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Mr. Andi Mallari opened a small shop selling transistor radios in 1979. His store was located at
one corner (General Luna St.) of the entire stretch of Burgos Avenue, the main through fare of
Cabanatuan City.

The demand for electronic parts made him carry a wide assortment of parts that are used in the
assembly and maintenance of radios, tape recorders, amplifiers, and various related appliances.

By 1990, Mr. Mallari was able to save enough money for the purchase of 300 square meter lot
along Del Pilar Street. He constructed a 10 meters x 15 meters two-storey building on the lot. The
ground floor is used as his store month after month. The second floor is used as his residence.

Mr. Mallari thinks that he can duplicate his feat in the other big towns of San Jose City, Gapan,
and Guimba. He has already started operating his stores in those towns and sales and repair. There are
five salesladies in Cabanatuan attending to the various needs of the customers. Those who bring their
appliances for repair are served by one of the six technicians. The parts used come from the stocks
maintained at the store.

Those who purchase parts from the store consist of technicians. The parts used come from the
various towns of Nueva Ecija. Sometimes, the technicians send somebody to do the purchasing of parts.

Mr. Mallari’s perspective has changed drastically after he met his former classmate Estelito
Chan in a class reunion at the Araullo University. Mr. Chan has a well-established appliance assembly
plant in Manila. He indicated that he did not start big but rather as a subcontructor for a large assembly
plant. Slowly, Mr. Chan’s business picked up until he was able to establish his own factory.

Mr. Mallari thinks that he can follow the footsteps of his friend. As he is already 47 years old and
his oldest child is about ready to enter college, he thinks this is the best time for him to consider sending
his son to an engineering school. His decision will enter on which school and which engineering course.
He feels that his children are keenly interested in whatever career he will ask them to take.

Mr. Mallari has three sons, all belonging to the top ten in their respective classes. He thinks all
three have the potential to help him realize his dream of establishing his own assembly plant. His
immediate concern now is to identify the right college for his children.

Case 2. R. E. CONSTRUCTION: It’s Now or Never

When Engineer Romeo Estabillo finished his Civil Engineering course at Mapua Institute of
Technology, he took the board examination and passed it in 1981. Wanting to start independently, he
went back to his hometown (Santiago City) to organize his own construction firm. In his first few years of
operation, he accepted contracts for the construction of residential houses. As he gained experience, his
clients grew in number, and even the most prominent persons in the province of Isabela availed of his
At the start, he hired two assistants to help him in his daily routine as a contractor. One of the
two assistants, Mr. Silvino Santiago, was a third year civil engineering student who had stopped
schooling due to financial difficulties. His main task was a draftsman. His duty was to produce all
documents relating to physical requirements of the various contracts entered into by his boss. Among
these documents are the building plan, specifications, bill of materials, building permit, etc. his
additional duty was to assist Engineer Estabillo in supervising the foremen and workers at the various
construction sites.

The second assistant, Mr. Romulo Mamaril, was assigned to coordinate purchasing,
bookkeeping, and other related administrative activities.

At the third year of operations, Engineer Estabilo was already directing operations in his newly
constructed office inside his residential compound. By this time, two more female employees were hired
to assist in the various task perform in the office.

By 1994, Engineer Estabillo reviewed his company’s payroll. It indicated that he has in his
employ six full-time civil engineers, two draftsmen, ten administrative personnel, one messenger and
one security guard. The foremen and laborers working at the various projects were contractual.

By June 1996, Engineer Estabillo felt that business was continuously growing, so he will have to
secure the services of four additional civil engineers on a full-time basis. As he was directly supervising
all operations are now more complex that decision-making must be little scientific. With this thoughts,
he pondered on how he will go about solving problem.

Case3. MOTORBUS COMPANY: Que Sera Sera

Engineer Hermogenes Ancheta has just received his appointment papers from his new
immediate superior, the Vice President for Operations. He has been promoted from Assistant Manager
to Manager of the Maintenance Department. After congratulating him, is boss gave him a verbal
directive that he should put some order in his department and make it work in the most effective and
efficient manner possible.

