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Case Study 4
The market and competition, including demand, capacity, and price competition
The outbreak may disrupt supply chains and productivity. Inventory such as construction
materials that cannot be turned over because of travel restrictions may have to be evaluated for
impairment. Changes in prices and reduction in the level of demand will also have an impact in
the market. Demand is expected to be buoyed in the medium-term with the completion of the
various infrastructure developments. The pandemic caused delay to purchase activities in the
residential market which influenced the developers to offer more flexible packages and payment
terms to entice the clients. Developers offer promotions and discounts. Income disruption would
result in receivable losses in the socialized and economic housing segments. The mid-market
segment may still have a steady stream of cash from receivables during this period, and sales are
expected to be sustained post COVID-19. Company is exposed to the risk of lower occupancy,
reduction in rental rates and late or non-payment of rentals.
Sectors directly affected by social distancing and government isolation guidelines, such
as airlines, hotels, and food service, are acutely impacted today. As they struggle with decreased
demand, they also have excess capacity and heightened price sensitivity. Many of these
companies are getting requests for steep discounts and new terms as their competitors scramble
to attract the few remaining customers, at times with prices well below cost. But for many
companies in this kind of marketplace, we believe that pricing is now beside the point. After
health and safety measures are in place, they should focus on maintaining cash reserves and
preserving key assets and talent to survive the crisis and fight another day. Serving a few
bargain-hunting customers at a loss is rarely a route to long-term success. Some sectors, such as
home improvement, landscaping, and consumer electronics, are not directly affected by COVID-
19 but feel the impact of a general slowdown or moderate uptick as people’s lives change at
work and at home. Many of these companies have opportunities to take near-term pricing actions
that preserve and build value—but they should avoid certain pitfalls.
Construction activity is anticipated to be negatively impacted by COVID-19. Weak
demand for new housing and project delays are anticipated to constrain demand for transport
equipment, machinery and scaffolding rentals. Property operators and real estate service
providers are likely to see a significant hit to revenue. Amidst the uncertainty, demand for
commercial and residential leases is expected to decline. Some retail and commercial tenants are
also expected to have difficulty meeting rent obligations. Residential property prices are
expected to fall as unemployment rises and some property owners fall into negative equity or are
forced to sell. Restrictions on auctions and open for inspections are anticipated to weigh on
property transaction volumes, reducing demand for real estate services. Real estate brokerage
firms are expected to see less transaction as social distancing means less people will open up
their homes to potential buyers. Buyers may also delay in purchasing a home.
https://www.ibisworld.com/industry-insider/coronavirus-insights/coronavirus-update-industry-
fast-facts/#realestate
 Based on the survey from Asian Development Bank (ADB), two-thirds of firms surveyed
immediately suspended business activity, while those still operating cut operations by half. The
smaller the firm size, the lower the share of businesses remaining open. Wholesale and retail
trade was the sector most adversely affected by the ECQ. Half of firms temporarily closed were
based in the NCR. COVID-19 and associated containment measures triggered a sharp decline in
April sales for most enterprises. Sales in wholesale and retail trade were most affected, both by
decreased value (those closed) and increased value (those servicing special demand). NCR-
based firms accounted for around half of those with decreasing sales values. More than one-third
of enterprises faced severe bottlenecks in the product supply chain, negatively affecting more
than half their production capacity. Supply chain bottlenecks were mainly caused by slow
customs clearance on imported goods, limited operations with local suppliers, and shortage of
trucks/drivers. More than half of enterprises reported no change in the cost of supplies after the
ECQ began, regardless of firm size. Traditional trade, accommodation and food services, and
manufacturing accounted for more than half of enterprises reporting an increase in the cost of
supplies. Half of enterprises facing an increase in the cost of supplies were based in the NCR.
Cyclical or seasonal activity
The real estate industry is most likely influenced by the movement in the interest rate of
an economy. Whenever the rates increase, the value of future cash flows decreases which result
in lower valuation on assets. Due to the pandemic, COVID-19, numerous Filipinos are currently
unemployed, current business projects are delayed, and the demand for some products decreases.
As a result, the projected economy of the Philippines is down to 3.9% in 2020 which shows that
economic growth is greatly affected. Moreover, the report of the Philippine Statistics Authority
stated that the inflation in the Philippines for the first six months is 2.5%. The higher the
inflation, the higher on the real estate prices and rents that may result in less prospective clients. 
Product technology relating to the entity’s products
The improvement of road networks and expansion of airports in major urban areas in the country
will further unlock land values, making it more feasible for residential projects. The use of social
media and other advertising platforms will increase the awareness of the potential clients
regarding the properties or services the company offers. With the increasing number of local and
foreign tourists of the community the demand of the public will increase. Resorts and hotels will
be visible to the popular local destinations to attract potential clients. Considering the
development of an area will benefit not just only the company but also the local government for
having additional income.
Regulatory factors

The industry that the company operates is bound to the regulations imposed by the
Philippine government. The projects offered by the company are developing real estate
investments, buildings, high-rise condominiums, or other residential projects. Implementation of
additional government policies such as the Comprehensive Tax Reform Package; relaxation of
foreign ownership restrictions on retail and construction; and amendments to the existing
procurement law and business registration systems. An assessment is conducted whether the
company has complied with the policies imposed.