SARAP Strama

Submitted by
July 1, 2014
Sarap
Table of Contents
EXECUTIVE SUMMARY 4
1 INTRODUCTION 6
2 RESEARCH DESIGN AND METHODOLOGY 7
LIMITATION OF THE STUDY 8
3 VISION/MISSION 9
4 EXTERNAL ENVIRONMENT 15
4.1 ECONOMIC FORCES 15
4.1.1 Less but Frequent Purchases of Goods by Consumers 15
4.1.2 Decrease in Food Expenditure at the Expense of Other Commodities 15
Ateneo Graduate School of Business
4.2 SOCIO-CULTURAL, DEMOGRAPHIC, AND ENVIRONMENTAL FORCES 15
4.2.1 Significant Distribution of Households in Visayas and Mindanao areas 18
A Strategic Management
4.2.2 Fast-paced Lifestyle Calls For ‘Quick And Easy’ Dependable Solutions
4.2.2 More Women are Joining the Work Force and Becoming More Independent
19
21
Paper 4.2.2 Still ‘Low’ Dish Penetration of Packaged Soups in Regularly Cooked Soupy Dishes
22
4.2.2 People are Becoming More Health Conscious 23

4.3 TECHNOLOGICAL FORCES 21
4.3.1 Increasing use of the Internet 23
4.4 POLITICAL, GOVERNMENTAL & LEGAL FORCES 24
4.4.1 Political Instability 24
5 INDUSTRY AND COMPETITIVE ANALYSIS 26
5.1 INDUSTRY ANALYSIS 23
for SARAP
5.1.1.Growth of the Flavorings Category whilst the Packaged soups 23
Submitted to ofProfessor
5.1.2. Lack DifferentiationHilda
AmongstTeodoro
Cooking Aids Brands 26
5.1.3. Versatility Proposition of Competitors 27
5.2 PORTER’S 5 FORCES ANALYSIS 28
5.2.1 THREAT OF NEW ENTRANTS 28
5.2.2 BARGAINING POWER OF BUYERS 29
5.2.3 BARGAINING POWER OF SUPPLIERS 29
5.2.4. THREAT OF SUBSTITUTES 30
5.2.5. RIVALRY AMONG COMPETITORS 30
5.3 COMPETITIVE PROFILE MATRIX 31
5.4 COMPETITORS 37
5.4.1 Misan Corporation 39
5.4.2 Yummy Philippines, Inc 39
6 EXTERNAL FACTOR EVALUATION MATRIX 41
7 INTERNAL ASSESSMENT 45
7.1 CULTURE 45
7.1.1 Values 45
7.1.2 CORPORATE SPIRIT 45
6.1.3 PROFITABILITY 39
6.1.4 GROWTH RATES 39
7.2 MANAGEMENT 46
6.2.1 MANAGEMENT SYSTEM 46
6.2.2 STRATEGY 46
1
Sarap
6.2.3 ORGANIZATION 47
6.2.4 SYNERGY AMONG THE SM GROUP OF COMPANIES 43
7.3 MARKETING 48
7.3.1 PRODUCT 48
7.3.2 PRICING 48
7.3.3 MARKET DISTRIBUTION 49
7.3.4 CHANNEL PRIORITIES 49
7.3.5 Good Customer Marketing Standards 51
7.3.6 Excellent Market Research Capability 51
7.4 FINANCE 51
7.4.1 Liquidity 52
7.4.2 LEVERAGE 53
7.4.3 ACTIVITY 53
7.4.4 PROFITABILTY 53
7.4.5 GROWTH 54
7.5 OPERATIONS 54
7.6 RESEARCH AND DEVELOPMENT 54
8 INTERNAL FACTOR EVALUATION MATRIX (IFE MATRIX) 56
9 STRATEGY FORMULATION 61
9.1 THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) 61

9.2 STRATEGIC POSITION & ACTION EVALUATION MATRIX (SPACE) 62
9.3 INTERNAL-EXTERNAL (IE) MATRIX 64
9.4 GRAND STRATEGY MATRIX 65
9.5 GE MCKINSEY MATRIX 66
10 SUMMARY OF MATRICES & ANALYSIS 67
11 QUANTITATIVE STRATEGY PLANNING MATRIX 69
12 PROPOSED STRATEGY 71
12.1 STRATEGIC OBJECTIVE 71
12.2 MARKET PENETRATION 72
12.3 MARKET SEGMENTATION 72
12.4 STRATEGIC POSITIONING 73
13 ACTION PLANS AND PROGRAMS 74
14 STRATEGY EVALUATION AND CONTROL 75
14.1. BALANCED SCORECARD 76
15 STRATEGY MAP 78
16. PAST AND PROJECTED FINANCIAL STATEMENTS 79
REFERENCES 83
APPENDIX
2
Sarap
Executive Summary
This strategic management paper aims to develop a viable strategy for the Sarap packaged soups business
retail business in the Philippines. The global brand ‘Sarap’ first came into the Philippine market in 1972,
with packaged soup cubes as its pioneering and flagship entrant in this high-potential Asian market.
Sarap is a relatively familiar brand known not just for packaged soups but for Sinigang mixes, liquid
seasonings, recipe mixes, powdered flavorings, packed soups and pasta as well. To date, packaged soups
is the biggest contributor in volume and value amongst the products in the Sarap portfolio. With 90%
market share in a Php 2 billion market, Sarap cubes revenue in 2004 is estimated at Php1.6 billion and
still managed to grow by 7% with an estimated Php1.7 billion sales in 2005.
However, the packaged soups category is experiencing flat growth and has reached its maturity at the
dawn of powdered flavorings. The brand’s strategic objective is to defend the relevance of packaged
soups by positioning it as ‘best for soupy dishes’ whilst establishing its presence and leadership in the
powdered flavorings segment. With the use of several strategic management tools, it was identified that it
is best to employ market penetration.
It was established through Project Pinoy that the market for packaged soups still has a lot of room to
grow, especially in soupy dishes where only 12% of all soupy dishes is penetrated by packaged soups.
By utilizing brilliant marketing, campaigns on soup can help arrest a possible decline in the packaged
soups category.
Other opportunities identified through the study apart from aggressive marketing campaigns behind
packaged soups are deemed to be necessary to realize and expedite the achievement of the brand’s
objective:
 On product distribution, improving the Sarap portfolio to be able to cater to downline channels
via direct servicing.
 On geographies, valuing the Visayas and Mindanao regions as a separate entity from that of
Luzon and GMA for reasons that the cultures and taste preferences are so distinct in itself
creating a world of possibilities for the business.
 On consumer purchasing habits, developing lower cash outlay products as an answer to a

growing economic reality.
Simultaneously, other efforts on master brand activations and company-wide initiatives are deemed to be
necessary as it can assist Sarap address growing direct and indirect consumer concerns such as:
3
Sarap
 The health factor in the use of cooking aids or any convenient, ready-to-eat, easy-to-prepare
commodity is addressed by Sarap’s thrust on Vitality.
 Certification of all cooking aids as ‘good for you’ products.
 Differentiating the Sarap brand from competition or other food brand with a relevant and
aspiring proposition that consumers will be able to connect to.
4
Sarap
1 Introduction
A viable strategy for the Sarap packaged soups business in the Philippines is what this strategic
management paper aims to develop. The global brand ‘Sarap’ first came into the Philippine market in
1982, with packaged soups as its pioneering and flagship entrant in this high-potential Asian market.
Sarap is a big player in the packed soups category. Through Sarap’s diverse portfolio, it has established
itself to be market leader in several categories and has always been referred to as a respectable brand in
the categories it plays in.
Sarap packaged soups remains the undisputed market leader in the packaged soups category with an
estimated market size of Php2 billion. With over 90% market share, Sarap packaged soups revenue in
2004 is Php1.6 billion and still managed to grow by 7% with Php1.7 billion sales in 2005. The packaged
soups category is considered to be one of the core categories since not only does Sarap packaged soups
stand for the category in itself but it is also very profitable and is able to support other adjacent categories
in the Sarap portfolio.
Sarap packaged soups are available in various retail channels nationwide - supermarkets, groceries,
market stalls and sari-sari stores. It is sold at a very affordable price of Php 9.50 per shell box (box of 2
packaged soups) and Php28.00 per pantry box (box of 6 packaged soups).
Sarap has an estimated 500 direct hire employees working in different functions in head office whilst
there are a thousand or so working in the different factories of Sarap’s 3 rd party manufacturers and
outsourced agencies.
5
Sarap
2 Research Design & Methodology

The construction of this paper needed several facts and information which were obtained primarily
through public and private sources alike.
The websites of the following government agencies were accessed to get the necessary and pertinent
information needed as references for this study:
 National Statistics Office – www.nso.gov.ph
 Bangko Sentral ng Pilipinas – www.bsp.gov.ph
 Department of Trade and Industry – www.dti.gov.ph

 National Economic Development Authority – www.neda.gov.ph
 Securities and Exchange Commission – www.sec.gov.ph
Methodology
Summary of Frameworks, Tools, Activities and Outputs

for this Strategic Management Paper
Framework Tools Activities Output
Ten Essential
Mission Statement Mission and Vision
Components of a
Evaluation/Formulation Statements
Mission statement
External Factor
General Environment
Evaluation (EFE)
Analysis Opportunities and
Matrix
Threats
Porter’s Five Forces Competitive Profile
Industry Analysis
Model Matrix (CPM)
Internal Factor
David’s Functional Strengths and
Evaluation (IFE) Company Analysis
Analysis Weaknesses
Matrix
Internal-External
Matrix (IE)
David’s Matching TOWS Matrix Objectives and
Strategy Formulation
Tools SPACE Matrix Strategies
Grand Strategy
Matrix
Quantitative
David’s Matching Prioritization of Recommended
Strategic Planning
Tools Strategies Strategies
Matrix (QSPM)
Market Segmentation Action Plans
Implementing
and Product Proforma Financial
Strategies
Positioning Statements
Norton and Kaplan’s Strategy Evaluation Performance
Balanced Scorecard and Control Measures
6
Sarap
Other research tools made available through Sarap were also used such as:
 Global Market Research Advisor
 Global Market Research Retail Audit
 Global Market Research Homepanel
 ATP (Advance Tracking Program)
 The Sarap Story (to quote brand values and corporate spirit)
 Project Sarap – In-House Monitoring Study
Limitations
This strategic management paper is limited to the packaged soups business of Sarap Foods.
7
Sarap
3 Vision & Mission

Amidst stiff competition in the fast moving consumer goods industry of cooking aids, Sarap’s
commitment is most evident in its continued desire to perfect its business where it is currently playing a
major role as a market leader in the packaged soups category.
3.1 Current Vision and Mission Statement
3.1.1 Vision
To be a Homemaker’s Best Friend.
3.1.2 Mission
With the help of our cooking aids, she is able to integrate her two desires: to nourish her family and
nurture her relationships. She is able to create joyful, nutritious meal experiences. Through the meal she
creates, she can make an impact on relationships with people around her to suit her personal agenda. She
becomes an inspired cook and also an accomplished woman. This 2-fold “Daily Victory” renews her
feeling of personal accomplishment and self-worth.
3.1.3 Review of the Current Vision and Mission Statements
Sarap’s vision is currently designed as a brand capsule where it is succinctly described as such for a very
targeted subject – the woman. It may be clear and compelling enough to refer to a ‘unifying focal point
of effort’ since ‘cooking’ is considered to be a mundane household chore that is most often than not
associated with the woman, especially in the Philippines.
8
Sarap
Vision
Criteria Evaluation
1. Vivid image no
2. Realistic no
3. Aspirational yes To be a Homemaker’s Best Friend
However, as far as the vision is concerned, it seems to lack the aspirational yet realistic angle that is to
inspire and move the team as one since it is stated in a manner of activity portraying not only
commitment but conviction to do its part in realizing a dream. This is good in so far as marketing is
concerned but as a business, it should be further enhanced to embody more meaning for all stakeholders.
Similarly, the mission is reflective of the brand’s commitment as to what it can and will do. However, it
doesn’t quite capture what the business is about in totality. If evaluated using the criteria of designing a
mission statement, it would only be able to satisfy several components:
Criteria Evaluation
With the help of our cooking aids, she is able to integrate her two
desires: to nourish her family and nurture her relationships. She is
able to create joyful, nutritious meal experiences. Through the
1. Customers yes
meal experiences she creates, she can make an impact on
relationships with people around her to suit her personal agenda.
She becomes an inspired cook and also an accomplished woman.
With the help of our cooking aids, she is able to integrate her two
2. Products & Services yes desires: to nourish her family and nurture her relationships. She is
able to create joyful, nutritious meal experiences.
3. Markets no
4. Concern for Survival,
no
Growth & Profitability
5. Technology no
6. Philosophy no
7. Self-Concept no
8. Concern for Public This 2-fold "Daily Victory" renews her feeling of personal
yes
Image/ Nation Building accomplishment and self-worth.
9.Concern for Employees no
10. Nation Building no
Revised Vision and Mission Statements
3.1.4 Vision
9
Sarap
To be the most relevant and preferred cooking aid brand in the Philippines.
3.1.5 Mission
It is our reason for being to provide our customers nourishment and nurturing through joyful meal
experiences created with 'The Sarap Effect', which makes a difference in the lives of Filipino people.
Through Sarap's heritage and credibility, our cooking aids has earned its place as an established and
delicious brand preferred in both retail and wholesale markets nationwide.
By providing adequate training and a great professional working atmosphere ensuring commitment
amongst our employees, we can further improve total business for all our stakeholders and sustain our
presence.
We are committed to continue studying and understanding evolving demands through research in order
to continuously develop solutions to our customers needs for the changing times.
10
Sarap
3.1.6 Review of Sarap’s Revised Vision and Mission Statements
Vision
Criteria Evaluation
1. Vivid image To be the most relevant and preferred cooking aid brand in the
yes
Philippines.
2. Realistic yes preferred cooking aid brand in the Philippines.
3. Aspirational yes To be the most relevant and preferred cooking aid
Criteria Evaluation
It is our reason for being to provide our customers nourishment and

1. Customers yes nurturing through joyful meal experiences created with 'The Sarap
Effect', which makes a difference in the lives of Filipino people.
Through Sarap's heritage and credibility, our cooking aids has earned
2. Products & Services yes its place as an established and delicious brand preferred in both retail
and wholesale markets nationwide.
3. Markets yes retail and wholesale markets nationwide
By providing adequate training and a great professional working

4. Concern for Survival, atmosphere ensuring commitment amongst our employees, we can
yes
Growth & Profitability further improve total business for all our stakeholders and sustain our
presence.
5. Technology yes We are committed to continue studying and understanding evolving

demands through research in order to continuously develop solutions to
our customers needs for the changing times.