Engineer Ancheta has just passed the board examination for Mechanical Engineering when he
joined Motorbus Company in 1993. By June 1995, he informed his former classmates at the University of
Santo Tomas that he was promoted as Assistant Manager for Maintenance.

The former manager of the department, Engineer Gaudencio Inductivo, joined the company
since it started operations in 1989. A total of ten buses began plying the Manila-Isabela route. A
maintenance unit was put up at the Manila terminal in Sampaloc. Another unit serves the Ilagan, Isabela
terminal. Each unit has a full-time mechanic and one assistant.

When a company bus comes in for repair, the mechanic diagnoses various automotive systems
in the bus and later produces a list of parts needing replacement. The mechanic sends the list to
Engineer Inductivo, who, in turn, forwards he same to the company accountant for approval of the
purchase request. Oftentimes, Engineer Inductivo performs the actual purchasing himself. Later, he
sends the purchased items to the mechanic who made the request.

The maintenance units were operating normally until new 40 buses were procured by the
company in 1993. Since then, every maintenance personnel was so busy that they threatened to quit
their jobs unless additional mechanics and assistants were recruited. By the end of 1993, each unit has a
personnel complement of 5 mechanics and 5 assistants.

Even with current developments, the old method of purchasing was not improved. Purchase
requests started to pile up. Mechanics and drivers began complaining to the VP for Operations about
delays in the delivery of needed parts.

The VP for Operations immediately sent a note to Engineer Inductivo ordering that the problem
should be resolved immediately. Engineer Inductivo was hard pressed and he could not offer an
immediate solution. The next day, Engineer Inductivo informed the VP for Operations that he is
requesting for the approval of his application for retirement as he is already 62 years old.

The VP forwarded the request to the President with an endorsement justifying the request. On
the same day, the request for the retirement was approved. The next day Engineer Ancheta received his
appointment papers promoting him to Manager.

One of the first things Engineer Ancheta did was to inspect the storage rooms for parts. He
found out that the room was full of an uneven supply of parts. Some parts were of excessive quantities,
while some important ones were inadequately stocked. A corne of the room contains a big volume of
obsolete parts.

At the end of the day, Engineer Ancheta was informed by the VP that the company will be
fielding an additional 50 new buses within 30 days. This will mean that by next month, about 100 buses
will be servicing the various routes assigned to Motorbus Company.

Engineer Ancheta is now mulling over how he will make the operations of his department as
efficient and effective as possible.


The Bits and Pieces International Corporation (BPIC) is one company that appears to be
succeeding and growth has become a part of its agenda for the next few years. This is quite unusual for
a company whose certificate of incorporation has only been approved by the Securities and Exchange
Commission four years ago.

BPIC is maintaining an office at the Makati Avenue in Makati and a plant at Sta. Rosa, Laguna.
The company is producing various injection molded plastic products classified as consumer and
The key officers of the company are as follows:

President and Chairman of the Board: Engineer Rodrigo Reyes

Vice President and General Manager: Engineer Jesus Ualat

Corporate Secretary: Mrs. Mildred Salazar

Treasurer: Ms. Purita Toquilar

Auditor: Ms. Elsa Marzo

Engineering Manager: Engineer Silvino Santiago

Production Manager: Engineer Severo Lagayan

The organization chart of BPIC is shown in Excibit 1.

The company, classified as a manufacturing corporation, operates on two activities.

1. Production of stocks to be sold to the local market.

2. Production as a subcontractor

BPIC does not maintain a sales force. The general manager acts as marketing executive and
directly transacts business with customers.

Te company’s average sales per month are as follows:

Product Average Sales per Month

Ball Pen Tips P 340, 000

Sputum Cups P 900,000

Grease Cups P 100,000

Bottle Cups P 100,000

PVC Fittings P 200, 000

Total P 1,640,000

At current output levels, the company was declared profitable.

The following financial data were provided:

1. Profit margin (net income/sales) = 32%
2. Return on total assets (net income/total assets) = 72%
3. Annual turnover = 15 times
4. Current ration = 1.1
5. Acid test ration = 1.05

An analysis of the company’s market potential convinced the top management to consider
expansion. It was also decided that a new product, the tissue holder, must be added to its existing line
of products.

