Bulaklak Films, Inc. had been one of the leaders in the film processing industry, operating with four profit centers: the black and white negative processing, black and white positive processing, color negative processing, and color positive processing. Before color film processing progressed in the Philippines, local movie producers would have their films color processed in Australia and Hongkong due to lack of skills and equipment of local processors. BFI conducted intensive research and training of its staff to establish competence in the color film processing. The company eventually monopolized this service line. The black and white film processing, on the other hand, was not anymore as in demand as the color processing as evidenced by the recent establishment of Image Duplicators and Exposures, Inc. both local color film processors. BFI charged processing fees in accordance with industry rates while Exposures, Inc.’s rates were five percent lower than that of BFI, threatening the former company’s operations and position in the industry. Moreover, the latter company offered more liberal credit extension policies than BFI, which apparently was a strategy that could attract many local movie producers to have their films processed in Exposures, Inc. In 1995, BFI was facing a rising competition and its management needed to come up with adjustments in their operations to maintain or even improve their performance and position in the industry.
What are the strategies that Bulaklak Fims, Inc. should implement in order to maintain or improve their performance at the same time secure their dominant position in the film processing industry despite the threat of competition? The following are guide questions to help BFI in its decision making: 1. What should be the components of the company’s costs? 2. What changes in the company’s policies in classifying costs should be employed? 3. What appropriate methods of cost...
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