Pamantasan ng Lungsod ng Marikina

Brazil St., Greenheights Subdivision Concepcion Uno Marikina City

College of Business Administration and Accountancy in partial fulfillment with the req. of Distribution Management Puregold Price Club Inc., (PGOLD.PS) Submitted by: Casio, Claudine Estoras, Ruby Huarde, Keren Keziah Morada, John Nicko Murciano, Clarence Claire Submitted to Mr. Norman Afable

Chapter 1. Executive Summary 1.1

1.2

Objectives Major Findings

Chapter 2. Background of the Study 2.1 Objectives of the Study In this research, first, we are investigating the legal aspects of Puregold Price Club Inc., (PGOLD.PS). There are legal issues regards to the President and owner of PGOLD.PS who is Mr. Lucio Co. Based on our research, Mr. Lucio Co was involved in a Multi-Million Peso Smuggling Issue, supported by Former President Joseph Ejercito Estrada. We will find out if the issue is still currently discussed. And in spite of the issue, why that PGOLD.PS is one of the competitive Retail Store in the Philippines. 2.2 Scope of Limitation of the Study In our investigation, we will search for the Puregolds company profile, current competitive performance, financial aspect of the company, Political, Economic, Social, Technological, Environmental, and Legal Aspects of the Company (PESTEL), company strategies, Internal

Environment of the Company, SWOT Analysis, and also, we will benchmark Puregold and its competitors. 2.3 Description of the general context in which the problem is to be viewed and discussed. Three close associates and a mistress of former president Joseph Ejercito Estrada will be investigated following reports that they are involved in the smuggling of goods into the country. Justice Secretary Hernando Perez said the four will be summoned by a task force created specifically to check out reports that some people close to Estrada have been involved in smuggling activities. "I have organized a task force to check on these smuggling cases. We have received reports that these were perpetrated by persons close to the former president I cannot reveal the names of those we are investigating but I have talked to (Titus) Villanueva of the Bureau of Customs and he is also creating a team to coordinate with us," Perez told reporters in a briefing. He cited reports that Estrada's associates tried to sneak in various goods ranging from food items like sugar and rice and electronics although the Department of Justice has yet to verify these reports. He confirmed that one of the four alleged smugglers is Lucio Co, an alleged supplier of smuggled goods to duty-free shops all over the

country. Co's name has been consistently dragged into allegations of smuggling activities. Co had been investigated before in connection with the smuggling of frozen chicken into the country, which found its way to duty free stores he owned. Co at the time was perceived to be close to Estrada and nothing came of the investigation. It will be recalled that at the height of Estradas impeachment trial at the Senate in January, former Finance secretary Edgardo Espiritu testified before the impeachment trial that bigtime smugglers were closely associated with Estrada. Espiritu, however, refused to name these people fearing for his life. Perez said he has designated senior state prosecutor Leo Dacera III and five other prosecutors to handle the smuggling probe. Aside from Customs commissioner Titus Villanueva and the panel of investigators he created to verify the smuggling attempts, Secretary Perez said that some agents of the National Bureau of Investigation have also been tasked to coordinate with the Bureau of Customs to dig deeper into the case. 2.4 Description of the situation in and the process by which the problem arose and developed

Two warehouse operators have identified Lucio Co of the supermarket chain Puregold Price Club Inc. as the owner of imported goods believed to be part of the cargoes of some 1,900 containers reported missing from the Port of Manila and the Manila International Container Port early this year, according to an intelligence officer of the Bureau of Customs (BOC). Simeon Caparroso Jr., a member of the BOC intelligence division, said Jimmy Go of Uni-Nexus Trading and Conrado Ybaez of Intercontinental Trading, who were arrested in separate raids, told him that Co had ordered a change in delivery plans a week before the raids last week. (Gos brother-in-law, Sonny Angeles, was the listed owner of Uni-Nexus Trading.) In his spot report to the BOC intelligence division chief, Caparroso said Co had asked Go and Ybaez to bring the goods to other warehouses that the two were running instead of bringing the shipments to a Pasig City warehouse. However, the two refused to reveal the locations of the other warehouses. The BOC intelligence team has identified the new warehouse destinations of the commodities and has secured a warrant to conduct a raid on it this week, Caparroso said. 2.5 Sources of Data and Information