The target sales for the next three years are as follows:

Products Year 1 Year 2 Year 3

Ball Pen Tips P 6M P 7M P 8M

Sputum Cups 12M 22M 33M

Grease Cups 12M 13M 14M

Bottle Caps 24M 36M 54M

PVC Fittings 48M 58M 70M

Tissue Holder 48M 58M 70M

Total P 154M P 194M P249M

The company made provisions for improving its facilities including land, building, machinery, and
equipment. The hiring of additional manpower was also proposed.

The following constitute the positions proposed:

Position Quantity

Finance Manager 1

Quality Control and Research and

Development Manager 1

Senior Machinist 1

Junior Machinist 2

Helpers 2
The president ordered the general manager to prepare an organization chart for the new set up.
They key officers of the company were directed to review the proposed setup and present their
comments on an executive meeting scheduled next week. The proposed organization chart is shown in
Exhibit 2.

Engineer Lagayan is now contemplating on what credible points he is going to raise in the


The Kundiman Communications Corporation (KKC) is a local company with more than 2,000
persons in it’s payroll. The company’s top management is composed of the President, the Vice President
for Marketing, the Vice President for Operations, and the Vice President for Administration.

A member of the staff, Engineer Lorenzo de Guzman, an electronics engineering graduate, has
just received an order from his immediate superior, the VP for Operations, to head the newly built
telecommunication facility in Antipolo, Rizal. So far, he is the oly company personnel identified with the
new facility. He was given three months to make the facility operational.

Engineer de Guzman appraised that for the Antipolo unit to operate, it will require the services
of a number or persons skilled in the various activities that will be undertaken.

As he has been working with KCC for ten years (five years in the field and five years in the head
office), Engineer de Guzman is familiar with many aspects of the firm’s operation. Some of the
supervisors and three of the key officers are his friends.

Engineer de Guzman felt that the various trainings KCC provided him had really prepared him
well for the technical aspects of his new job. His exposure to the different units at the head office will
also be useful in some ways to administrative aspects of his position. However, his trainings and
experiences have not provided him with expertise to recruit qualified persons to occupy the various
positions that will be created. To begin with, he does not even information on the number and nature of
the positions to be created.

As he was inspecting the building in Antipolo where he will hold office, Engineer de Guzman
wondered if he could convince top management to transfer some of his acquaintances in the head office
to his new assignment.

Engineer de Guzman knows that his next promotion will depend much in the success of the new
facility under his direction. He thought that ,if he could only get the right persons, his job would not be
too difficult. With this in mind, he pondered on what his first move must be.


Engineer Godofredo Monsod, Jr., general manager of Northern Container Corporation (NCC),
was taken aback by a letter-reply from a prospective new customer (see Exhibit 1). His company has
been operating for only five years and is in need of new customers with potentials of doing business
with them in a long-term basis.
NCC is engaged in the manufacture of general and sanitary tin cans, cooking oil filling facilities,
and moulds and dies fabrication. Its factory and administrative office is located at Valenzuela, Metro

Since its first year of operation, Engineer Monsod worked hard to make NCC’s operation at full
capacity. The company’s various departments are manned by a personnel complement of 323, growing
by 5 percent annually.

The increasing number of employees is a result of the growing patronage of the company’s
products by customers. Engineer Monsod felt, however, that the company needs one more good
customer and their operations will be at full capacity. It was in Octiber 1996 that Engineer Monsod came
in contact with the general manager of a newly established company, Mr. Godofredo Tapiador. Engineer
Monsod was able to convince Mr. Tapiador to order his tin can requirements from NCC.

In January 10, 1997, NCC’s production manager informed Engineer Monsod that unless new
production orders are received by his deparment, he will be forced to recommend the lay-off of 12
workers in the factory. Five days later, 12 workers were indeed laid off.

It was in Janury 25 that Engineer Monsod thought of making follow-up the agreement between
him and Mr. Tapiador. A letter was sent to Mr. Tapiador on the same day. On January 28, Engineer
Monsod read the reply of Mr. Tapiador.

