9 510.4 762.2
Notes payable 10.7 - 21.1 10.8 8.6 339.8
Advances from stockholders 11.9 11.9 22.2 8.1 10.0 8.8
Accrued retirement benefits 6.0 8.9 12.3 16.2 14.6 16.6
Total noncurrent liabilities 28.6 20.8 55.7 35.1 33.3 365.2
Total liabilities 399.7 393.8 571.4 571.0 543.7 1,127.4
Share capital 66.5 66.5 66.5 90.0 90.0 90.0
Cumulative earnings 88.6 120.1 156.9 182.4 232.7 322.2
Total equity 155.1 186.6 223.4 272.4 322.7 412.2
Total liabilities and equity 554.8 580.4 794.8 843.4 866.4 1,539.7

Income statement
Contract revenue 779.1 739.7 870.7 993.6 959.9 1,359.8
Contract costs (694.3) (656.5) (773.9) (890.4) (862.4) (1,140.6)

Gross profit 84.8 83.2 96.8 103.2 97.5 219.3
Administrative expense (40.9) (37.7) (49.0) (42.9) (41.5) (103.7)
Operating 44.0 45.5 47.8 60.4 56.0 115.6
income Other
items: - - 0.7 5.7 5.8 5.3
Miscellaneous income - 0.3 4.0 1.8 1.4 0.7
Sale from Batching plant - - - - - 3.2
Forex gain (loss) - - - - - (0.1)
Gain (loss) on sale of assets - - - (0.0) 5.5 1.6
- 0.3 4.7 7.5 12.7 10.7
Operating income with other items 44.0 45.8 52.6 67.8 68.7 126.2
Interest expense (0.8) (0.4)
Income before tax 43.2 45.4 52.6 67.8 68.7 126.2

Taxes (15.1) (13.9) (15.7) (18.8) (18.4) (36.7)
Net income 28.1 31.5 36.8 49.0 50.3 89.5
108
JE Manalo Corporation (JEMCO) Financial Statements

Balance sheet
Cash 11.2 60.7 65.4 47.8 60.3 87.5
Trade and other receivables 94.9 145.8 223.2 275.0 502.2 590.9
Advances to officers & employees 1.7 1.5 1.7 2.4 1.5 3.5
Costs of contracts in progress 57.7 117.9 137.3 74.3 129.2 81.3
Tax credits 20.0 16.7 11.6 10.7 7.5 8.1
Construction supplies and inventory 14.1 8.3 10.4 19.9 24.3 19.7
Total current assets 211.8 367.3 464.3 462.2 822.0 875.9
Available for sale (AFS) asset 51.9 52.5 67.5 63.0 69.4 74.9
Total assets 513.2 683.9 769.2 787.6 1,199.5 1,296.5
Deposits from contracts - - 232.4 189.5 343.2 406.7
Trade payables and accruals 123.5 278.4 74.3 58.6 213.5 147.9
Current portion of long-term debt - - - - 8.5 36.5
Output VAT payable - - 39.2 69.2 79.8 106.6
Other current liabilities 18.8 14.8 - 0.7 1.6 2.2
Loans payable - long term portion 11.5 - - - 36.5 20.0
Rent deposit - - 0.4 0.4 0.6 1.0
Total noncurrent liabilities 11.5 - 0.4 0.4 37.1 21.0
Total liabilities 153.9 293.2 346.3 318.4 683.7 721.0
Share capital 149.8 150.0 150.0 150.0 250.0 300.0
Deposit for future stock subscription - - 3.1 9.4 - -
Revaluation surplus 144.8 144.8 117.7 117.7 117.7 117.7
Total equity 359.4 390.7 422.9 469.2 515.8 575.5
Total liabilities and equity 513.2 683.9 769.2 787.6 1,199.5 1,296.5

Income statement
Contract revenue 318.6 462.2 761.3 634.0 1,111.0 1,413.4
Contract costs (256.5) (380.7) (661.0) (535.4) (977.1) (1,237.5)
Gross profit 62.1 81.4 100.3 98.6 133.9 175.8
Operating income 29.7 44.8 60.6 56.8 77.0 95.9
Other items:
Interest income from bank - 0.1 0.2 0.3 0.7 0.2
Dividend income - - 0.0 0.0 0.0 -
Other income 0.0 0.0 13.5 - 1.1 -
0.0 0.1 13.7 0.3 1.8 0.2
Interest expense (1.4) - - - (0.5) (1.9)
Taxes (9.7) (13.7) (18.2) (17.0) (23.3) (28.2)
Net income 18.6 31.1 56.1 40.0 54.9 66.0
109
Metro Stonerich Corporation (MSC) Financial Statements

