Analysis of the Production and Marketing Operations of Wood Carving Enterprises in Selected Towns of Ifugao

Date

3-2011

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Mar B. Cruz

Committee Member

Carolyn V. Melgar, Jewel Joanna S. Cabardo, Nanette A. Aquino, Reynaldo L. Tan

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Abstract

The study was undertaken to determine the production and marketing operations of wood carving enterprises in Banaue, Hungduan and Kiangan, Ifugao. The wood carving industry has long existed in Ifugao and it is one of the major industries in the province. Wood carving had been present in Ifugao long before the colonizers reached the country. It is part of the culture of the Ifugao people. Various products are made out of woodcarving operations which are generally classified as housewares, kitchenwares, furnishings. Other products include “sungka” and drums.

The objective of the study was to describe and analyze the production and marketing operations of wood carving enterprises in the selected towns of Ifugao. The study was conducted with the following specific objectives: assess the structure, conduct and performance of the woodcraft in selected towns of Ifugao, present profiles of the key players and enterprises of the industry, discuss the marketing and production, and other management functions undertaken by the key players, identify the problems and prospects in the operations of the business enterprise under study, and recommend possible solutions to the identified problems.

Thirty seven (37) woodcarvers, 14 merchandisers and 18 woodcarver-merchandisers were included in the study. The respondents were identified through the snowball sampling or through referrals. Primary data were gathered through personal and scheduled interviews with the key players in the industry and the key persons in the concerned government institutions. Secondary data were gathered from publications and data provided mainly by the DTI, the DENR and other government institutions. Related studies were also accessed from the CEM library. The study used the descriptive research design incorporating the analysis of the strong and weak points of the key players, determining the problems of the wood carving enterprises as well as it prospects and opportunities, competitive analysis using the Porter’s five forces model and cost structure analysis. Key success factors and the institutions in the industry were also determined.

Results showed that most of the players are operating in micro scale. Some of the merchandising and the woodcarving-merchandising enterprises were registered while some are not. Woodcarvers are not registered because they usually subcontract with the merchandisers. The woodcarvers sell rough woodcarving items to the merchandisers and the woodcarver-merchandisers. Merchandisers are the ones who do the finishing operations for the wood carving products from the woodcarvers. Woodcarver- merchandisers perform both the function of the two players as well as in marketing the products. Prices of the woodcarving products are based on cost plus pricing but there are items which are priced based on the existing market price. Woodcarvers do not promote their products as they have predetermined buyers while merchandisers and woodcarver merchandisers rely mostly on word-of-mouth advertising.

The key success factors for the wood carving industry in Ifugao were also identified. Most of enterprise operations do not conform to the identified key success factors. One of the enterprises’ strong points was offering wide array of woodcarving products in the market used for different purposes, with different designs that come in different sizes. Cost structure analysis was also done which showed 30 percent profit margin for the woodcarvers while 70-80 percent was for the merchandisers and woodcarver- merchandisers.

Michael Porter’s analysis revealed a promising entry point for the industry. Woodcarving, woodcarving-merchandising and merchandising has low barriers to entry as there is low capital requirement. Having a low barrier to entry, anyone can enter the industry which can increase competition among the players. Competition among the woodcarvers is low while competition among the merchandisers and the woodcarver- merchandisers is high because of similar product offerings and proximity to competitors. Bargaining power of the supplier of raw materials is high due to the decrease in supply while the bargaining power of the woodcarvers as sellers of rough woodcarving items is moderate. Bargaining power of the merchandisers as buyers of rough woodcarving products is low due to the standardized woodcarvers’ price. The bargaining power of the end customers is moderate even if they buy in bulk or minimal volumes.

The major problems and threats identified for the wood carving enterprises related to supply sourcing and production were 1) Climate change and decreasing number of trees for woodcarving; 2) Incorrect perceptions of people regarding government policies and laws; 3) More stringent DENR requirements for cutting trees; and 4) Increasing cost of direct materials. Marketing related problems include 1) Fierce competition with local and international market; 2) Threat of substitute products; 3) Decreasing number of tourists visiting Ifugao; 4) Seasonality of demand; and 5) Lack of support from the government. Problems on other management functions were also identified. The decreasing number of woodcarvers also imposes a threat on the enterprises. The prospects for the industry were also identified and were classified across management functions.

Based on the results, the following is recommended for the enterprises to attain growth and development and to boost the industry: 1) Form Community-based task force to initiate forest management and conservation; 2)Efficient use of raw materials to minimize the wasteful use of wood; 3) Market Penetration; 4) Product Development; 5) Forward Integration; 6) Strategic Alliance; 7) Institute Cooperative Alliance or Associations; 8)

Establish Market Linkage with Government Agencies; 9) Participation in Business- related trainings and seminars; 10) Consultation with Government Agencies; 11) Perform

forecasting techniques; 12) Invest in machines and equipment for better production

efficiency 13) Set quality control standards for the woodcarving products and 14) E- commerce. The institutions in the industry should 1) Identify fast growing tree species

that can be used for woodcarving; 2) Strengthen forest conservation and forest management system; 3) Intensify promotion and tourism in Ifugao; 4) Developing and repairing transportation infrastructures in Ifugao; 5) Conduct regular business and industry-related trainings and seminars; 6) Extend support to the players through microfinance institution linkages; 7) Develop regulatory pricing policy; 8) Enhance awareness and enthusiasm of the Ifugao youth towards the wood carving industry through education; and 9) Conduct study on the woodcarving industry to identify other areas of assistance.

Language

English

LC Subject

Wood-carving industry, Business enterprise, Production control, Marketing

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2011 M17 B65

Notes

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Document Type

Thesis

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