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One of the fast expanding businesses in many cities nationwide are those under the water utility
industry. Water is life so adequate supply of safe water is necessary. The water industry provides drinking
water and wastewater services (including sewage treatment) to residential, commercial, and industrial
sectors of the economy and most of water systems are either local or regional. This is the process of
providing water in a systematic way through installed pumps and pipe lines. Before water is provided to a
specific area, it undergoes a process called sanitation to ensure that the quality of water received is safe
for human consumption. The quality of water distributed each household categorize into three levels
depending on the source of water.
With the rapid increase of population, demand for water supplier also increase. Within the
Philippine archipelago, water supply providers have been created to sustain the needs of the Filipinos.
According to the 2002 Annual Poverty Indicators Survey conducted by the National Statistics Office, 3.2
million families (20%) do not have access to potable water. The same study showed that majority of
families without access to clean drinking water comes from the poorest 40% of families in the
Philippines. Moreover, there is a wide inconsistency between the access to water of urban areas (61%)
and rural areas (25%). The 2009 Annual Survey of Philippine Business and Industry (ASPBI), among
industries, Collection, Purification and Distribution of Water recorded the highest number of
establishments at 663 or 73.0 percent of the total.
Base on the study of World Bank on 2005, approximately 5,000 service providers exist in the
Philippines. Most of them only provide water, while sanitation is still expected to be a private
responsibility. The water infrastructure provided is classified into three levels.
The tables below shows various providers of water in responds with the numbers of population
within the Philippines.Table 2 summarizes information from various sources regarding Level III
coverage. Coverage in urban areas is much higher than in rural areas. Thus on average, only an estimated
42%48% of the population has piped water into private homes.
Table 3 summarizes information from various sources concerning Level III connections in urban areas
outside the NCR. The table shows that outside the NCR, water districts account for most Level III
connections.
Table 4 World Wildlife Fund Living Planet Report 2008 Collectively, the two Metro Manila
concessionaires, the 502 operational water districts, and the 350 LGU-run water utilities comprise 850 or
so water utilities that provide Level III water supply, primarily in urban areas. Together, they service
about 1,009 LGUs, or 60% of all cities and municipalities in the Philippines.
Evidently, it is a vast opportunity for those in line with water station in rural areas because of only
25% accessibility of water. Hence, the demand of potable and safe water in rural area would be much
higher compare to those in the urban.
Small-scale private water providers (SSPWPs) could be a trends for providing water to pockets of
poor communities in the countryside unserved by the bigger water utilities. When combined, these small
efforts become a significant contribution. This water station is often owned by a private individual.
Accessibility of location and personal income drive demands for water supplier in rural areas.
The profitability of individual businesses depends on the ability to supply enough clean water, highly
equipped facilities and deliver high quality water. Small businesses can compete effectively by offering
specialized potable water, serving a local market, or providing a personal level of customer service. The
water industry in rural area is not extremely costly and labour-intensive as it only required minimal
numbers of workers for the maintenance of water connection and equipment.
Water Station depend greatly on customer preference and are most often located in areas with
convenient access. Typical locations of water supplier in rural areas preferably near the high way
approximately 10 meters away. Store format and size vary by site, as some locations offer more space
than others. Selling prices for water station vary.
Water service providers face new challenges on a range of fronts that include rising consumer
expectations, increasingly stringent government standards, technical complexities, decaying
infrastructure, and a political imperative to control costs and to limit rate increases. These pressures have
created a market opportunity for private firms seeking to expand their role in the water services sector.
These include investor-owned water utilities, which have seen limited expansion through acquisitions,
and private domestic and foreign firms that offer services on a contractual basis to publicly owned water
and wastewater systems. These companies can bring additional technical and managerial competency to
the water sector, while also accepting a degree of competitive risk. Moreover, water consumers and public
and special interest groups are becoming more vocal and better educated about water quality and utility
management issues. This is because of a variety of factors, including growing media coverage of
contamination and pollution events, stressed water supplies in some regions, new statutory hurdles for
project construction, and competition between environmental and human uses of water.
INDUSTRY COMPETITIVENESS
1. Supplier Power - an assessment of how easy it is for supplier to drive up prices. This
The possibility of new firms entering in this industry would be high as long as government policy
is not an issue, it encourage firms to build their business in the provincial urban areas without access to
safe and potable water which not yet to serve by the water district.
Brand identity in this industry has never influence the customers it offers the same kind of service
and product, as the customer only care for the water they would use.
Switching cost is low which encourage potential entrants for the reason that the customer can
freely switch to our other competitors who offer a little differences in pricing.
Capital investment is medium not everyone can enter the industry if they had a low
budget/capital.
THREAT OF SUBSTITUTES
Below is the table that shows the substitute and compliments status of Water Station in associate with the
features and other economic concepts affecting the said factor.
Price/ Value of surrogate products or services is low since buyer in the water industry
do not have any other choice even waters price increases. To prove, one of the major
consumer of water is under the manufacturing sector. Even though the water districts will
increase the waters price, there are no surrogate products available in order for them to
cleanse their plant and equipment. Therefore, there is no perfect substitute of water in the
industry.
Switching Cost is high, since there are not surrogate products available to replace the
water in cleaning and maintenance to the body.
Quality between substitute water is low. Consumers nowadays have been fully aware
in regards with the level of quality of water they used. Off course, though the other firm
offers low price, they would still prefer to stick to the enterprise with quality supply.
Buyer propensity to substitute is low since buyers are more conscious in their health
than the money they spend for buying water.
COMPETITIVE RIVALRY
Competition in an industry become intense when one or more competitors either sees an
opportunity to grow and acquire the customers of competitors or feels the need to attract more customers
than others because of low profitability. Industries where competitive rivalry is a major issue will usually
have many competitors who are struggling to make an adequate return on investment so profitability will
generally be low. A few competitors, those that have established competitive advantage will make a
treasonable profit but more intense competitive rivalry means a fight to break even and generate enough
cash to survive. Every firm in a business make their products or services more likely attractive than other
firms to maintain cash inflows in their business. The main competitors of Aqua Clean Water Services are
the Lanoy Water Refilling Station, Sto. Nio Fresh Water Station and the Campo Santos Water Station
which makes the competitive rivalry high. Also, the industry growth is high but due to several numbers of
competitors and low service differentiation, rivalry becomes competitively high.
However, Aqua Clean Water Services was able to build competitive strategy over its competitors.
1. Marketing. Workers of Aqua Clean Water Services are responsible and in-charge when it comes
to dealing customers needs and wants. They also give two pesos discount in every thirty pesos worth of
purchase.
2. Suppliers. Aqua Clean Water Services has two suppliers: for water source and equipment
maintenance. Their main water source is located at Sitio Magsaysay, Marilog District, Davao City who
was owned by Mr. Ronnel Mandahay. Moreover, equipment maintenance was provided by Aqua Prime
Water System.
3. Services. Services offered by the Aqua Clean Water Services are water refilling services, a wide
space for a laundry purposes, rooms for bathing and dressing.
POWER OF BUYERS
The presence of powerful buyers reduces the profit potential in an industry. Buyers increase
competition within an industry by forcing down prices, bargaining for improved quality or more services,
and playing competitors against each other. The result is diminished industry profitability.
POTENTIAL ENTRANTS
SUBSTITUTE
POWER OF BUYERS