Balance sheet
Cash 36.0 75.7 112.3 77.4 141.9 176.5
Billed contract receivables 709.6 658.4 1,182.3 1,680.0 143.3 448.4
Construction in progress 230.7 253.8 493.7 738.1 795.8 333.2
Total current assets 1,002.4 995.7 1,830.2 2,585.9 1,103.2 1,006.8
Deferred asset - unbilled contract receivables - - - 1,879.8 1,101.3
Other noncurrent assets 20.8 17.1 18.5 31.1 36.6 15.0
Total noncurrent assets 84.1 99.7 188.1 212.0 2,092.7 1,307.0
Total assets 1,086.5 1,095.4 2,018.3 2,797.9 3,195.9 2,313.8
Trade payables 791.5 765.3 697.4 836.6 733.2 548.4
Other current liabilities 18.6 20.5 27.3 35.9 47.3 5.5
Notes payable 88.0 83.3 58.4 103.7 145.6 208.7
Advances from stockholders 0.2 0.2 5.2 25.2 30.2 40.2
Unearned revenue from unbilled contract receivables 963.6 1,484.5 1,879.8 1,101.3
Total noncurrent liabilities 88.2 83.6 1,027.2 1,613.4 2,055.7 1,350.2
Total liabilities 898.3 869.3 1,751.9 2,486.0 2,836.2 1,904.0
Share capital 120.0 120.0 120.0 200.0 200.0 200.0
Deposit for future stock subscription 20.0 20.0 20.0 - - -
Total equity 188.2 226.1 266.4 311.9 359.7 409.8
Total liabilities and equity 1,086.5 1,095.4 2,018.3 2,797.9 3,195.9 2,313.8

Income statement
Contract revenue 753.4 848.6 958.7 1,002.8 1,023.4 1,145.6
Contract costs (675.4) (724.9) (823.9) (837.3) (855.4) (916.5)
Gross profit 78.0 123.7 134.8 165.5 168.0 229.1
Other items:
Interest income 0.7 0.9 1.1 (0.8) 1.2 0.6
Other charges 1.7 - (0.2) 0.2 - -
2.4 0.9 1.0 (0.6) 1.2 0.6
Interest expense and other charges (6.0) (9.3) (6.2) (19.1) (11.4) (12.6)
Taxes (12.0) (16.2) (17.3) (19.5) (20.5) (21.4)
Net income 22.2 37.9 40.4 45.5 47.8 50.0
110
CM Pancho Corporation (CMPCI) Financial Statements

Balance sheet
Cash 9.9 41.5 23.4 26.6 58.8 56.4
Trade and other receivables 322.9 220.0 296.4 332.2 446.7 696.2
Inventories 10.0 43.8 18.5 10.9 16.1 10.0
Other current asset 7.0 23.2 1.0 - - -
Total current assets 349.8 328.5 339.3 369.7 521.5 762.6
Investment - - 98.2 123.2 123.2 123.2
Total assets 850.2 860.3 938.3 995.3 1,289.0 1,529.5
Trade payables and other payables 125.3 126.3 129.8 117.0 179.5 477.6
Income tax payable 0.5 0.2 0.6 2.6 4.2 5.3
Loans payable 25.0 35.0 51.6 100.7 103.1 41.1
Advances from customers 224.7 172.1 217.7 210.9 365.9 402.4
Total noncurrent liabilities 249.7 207.1 269.3 311.6 469.0 443.5
Total liabilities 375.4 333.6 399.7 431.1 652.8 926.3
Share capital 100.0 100.0 100.0 150.0 150.0 150.0
Deposit for future stock subscription - - - - - -
Revaluation surplus 294.1 314.1 289.5 277.5 315.7 251.5
Total equity 474.8 526.8 538.5 564.2 636.2 603.2
Total liabilities and equity 850.2 860.3 938.3 995.3 1,289.0 1,529.5