6. Philosophy yes nurturing through joyful meal experiences created with 'The Sarap
Through Sarap's heritage and credibility, our cooking aids has earned
7. Self-Concept yes its place as an established and delicious brand preferred in both retail
and wholesale markets nationwide.

8. Concern for Public
yes nurturing through joyful meal experiences created with 'The Sarap
Image/ Nation Building
By providing adequate training and a great professional working

atmosphere ensuring commitment amongst our employees, we can
9.Concern for Employees yes
further improve total business for all our stakeholders and sustain our
presence.
11
Sarap

10. Nation Building yes nurturing through joyful meal experiences created with 'The Sarap
The vision and mission should be cascaded to the employees of Sarap by hanging
posters of it in strategic locations in the office, making it part of the orientation and
posting it on the website.
12
Sarap
4 External Assessment
There are several external forces that affect the packaged soups industry. This strategic paper will
establish these realities and make it more relevant by translating it in terms of opportunities and threats
for the brand.
4.1 Economic Forces

4.1.1 OPPORTUNITY : Less but Frequent Purchases of Goods by Consumers
Figure 1: Frequency and Volume per Trip of Cooking Aids
FREQUENCY
24 25
12 14 12
11
7 7 6 7
3 3
MSG ROOTS CUBES FLAVORINGS SINIGANG PACK SOUPS
VOLUME PER TRIP

32
28 25
22 24
20 19
16 15 14
2 2
MSG (gm) ROOTS (gm) CUBES (gm) FLAVORINGS (gm) SINIGANG (gm) PACK SOUPS (pc)
MSG ROOTS CUBES FLAVORINGS SINIGANG PACK SOUPS
YTD05 YTD06
Source: Global Market Research Homepanel
Indicative of how difficult life is becoming, more and more, it can be observed that people are really
trying to live on a day to day basis. Filipinos spend less whenever they shop or buy commodities. As
much as possible only what they need for the day or for a short span of time is what they purchase.
However, the frequency of which is increasing. They won’t mind going through the hassle of having to
buy again especially once the need for it arises.
Relative to the uptrend in the frequency, the quantity of what they purchase is lessening. In the case of
Sarap, a ‘shell box’ has 2 packaged soups and it can be bought at Php 9.50. However, since 2005, the
13
Sarap
trend of purchasing just 1 packaged soup (11 gms) has more than doubled and this phenomenon would
most likely continue on as traders are adjusting towards shoppers buying habits, selling by the packaged
soup and more shoppers are moving towards this direction as well.
Figure 2: Volume Share of 11 gms purchase
VOLUME % SHARE
81 81 81
87 90 87 89 89 89 85 89 85 84 84 85 81 82
92 92 92 93 92 others
11GM
15 11 15 16 16 15 19 18 19 19 19
8 8 8 7 8 13 10 13 11 11 11
05 05 05 05 05 05 05 05 05 05 05 05 06 06 06 06 06 06 06 06 06 06
20 20 20 20 20 20 20 20 20 20 6 20 20 20 20 20 20 20 20 20 20 20 20
30 27 r 27 24 22 19 l 17 14 11 t 09 v 0 04 01 29 26 r 26 r 23 21 18 l 16 13 10
n b a r ay n u ug ep c o c an an eb a y n u g p
J a Fe M p
A M J u J O N e
D eJ eJ F M A p Ma J u e J A u S e
we e e we e we we e A e S we we e w w e e we e we w e e
4 4w 4w 4 4w 4 4 4w 4w 4 4 4w 4 4 4w 4w 4 4w 4 4 4w 4w
Source: Global Market Research
Currently, there is no SKU that addresses a single packaged soup purchase. Only traders’ own the
initiative of opening a shell box (2 packaged soups) or a pantry box (6 packaged soups) and sell by the
packaged soup. The current strategy can demand a bit more effort from the trader but they do not mind
selling in ‘tingi’ so as long as they are able to sell more. As a risk due to this phenomenon, Sarap’s sales
may experience a slight dip since shoppers who are accustomed to buying a shell box may resort to
buying just a packaged soup and this immediately cuts Sarap’s sales into half. However, this threat may
also be seen as a golden opportunity because packaged soups in a smaller format is something that is
prevalent in other countries and this just might be the solution to this rising phenomenon.
4.1.2 THREAT: Decrease in Food Expenditure at the Expense of Other

Commodities
From 1991 to 2003, family expenditures have been growing at a double digit rate per annum. If we look
closely into this expenditure type, it can be drawn that food and housing is what families spend on the
most – nourishment and shelter. However, unlike housing which is more stable in the 14% levels, +/-1%,
food, specifically, food consumed in-home has decreased significantly at the expense of several
expenditure types and shifting consumption from in-home to out-of-home. This is an indication of
14
Sarap
shifting behaviour or value wherein food is sacrificed for something deemed more important such as
convenience, transportation and communication, personal care effects, and the like.
Table 1: Distribution of Total Family Expenditure by Major Expenditure Group
Expenditure Group 1991 1994 1997 2000 2003
Total Family Expenditures (in million pesos) 623 863 1413 1802 2005
Percent 100 100 100 100 100
Food 48.5 47.8 44.2 43.6 42.6

Food consumed at home 44.7 43.5 39.5 38.7 37.3
Food regularly consumed outside the home 3.8 4.2 4.7 5.0 5.3
Housing 13.5 14.1 15.3 15.1 14.3
Transportation & Communication 5.4 4.7 5.6 6.8 7.4
Fuel, Light & Water 5.7 5.5 5.3 6.3 6.5
Education 3.0 3.7 3.7 4.2 4.0
Personal Care & effects 3.3 3.2 3.3 3.6 3.9

Other expenditures 1.9 1.7 3.0 2.9 2.9
Clothing, footwear & other wear 3.7 3.5 3.3 2.7 2.9
Household operations 2.7 2.6 2.3 2.3 2.2

Miscellaneous Expenditure 3.4 3.6 3.4 3.3 3.7
Special Occasions 2.4 2.6 2.4 2.4 2.5
Gifts & contributions to others 1.0 1.0 1.0 0.9 1.2
Households furnishings & equipment 2.4 3.1 3.3 2.7 2.8
Taxes paid 1.4 1.4 2.5 2.1 2.2
Medical care 1.8 2.3 2.2 1.9 2.2
Tobacco 1.7 1.4 1.3 1.1 1.1

Alcoholic beverages 1.0 0.9 0.9 0.7 0.7
Recreation 0.4 0.4 0.4 0.5 0.5
Source: National Statistics Office
In other countries, eating out and the shift of home-cooked meals to easy-to-prepare, ready-to-eat format
defines in-home consumption. In the Philippines, though meals are important and is a big thing in so far
as family members look forward to this occasion of eating together, it is an inevitable event that more
and more people will be living a very fast paced lifestyle and time would just be so little to even have
time to prepare and dine over a ‘home-cooked’ meal.
4.2 Socio-Cultural, Demographic, and Environmental Forces
4.2.1 OPPORTUNITY: Significant Distribution of Households in Visayas and

Mindanao areas
15
Sarap
Given the statistics (Year 2000) below at 2.5% year-on-year growth rate, the Philippine population is
currently estimated to be 85 Million with 16 Million households nationwide.
Table 2: Total Philippine Population (Year 2000)
16
Sarap
The Philippines is known for its’ 7,107 islands scattered all over the different regions of the country -
Luzon, Visayas and Mindanao. It is quite evident that each region has its’ own distinct culture. However,
it is also the very distinct differences in culture that make up what the Philippines is in itself.
There are millions of Filipinos residing in each region and what clicks in one region most likely differs in
another. There is an obvious culture that dominates over each and this makes each one ‘unique’ in its
own right.
17
Sarap
With over 40% of the Philippine population in Visayas and Mindanao, there is a huge potential to make
it big in these areas, just the way Luzon is being valued as the standard. However, if treatment for all
regions is done in a national scale, it will not be appreciated as much in other parts of the country where
it is very different (i.e. Visayas and Mindanao). Though there is the potential to be a big hit in the
southern part of the country, one will only succeed if they are addressed in their own ‘tongue’, relating to
them in their own ways.
Figure 3: Distribution of Household Population by Region
% Distribution of Household Population by Region
24 24
Mindanao
21 20
Visayas
South Luzon
21 22
North Luzon
21 21 NCR
14 13
1995 2000
Source: National Statistics Office, Global Market Research
The different regions of the Philippines are evidently distinct from each other. Though one country, its
culture is translated and brought to life ‘locally’. This is very much apparent in the different festivals,
dialects, delicacies and the like of the local areas. Given this, there really is an opportunity for Sarap to
look into each region as a distinct market in itself.
4.2.2 OPPORTUNITY: Fast-paced Lifestyle Calls For ‘Quick And Easy’

Dependable Solutions
It is inevitable that as time becomes more scarce, people would tend to look for ‘solutions’ that would
help them continue what they used to or even do more amidst time constraints. This need would then be
answered best by products that are seen to hinge on convenience as a selling proposition whilst quality
and affordability are also important considerations especially to the Filipino market.
In the latest retail audit done by Global Market Research, on analyzing shopper’s behaviour and category
trends, it was gleaned from the study that several categories are out performing others primarily because
of the aforementioned ‘must haves’.
Figure 4: Food Category Trends
18
Sarap
FOOD TRENDS 2006

60
50
40
30
20
10
0
yogurt
baby food
spaghetti
chocolate
catsup
flavorings
spirits
lollipops
noodles
packaged
packaged
tea drinks
pet foods
biscuits
ice cream
tomato paste
coffee mixes
soft drinks
instant
sauce
soups
water
GROWING SLIGHTTLY STABLE
INCREASING
According to the study, the reasons for the good performance of certain categories are due to the
following:
 Introduction of new brands that come in convenient format and an affordable price allowed new
users to get into the category or consumer needs are met.
 Introduction of new flavors allowed current users to increase their range.
 Downsizing as earlier mentioned in the growing trend of less but frequent purchases of shoppers/
consumers.
 Promotional activities that drive purchase
The study was also able to determine that the 5 consumer benefits that drive product launches are as
follows:
 Value for money
 Vanity
 Variety
 Availability
 Convenience.
Convenience is indeed a proposition that consumers will be vying for more and more since time is
becoming scarce and the pressure of having to do what they used to or even more or better is definitely
something people are worried about.
19
Sarap
This is also the case in cooking. There is less time to cook or room for error is no longer a luxury since
every minute is valuable. But food is something that is said to be the glue that keeps the family together
so it is very important that good food is served even if life has become extremely fast in a sense.
4.2.3 OPPORTUNITY: More Women are Joining the Work Force and
Becoming More Independent
Based from the National Statistics Office, the proportion of women in the labor force has increased and
primarily because nowadays, dual-income households are becoming a common practice since sustaining
a certain lifestyle has become quite a challenge. It has become normal for women to join the work force
to help their husbands support the family, to earn and be independent altogether. Even the employment
rate among women is said to be higher than the men and the age group of which is higher between 25-44
years of age. Probably because there is more to being a female - the available job would probably require
the female gender or working attributes of that one.
Figure 5: Women in the Work Force
The proportion of women in the labor force has increased

Employment rate among women is higher than men and half them are between 25-
LABOR FORCE % SPLIT BY GENDER
% FEMALE EMPLOYMENT
38 38 38 38 38 39 39 39 38 39 by Age- as of 2006 Q2
FEMALE
15-24 19
MALE 25-34 25
62 62 62 62 62 61 61 61 62 61 35-44 23
45-54 18
55-64 10
65 & Above 4
2004 Q1
2004 Q2
2004 Q3
2004 Q4
2005 Q1
2005 Q2
2005 Q3
2005 Q4
2006 Q1
2006 Q2
However, joining the work force does not excuse women from their roles at home which make it doubly
hard for them to balance. To be a good wife and mother, she has to be able to keep up with the chores.
Even if there is enough help around, it is still her who is responsible for managing everything. The
typical household chores of a woman are to keep the house clean, do the laundry, to cook and a whole lot
more. Cooking can be seen as a mundane household chore but this is where Sarap tries to come in and
help. Whilst Sarap’s competitors say that the secret is in what you use therefore attributing it to their
product, Sarap merely empowers the woman thereby branding itself as ‘A Woman’s Best Friend’. For
Sarap, it is all about the woman.
4.2.4 OPPORTUNITY: Still ‘Low’ Dish Penetration of Packaged Soups in