Philippine Daily Inquirer:11:43 pm | Sunday, September 11th, 2011 http://www.interaksyon.com/business/...l-trade-sector http://archive.malaya.com.ph/2012/03292012/busi4.html www.puregold.com.ph http://www.reuters.com/finance/stocks/overview?symbol=PGOLD.P S

http://www.iligan.gov.ph/puregold-buys-operator-of-eunilainegrocer-e-marts/

www.Inquirer.net http://www.stockmarketpilipinas.com/thread-278.html http://www.securities.com/Public/companyprofile/PH/Puregold_Price_Club_Inc_en_1674059.html

http://www.securities.com/Public/companyprofile/PH/Puregold_Price_Club_Inc_en_1674059.html

http://www.reuters.com/finance/stocks/companyOfficers?symbol=P GOLD.PS

http://www.insideview.com/directory/puregold-price-club-inc http://www.reuters.com/finance/stocks/companyProfile?symbol=PG OLD.PS

http://business.inquirer.net/70531/puregold-widens-publicownership-to-32

http://business.inquirer.net/45935/puregold-price-club-net-profittripled-to-p1-54b-in-2011

http://business.inquirer.net/45423/lucio-co-starts-talks-on-mergerof-sr-puregold

http://business.inquirer.net/35953/puregold-%E2%80%98ontrack%E2%80%99-to-hit-net-profit-target-of-p1-5b

http://business.inquirer.net/102585/puregold-buys-operator-ofeunilaine-grocer-e-marts

http://business.inquirer.net/93224/puregold-9-month-profit-up-67 http://business.inquirer.net/84260/puregold-eyes-upsize-of-debtnotes-sale-to-p8b

http://business.inquirer.net/83800/puregold-eyes-p5b-debt-offer http://business.inquirer.net/76951/puregold-nets-p1-in-1st-half-of2012

http://business.inquirer.net/57737/puregold-vows-to-support-smallentrepreneurs

http://business.inquirer.net/55445/puregold-nets-p469m-in-q1 http://business.inquirer.net/47531/puregold-goes-for-25-profitgrowth-in-%E2%80%9912

www.puregold.com.ph http://www.pse.com.ph http://investing.businessweek.com/research/stocks/snapshot/snaps hot.asp?ticker=PGOLD:PM

http://markets.ft.com/research/Markets/Tearsheets/Forecasts?s=P GOLD:PHS

www.lawphil.net http://www.pse.com.ph/stockMarket/companyInfo.html?id=629&sec urity=567&tab=0

Chapter 3. Company Profile 3.1 Vision and Mission Vision To be the Most Customers-Oriented Hypermart offering a One-Stop Shopping convenience and Best Value to our Customers. Mission Our Mission is to Provide Products, Services and Business Opportunities to Every Filipino Family. We Establish Lasting Relationship with Our Suppliers and Business Partners. We Strive to Promote the Personal and Professional Development of our Employees. 3.2 Goal We Commit Profitable Results to the Stockholders.

To be the Top Retail Store in the Philippines

3.3

Organizational Structure

Because of the confidentiality of the confidentiality of the company, here is the list of the executives and Board of Directors of Puregold Price Club Inc.,

