Coping mechanisms and diversification decisions of balut processors in Pateros, Metro Manila

Date

3-2011

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Nimfa Derige Montes

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Abstract

The study was conducted to determine, analyze, and evaluate the coping mechanisms of the former and current balut processors in Pateros. The general objective of the study was to present the coping mechanisms and diversification options of balut processors in Pateros. The specific objectives were to present the profiles of the existing and former balut processors in Pateros; to trace the development/changes in the actual practices of balut processors over a period of time; to evaluate the coping mechanisms undertaken and diversification decisions made by existing and former balut processors and identify potential problems arising from it; to determine the external and internal factors affecting the sustainability of operations of balut processors; and to recommend possible solutions/strategies based on the findings of the study. A total of 11 balut processors were identified and interviewed. The lists were obtained from the official website of Pateros and from the record of the Business Section of the town’s municipality. On the other hand, there were eight former balut processors identified through snowball or referral method. The profile information of the existing and former balut processors were presented such as sex, age educational attainment, household size, number of years of residence, and membership to an organization. The influence of these entrepreneurial characteristics to the type of diversification decisions and coping mechanisms adapted by the processors were analyzed and described. The external factors affecting the balut operations and its sustainability were also identified and analyzed. The external factors were supply of duck eggs, costs of feeds, competition with balut producing provinces and Vietnamese processors, mass production with the aid of modern incubator, government assistance through OTOP and Balut festival, tertiary educational system in Pateros, and aging population. These factors were acting on the balut business that led to the coping mechanisms and diversification decision made by the balut processors. The balut business practices were also presented to trace the changes and development in the business as a response to the changes in the industry’s environment. It was done across functional areas; marketing, production, human resource and finance. And to assess the profitability of the diversification decision o trading balut, a cost-benefit analysis was done. The study showed that the target markets of balut are those people with exotic taste. The price of balut was also highly dependent on the price of duck eggs and increasing the price too much would result to a decrease in the consumption of the balut eaters since it was not a necessity good. Pateros also used traditional method in producing balut that gave it the delicious taste. It was also showed in the study that balut making was labor intensive and that there were few people now who were engaged in the balut making. The capital for balut business was also a constant problem to the processors due to the inappropriate allocation of sales between the household needs and business operations. The internal factors affecting the sustainability of the balut operations were also identified and analyzed. The internal factors were seasonal demand, overcapacity and under capacity in production of balut during the peak and lean seasons, skills of the balut processors in handling balut, role of the balutan workers, interest of the entrepreneur, the financial standing of the balut business. Meanwhile, evaluation of the coping mechanisms undertaken and diversification decisions made by the processors was done through the analysis of the advantages and disadvantages of the given business decisions. The coping mechanisms and diversification strategies that were evaluated and analyzed were concentric diversification through selling balut by-products and trading balut, conglomerate diversification through water refilling station and rental building business, price and quality differentiation strategies, forward integration, strategic alliance, product development, market development, and liquidation. Profitability analysis of each strategy was done to determine the earnings gained from the business. It was found out that the processors were able to gain profits but the net margins were low. This was due to different factors such as high price of duck eggs, and labour costs. Analysis on the strengths, weaknesses, opportunities and threats was also done to summarize the internal and external factors acting upon the balut business that consequently affected their coping mechanisms and diversification decisions. The identified strengths of Pateros balut industry were high quality of balut, established name and the traditional method of processing balut while the identified weaknesses were sources of raw materials, seasonal demand and limited product form. On the other hand, the identified opportunities of the industry were the international market, balut festival, OTOP support services, and the local government’s plan while the identified threats were competition with other balut-producing provinces, urbanization, and increasing price of poultry feeds. Other concern like the lack of business succession was also included in the analysis. Meanwhile, the problems of the processors were identified such as competition both in the local and domestic markets, sources of raw materials, and oversupply of balut from the suppliers of the processors engaged in trading balut, costly marketing strategies and so on. Recommendations were done to help the processors and the former balut processors to cope with the problems arising from the coping mechanism and diversification decisions made. It was done by stakeholders such as balut processors, government, potential processors, and support agencies. For the balut processors, it was recommended that they perform the market development for the international market and focused strategy for the institutional buyers in the local market since both markets were not fully penetrated by the balut processors in Pateros. For the government, it was recommended that they should assist the balut processors to backward integrate or contract grow to help address the problem in the source of raw materials, for the potential balut processors, it was recommended that they attend trainings on how to process balut ion a traditional method and how to process bottled balut. Lastly, for the support agencies like DOST and DTI, it was recommended that they assist the balut processors in marketing their balut in a greater market reach through conducting different programs like trade fairs that will showcase the Pateros balut.

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2011 M17 A74

Document Type

Thesis

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