Income statement
Contract revenue 810.8 823.8 616.3 720.3 808.9 976.1
Contract costs (697.1) (700.2) (536.4) (603.9) (683.4) (826.2)
Gross profit 113.6 123.6 80.0 116.4 125.4 149.9
Depreciation on revaluation reserve (12.7) (12.4) (12.2) (12.0) (11.8) (12.6)
Other items:
Interest income - - 0.6 0.3 0.3 0.2
Net income sharing - - - - - 32.1
- - 0.6 0.3 0.3 32.3
Interest expense (0.3) (0.2) (0.3) (0.5) (0.8) (2.4)
Taxes (14.1) (19.0) (10.1) (18.2) (17.0) (21.0)
Net income 13.5 32.0 12.0 30.6 28.0 36.7
111
PhilHealth Premium Contribution Table
http://philpad.com/new-philhealth-contribution-table-2014/
http://www.nwpc.dole.gov.ph/pages/region_4a/cmwr_table.html
112
SSS Contribution Table
http://philpad.com/new-sss-contribution-table-2014/
113
PROJECTED INCOME STATEMENT USING MARKET PENETRATION
STRATEGIES:
Revenue 1,593,875,733.02 1,641,692,005.01 2,019,281,166.16 2,483,715,834.38
Gross Income 480,729,415.84 464,278,707.48 289,171,159.40 355,680,526.06
Operating Expenses
Other Expenses 95,091,633.14 95,091,633.14 95,591,633.14 95,641,633.14
Income Tax 88,408,315.48 81,685,516.58 25,401,641.40 41,104,726.89
Revenue 1,593,875,733.02 3,054,970,476.29 3,757,613,685.83 4,621,864,833.58
Gross Income 480,729,415.84 437,487,047.06 538,109,067.88 661,874,153.49
Operating Expenses
Other Expenses 95,091,633.14 95,691,633.14 95,741,633.14 95,791,633.14
Income Tax 88,408,315.48 60,642,310.74 84,924,550.64 115,075,867.44
114
PROJECTED INCOME STATEMENT APPLYING MARKET PENETRATION AND
SERVICE DEVELOPMENT STRATEGIES:
Revenue 1,593,875,733.02 1,641,692,005.01 2,019,281,166.16 2,483,715,834.38
Gross Income 480,729,415.84 464,278,707.48 430,116,984.80 529,043,891.30
Operating Expenses
Other Expenses 95,091,633.14 95,091,633.14 96,091,633.14 96,141,633.14
Income Tax 88,408,315.48 81,685,516.58 63,664,336.15 84,060,314.88
Revenue 1,593,875,733.02 3,054,970,476.29 3,757,613,685.83 4,621,864,833.58
Gross Income 480,729,415.84 650,723,986.30 800,390,503.15 984,480,318.88
Operating Expenses
Other Expenses 95,091,633.14 96,191,633.14 96,241,633.14 96,291,633.14
Income Tax 88,408,315.48 109,080,215.54 139,795,467.33 177,527,434.33
115

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Strategic Management Paper

PROF. ELISEO AURELLADO

FRANCIS ROY C. PONIO

XI. References 102

42013 Audited Financial Statements (see Appendix)

2.1 Research Design

To be able to assess BSPCI’s performance relative to its competitors, audited financial

2.2 Scope and Limitation

III. MISSION AND VISION STATEMENTS OF THE COMPANY

Vision Statement and Evaluation

Vision Statement Evaluation

Mission Statement Evaluation

4.1 Economic Performance and Forecast

A projected acceleration of growth in the Philippines in 2015 reflects accelerated

The Philippine construction industry in particular increased in value at a compound annual

Table: 2011-2015 DPWH Infrastructure Program Capital Outlays

In a recently conducted planning session of DPWH management, Secretary of Public Works

4. Emergence of Public-Private-Partnership Program (OPPORTUNITY):

5. Continuous Growth in the BPO Sector (OPPORTUNITY)

4.2 Political and Government Aspects

6. Effect of ASEAN Integration (OPPORTUNITY)

12 BSPCI Company Profile

4.3 Social Factors

1. Social re-development of Metro Manila (OPPORTUNITY)

2. Housing Demand (OPPORTUNITY):

3. Increased Tourism Demand (OPPORTUNITY):

4. Reconstruction Efforts due to recent calamities (OPPORTUNITY)

4.4 Ecological/Technological Factors

5.1 Industry and Market Profile

Classification No. of 2012 Market Revenue Average

Industry: Heavy and Civil Engineering Construction

Threat of Competition – STRONG

The construction-industry, especially on horizontal-works, is very capital intensive. In order to

.Threat of New Entrants – WEAK

Bargaining Power of Suppliers – MEDIUM

Bargaining Power of Buyers/Customers – STRONG

Overall, the bargaining power is considered strong due to these factors.

Potential for Substitutes- WEAK

Key competitors of BSPCI

Competitor # 1 JE Manalo Corporation24

Competitor #2 Metro Stonerich Corporation25

Competitor #3 CM Pancho Corporation26

CRITICAL SUCCCESS FACTORS

CSF # 1 Adequate Capitalization

Importance Weight: 15%

Importance Weight: 30%

CSF # 3 Equipment Lineup and Management

Importance Weight: 15%

CSF # 4 Operational Execution

Importance Weight: 20%

Importance Weight: 10%

CSF # 6 Technical Qualifications and Accreditations

BSPCI CSF Ratings

CSF#1 BSPCI’s Capitalization (2)

CSF#2 BSPCI’s Price Competitiveness (2)

CSF#3 BSPCI’s Equipment Lineup and Management (2)

CSF#5 Quality Control (3)

CSF#6 BSPCI’s Technical Qualifications and Accreditations (3)

CSF#7 Customer Relations (2)

Comparative analysis - Cost and expense structure (FY13)

Sales 100.0% 100.0% 100.0% 100.0%

Comparative analysis - Derived tax rates (FY13)