Regularly Cooked Soupy Dishes
In the realm of cooking aids and dishes, packaged soups are said to be best for soupy dishes since a
packaged soup format locks in the flavour of the broth that is crucial in every soupy dish base. Whilst it
20
Sarap
is also used in sautéed and saucy dishes, there are other cooking aids best positioned to work with these
dishes.
Project Sarap is a month long usage, attitude & image study with diary method conducted by Global
Research for Sarap Philippines that looked into cooking aids in dish preparation in the Philippines. It was
nationwide in scope with about 1,100 female respondents from class ABCDE, aged 25-45 years old,
purchase decision makers and in-charge of cooking at home.
Figure 6: Cooking Aids Penetration in Different Dish Types

OTHERS
7%
SAUTEED FRIED
11% 31%
SINIGANG
6%
SOUPY SAUCY
25% 20%
The PENETRATION of packaged
soups
into Soupy dishes is just 12%
Source: Project Sarap
The study reveals that out of all dishes prepared in a month, 25% are soupy and of which, only 12% has a
packaged soup in it. If further quantified this would mean that out of a hundred soupy dishes, only 12
were prepared with a packaged soup. Hence, there is still a huge potential by increasing the penetration
of packaged soups in soupy dishes. Probably, the most practical thing to do is to look into what kind of
soupy dishes are actually being prepared and Sarap should increase the relevance of using packaged
soups in these dishes so as to be made a part in the must haves in preparation of it.
4.2.5 THREAT: People are Becoming More Health Conscious
With the increasing importance of living a healthy lifestyle, individuals and manufacturers alike are
becoming more conscious about what constitutes a certain product. This growing concern about what is
good for you does not necessarily mean one would have to do away with all unhealthy food since it
would be extremely difficult and quite impossible too. Sometimes, there is a compromise between health
and pleasure as properly described in Datamonitor’s debit and credit lifestyle article.
DATAMONITOR’S VIEW:1
 In balancing health and pleasure consumers are moving towards a debits and credits lifestyle
1
DATAMONITOR Market Analysis Experts Future Briefings Debit and Credit, Balancing health and
pleasure
21
Sarap
Increasingly informed consumers have become more aware of the link between diet, health, well-
being and performance. However, in an increasingly individualized, high-paced and pressurized
society, health intentions often collide with the need for moments of escape, reward and comfort. As
consumers become more informed about health issues, they are accommodating the conflicting
needs in an increasingly calculating ‘debits and credits’ approach to their lifestyle. 2
 In a debits and credits world ‘occasions’ becomes key

Consumer behavior continues to polarize between a focus on functionality, convenience and health
at more routine moments and pure uncompromising indulgence at special, escapist or reward
occasions. As a result, it becomes increasingly important to look beyond the traditional one-
dimensional focus on ‘consumer groups’ and towards ‘consumer occasions’.3
For cooking aids, wherein MSG or sodium content are being watched out for, consumers would be
pleased to know that manufacturers are conscious of the allowable dosage in every unit. There are
several wellness campaigns from different manufacturers that would promote what is ‘good for you’.
In the case of MSG, according to expert opinions on monosodium glutamate by Steve L. Taylor,
Ph.D. and Susan L. Hefle, Ph.D. of the Food Research Allergy and Resource Program, Institute of
Agriculture and Natural Resources of the University of Nebraska, Lincoln:
“MSG is a flavor enhancer that is added to many foods but which also occurs naturally. MSG is the
sodium salt of one of the most common amino acids in the human body… MSG occurs naturally in
virtually all foods.”4
4.3 Technological Forces
4.3.1 OPPORTUNITY: Increasing use of the Internet
Internet usage in the Philippines has been growing rapidly although penetration rate still remains low.
Statistics on the country’s Internet usage are important decision-making variables for the government and
companies doing business in the Philippines. Companies in the cooking aids industry are able to create
websites that give customers nutritional information as well as a variety of recipes that use their cooking
aids to create nutritious and delicious meals.
4.4 Political, Legal and Government Forces
2
ibid.
3
ibid
4
DATAMONITOR Market Analysis Experts Future Briefings Debit and Credit, Balancing health and
pleasure
22
Sarap
4.4.1 THREAT: Political Instability
Because of its history of people power and various EDSA uprisings, the Philippines is considered
politically unstable. Charges of graft and corruption are constantly being hurled at the current
government and while the president controls the congress the possibility of impeachment though distant
still looms over her. The extent of graft and corruption throughout the government poses a threat to
multinational companies like Sarap who import many of the ingredients.
23
Sarap
5 Industry and Competitive Analysis
5.1 Industry Analysis

5.1.1 THREAT: Growth of the Flavorings Category whilst the
Packaged soups Category is Flat
The packaged soups industry is Php 2 Billion in size. According to Global Market Research’s Advisor,
the packaged soups market has been experiencing a slight setback as far as category growth is concerned,
primarily because of the shift of the growth to the flavorings category which is currently Php1 Billion in
size and is growing aggressively.
Figure 7: Basic Seasonings Category Growth
Soup and Flavorings Category Growth

Jan 2005 – Jun 2006
Category Sales
250,000,000
0% MAT Growth
200,000,000
150,000,000
+68% MAT Growth

100,000,000
50,000,000
-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2005 2006 2006 2006 2006 2006 2006
Cubes Flavorings
Source: Global Market Research Advisor
The aggressive and rapid growth of flavorings is really a huge threat to the packaged soups industry,
especially to Sarap who happens to be the market leader in packaged soups and happens to be a third
player in the powdered flavorings category.
24
Sarap
Figure 8: Flavorings Business Size in the Philippines
market overview - Table

Total Philippines - Flavorings | Period Ended Aug 2006 | Hide NA's | Colour % Chg | Share of Flavorings
Source: ACNielsen Philippines Retail Index

With a flavorings market rapidly growing and a packaged soups category that is flat, flavorings might
sooner or later overtake the packaged soups market and this is not far from happening since it has already
happened in other countries, where powdered flavorings were able to overtake the packaged soups
business as far as market dominance is concerned. This event might also happen in the Philippines. In
fact, the very phenomenal birth and aggressive growth of flavorings into the market mimics exactly what
transpired in other countries. However, unlike the Philippines who sees this coming, other countries did
not have any hunch of what was happening to their basic seasonings business.
This is a similar threat being faced by the Sarap packaged soups business in the Philippines but with the
familiarity of this occurrence, it is able to ready itself to defend its market leadership in the packaged
soups category.
5.1.2 OPPORTUNITY: Lack of Differentiation Amongst Cooking Aids Brands
In the minds of consumers, there is the need to reinforce branding and communication since
differentiation amongst existing cooking aids brands is weak. Though there has been a lot of work done
to help consumers distinguish which is which, there still lies the opportunity to really dominate and
furthermore, own the category in the minds of our consumers by a single-minded strong brand
proposition.
5.1.3 THREAT: Versatility Proposition of Competitors
Appropriate for any kind of dish and suitable for everyday cooking needs are versatility characteristics
that competitors, both Misan and Yummy want to own in the minds of consumers. Whereas Sarap’s
25
Sarap
strategy is focused – packaged soups for soupy dishes and flavorings for meatiness, criteria is very
distinguished from the rest and this is evidently shown when consumers are able to associate Sarap with
these characteristics.
Figure 9: Brand Image Profile
Source: ATP (Advance Tracking Program)
26
Sarap
5.2 Five Forces of Competition Model
In evaluating the Sarap Philippines packaged soups retail business using the five forces of competition, it
Threat of New Entrants

LOW
Bargaining Power of Buyers Rivalry among Bargaining Power of Suppliers

LOW Existing Competitors LOW
HIGH
Threat of Substitute Products

HIGH
can be said that there is no middle ground in this category. Primarily because of the complexity, there is
low threat from new entrants, whilst both buyers and suppliers have low bargaining power. The real and
bigger threats are those that come from substitute products and somehow, from existing competitors as
these are one in the same companies that manufacture both commodities. This is also probably the same
five forces evaluation of any fast moving consumer goods product such as the packaged soups.
5.2.1 Threat of New Entrants: Low
Entering into the packaged soups business would require huge capitalization because not only does it
entail some sort of technology that can actually transform all the ingredients into a ‘packaged soup’ but
the whole production line that would eventually yield the finished goods. Also, other corresponding
support that it would require to ensure success in bringing it to market would also mean more investment
and resources.
A new entrant would be competing with the big players, well-entrenched into the market and are actually
brands of stable multinational companies such as Sarap, Yummy and Misan.
Given this, it only means that the players in the market are well aware of their position vis-à-vis existing
players in the industry. They are able to manage competition and the market may be considered as
‘sizeable’, measurable or for the market leader, Sarap is able to confidently say that they are the market.
27
Sarap
However, it may also run the risk of underestimating new players to come in and give them a run for
their money.
5.2.2 Bargaining Power of Buyers: Low
Most consumer goods products have the liberty to ‘design’ their brand mix without limitations or subject
to the mercy of buyers as long as it is sound enough. By ‘sound’ it simply means that the mix is designed
for the right target consumer and this is most evident in the 4 P’s of marketing – product, price, place and
promotion.
However, for a consumer goods product such as Sarap, the inputs of buyers are still held important. This
is most evident in the way it values feedback for a product that is just about to be brought to market, a
product that is already out and doing very well and most especially for a product that is on the rocks. The
danger with this is that if buyer’s inputs, customers and consumers alike are taken for granted, the brand
mix put together just might be ‘off’ as far as filling in the gap or answering a consumer need is
concerned.
5.2.3 Bargaining Power of Suppliers: Low
Regional sourcing is enjoyed by brands that are managed by multinational companies because these
companies have the muscle to put together volumes from several countries all over the world and use it
as a leveraging factor to get the best deals from the supplier or country from anywhere in the world.
Given this worldwide phenomenon brought about by free trade, it makes it easier and cheaper for the
manufacturer to acquire the raw materials and other supplies it needs to produce the finished goods
where it is cheapest then produce it in the market that would also be wisest in terms of cost and
regulations which then yield the finished goods that will be shipped and sold to the different markets all
over the world.
In the traditional buying practice by manufacturing companies, they are able to have and sustain
partnerships with their suppliers. Partnership may be in terms of the bargain price given to them and
other non-monetary terms as well such as customer service, the sharing of the same vision, and the like.
This is quite difficult or it becomes more challenging given that the suppliers in the new world are
separated by bodies of water. Hence, the relationship becomes purely supplier-principal in nature.
5.2.4 Threat of Substitute Products: High
28
Sarap
Every consumer product should always innovate and want to be better not only because it is a promise it
has made to its consumers the moment they brought their product to market but there is the reality that
substitute products will always try to make customers switch to a cheaper or better alternative.
It can be said that the packaged soups business is ‘under-attack’ by the powdered flavorings category.
This new player is a big threat since it is aggressively growing and eating up into the shares of the
packaged soups market. When this happens, value lost is a risk that the packaged soups market is faced
with because it means there is not much differentiation in terms of ‘usage’.
5.2.5 Rivalry Among Existing Competitors: High
With the whole competitive activity of stealing shares from competitors, the very existence of
competition motivates all players to be the best there can be in the category. Continuous improvement is
definitely an advantage that consumers can expect from their leading brands since battling with other big
players in the category is an everyday reality that every brand wakes up to. Sarap’s dominance in the
category is something that is very much valued and watched out for by the brand management team.
In a high-heat category such as packaged soups, brand switching is not a far-fetched possibility since this
is a very vulnerable category. Vulnerability in the sense that once one stops making noise or buzz in
media or on-ground, further aggravated by competition, shares are sure to be at risk.
The fact that Sarap is always present above-the-line or running some activity in-store, shows it wants to
always stay top of mind amongst consumers. Women refer to it as their ‘best friend’ in cooking.
Oftentimes, it is part of their ingredient list and this is because Sarap has always reminded women about
the value of Sarap packaged soups. This place however can and will be easily foregone if competition
such as Yummy and Misan, both two big and very able players decide to give Sarap a run for their
money. At the end of the day, all these are brands that claim to be the best and say that they have the
ability to deliver the results. It only takes a consumer to try and experience it once for them to decide
what brand to continue purchasing. Also, losses cannot only be quantified for current markets but for
possible new category entrants as well.
5.3 Competitive Profile Matrix (CPM)
CRITICAL SUCCESS FACTORS Sarap Misan Yummy

Wt Rating Score Rating Score Rating Score
1 Product Quality & Performance 0.30 4 1.20 2 0.60 3 0.90
2 Effective Sales Distribution 0.20 3 0.60 2 0.40 1 0.20