After a while, Engineer Monsod composed himself and prepared to think hard about what
happened and what possible remedies could be worked out.


Engineer Felicidad Lazaro, a mechanical engineering graduate of Adamson University, has been
operating in the past five years an auto parts supply in Kumintang Ilaya, Batangas City. It is lucrative
business she inherited frim her father.

Four years ago, she started teaching on part-time basis at the Batangas Polytechnic College.
After a year, she became a full-time faculty member of the college of engineering. She attended to her
auto parts business after her official hours at the school.

Miss Lazaro’s dedication to her duties earned her the chairmanship of the Mechanical
Engineering Department. When her boss, the dean, was offered a good paying job abroad, he resigned.
Miss Lazaro was named the new dean of the College of Engineering.

Miss Lazaro feels that even if she offered a job anywhere, she cannot accept it because of her
concern for her business. This made her also think that she must take her new job as dean, seriously.

Miss Lazaro’s first concern is to recruit well-qualified engineers to fill up the slots left by five
faculty members who resigned. An advertisement for the vacancies was made. After a few weeks of
waiting, only ten applications were forwarded to her. Nine of the applicants were new graduates and
have no job experience of any kind. The tenth applicant is a retired government employee with no
teaching experience.
Miss Lazaro slowly realized that there are good engineers in the area but they are not attracted
by the prospect of teaching engineering subjects. Miss Lazaro is also aware that even those that are
currently employed by the school are only waiting for a good job offer from other institutions.

Miss Lazaro was mildy shocked when her assistant showed her enrollment statistics of the
College of Engineering. In the past five years, a steady 10% increase in the number of students was
noted. Last year, there was 16% increase.

Just yesterday, Engineer Lazaro was approached by two engineering professors, one a
department chairman, and the other, a senior faculty member. They were requesting for a year’s leave
of absence. Because nobody at the moments could take their place, Engineer Lazaro was given the
information that the two will take jobs in another company on a one-year trial basis. If prospects are
good, they will resign from the school.

After Having been informed of the disapproval of their request for leave, the two professors
filed their irrevocable resignations the next morning.

Engineer Lazaro is now faced with two serious problems:

1. Formulating an immediate solution to the shortage of teachers in her area of concern;

2. Keeping the incumbent ones satisfied with their jobs.

Engineer Lazaro is now contemplating how she will survive this crisis.


Right after Engineer Oscar Pascua finished his electrical engineering course at FEATI University in
1985, he was hired as an employee of the National Electrification Administration (NEA). He was assigned
to handle jobs in the various units of NEA until his promotion to Chief Planning Officer in 1994. His main
function was to supervise the planning activities of his unit. Three engineers and two other employees
reported directly to him. His performance was rated very satisfactory.

Engineer Pascua attended training sessions of various kinds including those for management. He
finished his M.B.A course in 1995.

When the position of general manger of the Buenavista Electric Cooperative, Inc. (BECI) became
vacant in January1996, he was nominated by NEA. He got the post in March 1996. Aware of the many
problems besetting the cooperative, he immediately went to work.

When Engineer Pascua called the key officers of the cooperative to a meeting, he was appraised
of the following:

1. That the price of electricity charged to BEICI’s customers is the fifth highest in the
2. That 25 percent of the electricity service provided by BECI is lost every month and
cannot be accounted for;
3. Requisitions for supplies and materials are served after delays of as long as three
4. Some employees of the cooperative do not report regularly for work;
5. The increasing amount of uncollected accounts.

Three days after the meeting, he recommended to the board of directors the following:

1. The dismissal from the service of employees not regularly reporting for work;
2. Salary increases of up to 20% for every employee on the payroll;
3. The hiring of eight additional employees; and
4. The formation of a team to investigate and recommend measures to minimize
“system loss”.

All his recommendations were approved by the board, after which Engineer Pascua signed all
the necessary memoranda to implement his programs. He made regular inspections of the
activities of the various units of the cooperative.