KEY EXECUTIVES

Name

Age

Since

Current Position

Lucio Co

58

1998

Chairman of the Board

Leonardo Dayao

68

1998

President, Director

Susan Co

55

1998

Vice Chairman of the Board, Treasurer

Aida de Guzman

51

1999

Senior Vice President

Denise Maria Carolino

47

1999

Vice President Administration

Erlinda Orro

54

2005

Financial Comptroller

Elvira Gutierrez

40

2011

Senior Manager - Human Resources

Pamela Justine Co

28

2003

Merchandising Manager, Director

Lalette Alea

38

2009

Site Identification and Acquisition Manager

Edison Anggala

35

2001

Senior Store Manager

Anabelle Kahiwat

39

2011

Senior Manager - Audit

Baby Gerlie Sacro

34

2000

Corporate Secretary

Candy DacanayDatuon

33

Assistant Corporate Secretary, Compliance Officer

Ferdinand Vincent Co

31

2003

Director

Edgardo Lacson

67

2010

Independent Director

Marilyn Pardo

74

2010

Independent Director

Lucio Co Mr. Lucio L. Co serves as Chairman of the Board of Puregold Price Club Inc since September 1998. He is also currently the Chairman of Puregold Finance, Inc., Puregold Duty Free Subic, Inc., Puregold Realty Leasing and Management, Inc. and President of Bellagio Holdings, Inc., Ellimac Prime Holdings, Inc., Cosco Prime Holdings, Inc., Forbes Corporation, LCCK & Sons Realty Corporation, Patron Supermarket, Inc., Puregold Junior Supermarket, Inc., Puregold Duty Free, Inc. and Puregold Properties, Inc. He is also a Director of Alcorn Gold Resources, Inc. and a member of the Board of Trustees of Adamson University. Mr. Co has been an entrepreneur for the past 40 years. Leonardo Dayao Mr. Leonardo B. Dayao serves as President and Director of Puregold Price Club Inc since 1998. He is also currently the Chairman of PSMT Philippines, Inc., President of Puregold Finance Inc. and Alcorn Gold Resources, Inc., and Vice-President of Ellimac Prime Holdings, Inc., Bellagio Holdings, Inc., Pajusco Realty Corporation, Puregold Properties, Inc., VFC Land Resources, Inc., and Cosco Prime Holdings, Inc. Mr.

Dayao is also a Director of Fontana Development Corporation. Mr. Dayao was previously connected with Ayala Investment and Development Corporation as Vice-President from 1980 to 1984 and Bank of the Philippine Islands as Vice President from 1984 to 1994. Mr. Dayao received a Bachelor of Science degree in Commerce from the Far Eastern University. Susan Co Mrs. Susan P. Co serves as Vice Chairman of the Board and Treasurer of Puregold Price Club Inc since September 1998. She is also currently the Chairman of Cosco Price, Inc., President of Pure Value Foods, Inc., and Treasurer of Bellagio Holdings, Inc., Pajusco Realty Corporation, Puregold Finance, Inc., and Puregold Leasing and Management, Inc. She received a Bachelor of Science in Commerce from the University of Santo Tomas. Aida de Guzman Ms. Aida B. de Guzman serves as Senior Vice President of Puregold Price Club Inc since September 19, 1999. Prior to her engagement with Puregold, she was employed by Royal Duty-Free Shops, Inc. as Assistant General Manager and Rustans Supercenters, Inc. (Shopwise) as Senior Manager for Supermarket Merchandising from 1993 to 1999. She received a Bachelor of Science in Commerce Major in Economics degree from the Polytechnic University of the Philippines, Cum Laude. She also studied

Supermarket Management Operations at Fleming Institute in Oklahoma City, Oklahoma, USA. Denise Maria Carolino Ms. Denise Maria D. Carolino serves as Vice President for Administration of Puregold Price Club Inc since 1999. Prior to joining the Company, she served as Purchasing Manager at Uniwide Sales, Inc. Houseware Department from 1987 to 1992. Ms. Carolino received a Bachelor of Science degree from the University of Santo Tomas and passed the Architects Licensure Examinations in 1986. Erlinda Orro Ms. Erlinda G. Orro serves as Financial Comptroller of Puregold Price Club Inc since 2005. She was previously employed by Gregorio Araneta Management Corporation as Group Internal Auditor from 1984 to 1986, and served as Finance Manager with Kuwait Asia Corporation, GSA for Kuwait Airways from 1986 to 1989, Audit Manager with SyCip, Gorres, Velayo & Co., CPAs from 1990 to 1991, Group Financial Controller with Blue Horizons Travel and Tours, Inc. from 1992-2000 and Vice President for Finance with Destiny, Inc. from 2000 to 2004. Ms. Orro received a Bachelor of Science degree in Commerce from the University of Pangasinan and is a Certified Public Accountant. Elvira Gutierrez