3 Market Acceptability 0.15 4 0.60 1 0.15 2 0.30
29
Sarap
4 Brand Management 0.10 4 0.40 2 0.20 2 0.20

5 Customer Loyalty 0.15 3 0.45 2 0.30 2 0.30
6 Pricing 0.10 2 0.20 4 0.40 3 0.30
TOTAL 1 3.45 2.05 2.20

Note: weight score: 0.0 (not important) to 1.0 (very important)
Rating score: 4= major strength, 3= minor strength, 2= minor weakness, and 1= major weakness
In determining competitive superiority of the players in the category, the following critical success
factors have been identified:
1. Product Quality & Performance: The true measure of a brand’s commitment to deliver what the
consumer expects because products are bought or in marketing they say brands are ‘hired’ to answer a
need. Hence, the utmost consideration for a product’s success is its ability to play the part which is
mirrored in its quality and performance.
 Sarap packaged soups was able to garner market leadership primarily because of product quality
and performance. In several consumer tests, it does not fail to deliver the best ‘broth savouriness’
results vis-à-vis competitors and so it got a score of 4.
 Yummy packaged soups is a far second player in the packaged soups category. It got a score of 3
only because in the absence of Sarap, it will be the go-to brand to fulfill the need for packaged soups
especially in broth preparation.
 Misan got a score of 2 because though it is categorized to compete in the packaged soups market its
format is in powder form and the distinct qualities of a packaged soup versus powder are quite
obvious which is why the whole ‘Sarap’ campaign of Sarap worked.
2. Effective Sales Distribution: The key to success for a consumer goods product such as the packaged
soups is availability in all channels. In the Philippines, downline channels such as sari-sari stores are very
crucial. Whereas other channels such as supermarkets, groceries and market stalls also play a significant
role for it caters to a different set of shoppers.
In Global Market Research, effective sales distribution is actually measured by what they call Numeric
In-Stock or NIS. With a given universe, it will give you data on how widely distributed your product is.
Another tier of analysis on effective distribution is the Weighted In-Stock or WIS reading which will
generate quantities in each distribution point. An indication of whether or not there is enough stock cover
on-shelf or in the stock room.
30
Sarap
An account’s acceptability however greatly depends on offtake. This is sometimes referred to as

secondary sales, our customer’s sales to their customers (our end-consumers). Indirectly, offtake is also
indicative of shelf turnover, how often do retailers replenish their stocks on-shelves. No retailer would be
willing to purchase products that are slow moving or worse, not moving at all because their shelves
would be useless in terms of income generation. This may be the case for products that are not relevant,
hence, do not fill in a need or in most cases the demand for that product is being monopolized by a
bigger player as the case with Sarap packaged soups.
Figure 10: Numeric In-Stock Trended Comparison by Channel
Junichero
Vane
Blair
 Sarap got the highest score because it dominates the market and is more often than not present in all
channels. In fact, if there was only one brand being carried by the trader, it would surely be Sarap.
However, it only got a score of 3 because there are still opportunities for improvement as far as
distribution is concerned, most especially in downline channels. This is because of practical reasons
- Sarap’s distribution strategy does not rely on direct distribution only to get its products in the stores
of all of the accounts especially far-flung downline channels. Its distributor’s profitability is
compromised beyond a certain proximity limit. Thus, Sarap had to explore other ways and means to
get its products in the most crucial channels (i.e. sari-sari stores).
Team Sari Sari is an in-direct distribution (IDD) strategy that caters to sari-sari store owners who
prefer to buy their stocks from nearby groceries rather than being serviced directly by cash van sales.
This solution does not only provide answers to Sarap’s distributors profitability dilemma but rather it
was also able to give the sari-sari store owners the liberty to come and go or rather, purchase what
they need and when they need it. Furthermore, since Sarap’s Team Sari Sari is targeted to a
captured and relevant market (sari-sari store owners), they were able to design the whole program in
such a way that it talks to them in a manner that would be clearly understood and appreciated. It was
designed to be a free membership and earn points whenever you buy type of scheme. Thus, even the
prizes for redemption are exactly what the sari-sari store owners want and need. This is a brilliant
way to temporarily hold off the need to cover stores directly. However, there is still no substitute for
31
Sarap
direct coverage because it not only allows one to sell per se but rather, it also gives Sarap the edge to
merchandise and to create partnerships with traders through our regular visits. Eventually, this is still
the direction where Sarap distributors want to lead to as a key distribution strategy. It is just a matter
of time or rather a strengthening of portfolio that needs to be done so that with every trip, it is well
worth the distance because Sarap’s distributors would have sold a significant amount because most
if not all the products they carry are relevant in the eyes of its traders or more importantly, to its
trader’s customers, its end-consumers.
 Yummy packaged soups and Misan both got a score of 2 because though these brands are carried
by companies that also have the muscle or the capability to distribute, they lost against Sarap for the
reality that oftentimes, trader’s have a limited budget and since Sarap is pretty much the category in
itself or has the greatest demand, the trader would tend to just purchase Sarap. It still got a score of 2
because there are also some traders who would want to have at least 2 or 3 other brands apart from
the market leader in their shelves to be able to also cater to customers of Yummy and Misan or for
new customers, to give them a choice amongst the 3 category players.
3. Market Acceptability: An indication of a brand’s success is market acceptability. It signals

dominance and stronghold into the category. More importantly, market acceptability is also an indication
of consumer trust in the brand.
 Sarap packaged soups is market leader in the packaged soups category with over 90% market share
it got a score of 4.
 Yummy packaged soups got a score of 2 because it is next to Sarap with an estimated 8% market
share.
 Misan has negligible share values at about 2% and so it got a score of 1.
32
Sarap
Figure 11: Market Shares (Packaged soups Market)
Junichero
Vane
Blair
4. Brand Management: A brand’s performance is highly dependent on the marketing plan that
companies design for it. Plans are dependent on company strategies. Not all plans are actually geared to
succeed, some are designed to fail. As absurd as it may sound but brands, especially those that are part of
a portfolio are managed to play a part in the bigger scheme of things or rather, to deliver not just brand
targets but more importantly, business targets. Brands are a means to achieve and resources are allocated
to do brand management. Whilst brand management may pertain to only managing a brand or a portfolio
of brands, there are also ways on how to go about it especially given dynamic times, companies should
be flexible enough to adapt to changing times versus traditional ways of doing things.
 Sarap is the biggest food brand and the packaged soups category is considered to be the core
category being managed under the Sarap brand. This is a highly valued brand and category so the
company gives more than what it requires to ensure superb brand management. Given the new
structure, Sarap got a score of 4. This is needed in order to compete. On people resources, the local
Sarap brand management team or brand building team comprise of a group brand manager with
several brand managers that manage the different categories of Sarap and a particular region as well.
On packaged soups alone, it has a brand manager looking after the whole range and a dedicated
resource looking after a specific variant for a specific region. In conjunction to this local structure,
Sarap, being multinational in nature has brand development counterparts in the region who ensure
that all details pertaining to the brand are tied-up to the global brand strategy.
 Yummy packaged soups got a score of 2 because the brand Yummy is just managed as one of the
many brands bulked together in the food and culinary milks business unit wherein there is a head
leading the team, under him is the food group product manager who has respective managers for the
different categories – meal solutions, flavor world, noodles, etc. Depending on the size of the
category, assistant brand managers and executives are assigned.
33
Sarap
There is no marketing director, since each business unit operates on its own and reports directly to
the CEO. This structure is unique but tends to be missing out on the opportunistic advantages that
one category can benefit from another since the business units are separate entities altogether and the
only point of reconciliation is already at the CEO’s level whose concern is too many.
 Misan got a score of 2 because the way the brand management team is structured is still a bit on the
traditional side though wisely integrated between sales (category) and marketing (section). These
functions are supported by brand managers, assistant brand managers and brand assistants. The
brand manager may directly report to the marketing manager in the absence of a section manager
whose function directly relates with the end consumer whilst the category manager in the sales
function coordinates directly with trade marketing for trader concerns.
5. Customer Loyalty: With the proliferation of all sorts of media and on-the ground activities, loyalty is
so easy to win and lose. Even though market shares are high and would seem to be stable enough, it still
faces a lot of risk. It has been said that it is easier to make a customer stay because all you have to do is
to keep them happy whereas, if you lose a customer, it would be more difficult to win them back or to
look for new ones.
 Sarap packaged soups got a score of 3 for it is able to satisfy and retain its customers.
 Yummy packaged soups has a following and so it got a score of 2 being second player next to
Sarap.
 Misan also got a score of 2 because interestingly enough, this player has a niche market following
and probably because of its product design, an Misan variant for a particular soupy dish. With this
strategy, it was able to create and sustain its own market somehow different from that of what Sarap
and Yummy currently caters to.
6. Pricing The only criteria where Sarap got a 2 rating is in pricing. Below is a summary of competitive
pricing for comparison:
Table 3: Comparative Price List
Price Per Price Per

Absolute
Case Incl. Piece Incl. SRP % Trade
BRAND / DESCRIPTION Trade
Tax Tax (per pc) Margin
Margin
(LPAT/cs) (LPAT/pc)
SARAP (as of October 2006)
SARAP PACKAGED SOUPS

PACKAGED SOUP 12X24X22 G 2,523.25 8.76 9.50 8% 0.74
PACKAGED SOUP PANTRY 72X66 G 1,886.98 26.21 28.00 7% 1.79
YUMMY (as of Feb 2006)

34
Sarap
YUMMY PACKAGED SOUPS

MISAN (as of Feb 2006)
MISAN
Source: Sarap Foods Trade Marketing Group
Sarap’s pricing is affordable but in comparison to its competitors, it is the most expensive, both for the
trader and the consumer. For the same commodity, the trader would have earned more since the margins
are bigger with Yummy and/ or Misan, whilst the consumer would have spent less. However, since Sarap
has established its category superiority well enough, consumers are willing to pay a bit more for a trusted
brand such as Sarap packaged soups and traders are willing to lose a few centavos compensated by
volume sales.
5.4 Competitors
There are 2 major competitors considered in the packaged soups industry and these are Yummy packaged
soups manufactured by Yummy Philippines Inc. and Misan. However, posing as a huge threat to Sarap’s
packaged soups business and market leadership more than its existing competitors in the category are
flavorings, of which Misan is the market leader with 67% market share and Yummy is a far-second while
Sarap ranks 3rd in this category.5
Whilst market shares indicate positions in the category, this is further defined by the growth registered by
each player. Hence, not only is the category in itself expanding but the players, due to its own efforts as
well also pose huge growth themselves.
In terms of communication, it had become so difficult for consumers to tell the difference already since
airwaves are bombarded by the same thing and hence creating enough jolt to really make the market
react in a way that made the flavorings grow at a very rapid pace.
In 2006 alone, there had been so many activities done by the 3 players both above-the-line and below-
the-line, making competition stiffer than ever before and as a result, Sarap’s shares suffered in light of
not just packaged soups but combined packaged soups plus flavorings.
Figure 14: Combined Packaged soups+ Flavorings Shares of Each Player
5
Global Market Research Advisor
35
Sarap
Combined Basic Seasonings Shares of Each Player

Jan 2005 – Jun 2006
11
24
65
Source:
Global Market Research Advisor
5.4.1 Misan Corporation
In Misan’s company profile, it is said that their passion is to produce the best food seasoning in the world
and make it available in every Filipino home. In 1962, Misan was locally produced. Misan Flavor Mix
was launched in 1991.
Today, Misan Philippines Corporation ranks as one of the top 200 corporations in the Philippines.
Misan’s network has grown to 8 regions overseeing the operations of 31 sales stations and 9 depots.
Misan’s slogan is associated with good food and good life.
5.4.2 Yummy Philippines, Inc.
In Yummy Philippines, Inc 2005 corporate profile, it is said that Yummy is proud to bring the best food
throughout the stages of Filipino consumer’s lives. When it started in the 1960’s, Yummy used to
distribute several categories that are not necessary in line with food just to keep the company afloat due
to strict government regulations on importation. In 1988, Yummy became a wholly owned subsidiary
brand by Yummy SA. “Today, Yummy produces and markets products under some of the country’s well
known brands. Its product range has expanded to include coffee, milk, infant nutrition, infant food,
beverages, non-dairy creamer, food, ice cream and chilled dairy, breakfast cereals, confectionery, and pet
care. Over time, Yummy’s quality and affordable products have become strong brands, number 1 or
number 2 in their various categories, and a part of the Filipino way of life.”
36
Sarap
Competitive rivalry amongst the three multinational companies is very professional. In fact, the dynamic
activities and creative of which may be greatly attributed to the healthy competition that these players
pose against each other. The very brands and the categories that are being considered in this study
experiences the typical yet expected surprises in any competitive game.
Sarap despite being market leader experiences a lot of challenges mostly due to the Yummy and Misan’s
expertise in the category. This puts more pressure to the leading brand because it cannot afford to slip in
any way or else competition may do some drastic moves that may take away its reign and leadership.
Yummy being a far second player’s strategy is to not allow Sarap to monopolize the market. For years
now, it has kept its packaged soups in the market despite the difficulty to grab share from Sarap. It has
not had any massive campaign over packaged soups but through brilliant basics – availability in retail
channels, it has established its presence. It also tries to be a strong player in other categories as a way to
attack Sarap’s core business. They have been fairly successful with it with Sarap which has tremendously
grown even faster than the whole category.
Misan on the other hand is an Misan brand that is more of a niche market player. This may be just 2% of
the market now but it should be taken for granted as this is also how Misan started too. Knowing
especially that Misan’s expertise is in savoury and cooking aids, it is a given that Misan very well knows
this game.
37
Sarap
6 External Factor Evaluation Matrix (EFE)

Weighted
Key External Factors Weight Rating
Score
OPPORTUNITIES
1-E Less but frequent purchases of goods by consumers 0.05 2 0.10
Fast-paced lifestyle call for 'quick and easy'

2-SC 0.15 4 0.60
dependable solutions
More women are joining the work force and are
3-SC 0.10 3 0.30
becoming more independent
Significant distribution of households in Visayas

4-SC 0.10 2 0.20
and Mindanao areas
Still low 'dish penetration' of packaged soups in

5-SC 0.05 3 0.15
regularly cooked soupy dishes
Lack of 'Differentiation' amongst cooking aids

6-C 0.10 2 0.20
brands
7-T Increasing use of the internet 0.05 3 0.15
THREATS
Decrease in food expenditure at the expense of