During the first week of March 1997, he convened the key officers for an evaluation of the past
year’s activities. The following points were made clear to him:

1. No reduction in the price of electricity could be extended to BECI’s customers because

no reduction in the overall cost of doing business was achieved.
2. Instead of reducing the 25% system loss, it even went up to 26%.
3. There was no improvement in the requisition of supplies and materials. Delays still
reach three months.
4. There is a new set of employees who do not report regularly for work.
5. The amount of uncollected accounts increased from P3.8 million to P4.2 million.

Engineer Pascua concluded that in spite of the granting of salary increases requested by
the rank and file, no subsequent improvement in services was registered. He is now considering
more drastic measures but he is not sure if it is the right thing to do. In addition, he is also aware
that there are some employees who are qualified and dedicated to their jobs.


Engineer Frederick Panganiban was reading the advertising sales report handed to him by his
assistant. The report contains information consolidated from the ten radio stations owned and operated
by Good Music Broadcasting Corporation (GMBC). These stations are located in the various parts of the

GMBC headquarters and sales office are located in Makati. GMBC derives income from
advertisements lodged by companies like San Miguel Corporation, Ayala Life, and others. The sales
office receives the cassette tapes and written containing the advertising messages of the client

The tapes are meant to be played at regular intervals in all of the ten radio stations operated by
GMBC. The written text is an alternative advertising form read by the radio announcers at regular
intervals. An advertising message does not exceed one minute. The advertisers are billed depending on
the frequency of exposure of their messages.

Each station is managed by a station manager who reports directly to Engineer Panganiban, the
general manager. The stations are allowed to accept local advertisements subjects to availability of slots
after accommodating the national advertisers.

A certain portion of the advertising income is credited to the account of the individual stations
depending on the assignments sent to them by the GMBC headquarters. The total advertising income of
a station consists of the credited account from the head office plus whatever income from local
advertisers is derived.

Engineer Panganiban is now reviewing the consolidated sales report. He wants some
improvement in operations so that the overall income will increase. He feels that the sales report is
useful, but he believes some other data may help him make a better decision.


It was in December 19, 1990 when Engineer Milagros Barera founded her own company, the
Pretty Dove Development Corporation (PDDC). The company was able to buy a 51-hectare farmland
along the diversion road in Baliwag, Bulacan. The land was developed into a residential subdivision with
lot sizes ranging from 300 to 450 quare meters. Selling began as early as June 1992.

Before founding PDDC, Engineer Abrera accumulated many years of experience working with
various companies from construction to real estate develop ment. The exposure helped her in managing
the activities of the company. As general manager of PDDC, Engineer Abrera expanded its operations.
Rewlands were acquired in Cabanatuan Cuty and San Joses City in Nueva Ejica, in Bataan and in Tarlac.
The marketing department of the company was able to sell the developed residential lots as quickly as
they should.

Engineer Abrera feels contented as the company’s performance was beyond her expectations.
As she was reminiscing her graduation day at the University of the East in March 1968, she remembers
the words of her close friend:

“Mila, we have already finished our B.S. in Civil Engineering course. Someday, you and I may be
successful, but remember, nothing lasts forever. However there is something you can do to delay the

Engineer Abrera suddenly thought that wgat her company is reaping now may not last forever.
The demand for residential lots may decline or there may be an oversupply of lots offered for sale.

In a recent meeting of the key officers of the company, the marketing manager hinted that the
company’s sales growth may have already reached its peak and recommended that maybe it is time to
consider designing a new product.

After meeting, Engineer Abrera sank in deep thought thinking of the relevance of a new product
design. After all, when she considered developing residential lots, it was as if she had a natural feeling
that households will require them. Years of observing keenly the market gave her with sufficient insights
on demand and product specifications. Now, she feels so lost in deciding what moves she should make.


Samuel Bugarinand Antonio Tagorda were classmates at the Chemical Engineering Department
of De La Salle University. After passing the board examinations in 1981, Engineer Bugarin applied for a
job in a chemical manufacturing company. He first worked as an assistant in the quality control unit.
Later, he became chief of the unit. He handled various jobs in the production department. Because of
his good performance, he was promoted to production manager in 1993.

