Organic Chicken Farm Corporation: A Case Study

Date

3-2011

Degree

Bachelor of Science in Agricultural Economics

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Reynaldo L. Tan

Committee Member

Nanette A. Aquino, Normito R. Zapata, Jr.

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For non-UP researchers, requests for access to this material may be directed to the CEM Library at cemlibrary.uplb@up.edu.ph or to the UKDR administrator at uscs-mainlib.uplb@up.edu.ph

Abstract

Organic poultry production is still at infancy stage in the Philippines. There are only eight identified companies that are producing their poultry products organically. These are: Organic Chicken Farm, Solraya Enterprises, Teresa Farms, Forest Hill Nature Farms, Krukukuk Farms, Herbana Farm Philippines, Villegas Organic and Hobby Farms, Full of Grace Organic Agriculture Producer. However, these companies are not certified organic by The Organic Certification Center of the Philippines (OCCP). OCCP is a private, organic standard setting and organic certification body.

In the country, Organic Chicken Farm is the only poultry producer that is certified organic. Organic Chicken Farm is owned and managed by Ms. Rosie Chua. The farm is a 2.7-hectare land and it has the capacity of ten thousand heads per operation. It started in the year 2000. Organic Chicken Farm used only two kinds of imported breeds which are sasso and kabir. These breeds are imported from Spain and Israel. The company strived to have the organic certification from the Organic Certification Center of the Philippines to ensure high quality products. However, the owner got tired in managing the business since she is the one responsible on the overall management of farm operations, from the acquisition of supplies up to the distribution of the organic products. Due to management stress felt by the owner, Organic Chicken Farm stopped its operation in the year 2007

Recently, the company wants to revive its operation as it sees an opportunity on the growing market for organic products. Meanwhile, in order to address the prevailing issue for the company of management stress that was felt by the owner in operating the business, the company will hire a general manager who will be responsible for the overall management of the farm. Hence, it is now best to know what courses of actions that the company must do once it goes back to operation.

This study aimed to determine and assess the performance of Organic Chicken Farm which is a certified organic poultry producer. The specific objectives of the study are to: (1) evaluate the business environment of the firm; (2) evaluate the company in terms of the four business functions; (3) define and evaluate the problem confronting the business; (4) formulate alternative solutions to address the problem; (5) evaluate alternative solutions using appropriate criteria; and (6) design an implementation plan for the business.

The business case was assessed according to its internal and external factors. Internal factors are the issues and developments within the company being studied. The marketing, production, personnel and financial status of the company was identified and analysed. On the other hand, the external factors involve the macroenvironment such as economic, demographic, technological, political and socio-cultural developments and the microenvironment which includes key industry players, customers, market channels, and key raw material suppliers. Through the SWOT Analysis, three alternatives were formulated, these are (1) Revive the operation and sell only live organic chickens; (2) Revive the operation and sell both live and organic chickens and distribute products to Healthyfresh Restaurant and OPTA store; and (3) Revive the operation and sell both live and organic chickens and develop own distribution outlet.

Each alternative was evaluated using cost and return analysis to determine expenses and profitability of each. In the analysis done Alternative 1 which is to revive the company operation and sell only live chickens would generate a net income of Php 255,738. Alternative 2 which is to revive the operation and sell both live and organic chickens will have a net income of Php 975,270. In this alternative, the products of the company will be distributed to Healthyfresh Restaurant and OPTA store. Lastly, Alternative 3which is to revive the operation of the company and establish a distribution outlet will generate a net income of Php 682,138. Moreover, each alternative was assessed according to Net Profit Margin and Return on Investment (ROI). For Alternative 1, the Net Profit Margin is 0.05 and the Return on Investment is 0.05. Alternative 2 will have a Net Profit Margin of 0.13 and a ROI of 0.12. Lastly, Alternative 3 will have Net Profit Margin of 0.09 and a ROI of 0.08.

Aside from the cost and return analysis and net profit margin and ROI, the alternatives were evaluated through different criteria. The criteria include sustainability (20%), ease of implementation (10%), cost of implementation (30%), and profitability (40%). In the evaluation of alternatives, scores were given to each alternative and results showed that Alternative 2 is the best solution to address the prevailing problem of the company.

Lastly, an implementation plan was designed in reviving the operation of Organic Chicken Farm Corporation. The implementation plan includes activities like hiring of new general manager, land preparation, and training of employees. Moreover, in implementing the best alternative that was generated for the business, farm operations will continue and production cycles will run. A Gantt chart was developed in order to track the activities through time.

Language

English

LC Subject

Poultry products—Quality, Chicken industry

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2011 M17 B84

Notes

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Document Type

Thesis

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