1-E 0.05 2 0.10
other commodities
People are becoming more and more health
2-SC 0.05 2 0.10
conscious
3-C Growth of the flavorings category 0.15 2 0.30
4-C ‘Versatility' proposition of competitors 0.10 2 0.20
5-P Political instability 0.05 1 0.05
TOTAL EFE SCORE 1.00 2.45
E=Economic, SC=Socio-cultural, P=Political, T=Technological, C=Competitive
OPPORTUNITIES
1-E Less but frequent purchases of goods by consumers

Sarap’s rating of 2 is due primarily to the ‘dilly-dallying’ position it has consciously taken since it is one
reality that they are not riding on just yet especially with the ‘tingi’ phenomenon growing and it clearly is
a manifestation of downsizing in purchasing habits of basic commodities. It remains to be an opportunity
because in other countries Sarap has had existing technology and capability to produce smaller SKU’s in
the event that the management in the Philippines decide to get into the trend then it should not be a
38
Sarap
problem anymore. With a category that is flat and sales at risk, then a strategy such as this would most
likely merit an increase in volume to make up for losses and even growth due to the downsizing trend.
2- SC Fast-paced lifestyle call for ‘quick and easy’ dependable solutions

Sarap got a perfect 4 rating for this factor because the very products of Sarap sells convenience as a
given apart from the functional benefits that come with the product.
3-SC More women are joining the work force and are becoming more independent
With Sarap’s campaign on empowering women and the whole marketing strategy of positioning Sarap as
a woman’s Best Friend, a high score of 3 is given them since it was smart for Sarap to talk to the woman
and it obviously opens a lot of opportunities for the brand. However, consistency is key to make a
campaign create an impact. Therefore, it is high-time for Sarap to consider improving their strategy on
talking to the woman and this pertains to maximizing communications in all relevant mediums.
4-SC Significant distribution of households in Visayas and Mindanao areas

Sarap is given a rating of just 2 because it is only recently that it has started to position itself to address
regional differences and the recognition of VisMin potential is not yet given much importance as it
should be. However, directionally, Sarap is headed to valuing the regions depending on its’ potential and
the company is geared to even design products that would make it big in those regions.
5-SC Still low 'dish penetration' of packaged soups in regularly cooked soupy dishes
As done in the past, Sarap will do a dish specific campaign to communicate that Sarap is best for that
particular soupy dish. Knowing especially that it takes a couple of months with high campaign levels
before a consumer can fully absorb the message that is being conveyed and would tend to show an
upward trend in sales. With this as a strategy that is currently employed, Sarap got a rating of 3.
However, there is still room for improvement for dish-specific campaigns. It should be done one at a
time allowing the consumer to be more receptive and the campaign to be more effective for it to create a
bigger impact to the business.
6-C Lack of 'Differentiation' amongst cooking aids brands

A rating of 2 is what Sarap got since this very big and important marketing activity has temporarily taken
a back seat not for the wrong reasons but rather, a comprehensive, well-thought of differentiation
strategy is being developed. Once the brand is ready, it shall immediately bring this to the market and
activate it in a way never done before.
7-T Increasing use of the Internet
Internet usage in the Philippines has been growing rapidly although penetration rate still remains low.
Statistics on the country’s Internet usage are important decision-making variables for the government and
companies doing business in the Philippines. Companies in the cooking aids industry are able to create
websites that give customers nutritional information as well as a variety of recipes that use their cooking
39
Sarap
aids to create nutritious and delicious meals. Sarap was given a rating of 3 because its website is quite
attractive with many recipes.
THREATS
1-E Decrease in food expenditure at the expense of other commodities

The brand can probably do an emotional campaign about the value of food to arrest the decline. This
campaign is very much possible and interesting but something that Sarap has not yet ventured into so a
rating of 2 is given the brand.
2-SC People are becoming more and more health conscious

Sarap’s rating is at 2 since nothing has been done yet. However, with the vitality passport well on its
way, it shall give the quality assurance consumers need.
3-C Growth of the flavorings category

Though Sarap is also a player in the powdered flavorings category, it just got a score of 2 since amongst
the 3 players in the industry it currently is the 3 rd player. All its efforts are struggling to improve
performance, hence shares. However, it is not enough. It needs more than what it currently has and is
doing to be able to lessen the risks that is being posted by this huge threat.
4-C ‘Versatility’ proposition of competitors

Sarap’s strategy does not entail claiming versatility, rather, it will be single-minded with its
communication focusing a particular product to address a specific need. Therefore, it just got a rating of
2 since not much is being done regarding this external factor and this is deliberately by design.
5-P Political instability
The extent of graft and corruption throughout the government poses a threat to multinational companies
like Sarap who import many of the ingredients. Sarap was given a rating of 1 because as a multinational
company its policy has been to stay clear of political influence and has not done anything about this
threat.
Conclusion/Strategic Issues
In conclusion, with Sarap’s external factor evaluation garnering a score of 2.55 its position is middle
ground since there lays a lot more opportunities yet to be realized and threats to be managed. While it is
addressing the desire of people for quick and dependable solutions it needs to do more to grow the
Visayas and Mindanao markets.
40
Sarap
41
Sarap
7 Internal Assessment
Likewise, there are several internal forces that affect Sarap’s status in the market. These are
considered to be the brand’s strengths and weaknesses and it shall be established and considered to
be as the foundation for the brand’s performance.
7.1 Culture
7.1.1 Values
Unlike most cooking brands in Asia whose focus is on the dish. Sarap focuses on the
transformation and enhancement of ingredients.
o Sarap is about the creation of food, that appeals to the cook by enhancing her engagement
in her cooking. Sarap speaks to the Asian woman in a way that conveys profound
understanding and respect; Sarap speak to the soul, not the role.
o It wants to show an empowered woman who can judge her own result - context of a modern
woman, cooking aid, transformation, enhanced effect, involvement, gratification, self-
esteem.
So Sarap is very different from its competition on several levels, particularly in the way it
portrays the woman who is cooking and the concrete level of the function of the product.
All these set Sarap apart:
 They are traditional, Sarap is modern.

 They compete with the cook, Sarap satisfies the cook.
All these differences are established to actively position Sarap against competitors and to
establish what the brand’s values are all about.
7.1.2 Corporate Spirit
Our Chefmanship
Our competence to create recipes, flavour and transformation is in our products. Our
chefmanship rests on our 130 years’ cumulative experience in creating products containing
perfectly blended natural ingredients and connecting to many cuisines in the world.
The SARAP effect
42
Sarap
Sarap’s products transform ingredients through cooking in a way that can be experienced via the
senses: tasting, seeing, smelling and feeling. This moment of transformation, is branded the
SARAP effect.
7.2 Management
7.2.1 Management System
Sarap is a brand managed under Sarap Foods, a separate business unit from that of Home and
Personal Care and Ice Cream. However, there are several systems that are shared across all
business units as a discipline and as a Sarap standard in terms of ways of working.
STRENGTH: Efficient business/ brand planning process

Sarap being a multinational company is operated via multi-faceted disciplines that are rolling in
nature. Weekly activities are all linked up together and cross functional teams are involved in
different phases. This pertains to the operational day-to-day aspect of the business.
This is different from how brands are managed especially for a marketing company such as
Sarap. Its rolling calendar is not on a weekly basis but rather in a span of 18 months. There is
more regional involvement since the very brands existing in the country such as Sarap are
global in nature and strategies emanate from one brand key and is translated and brought to life
locally.
7.2.2 Strategy
The 3 key strategies being employed currently are as follows:
 Dish-specific campaigns – communicating clearly what the product is and what it is for is a strategy
that seems to be doing the brand very well. Given that this has worked in previous campaigns (Pork
packaged soups sa Monggo) and there are several campaigns (Beef packaged soups sa Nilaga & Fish
packaged soups sa Fish Tinola in VisMin) currently running with that as a core strategy. Sarap
should continue using this as a strategy in the future since it has deemed to be highly effective. The
value of being single-minded and focused in its communication is that consumers are able to
understand and appreciate what is being communicated in its entirety whereas if a lot of messages
are being communicated, there lays the risk of being half understood and appreciated or worst, not at
all.
 Woman Empowerment – by talking to the woman and establishing the reason for the brand’s being
which is to address the woman’s needs hence, its brand capsule “A Woman’s Best Friend” does a lot
of good to the brand and to the business. It is able to position itself in a way that understands its
43
Sarap
target market in a deeper, more holistic level rather than becoming just another consumer product
waiting to be picked up from the shelves. This strategy is evident in all above-the-line and below-
the-line activities of the brand.
 STRENGTH: Regional Marketing – Sarap’s performance in every region varies and the
categories that are delivering exceptional growth and suffering the most are also highlighted in area
business reviews. It therefore made a lot of sense to position the brand team members to specific
areas/ regions that are most relevant to the categories they are managing. Hence, apart from the
category management role that is tasked to each individual, there is also a corresponding area
management role that they would have to fulfil for the brand as well.
o Sinigang Brand Manager – North Luzon
o Soups Brand Manager – Greater Metro Manila + Modern Trade
o Flavorings Brand Manager – South Luzon
o Packaged soups Brand Manager – Visayas & Mindanao
7.2.3 Organization
Sarap Foods Management Team

The foods executive committee comprise of the following:
o Foods Managing director, who also represents local marketing
o Market Research manager
o Media manager
o Customer Development (Sales) manager
o Human Resources manager
o Finance manager
o Supply Chain manager
o Corporate Development manager
Sarap Brand Management Team

Regional marketing as a strategy with clearly defined roles for category/ area management is currently
how the brand management team is structured apart from the group brand manager heading the whole
Sarap brand building team.
7.3 Marketing
7.3.1 Product
A Sarap packaged soup is ‘Siniksik sa Sarap’ to give that perfect broth taste to your soupy
dishes. It is made from real ingredients and choice spices. It comes in 6 variants: Chicken, Pork,
Beef, Shrimp, Fish and Tamarind.
44
Sarap
7.3.2 WEAKNESS: Pricing
Table 3: Comparative Price List
Price Per Price Per

Absolute
Case Incl. Piece Incl. SRP % Trade
BRAND / DESCRIPTION Trade
Tax Tax (per pc) Margin
Margin
(LPAT/cs) (LPAT/pc)
SARAP (as of October 2006)
SARAP PACKAGED SOUPS

YUMMY (as of Feb 2006)

YUMMY PACKAGED SOUPS
MISAN (as of Feb 2006)
MISAN
Source: Sarap Foods Trade Marketing Group
Sarap’s pricing is affordable but in comparison to its competitors, it is the most expensive, both
for the trader and the consumer. For the same commodity, the trader would have earned more
since the margins are bigger with Yummy and/ or Misan, whilst the consumer would have spent
less. However, since Sarap has established its category superiority well enough, consumers are
willing to pay a bit more for a trusted brand such as Sarap packaged soups and traders are
willing to lose a few centavos compensated by volume sales.
7.3.3 Market Distribution
In terms of geographic distribution of accounts, 47% of all accounts are in Luzon, 38% are in
Visayas and Mindanao, with 19% contribution each. Greater Manila Area or GMA accounts for
15%.
7.3.3.1 WEAKNESS: Weak dominance in VisMin areas
Geographically, the VisMin areas show that there can still be opportunities for improvement as
far as distribution is concerned. Especially in the Central East Visayas and Mindanao areas
where NIS distribution is just half of total national.
Table 4: Universe of Accounts (Year 2003)
Total SM GS SSS MS
TOTAL
PHILIPPINES 556,738 824 4,950 509,345 41,619
1. GMA 84,692 288 961 79,779 3,664
2. Luzon 260,666 278 2,565 238,934 18,889
3. Visayas 104,986 109 849 93,153 10,875
45
Sarap
4. Mindanao 106,394 149 575 97,479 8,191