Ms. Elvira D. Gutierrez serves as Senior Manager for Human Resources of Puregold Price Club Inc since April 2011. Prior to joining the Company, she was employed by Royal Undergarments Corporation of the Philippines as personnel staff from 1991 to 1993, by Northwest Realty Corporation as Human Resources and Administrative Manager from 1993 to 2001 and by Super Shopping Market, Inc, (Super SM Hypermarket) as Personnel Manager from 2001 to 2003. Ms. Gutierrez received a Bachelor of Arts degree in Psychology from the College of the Holy Spirit. Pamela Justine Co Ms. Pamela Justine P. Co serves as Merchandising Manager and Director of Puregold Price Club Inc since 2003. She is also currently the President of Fertuna Holdings, Inc., and Treasurer of 118 Holdings, Inc., Cosco Prime Holdings, Inc., Cosco Price, Inc., Ellimac Prime Holdings, Inc., KMC Realty Corporation, Patagonia Holdings, Corporation, Patron Supermarket, Inc., Pure Value Foods, Inc., Puregold Junior Supermarket, Inc., and VFC Land Resources, Inc. She is also a Director of Pajusco Realty Corporation, PSMT Philippines, Inc., and Puregold Duty Free (Subic), Inc, and is the General Manager of Ice Mixx Trading. Ms. Co received a Bachelor of Science degree in Entrepreneurship from Thames International Business School. Lalette Alea

Ms. Lalette Alea serves as Site Identification and Acquisition Manager of Puregold Price Club Inc since 2009. She previously worked at International Family Food Services, Inc. as Senior Business Development Officer from 2007 to 2009. She is a graduate of De la Salle University with a Bachelor of Science degree in Marketing Management. Edison Anggala Mr. Edison T. Anggala serves as Senior Store Manager of Puregold Price Club Inc since 2001. Prior to joining the Company, he was employed by Fortune Tobacco Corporation as an internal auditor from 1998 to 2001. Mr. Anggala has a Bachelor of Science degree in Industrial Engineering from the University of Santo Tomas. Anabelle Kahiwat Ms. Anabelle S.J. Kahiwat serves as Senior Manager - Audit of Puregold Price Club Inc since April 2011. Prior to joining the Company, Ms. Kahiwat worked as an Audit Manager with SyCip, Gorres, Velayo & Co., CPAs from 1991 to 2001. She received her Bachelor of Science degree in Business Administration, majoring in Accounting from the University of the East. Baby Gerlie Sacro Ms. Baby Gerlie I. Sacro serves as Corporate Secretary of Puregold Price Club Inc since 2000. Prior to joining the Company, she was employed by

Plaza Fair, Inc. in the Compensation and Benefit Section of the Human Resources Department. Ms. Sacro received a Bachelor of Science degree in Entrepreneurial Management as well as completing a postbaccalaureate course in Management from the Polytechnic University of the Philippines. Candy Dacanay-Datuon Atty. Candy H. Dacanay-Datuon serves as Assistant Corporate Secretary and Compliance Officer of Puregold Price Club Inc. She is a lawyer and a member of the Philippine Bar since 2004. She has been employed as counsel for the Company since 2004. She received a Bachelor of Arts, Cum Laude in Political Science from the Colegio de San Juan de Letran and a Bachelor of Laws Degree from the University of Santo Tomas. Ferdinand Vincent Co Mr. Ferdinand Vincent P. Co serves as Director of Puregold Price Club Inc since 2003. He is also the Marketing Director of the Company. Mr. Co is currently the President of 514 Shaw Property Holdings, Inc., KMC Realty Corporation, VFC Land Resources, and Pajusco Realty Corporation and Treasurer of Fertuna Holdings, Inc. He is also a Director of 118 Holdings, Inc. and Ellimac Prime Holdings, Inc., Patagonia Holdings, Inc. Mr. Co received a Bachelor of Science degree in Entrepreneurial Management from the University of Asia and the Pacific.

Edgardo Lacson Mr. Edgardo G. Lacson serves as Independent Director of Puregold Price Club Inc since October 20, 2010. He is currently the Chairman of Metrostore Corporation, MIL Export Philippines, Beacon Environmental Management Services, Primelode, Managing Director of Link Edge and the President of MIS Maritime Corporation, Safe Seas Shipping Agency, Marine Industrial Supply Corporation, and EML Realty. He is also the President of the Employers Confederation of the Philippines and a Member of the Makati Business Development Council, Philippine Nippon Kyokai Technical, Philippine Interisland Shipping Association and the Management Association of the Philippines. Mr. Lacson received a Bachelor of Science in Commerce from De La Salle College (now De La Salle University). Marilyn Pardo Ms. Marilyn V. Pardo serves as Independent Director of Puregold Price Club Inc since October 20, 2010. She is currently the Chairman and Chief Executive Officer of Asian Holdings Corporation, Downtown Properties, Inc., Casa Catalina Corporation, and Catalina Commercial Properties, Inc. Ms. Pardo received a Bachelor of Liberal Arts and an Associates Degree in Business from Assumption College. 3.4 History

