Rasza Agro Produce Corporation: A Case Study

Date

3-2010

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Dinah Pura T. Depositario

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Abstract

RASZA Agro Produce Corporation (RAPCo) has been into the production of crude coconut oil and copra cake since the establishment of the enterprise in 1983. Recently, however, the firm decided to expand its long-standing product line and produce coconut biodiesel or CME. The current dilemma faced by the firm is that after almost three years of being engaged in CME production, they have not found any buyer for their new product, Diezel Aide. The firm has since mid 2009 stopped its CME operations.

The study therefore seeks to identify feasible strategies to revitalize the firm’s CME venture. Specifically, it aims to: 1) present and discuss a noteworthy business issue(s) which has company-wide implications; 2) evaluate the business environment prevailing at the particular time of the case; 3) define the problem relevant to the business issue(s) being studied; 4) generate and evaluate solutions to the identified problem; 5) identify the best solution using appropriate criteria; and 6) design an implementation plan for the chosen solution.

Primary data were collected through key informant interviews with the owners and workers of the firm while secondary data were gathered from Special Problem manuscripts, publications, documentations, references from the World Wide Web and relevant institutions such as the Philippine Coconut Authority (PCA), Department of Science and Technology (DOST), the Bureau of Agricultural Statistics (BAS), United Coconut Association of the Philippines (UCAP) and the University of the Philippines, Los Baños (UPLB). The study made use of both descriptive and action research designs. Quantitative (e.g., profitability analysis, financial ratio analysis, etc.) and qualitative (e.g., SWOT analysis, IFE and EFE matrices, etc.) tools of analysis were employed in analyzing the gathered data.

RAPCo is family-owned corporation of the Awayan family. The firm has an average of 20 employees throughout the year, mostly contractor workers involved in the production process. At present, the firm relies heavily on copra cake and crude coconut oil sales for its sustainability. RAPCo’s production capacity is limited by their current facilities. An analysis of their financial statements revealed that RAPCo is realizing marginal profit. The firm is also less competitive vis-à-vis other players in the coconut processing industry. The short-term issue which needs to be addressed is RAPCo’s unclear strategic direction for its CME venture. This can be largely attributed to the firm’s ineffective marketing efforts. On the other hand, the long-term issue facing the firm is its inability to keep abreast with the challenges and changes in the coconut processing industry.

Two sets of SWOT of the firm’s CME venture and its overall operations were identified. From these analyses, the following opportunities in the short-term were identified: 1) RAPCo has not yet tapped industrial companies, transport groups, and households for the sale of their coco-biodiesel; 2) There is a growing demand for Biofuels in the export market; 3) There are a lot of government agencies and institutions from the private sector that support the Biofuels industry. On the other hand, the following serious threats emerged: 1) Local Coconut Methyl Ester (CME) supply for the Biodiesel (B2) blend currently exceeds the mandated requirement; 2) There is a dwindling supply of whole coconuts and copra; 3. There is an insufficient public awareness on biofuels. Opportunities were also drawn from the long-term and these were: 1) There are available technologies for other in-demand and non-traditional coconut products; 2) Financing institutions are present in the coconut industry; 2) There are a lot of untapped feed-mills and livestock farms in Luzon. Meanwhile, latent threats also surfaced: 1) Competition across coconut industries is continuously intensifying; 2) Adverse effects of climate change due to global warming; 3) Unabated cutting and increasing number of senile coconut trees.

In working against serious threats, the firm must capitalize on their top strengths to be able to seize opportunities. These identified strengths were: 1) The proprietor has a very high level of technical expertise; 2) The owners have established networks with support institutions; 3) The site of the firm’s plant is in close proximity to suppliers as well as buyers. Conversely, RAPCo had weaknesses that need to be dealt with which were: 1) The firm is lacking effective marketing strategies; 2) It has a limited production capacity resulting to low productivity; 3) Tasks handled by employees across the organization are overlapping.

From the QSPM matrix analysis, the short-term issue recommended decision was for the company to revive its CME venture through more aggressive marketing efforts. Under this, the company should aggressively tap industrial users and jeepney associations as its markets. Also, the company must strengthen its collaboration with other big and small CME industry players as well as industry associations to enable it to file an appeal with the Department of Energy to increase the minimum mandated biodiesel blend to at least 5 percent from the current 2 percent. The long-term recommended strategy is for RAPCo to engage in market development to enable it to appeal to other users for its products. To cite, for its copra cake and crude coconut oil, animal farm owners and feed millers can be eyed as potential buyers.

Recommendations for minor issues were also prepared. To address the firm’s issue on overlapping tasks and lack of effective marketing strategies, a new organizational structure was suggested. In this, a marketing department has been appended to formally take charge of all marketing functions of the firm. In addition, a book keeper who shall be completing and counterchecking all of the RAPCo’s financial records is advised to be hired. For the promotion of Diezel Aide, the firm should prepare a business proposal which would highlight the business selling proposition of the product. To back this up, in-house R and D must be conducted with regards to the usage of its CME. Furthermore, a company website should be made for easy access with potential suppliers and buyers.

General recommendations for the biofuel regulators were also identified. These include provision of market-matching assistance chiefly to small industry stakeholders, conduct of a study for an appeal to increase the mandated biodiesel blend, intensive public information dissemination through various forms of media, and continuous search for idle and marginal lands for feed stock production to ensure uninterrupted supply.

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2010 M17 G83

Notes

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Document Type

Thesis

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