Source: Global Market Research
7.3.4 Channel Priorities

Packaged soups are actually available in all retail outlets. Retail outlets are defined to be those
that sell 75% of their goods to end consumers. The different retail channels and its
characteristics as identified by Global Market Research’s retail audit are as follows:
 Supermarkets (SM) – A large retail store which sells various commodities, including food,
household wares and personal items, arranged in sections. It has at least three check-out-counters
(C.O.C) with cash registers, self-service/push carts/ baskets are provided, at least 50% of the display
area are grocery items, there are numerous gondolas and mass displays in the area which is usually
air-conditioned and may have restaurants, refreshment parlors or food stalls.
 Grocery Stores (GS) - Sells more food items relative to other product lines, presence of 1 or 2 cash
registers, smaller than supermarkets, sells generally the same line of products sold in supermarkets,
may or may not have check-out counters.
 Market Stalls (MS) - A sari-sari store inside and at periphery of a market building. Market Stall X
is another type of market stall, which is smaller in terms of value.
 Sari-Sari Stores (SSS) - Small neighborhood stores selling a wide variety of food and non-food
items. Goods are sold by the piece and often by the lowest possible quantity (“tingi”). Does not issue
receipts to customers. Does not allow customers to pick things they want to buy - goods in display or
in open shelves are beyond customer’s reach. Usually sells re-packed items, wherein owner breaks
up manufacturer’s items into smaller units (e.g., cooking oil, sugar, soy sauce, vinegar, powdered
detergents, sugar, etc.) Stores selling only non-packed food item such as rice and cereals, fresh
vegetables, fish and meat are not considered as sari-sari stores according to our definition.
Sari-sari stores account for over 90% of the whole retail universe since these are easier to build and
manage, as these are called to be “hole-in-the-wall” types of accounts. Whilst Supermarkets may
only account for less than 1% of the universe, it contributes significantly in terms of sales for this
industry and most likely for other goods as well.
7.3.4.1 WEAKNESS: Limited Reach In Downline Channels
By virtue of win-win partnership between Sarap and its’ distributors, profitability is kept well-managed
in such a way that no activity is to be implemented if it will compromise profitability. Direct coverage
has always been a challenge for Sarap, especially beyond a certain proximity wherein it does not make
sense for a distributor truck to go the lengths to visit an account that would only purchase a small value
or worst, none at all. Therefore, not until the portfolio of products of Sarap Foods for downline channels
46
Sarap
has been improved and chances of making a sale is bigger then that will only be the time when Sarap
distributors will directly cover the downline accounts that are outside the coverage within workable
proximity.
7.3.5 STRENGTH: Good Customer Marketing Standards
The structure of Sarap’s customer development is set up in such a way that good service is provided to
business partners and traders alike. Therefore, there are account managers dedicated to handle specific
accounts or a set of accounts for modern trade whilst for general trade, there are customer development
managers tasked to look after the distributors business. The make up of Sarap distributors customers are
inclusive of several channels: SMMT (small and modern trade) accounts, public market stalls and sari-
sari stores. For each channel, there are appointed channel and area channel champions to draw up and
implement strategies accordingly.
7.3.6 STRENGTH: Excellent Market Research Capability
Sarap’s commitment is to continue knowing its’ consumer best which makes market research integral to
the brand operation.
 Global Market Research Advisor is provided to monitor shares, distribution performance, growth
and many more other brand facts by area or by channel for any of the categories in our portfolio.
 Retail audit monitors retail trends whilst Homepanel monitors household penetration of a given
category or product..
 ATP (Advance Tracking Program) monitors advertising effectivity, product and trial awareness.
 Project Sarap and Sunshine are in-house studies that monitor dish penetration. It measures whether
Sarap’s products are being bought and used by customers in relevant dishes.
7.4 Finance
Brand contribution to total business is increasing year-on-year

Sarap packaged soups is a core business in the Sarap Foods portfolio. With over 90% market share in a
Php2 billion market, Sarap packaged soups revenue in 2004 is estimated at Php1.6 billion and still
managed to grow by 7% with an estimated Php1.7 billion sales in 2005.
FINANCIAL RATIOS 2003 2004 2005
1 Liquidity
Current ratio = CA/CL 0.78 0.64 0.74
Quick ratio = CA – Inv/CL 0.52 0.39 0.45
47
Sarap
2 Leverage
0.87 1.07 0.95
Debt–to-TA ratio = TLiab/TA
6.47 16.28 21.17
LT Debt-to-Equity = LTD/Equity
3 Activity ratios
AR turnover = Rev/AR 5.22 6.19 6.45
Days Receivable = 365/AR turnover 69 59 57
Inventory turnover = Rev/FGInventory 13.6 15.2 16.4
Days Inventory 28 26 25
FA turnover = Rev/FA 42.1 55.6 74.1
4 Profitability Ratios
Gross Margin = Rev – CGS 70.1% 72.3% 74.6%
Oper exp % = Opex/Rev 55.6% 59.9% 60.9%
Oper margin = EBIT/Rev 14.5% 12.4% 13.7%
ROA = NI/TA 17% 18% 17%

ROE = NI/SHE 84% 34.6% 13.5%
5 Growth Rates %
Sales 8% 9% 7%
Net Income 6% 7.7% 6.2%
7.4.1 Liquidity
The company has low liquidity over the last three years as shown in its financial statements because it
must maintains a reasonable amount of inventory to service its extensive distribution system throughout
the Philippines.
The liquidity ratios above show the companies’ ability to pay its debts as it comes due.
The Current Ratio shows that in an industry such as Sarap’s, though the ratios are lower than a typical
manufacturing firm’s, it can be sustained since it is evident in their inventory management process that
they can move inventory and collect accounts receivables quickly.
The Acid-Test (quick) Ratio shows that amongst the 3 brands, Sarap has better cash flow management.
7.4.2 Leverage
The leverage ratios identify the level of debt of the different brands/ companies. It will mirror manner of
financing of assets whether through debt or through equity. It will also show its ability to pay the debts it
has incurred.
48
Sarap
The Debt-to-Equity and Debt-to-Capital Ratios show whether the business is financed by borrowings or
by equity. The high Debt-to-Equity Ratio shows that much of the assets of Sarap is financed by
borrowings, this position puts the company in a risky financial position but may be part of a longer term
plan.
7.4.3 Activity
The company’s accounts receivable turnover of 6.45 is close to the industry average.
The Accounts Receivables (AR) Turnover Ratio shows that Sarap is not able to collect as fast as it
should but it shows significant improvement as well from 2003 to 2005 as compared to competition who
may have too restrictive credit policy and is easing up a bit probably to give way to sales.
Lastly, the Inventory Turnover Ratio shows that Sarap is able to move its inventory faster than
competition.
7.4.4 Profitability
The Return on Equity (ROE) shows that huge profit was earned on the shareholders’ investment.
The Return on Sales (ROS) or profit margin for the Sarap brand had been dramatic since it had achieved
a 360 turnaround whilst Yummy is more consistently high and Misan is flat.
The Return on Assets (ROA) shows that Sarap does a relatively good asset management job.
7.4.5 Growth rates
Sarap has enjoyed a steady, continuous growth in sales and net income in the range of 6 to 9 per cent. .
7.5 Operations
WEAKNESS:Outsourced Manufacturing
All variants of Sarap packaged soups except for chicken are produced in Thailand. For several reasons
wherein cost is also a part of, Sarap is better off by manufacturing packaged soups from Thailand as
compared to other parts of the world, including the Philippines. For the chicken variant however, Sarap
Philippines is tasked to commission a toll packer to manufacture it locally and this is primarily due to the
avian flu scare wherein chickens are said to be the carrier of the avian flu disease and that it is very
dangerous and deadly for human consumption. At the height of the avian flu scare, it was very difficult
49
Sarap
for Sarap to import the chicken variant. Hence, it was agreed that it is better if this variant were produced
(sourcing & manufacturing) locally to have more control of and enough precautionary measures are
taken to eliminate the possibility of avian flu in the nation. With this setup, it takes a while for the stocks
to arrive in the country, so much so that accurate forecast is critical to the business.
7.6 Research and Development
STRENGTH: ‘Vitality’ passport to promote good for you products

In line with Sarap’s thrust of adding vitality to life, meeting the everyday needs for nutrition, hygiene and
personal care with brands that help people feel good, look good and get more out of life, the vitality
passport is a gauge whether dietary guidelines on daily dosage nutrients are being met. Trans fat,
saturated fat, sodium and sugar is kept within control. For every product, it is rated as better for you if all
4 are within acceptable levels of consumption. If there is at least 1 that is kind of within boundary, it is
rated as just good for you. However, if at least one of the 4 is below acceptable levels then it is rated as
informed choice.
It is Sarap’s commitment to manufacture products that are healthy for you and all these are made to pass
the vitality passport with flying colors. Whilst existing products that are not yet in better for you zone are
undergoing reformulation for improvement in certain nutrient levels without sacrificing quality taste.
50
Sarap
8 Internal Factor Evaluation Matrix (IFE)

Weighte
KEY INTERNAL FACTORS Weight Rating
d Score
STRENGTHS
1-MT Efficient business/ brand planning process 0.20 4 0.80
2-M Excellent market research capability 0.15 4 0.60
3-M Good customer marketing standards 0.10 3 0.30
Brand contribution to total business is increasing year-on-

4-F 0.10 3 0.30
year
5-MT Clearly defined roles for category/ area management 0.10 3 0.30
6-R Vitality' passport to promote 'good for you' products 0.03 3 0.09
WEAKNESSES
1-M Limited reach in downline channels 0.10 1 0.10
2-M Weak dominance in the Visayas and Mindanao areas 0.15 1 0.15
3-M Sarap packaged soups is regarded as expensive 0.02 2 0.04
4-O Manufacturing of packaged soups is outsourced 0.05 2 0.10
TOTAL IFE SCORE 1.00 2.78
C=Culture, MT=Management, M=Marketing, F=Finance, O=Operations, HR=Human Resources, I=

Information Systems R=Research & Devt
The details presented in the internal assessment were very informative in nature. The aspects discussed
thoroughly were the ones that are deemed to be greater strengths and weaknesses of the company. These
are the factors that are most influential to the brand and so the scores are given as such with the weight as
a way to value impact to the brand and the rating as a way to measure company’s strengths and
weaknesses whether it is major or minor. The internal factor evaluation for Sarap turned out as follows:
1-MT Efficient business/ brand planning process

Efficient planning is integral to every business. Nothing will be achieved if it were not planned well.
There is high risk for error and miscalculation if companies or even individuals go about without having
to plan. Companies nowadays have strategic management meetings that are regular in nature. It can be
slated to happen monthly, quarterly or annually and is most of the time even coupled with business
reviews to judge if previous plans were implemented, what worked and what is the best strategy to
51
Sarap
employ moving forward. Hence, because of the great importance of planning be it for the business or in
this case, the brand, it got a weight of 20%. Since Sarap is strict in employing and implementing
planning disciplines that are sure to take the business forward, it got a perfect score of 4. This is
reflective of Sarap’s excellent management standards making it a major strength.
2-M Excellent market research capability

Companies’ competitiveness in the game is indicative of how well they know their business, so much so
that they know what they are going to do, when they are going to do it and where. The ability to know is
very valuable and sometimes, it is even one’s edge to get ahead in the game. Hence, because of its
importance, it got a weight of 15% and the rating Sarap got is a high of 4 because in the recent years,
Sarap Foods built their capability on market research with the foresight that the success of the future will
really be hinged upon dishes since no cooking aid exists without the benefit of it being used in and for a
dish which is called the ‘masterpiece’. Apart from the typical researches available through third-party
agencies whose expertise is really on providing accurate and timely information to practically everyone
in the industry, Sarap commissioned the creation of a study that is for their own use and these are called
Project Ethno and Sunshine with Ethno as the first crack at getting dipstick indication of dish penetration
whilst Sunshine is the monthly monitoring of which. With this, Sarap is able to craft marketing strategies
accordingly thereby maximizing this strength.
3-M Good customer marketing standards

They say ‘Customer is King’ and by it a weight of 10% is given to this internal factor. With the current
structure of customer development and the involvement of cross-functional teams, a rating of 3 is
garnered by Sarap because operationally this has clearly been somehow a tried and tested strength.
4-F Brand contribution to total business is increasing year-on-year

Amidst trying times, it makes it an even greater challenge to deliver when everything seems to be
working against you, hence, a weight of 10%. If and when one is able to still meet expectations or even
go beyond, it becomes an even greater glory. This is the story of Sarap for it was able to grow by 7%
from 2004 and is positioned to grow even more and so a rating of 3 was given. In addition, Sarap
packaged soups is really a core category which means it is very profitable in itself that it is able to fund
its own operations and other categories that rely on it too.
5-M Clearly defined roles for category/ area management

In the old world of marketing, brand managers only look after the welfare of their respective categories
because the management of which is deemed to be their primary role. In sales, each area has a manager
looking after the area’s sales performance in the bigger scheme of things. However, in the new world,
marketeers and sales managers are no longer just responsible for their primary roles. To ensure success,
the spirit of being one has to move the team. Hence, marketeers are now also concerned with how the
brands are performing in terms of sales in the respective areas and sales managers are concerned with the
performance of the brands in their areas as well apart from just sales. This is important, so much so that a
52
Sarap
weight of 10% is given to this internal factor. With the new regional marketing structure of Sarap in
place, its brand managers are now tasked to look after the brand’s performance in their assigned areas.
This restructuring is very appropriate therefore making it a strength, with a score of 3.
6-R ‘Vitality’ passport to promote good for you products

With the growing consciousness for what is good for the body amongst consumers, the pressure for
manufacturers to produce products that are healthy continue to rise. However, since this does not really
yet come on top of the must have list at the expense of convenience, pleasure, and so, it is weighted at
3%. With the Vitality passport being constructed in response to this and the conscious repair efforts that
the brand is putting behind this initiative, Sarap gets a rating of 3, a strength that is still being developed.
1-M Limited reach in downline channels

Availability is key and in the Philippines, sari-sari stores and other downline channels account for over
90% of the universe. This is highly crucial since this is the nearest point of contact to the consumer.
Every street in every town might have at least one or two to cater to the residents in that road. Hence, it is
given a weight of 10% for reasons that this is the primary sourcing channel especially for impulse
purchases. With the limitation of direct reach by Sarap’s distributors with respect to profitability, a score
of 1 is given, making it a weakness inspite of several efforts with indirect distribution but clearly
understandable in light of true partnership between principal and the distributor. However, there simply
can not be anything to replace the value of direct reach because apart from sales, there are other benefits
such as merchandising, relationship building, and competitive intelligence amongst many others.
2-M Weak dominance in the Visayas and Mindanao areas

Clearly, the VisMin region has established itself to be a different being altogether from that of North
Luzon, South Luzon and most especially GMA. For many years, Sarap has tried to replicate its successes
in the Northern region of the country in VisMin. However, it was not a repetitive formula and the success
remained to be a mere vision not because it is not a good plan but there are just certain differences that
needed to be acknowledged. With over 40% of the country’s household population in VisMin, this is as
stated earlier, a gold mine waiting to be discovered and so the weight of 15% to stress on the importance
of this internal factor. However, Sarap just got a score of 1 because though there had been some efforts
already with the current restructuring done to the brand team, this appeared to be an apparent weakness
still because to make it big in VisMin, it indeed meant more than just addressing the lack of resources
dedicated for the region but rather ‘walking the talk’ – hence, full support should be provided.
3-M Sarap packaged soups is regarded as expensive