The advent of one-stop shopping convenience began in 1998 when PUREGOLD opened its first branch along Shaw Blvd. in Mandaluyong City. The store offered a wide array of goods from groceries, apparel, household accessories and furniture at very affordable prices. During that time, the one-stop shopping philosophy was still a novel idea to consumers but with the excellent service and quality products it provided, it did not take long for Puregold to make its mark in the retail industry. Today, it has grown into a giant retail chain with more than 50 stores nationwide. Chapter 4; 4. The company and its External Environment 4.4 PESTEL Analysis Political Factors For employment legislations, the government encourages retailers to provide a mix of job opportunities from flexible, lower-paid and locally-

based jobs to highly-skilled, higher-paid and centrally-located jobs. Also to meet the demand from population categories such as students, working parents and senior citizens. PGOLD.PS understands that retailing has a great impact on jobs and people factors (new store developments are often seen as destroying other jobs in the retail sector as traditional stores go out of business or are forced to cut costs to compete), being an inherently local and labor-intensive sector. PGOLD.PS employs large numbers of; student, disabled and elderly workers, often paying them lower rates. In an industry with a typically high staff turnover, these workers offer a higher level of loyalty and therefore represent desirable employees. Puregold faces operational and logistical risks of doing business in new territories. Possible difficulties include obtaining regulatory or local government approvals and distributing/transporting inventories. Also, Puregold may experience difficulty in building its brand in these new areas. While the risks may be substantial, Puregold believes that the risks are worth taking given its growth potential Economical Factors Economic factors are of concern to PGOLD.PS, because they are likely to influence demand, costs, prices and profits. One of the most influential factors on the economy is high unemployment levels, which decreases the effective demand for many goods, adversely affecting the demand required to produce such goods.

These economic factors are largely outside the control of the company, but their effects on performance and the marketing mix can be profound. Although international business is still growing , and is expected to contribute greater amounts to PGOLD.PSs profits over the next few years, the company is still highly dependent on the Philippine market. Hence, PGOLD.PS would be badly affected by any slowdown in the PGOLD.PS food market and are exposed to market concentration risks. Social/Cultural Factors Current trends indicate that Filipino customers have moved towards onestop' and bulk' shopping, which is due to a variety of social changes. PGOLD.PS has, therefore, increased the amount of non-food items available for sale. Demographic changes such as the aging population, an increase in female workers and a decline in home meal preparation mean that Filipino retailers are also focusing on added-value products and services. In addition, the focus is now towards; the own-label share of the business mix, the supply chain and other operational improvements, which can drive costs out of the business. National retailers are increasingly reticent to take on new suppliers. The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs. Consumers are becoming more and more aware of health issues, and their attitudes towards food are constantly changing. One example of Tesco adapting its product mix is to accommodate an

increased demand for organic products. The company was also the first to allow customers to pay in checks and cash at the checkout. Technological Factors Technology is a major macro-environmental variable which has influenced the development of many of the PGOLD.PS products. The new technologies benefit both customers and the company: customer satisfaction rises because goods are readily available; services can become more personalized and shopping more convenient. The launch of the Efficient Consumer Response (ECR) initiative provided the shift that is now apparent in the management of food supply chains The adoption of Electronic Point of Sale (EPoS), Electronic Funds Transfer Systems (EFTPoS) and electronic scanners have greatly improved the efficiency of distribution and stocking activities, with needs being communicated almost in real time to the supplier (Finch, 2004). Environmental Factors In 2003, there has been increased pressure on many companies and managers to acknowledge their responsibility to society, and act in a way which benefits society overall. The major societal issue threatening food retailers has been environmental issues, a key area for companies to act in a socially responsible way. Hence, by recognizing this trend within the broad ethical stance, PGOLD.PSs corporate social responsibility is concerned with the ways in which an organization exceeds the minimum obligations to stakeholders specified through regulation and corporate

