Royal Printing & Packaging Company:
A Case Analysis
Presented by GROUP 3
Margerry Ann Noval
Roxanne Margrete Oclarino
I. Point of View
We have chosen the perspective of Mr. Jose Baltazar, who is the new manager and son of the founder of the company. He plays the main role in the decision-making process to meet his own targets. However, his decisions are also discussed to his father. Present time in the case is 1989. Jose’s plan will define the company’s future and loose from previous disappointment.
II. Analysis of Case Situation
There were several prospects for the printing industry during the next ten years: 1) generation of business from elections, political stability and economic recovery, 2) on-going structural reform, 3) projected uptrends in value of production in the manufacturing sector which mostly served by local job and commercial printers, 4) local printers expect a bullish outlook from the service sector and 5) demand for basic school textbooks.
Due to demand in printing and publishing industry, competition is increased. There are estimated 3700 printing establishments in the country of which 2700 are located in Metro Manila. And as of 1987, there are 15 BOI-registered firms.
Credit term to buyers is from 30-60 days. Purchasing departments of institutional buyers decide on the printer according to the: 1) quality of work, 2) ability to meet deadlines and 3) quoted price. Paper comprises 70% of the total production cost. And suppliers grant 3% cash discounts if payments are made within 7 days.
The company recently depended on a few multinational drug companies. There are no substantial liabilities and the machineries were bought first hand. However, the company sales haven’t reached P1 million after being in the business for 27 years. The net margin in 1987 was only about 10% compared to the interest rate of 16% if the assets are invested in Treasury bills. Furthermore, selling the assets is not an option according to the father.
III. Problem Statement
How could the company increase their net income and reach P1 million sales?
IV. SWOT Analysis
The company has been in the business for 27 years. There are no substantial liabilities. They own first hand machineries that are still in good running condition. The German brands of machineries basically last forever. In addition, Jose Baltazar graduated from a business school. And the market value of the two Heidelberg Offset sums to P2.5M.
In spite of being in the business for 27 years, the company sales haven’t reach P1 million mark. The company lost its client bank recently. And the net margin for 1987 was only about 10%. The net income is small due to large operating expenses. The miscellaneous expenses also increased drastically. Though Jose came from a business school, he just graduated a month ago. What's more is his father didn’t agree in selling and investing the assets in Treasury bills.
Luckily, the demand for printing services will generally increase. The restoration of democratic processes will not only generate business from elections but will also help achieve political stability and economic recovery. There are projected uptrends in the value of production in the manufacturing sector which is 75% of the market being served by the local job and commercial printers. Local printers expect a bullish outlook from the service sector. And the demand for basic school textbooks is expected to expand. Paper suppliers grant 3% cash discounts if payment are made within 7 days and has credit term of 30 days. In addition, the Treasury bills’ interest rate is 16% on their time and the rate of exchange is roughly P20 to $1.
There were several threats that the company had to face. On-going structural...
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