In comparison to competitors, Sarap packaged soups appear to be the most expensive. However, since
this does not cause much of a problem especially for those who have come to believe and stay loyal to
the brand, a weight given this internal factor is just 2% and Sarap got a rating of 2 making it a minor
weakness.
53
Sarap
4-O Manufacturing of packaged soups is outsourced

With this operational reality that Sarap packaged soups are produced in Thailand for several business
reasons (except for the Chicken variant) and the pressure that accurate forecasting is a must to have
sufficient stocks on hand, a weight of 5% is given this internal factor. This is a weakness in itself
especially if preventive measures are not taken. It risks advertising without sufficient stocks on shelf or
running sampling efforts that would deplete existing stocks meant for selling. However, with the relative
experience of having to deal with this kind of business reality in the past, Sarap has the muscle and the
experience to deal with it hence, a rating of 2 is given.
Conclusion/Strategic Issues
In conclusion, the internal factor evaluation for Sarap show that Sarap needs to draw on it strengths of
efficient business planning process and excellent market research to address it weakness in the Visayas
and Mindanao regions. Its IFE score of 2.78 reveals that Sarap is only doing slightly better than average
internal position.
54
Sarap
9 Strategy Formulation
9.1 Threats-Opportunities-Weakness-Strengths
STRENGTHS –S WEAKNESSES- W
1. Efficient business/ brand planning 1. Limited reach in downline channels
process 2. Weak dominance in the Visayas and
2. Excellent market research capability Mindanao areas
3. Good customer marketing standards 3. Sarap packaged soups is regarded as
4. Brand contribution to total business is expensive
TOWS ANALYSIS increasing year-on-year 4. Manufacturing of packaged soups is
5. Clearly defined roles for category/ outsourced
area management
6. 'Vitality' passport to promote 'good
for you' products
OPPORTUNITIES - O SO STRATEGIES WO STRATEGIES
1. Less but frequent purchases of goods 1. Strengthen the selling proposition of 1. Explore less cash-outlay products that
by consumers Sarap packaged soups in the minds of will be a more viable selling proposition
2. Fast-paced lifestyle call for 'quick customers & consumers thru ad for downline channels (W1, O1)
and easy' dependable cooking solutions campaign (S1, S3, S6, O1, O2, O3, O5, 2. Reinforce the superiority of packaged
3. More women are joining the work O6) soups in terms of product quality and
force and are becoming more 2. Own 'best for soups' as jobs-to-be- performance (W3, O2, O5)
independent done for buillion as a cooking aid (S1, 3. Establish and reinforce brand
4. Significant distribution of households S2, O2, O5) presence and superiority in the VisMin
in Visayas and Mindanao areas 3. Clearly differentiate Sarap from areas (W2, O4)
5. Still low 'dish penetration' of competitors (S1, S2, S4, S5, O6)
packaged soups in regularly cooked
soupy dishes
6. Lack of 'Differentiation' amongst
cooking aids brands
7. Increasing use of internet
THREATS -T ST STRATEGIES WT STRATEGIES

1. Decrease in food expenditure at the 1. Promote Sarap’s 'Vitality' campaign 1. Create a viable 'trade story' to make
expense of other commodities amongst consumers to create the products available in downline channels
2. People are becoming more and more awareness on 'good for you' products (W1, T1)
health conscious (S3, S6, T2)
3. Growth of the flavorings category 2. Devise a 'defense' plan for the
whilst the bullion category is flat buillion category and an 'offense' plan
4. 'Versatility' proposition of for the flavorings category (S1, S2, S5,
competitors T3, T4)
5. Political instability
TOWS STRATEGIES
Market Penetration Market Development Product Development
55
Sarap
9.2 Strategic Position & Action Evaluation Matrix (SPACE)

X – AXIS
Industry Strength (IS) 6 best, 1 worst
1 Low bargaining power of suppliers 6
Significant growth potential given that there is still low packaged soups
2 4
penetration into soupy dishes
3 Packaged soups business is ‘under-attack’ by the powdered flavorings category 2
4 Low threat of new entrants 4
IS Average 4.00
Competitive Advantage (CA) -1 best, -6 worst
1 90% market share in the packaged soups category -1
2 Superior product quality and performance -1
3 Strong brand management -2
4 Customer loyalty -3
CA Average -1.75
Directional Vector Coordinate X = IS Average + CA Average 2.25

Y – AXIS
Financial Strength (FS) 6 best, 1 worst
1 Healthy gross margin 6
2 Revenue increase by 21% versus previous year 4
3 Highly leveraged business 1
FS Average 3.67

Environmental Stability (ES) ) -1 best, -6 worst
1 Fast-paced lifestyle call for 'quick and easy' dependable solutions -1
2 More women are joining the work force and are becoming more independent -2
3 ‘Versatility' proposition of competitors -6
ES Average -3.00

Directional Vector Coordinate Y = FS Average + ES Average 0.67
FS
56
Sarap
CONSERVATIVE 5 AGGRESSIVE
4
3
2 * (2.25, 0.67)
1

CA IS
-5 -4 -3 -2 -1 0 1 2 3 4 5
-1

-2
-3
-4
DEFENSIVE -5 COMPETITIVE
ES
Given all of the aforementioned financial strengths (FS), competitive advantage (CA),
environmental stability (ES) and industry strength (IS) and the corresponding ratings and scores
computed for each, the vector shows that it is in the aggressive quadrant. Sarap is in a position
to utilize its strengths to take advantage of external opportunities and deal with internal
weaknesses and external threats. Therefore, the following are the corresponding aggressive
strategies that can be used:
Market penetration
Market development
Product development
Backward integration
Forward integration
Horizontal integration
Related diversification
Unrelated diversification
9.3 Internal-External Matrix (IE)
57
Sarap
THE IFE TOTAL WEIGHTED SCORE
THE EFE TOTAL WEIGHTED SCORE

IFE = 2.78 STRONG AVERAGE WEAK
EFE = 2.45 (3.0 -4.0) (2.0–2.99) (1.0–1.99)
HIGH
I II III
(3.0 – 4.0)
MEDIUM
IV V VI
(2.0 – 2.99)
LOW
VII VIII IX
(1.0 – 1.99)
With the weighted scores computed as Sarap’s external and internal factors were evaluated in the
Internal-External (IE) Matrix, it shows that it belongs to Quadrant V, an average hold and maintain
quadrant wherein the 2 commonly employed strategies are market penetration and product
development.
58
Sarap
9.4 Grand Strategy Matrix
STRONG COMPETITIVE POSTION

WEAK COMPETITIVE POSTION
RAPID MARKET GROWTH
QUADRANT II QUADRANT I
QUADRANT III QUADRANT IV
SLOW MARKET GROWTH
The Grand Strategy Matrix (GSM) is constructed based on competitive position and market
growth. Relating this to Sarap whose competitive position is strong but with a market that is
slow-growth, clearly, its strategy is that of quadrant IV. It can get into diversified programs
that are promising enough to deliver growth. Some of the strategies that may be employed by a
quadrant IV position are as follows: related diversification and unrelated diversification.
59
Sarap
9.5 GE McKinsey Matrix
The GE McKinsey Matrix (GSM) is constructed based on business strength-competitive

position and industry arractiveness. Relating this to Sarap whose competitive position is strong
and a strong industry attractiveness, its strategy is that of cell I. Some of the strategies that may
be employed by a cell I position are as follows: intensive, integrative and diversification
strategies.
60
Sarap
10 Summary of Matrices & Analysis
STRATEGY OPTION TOWS SPACE GE IEM GSM TOTAL

INTEGRATION STRATEGIES

1 Forward Integration 1 1 2
2 Backward Integration 1 1 2
3 Horizontal Integration 1 1 2
INTENSIVE STRATEGIES

4 Market Penetration 1 1 1 1 4
5 Market Development 1 1 1 3
6 Product Development 1 1 1 1 4
DIVERSIFICATION STRATEGIES

7 Related Diversification 1 1 1 3
8 Unrelated Diversification 1 1 1 3
DEFENSIVE STRATEGIES

9 Retrenchment 0
10 Divestiture 0
11 Liquidation 0
The summary above shows that based on the different matrices used to determine which strategy to
employ the following strategies were suggested as it seemed to show potential given the current position
of Sarap packaged soups in the Philippines. However, basing it on what the strategy is and considering
the readiness of the brand or the company to pursue the given strategy, the evaluation below shall
determine the top 3 strategies to be evaluated in the QSPM (Quantitative Strategy Planning Matrix).
 Market Penetration was suggested across all 3 matrices primarily because this simply entails
improving brand performance by being aggressive in utilizing greater marketing efforts. Sarap being
61
Sarap
a marketing company and Sarap being a known commodity, the name of the game is no longer about
awareness but taking it a step further by increasing brand relevance making it more effective with its
communication. Hence, this strategy seems to be one of the more viable ones and as quoted in the
book, Strategic Management by David, p. 167- Market Penetration is an effective strategy if current
markets are not saturated with a particular product or service or usage rate of present customers
could be increased significantly.
 Market Development appeared to be a viable strategy in the TOWS and SPACE matrices probably
because this strategy entailed introducing existing products to new territories. Although Sarap
packaged soups is found nationwide already, this can still be a key strategy especially that
dominance in certain areas needs to be reinforced further.
 Product Development is the strategy employed if it entails improving or modifying present
products or services to increase sales and this strategy was suggested in the SPACE and IEM. As it
is, Sarap packaged soups formulation is accepted because it delivers and fulfils the need.
Given the comparative analyses done on all the possible strategies to implement, what seemed to be
viable are the following: market penetration, market development and product development. Hence,
these are the ones that shall be evaluated in the QSPM (Quantitative Strategy Planning Matrix).
62
Sarap
11 Quantitative Strategy Planning Matrix

Market Market
Product Devt
Penetration Devt
KEY FACTORS Wt
AS TAS AS TAS AS TAS
External Opportunities
1 Less but frequent purchases of goods by consumers 0.05 4 0.20 2 0.10 3 0.15
Fast-paced lifestyle call for 'quick and easy' dependable

2 0.15 4 0.60 2 0.30 3 0.45
cooking solutions
More women are joining the work force and are

3 0.10 - - -
becoming more independent
Significant distribution of households in Visayas and

4 0.10 3 0.30 4 0.40 2 0.20
Mindanao areas
Still low 'dish penetration' of packaged soups in regularly

5 0.05 4 0.20 2 0.10 3 0.15
cooked soupy dishes
6 Lack of 'Differentiation' amongst cooking aids brands 0.10 - - -
7. Increasing use of the Internet 0.05
External Threat
Decrease in food expenditure at the expense of other

1 0.05 - - -
commodities
2 People are becoming more and more health conscious 0.05 - - -
Growth of the flavorings category whilst the bullion

3 0.15 3 0.45 2 0.30 4 0.60
category is flat
4 Versatility' proposition of competitors 0.10 3 0.30 2 0.20 4 0.40
5 Political instability 0.05
Internal Strengths
1 Efficient business/ brand planning process 0.20 - - -

2 Excellent market research capability 0.15 - - -
3 Good customer marketing standards 0.10 - - -
Brand contribution to total business is increasing year-
4 0.10 - - -
on-year
5 Clearly defined roles for category/ area management 0.10 3 0.30 2 0.20 4 0.40
6 Vitality' passport to promote 'good for you' products 0.03 - - -
Internal Weaknesses
1 Limited reach in downline channels 0.10 4 0.40 2 0.20 3 0.30
2 Weak dominance in the Visayas and Mindanao areas 0.15 3 0.45 4 0.60 2 0.30
3 Sarap packaged soups is regarded as expensive 0.02 3 0.06 2 0.04 4 0.08

4 Manufacturing of packaged soups is outsourced 0.05 - - -
TOTAL ATTRACTIVENESS SCORE 3.26 2.44 3.03
Rating score: 4= most acceptable, 3= probably acceptable, 2= possibly acceptable, and 1= not acceptable
63
Sarap
12 Proposed Strategy
Given all of the evaluations and analyses done with Sarap’s internal strengths and weaknesses, as well as
the external opportunities and threats, the strategies that shall be employed to pursue further progress is a
mix of market penetration and concentric diversification.
12.1 Strategic Objective
Since the packaged soups market has registered flat growth, Sarap puts itself in a defense mode. Being
market leader, sustaining leadership and delivering incremental business by increasing penetration into
soupy dishes is definitely a big challenge to the brand. The strategic objective for the packaged soups
business is stated as follows:
“Grow sales by 10% year-on-year from 2006-2009”
This is the summary statement of what Sarap will do to make this possible:
On Products – Packaged soups& Flavorings

 To reinforce the superiority of packaged soups in terms of product quality and performance
 To strengthen the selling proposition of Sarap packaged soups in the minds of customers &
consumers
 To own 'best for soups' as jobs-to-be-done for buillion as a cooking aid
On Geographical/ Channel Distribution & Consumer Purchase Habits

 To create a viable 'trade story' to make products available in downline channels
 To explore less cash-outlay products that will be a more viable selling proposition for
downline channels
 To establish and reinforce brand presence and superiority in the VisMin areas
On Positioning - Responsible & Superior Manufacturer