governance. They also support the city ordinance of Marikina for echo bags instead of plastic bags. Legal Factors There is an issue during the presidency of former President Joseph Ejercito Estrada. this issue was about smuggling issue of Lucio Co and some other businessman, revealed by the mistress of the former president. "I have organized a task force to check on these smuggling cases. We have received reports that these were perpetrated by persons close to the former president I cannot reveal the names of those we are investigating but I have talked to (Titus) Villanueva of the Bureau of Customs and he is also creating a team to coordinate with us," Perez told reporters in a briefing. He cited reports that Estrada's associates tried to sneak in various goods ranging from food items like sugar and rice and electronics although the Department of Justice has yet to verify these reports He confirmed that one of the four alleged smugglers is Lucio Co, an alleged supplier of smuggled goods to duty-free shops all over the country. Co's name has been consistently dragged into allegations of smuggling activities. Co had been investigated before in connection with the smuggling of frozen chicken into the country, which found its way to duty free stores he

owned. Co at the time was perceived to be close to Estrada and nothing came of the investigation. It will be recalled that at the height of Estradas impeachment trial at the Senate in January, former Finance secretary Edgardo Espiritu testified before the impeachment trial that bigtime smugglers were closely associated with Estrada. Espiritu, however, refused to name these people fearing for his life. Perez said he has designated senior state prosecutor Leo Dacera III and five other prosecutors to handle the smuggling probe. Aside from Customs commissioner Titus Villanueva and the panel of investigators he created to verify the smuggling attempts, Secretary Perez said that some agents of the National Bureau of Investigation have also been tasked to coordinate with the Bureau of Customs to dig deeper into the case. 4.2 Industrial Analysis 4.2.1 Bargaining power of suppliers This force represents the power of suppliers that can be influenced by major grocery chains and that fear of losing their business to the large supermarkets. Therefore, this consolidates further leading positions of stores like PGOLD.PS in negotiating better promotional prices from suppliers that small individual chains are unable. In return, Philippine based suppliers are also threatened by the growing ability of large retailers to source their products from

abroad at cheaper deals. The relationship with sellers can have similar effects in constraining the strategic freedom of the company and in influencing its margins. The forces of competitive rivalry have reduced the profit margins for supermarket chains and suppliers

4.2.2

Risk of Entry by potential competitors PGOLD.PS is now known by the consumers for their affordable products and good service. And also, PGOLD.PS is known for their domination in the Retailing Industry. Lately, there are news that PGOLD.PS has been allied with Eunilaine Grocer E, S&R Membership and Parco. Puregold buys operator of Eunilaine, Grocer E marts By Doris C. Dumlao Philippine Daily Inquirer 4:34 pm | Monday, January 14th, 2013 MANILA, PhilippinesBusinessman Lucio Co-led Puregold Price Club has gobbled up another retailing peer that operates the Eunilaine foodmarts and Grocer E supermarkets, adding 15 new stores to its fast-growing network. Puregold, the countrys second-biggest retailer and the most serious challenger to taipan Henry Sys, announced on Monday the acquisition of all the outstanding shares of stocks of Company E Corp. This paves the way for its takeover of the four operating Eunilaine foodmarts and 11 operating Grocer E supermarts.

The additional stores are distributed as follows: seven in Metro Manila, six in Rizal and two stores in Cavite. Puregold ended 2012 with 156 stores in operations, consisting of 131 Puregold hypermarkets, supermarkets and extras; 19 Parco supermarkets; and six S & R warehouse membership shopping clubs. Last year Puregold accelerated its expansion with the acquisition of the Parco and S&R chains. The companys footprint now covers the following areas: 77 in Metro Manila, 45 in South Luzon, 33 in North Luzon and one in the Visayas. Puregold is indicatively targeting to open 25 new Puregold stores and one new S & R warehouse membership shopping club this 2013, which will mark its entry in Mindanao with the opening of the S & R store in Davao City and the Puregold hypermarket in Cagayan de Oro City. All the Parco supermarkets will be rebranded into Puregold in 2013. Meanwhile, in the January 2013 issue of AsiaMoney on the matter of the best businesses in Asia, Puregold was awarded as the Medium-Cap Corporate of the Year for 2012 for the Philippines. The mid-cap award for the Philippines was a close call. ICTSI was a contender, as were Manila Water and Security Bank, all of which were deemed by analysts to have displayed impressive strategies this year in the mid-cap space. But while these companies have all

performed well, their strategies on the whole have been a continuation of good management in previous years. Puregold Price Clubs strategy, on the other hand, has allowed it to gain market share over larger rivals for the past 12 months, the magazine said.