Engineer Tagorda got a job in 1982 as production planner of Reliance Chemical Company. In
1990, he was assigned as assistant production manager. When the company’s marketing manager and
was named as the new marketing manager. His main function was to market the company’s products
consisting of synthetic resins, aluminum paste, adhesives plasticizers, calcium sulfate, etc. When he
assumed his post as marketing manager, the company is already serving a group of loyal customers. The
increasing requirements of these customers also meant additional orders for the company’s products.
The company’s sales increased even if the number of its customers did not.

In a class reunion held in April 1997, Samuel and Antonio met and they conversed for more than
three hours. Samuel mentioned that he had started organizing his own chemical manufacturing firm and
he wanted Antonio to join him. Antonio agreed and in a subsequent meeting decided to divide the work
between the two of them. Samuel was to take care of production and Antonio would handle marketing.
They decided to invite an experienced finance officer and a high school classmate, Egardo Abuan. He
became the company’s finance manager.

The company was registered as a stock corporation and the capital contribution of the
stockholders were as follows:

Name of the Stockholder Amount of Capital Contribution

1. Samuel Bugarin P30,000,000

2. Antonio Tagorda 15,000,000
3. Edgardo Abuan 3,000,000
4. Jesus Ualat 1,000,000
5. Rosarion Mariano 1,000,000
6. Ausberto Taguinod 1,000,000
7. Francisco Bundoc 1,000,000
8. Amparo Paragas 1,000,000
9. Andres Nicolas 1,000,000
Total P54,000,000

The three agreed to produce caustic soda liquid, hydrochloric acid, soda ash, sodium sulphate,
sodium tripolyphospate, and sulfuric acid. The construction of the company’s plant has already begun in
Dasmarinas, Cavite. The company has been named the Bugtag Chemical Corporation.
Samuel has already started organizing the production department by hiring a production
planner. Antonio is still considering what steps to take in organizing his department. One of his problems
is the lack of information regarding the nature of the market the company must tap. Also, Antonio is
aware of the utmost importance of providing the production department with a demand forecast for
the company’s products.


In 1964, four girls who were in their fourth year high school at St. Mary’s in Bayombong, Nueva
Viscaya, made a pact that they must be together even after college. The girls consisting of Glorian
Tadino, Rosemarie Ginez, Ligaya Sebastian, and Rosalie Chico were the brightest in the graduating class.
They parted ways in college, however.

Gloria went on to finish a civil engineering course at the University of San Agustin. Rosemarie
got her industrial engineering course at the University of Manila. Ligaya was awarded a diploma in
sanitary engineering by National University. Rosalie graduated with a business management degree at
St. Paul College.

In 1973, the four were reunited at the birthday party of Gloria. All four were already working
and have good paying jobs. Rosemarie mentioned to her friends that maybe they should put up
business. All agreed and within a short period, they opened a construction and hardware supply store in
Bayombong. A capital contribution of P100,000 each was placed in a common equity fund. The store
carried the name Four Aces Construction and Hardware Supply (FACHS) and Ligaya was assigned as store
manager. The operation was successful that after two years, the firm’s value was placed at P956,000.

A second store was opened in 1976 at nearby Solano town and was assigned to Gloria. The
operation was also a success. This prompted the four to open another store in Santiago City under the
managership of Rosemarie and a fourth one in San Jose City under the care of Rosalie.

The company was able to maximize profits by installing a centralized purchasing system. As a
result, volume discount and credit extensions were granted by the suppliers. The company was able to
institute an effective personnel development program.

By December 1997, FACHS’ assets were valued at over P75 million. The four ladies realized that
an opportunity for expansion exists but they also understand their limitations. They are aware that they
are not getting any younger as all of them are already fifty years old. In addition, expansion would mean
additional funds will be required. Nevertheless, they thought that it would be nice to allow the business
to grow even if they are no longer capable of doing so. As all of them are already married and have
children, the idea was deemed appropriate.

As Gloria, Ligaya, Rosemarie, and Rosalie faced each other in a meeting, they hoped that options
will be brought up by anybody to help them solve their problem.