 To clearly differentiate Sarap from competitors
 To promote Sarap’s 'Vitality' campaign amongst consumers to create the awareness on
'good for you' products
12.2 Market Penetration
By employing this strategy, the Sarap packaged soups retail business in the Philippines should
be more aggressive since the market has taken on a new frontier. Competition is made tougher
64
Sarap
with substitute products trying to eat up into the packaged soups territory. This can be done by
reassessing the current marketing efforts being done and by being more creative and coming up
with more hardworking and brilliant marketing techniques that will arrest the possible decline in
the category.
As identified in the course of this paper, increasing penetration into soupy dishes is a potentially
big thing since currently, packaged soups is only at 12% of all soupy dishes. By bringing this to
20% in the next 5 years, it can bring tremendous incremental growth.
12.3 Market Segmentation

Figure 17: Cooking Aids Penetration in Different Dish Types
OTHERS
7%
SAUTEED FRIED
11% 31%
SINIGANG
6%
SOUPY SAUCY
25% 20%
The PENETRATION of packaged
soups
into Soupy dishes is just 12%
Source: Project Sarap
The market is currently segmented by dish preparation. For the bouillion, it is geared to
penetrate the soupy dish market since there still a huge potential and it simply means making
MSG users shift to packaged soups.
65
Sarap
12.4 Strategic Positioning
In terms of strategic position, Sarap would want to maintain its strong product quality. By being ‘A
Woman’s Best Friend’, it has become a well loved brand because of its product quality. Sales
distribution is half of what makes Sarap a success. Sarap’s market share is a good indicator of how well
distributeded Sarap cooking aids are. It shows the market likes the taste, ease of use and convenience of
Sarap products.
66
Sarap
13 Action Plans & Programs

To achieve the strategic position for the brand Sarap, there has to be a couple of activities
implemented, most of which pertain to housekeeping and the organization as a whole to realize
Sarap’s vision to the most preferred cooking aids brand.
Completi Team
Activities on Date Expected Output Responsible
A trademark that will
Activate a platform that will differentiate
differentiate and
1 and establish brand superiority for Sarap Q1 2007 Brand Team
distinguish Sarap from all
across all categories
other cooking aids
Certified 'good for you'
Implement 'My Choice' logos in all SKU's as Supply Chain
2 Q3 2007 products with new look
an indication of 'good for you' certification Teams
(packaging)
An all year-round
Corporate
Promote 'Vitality' as a company-wide obtrusive ATL & BTL
3 Q1 2008 Development &
campaign campaign that will
Brand Team
characterize Sarap
"Best for Sabaw"
Reinforce the superiority of packaged soups campaign with specific
4 Q2 2007 Brand Team
in perfect broth creation soupy dishes being
promoted
A nationwide relevance
building campaign that
Create the awareness for Sarap Meaty will allow consumers to
Seasoning Mix by doing a massive acknowledge and
5 Q1 2007 Brand Team
campaign that includes activities that will appreciate Sarap's KMSM
induce heavy trial powdered flavoring for
use in all their sauteeing
needs
Improve portfolio of products for downline Lower cash outlay Brand Team &
6 Q2 2007
trade channels products Supply Chain
Increase in direct
7 Develop trade story for downline channels Q3 2007 coverage of downline Sales Team
trade channels
Position the Sarap brand
Learn about the varying cultures that Brand & Sales
8 Q3 2007 in a way that the VisMin
characterize Visayas and Mindanao Team
people may relate to it
67
Sarap
14 Strategy Evaluation & Control

To measure the effectivity and success of the strategies put in place, certain evaluation and
control measures are to be used to monitor implementation and progress.
14.1 Balanced Scorecard

The Balanced Scorecard will serve as a quick reference with regards to the implementation of
the aforementioned strategies; this shall enable decision-makers to rationalize on which
strategies are working best and which need more time or fail to deliver expected results. Hence,
with this knowledge, they are in a better position to direct the company.
14.1.1 Financial Perspective
Financial Perspective
Goals Measures Current Targets
Grow by 10%
1 Net Sales 2005 Net Sales Php 1.7 billion year-on-year from
2006-2009
Gross Profit at Gross Profit at
2 Gross Profit GP % vs. Net Sales
48% 53%
Grow from 15% to
3 Net Income Income Statement 15%
20% by 2010
68
Sarap
14.1.2 Customer Perspective
Customer Perspective
92% for Packaged
Vol & Val % Shr -
90% market soups &
1 Market Share Global Market
share Increasing Shares
Research
for Flavorings
Vol & Val % Shr and
Increasing to 60%
Vol & Val Sales - 55 % shares &
2 Regional Marketing shares & net sales
Global Market net sales value
value
Research
Numeric In-Stock
Downline Channels 55% channel
3 Distribution - Global Increase by 20%
Shares shares
Market Research
Lead position
nd amongst all
2 position
cooking aids
4 Positive Image Brand Health Check among cooking
brands as
aids
indicative of
favorability
14.1.3 Internal Business Perspective
Internal Business Perspective

Implementation of
GoodHousekeeping 40% of all SKU's >50% of all SKU's
1 'My Choice' logo in
of product portfolio in 2007 in 2007
all products
Numeric In-Stock
Improve Product
2 Distribution - Global 64 Increase by 20%
Portfolio
Market Research
69
Sarap
14.1.4 Innovation & Learning Perspective
Innovation & Learning Perspective

Brand Platform ATP (Advance
1
Activation Tracking Program) - Awareness levels Awareness levels
Brand of 80% of 90%
2 Vitality Campaign
Communication
Vol & Val % Shr and
Increasing to 60%
Vol & Val Sales - 55 % shares &
3 Regional Marketing shares & net sales
Global Market net sales value
value
Research
70
Sarap
15 Strategy Map
71
Sarap
16 Projected Financial Statements (BE SURE TO

ATTACH THE ACTUAL PROJECTED 3-YEAR
FINANCIAL STATEMENTS)
The following projected 3-year financial statements are based from derived historical performance of
Sarap packaged soups taking into account the overall impact and evaluation of strategies.
The assumptions and the impact of which on certain components of the financial projections are
stipulated below:
3-Year Projection of Statements of Income

The projected income statement shows that Sarap packaged soups retail business strategy is more on a
defense as earlier stated with all of the action plans that have been formulated. Currently, 55% of all
packaged soups sales are known to be used for soups. With a 12% penetration in soups, this can be
valued at Php 961,419,085. Increasing penetration of packaged soups in soupy dishes to 20% would
mean that the 55% contribution of soupy dishes would increase to 67% by 2010 and this can be valued at
Php 1,602,365,141. Other usage of packaged soups will continue to contribute to the business but would
be less acknowledging that there would be shifting to flavorings especially for sautéed dishes.
Since the main source of growth would be on the 1-2 campaigns that will be implemented per year, the
growth is assumed to be 7.33% year-on-year from 2006 to 2009. 2010 growth would be less as this
would be the time to shift to a new strategy already. Also, in 2010, the company shall do a bit of clean-up
as well before changing directions and plans. SKU rationalization, assessment of structure, and the like
will be done to equip the brand better for the next challenge.
In general, what can be gleaned from the projections is that it is healthy. As in any business, cost
reduction is a continuing activity. This is brought about by the efficiency in regional sourcing wherein
cost of sales was lessened and gross margins improved. Operating expenses is kept within standard,
having learned from and experienced negative income in 2004 due to very high operating expense and
not so good top line. In the projections, operating expense is kept within the norm of 70-75% levels.
Good projections for non-operating income and expenses were also included given that the same level of
interest expense will be availed and the strengthening of the peso will continue.
3-Year Projection of Balance Sheets

The financial position that Sarap is projected to have in the balance sheet shows that about 60% or
majority of the current assets would be cash, cash equivalents and trade receivables and a significant
28% would be provision for healthy stocks of inventory since manufactured goods of Sarap packaged
soups would still be coming from Thailand, except for the Chicken variant which is produced locally.
The valuation method used for inventory is weighted average cost. Prepaid expenses and other current
assets are valued at 11% since this is a matter of policy for necessary warehousing costs, and the like.
72
Sarap
Total current assets account for 70% of total assets. The remaining 30% total assets are long-term assets.
Property plant and equipment account for only a little over 60%, reduced significantly from 90% levels
in 2003. This is primarily because all operations had been moved and will be maintained within the Paco,
Manila vicinity for the next 5 years and logistics had been well-managed. Deferred income tax is a
significant long-term asset contributing about 20% primarily because Sarap is a good tax payer. A
provision for other assets that also benefit the company is valued at 10%.
Similarly, majority of what finances the assets comes from current liabilities accounting for about 90%,
of which, trade and other payables account for a significant 60%. Borrowings within the 5-year
projection are reduced because the strategy that will be employed is to use the company’s retained
earnings by funnelling it back to the company. Stockholders will be given a good deal that will allow
them to enjoy their earnings on the 6th year.
3-Year Projection of Statements of Cash Flows
Cash from Operating Activities

The day to day expenses of the organization are reflected in this portion, the following major components
are as follows:
 After the net income, all of the non-cash expenses are added back such as depreciation and
amortization, provision for adjustments in property, plant and equipment and gains on disposals of
assets.
 Allowances for spoils are also provided for as packaged soups remain to be a food commodity that
under certain circumstances might not be best for consumption (i.e. direct sunlight, etc.).
 Given that Sarap is also challenged with the new organizational structure, provision for restructuring
is also budgeted for generously.
 As earlier mentioned, the strengthening of the peso will bring in forex gains.
 Interest income is less in lieu of interest expense, due to more borrowings.
 Increase in receivables is due to more sales.
 Increase in inventory is due to increase in stock cover.
Cash from Investing Activities

For the succeeding years, there would also be several capital expenditures and acquisitions that would
impact the business, such as:
 Additional property and equipment for increased capacity.
 Disposal of old and for replacement property and equipment.
 Restructuring costs incurred by the business.
Cash from Financing Activities

Financing pertains to the loans and repayment of cash borrowed by the business. In the 5-year projection,
it shows that:
73
Sarap
 Notes payables will be paid year-on-year.

 Work level 3’s and above of the local management team will be rewarded with a good share-based
compensation plan.
For the next 5 years, the task for packaged soups is a matter of brilliant basics. The category being on a
‘defense’ mode shall be quite aggressive and swift with its moves well-hinged on the findings on this
strategic management paper.
74

SARAP Strama

Загружено:

Сведения о документе

Исходное описание:

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

SARAP Strama

Загружено:

Авторское право:

Доступные форматы

Submitted by

4.2.2 People are Becoming More Health Conscious 23

9.1 THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) 61

 On consumer purchasing habits, developing lower cash outlay products as an answer to a

 Certification of all cooking aids as ‘good for you’ products.

2 Research Design & Methodology

 Department of Trade and Industry – www.dti.gov.ph

 Securities and Exchange Commission – www.sec.gov.ph

Summary of Frameworks, Tools, Activities and Outputs

3 Vision & Mission

3.1 Current Vision and Mission Statement

To be a Homemaker’s Best Friend.

3.1.3 Review of the Current Vision and Mission Statements

Revised Vision and Mission Statements

3.1.6 Review of Sarap’s Revised Vision and Mission Statements

It is our reason for being to provide our customers nourishment and

3. Markets yes retail and wholesale markets nationwide

By providing adequate training and a great professional working

5. Technology yes We are committed to continue studying and understanding evolving

It is our reason for being to provide our customers nourishment and

It is our reason for being to provide our customers nourishment and

By providing adequate training and a great professional working

It is our reason for being to provide our customers nourishment and

4.1 Economic Forces

Figure 1: Frequency and Volume per Trip of Cooking Aids

MSG ROOTS CUBES FLAVORINGS SINIGANG PACK SOUPS

VOLUME PER TRIP

MSG ROOTS CUBES FLAVORINGS SINIGANG PACK SOUPS

Source: Global Market Research Homepanel

Figure 2: Volume Share of 11 gms purchase

Source: Global Market Research

4.1.2 THREAT: Decrease in Food Expenditure at the Expense of Other

Table 1: Distribution of Total Family Expenditure by Major Expenditure Group

Expenditure Group 1991 1994 1997 2000 2003

Percent 100 100 100 100 100

Food 48.5 47.8 44.2 43.6 42.6

Personal Care & effects 3.3 3.2 3.3 3.6 3.9

Household operations 2.7 2.6 2.3 2.3 2.2

Tobacco 1.7 1.4 1.3 1.1 1.1

4.2 Socio-Cultural, Demographic, and Environmental Forces

4.2.1 OPPORTUNITY: Significant Distribution of Households in Visayas and

Table 2: Total Philippine Population (Year 2000)

Source: National Statistics Office

Figure 3: Distribution of Household Population by Region

% Distribution of Household Population by Region

Source: National Statistics Office, Global Market Research

4.2.2 OPPORTUNITY: Fast-paced Lifestyle Calls For ‘Quick And Easy’

Figure 4: Food Category Trends

FOOD TRENDS 2006

Figure 5: Women in the Work Force

The proportion of women in the labor force has increased

LABOR FORCE % SPLIT BY GENDER

4.2.4 OPPORTUNITY: Still ‘Low’ Dish Penetration of Packaged Soups in

Figure 6: Cooking Aids Penetration in Different Dish Types

4.2.5 THREAT: People are Becoming More Health Conscious

 In a debits and credits world ‘occasions’ becomes key

4.3 Technological Forces

4.3.1 OPPORTUNITY: Increasing use of the Internet

4.4 Political, Legal and Government Forces

4.4.1 THREAT: Political Instability

5 Industry and Competitive Analysis

5.1 Industry Analysis

Figure 7: Basic Seasonings Category Growth