Puregold eyes merger with S&R Membership Lucio Co eyes consolidation of retail operations By Doris C. Dumlao Philippine Daily Inquirer 11:09 pm | Monday, February 20th, 2012 MANILA, PhilippinesChinese-Filipino businessman Lucio Co plans to merge S&R Membership Shopping with Puregold Price Club Inc., thus consolidating his retailing businesses into a publicly listed vehicle catering to all market segments. In a disclosure to the Philippine Stock Exchange Monday, Puregold said its board had authorized its management to commence study and discussions for the possible acquisition of S&R at terms and conditions satisfactory to both parties. The planned infusion of S&R into Puregold will diversify the latters market base and potentially harness the power of increasing

consumer affluence in the Philippines. S&R caters to the upscale segment while Puregold caters to the lower-income but more populous market segment. Whats good about the infusion is, remember that Puregold Price Club serves the CDE market and S&R serves the AB market. So with this, we will be able to cover the whole spectrum of the market segments, Puregold president Leonardo Dayao said in a phone interview. We (in Puregold) havent focused much on the AB market so we now have a vehicle and a store format for that, he added. Puregold currently has three retail formats: hypermarket (Puregold Price Club), which caters to resellers and retail customers; supermarkets (Puregold Junior) and discount stores (Puregold Extra). The bulk of the business comes from hypermarket with an 86.7 percent share of total revenues. As of end-September, Puregold had 48 hypermarkets, 20 supermarkets and nine discounter stores. In 2011 alone, a total of 15 stores were opened while 12 stores were opened in the last quarter of 2010. These new stores accounted for nearly a quarter of total net sales for the nine-month period in 2011.

S&R, meanwhile, operates six membership stores serving the AB market, located at Fort Bonifacio, Alabang, Diosdado Macapagal Highway, Quezon City, San Fernando (Pampanga) and Cebu. In terms of geographic base, the potential merger will give Puregold a foothold outside Luzon, given S&Rs branch in Cebu. Puregold itself, however, has plans to put up stores in the Visayas and Mindanao within the next two to three years. When asked about the timeframe to finish the study leading to the prospective infusion, Dayao said: We expect to do it within the year, although you know, the timetable can change depending on many factors. No details were disclosed about S&Rs financial profile. Puregold debuted on the Philippine Stock Exchange on October 5 last year at P12.50 per share. As of Monday, its share price rose by 72 percent to P21.50, giving it a market capitalization of P43.6 billion. Its shares were down by 1.4 percent Monday after the disclosure of the prospective merger with S&R. As of September last year, Puregold posted a net profit of P1 billion, up by 185 percent from a year before on the back of a 36.3-

percent increase in net sales to P26.9 billion, in turn as a result of opening of new stores in 2011 and in the 4th quarter of 2010. 4.2.3 Threat of Substitutes products General substitution is able to reduce demand for a particular product, as there is a threat of consumers switching to the alternatives. In the grocery industry this can be seen in the form of product-for-product or the substitute of need and is further weakened by new trends, such as the way small chains of convenience stores are emerging in the industry. In this case PGOLD.PS is trying to acquire existing small-scale operations and opening Hypermarts and Puregold Jr. stores in local towns and city

4.2.3 Rivalry among Establish firm5.

The company and its Internal

Environment 5.1 MS Model Analysis 5.1.1 Men- Human assets, their skills, and competencies 5.1.2 Management quality, expertise and experience 5.1.3 Money-financial health of the business

5.1.4 Make up-organizational structure and culture 5.1.5 Machinery-physical asset of the business 5.1.6 Methods- processes adopted by the business 5.1.7 Markets the firms product/ Market Mix(7Ps) 5.2 SWOT Analysis

6.

The company Strategies 6.1 Tactics (specify each action steps that company is implementing)

6.2

Key Performance Indications (how does the company measuring the

performance)

7. 8. 9. 10.

Recommendation Conclusion Cite your individual key learnings Bibliography