Enterprise study of micro, small, and medium-scale shoe manufacturers in Marikina

Date

2010

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Victoria R. Guieb

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Abstract

An “Enterprise Study of Micro, Small and Medium Scale Shoe Manufacturers in Marikina” aims to focus on the present nature and status of the shoe manufacturers in Marikina. The specific objectives are: 1) To present the profile of selected small and medium-scale enterprises (SME’s) and those of the entrepreneurs engaged in these enterprises, 2) To discuss the characteristics, traits or qualities of the entrepreneurs engaged in the selected enterprises and how these are concretely expressed and manifested in key business decisions, 3) To identify and analyze the economic, technological, customer, competition and legal-political factors affecting the enterprises 4) To discuss the various considerations in establishing and organizing enterprises, and 5) To identify start-up and current problems, discuss management practices and innovations adopted/implemented by the entrepreneurs and offer some recommendations to solve these problems. The study was conducted in nine of the barangays in Marikina particularly the barangays with the most number of shoe manufacturers recorded in the municipal office. These were Tañong, Jesus Dela Peña, Sta. Elena, San Roque, Calumpang, Sto. Niño, Marikina Heights, Malanday, and Concepcion. There were 25 respondents included in this study. They were given the questionnaires and interviewed regarding the current status of the enterprise especially after super typhoon “Ondoy”. Results show that all of the shoe enterprises were into manufacturing and two of which already ventured into shoe trading. Not all of the respondents were registered because only 22 out of the 25 were recorded in the registered list of the city government. There were more enterprises which were still operating under the management of the owner for less than 10 years for they only inherited the family business from the previous proprietor in the family. Indeed, the shoe enterprises were mostly under sole proprietorship while two were into partnership and two were a corporation. In Marikina, micro-scale enterprises were dominant with a total of 12 because only nine were small and four were medium-scale. The entrepreneurs owning the shoe business were relatively diverse. Varied ages of the entrepreneurs were noticed. The male comprised 52 percent but were not considered dominant. The owners were mostly married that their spouse served to help in the overall financing of the business. Most of the entrepreneurs have small and medium sized families with five to more than 10 members depending on the shoe business as their major source of income. Only four entrepreneurs declared their other sources of income such as other businesses and employment in a government office. Some of the entrepreneurs were past officers of the cooperatives and 12 were affiliated to the Philippine Footwear Federation, Inc. The strongest and weakest traits and characteristics of the entrepreneurs were determined through the Personal Entrepreneurial Competency (PEC) Analysis. It was obtained from the computations that micro-scale entrepreneurs were highly goal setters but risk-averse individuals. Owners of the small-scale enterprises scored high in goal setting and information seeking but got a low score in persuasion and networking. Lastly, medium scale entrepreneurs were opportunity seekers but not risk takers. External assessment of the shoe industry was also conducted. Prices of raw materials, high labor price and fluctuating interest rates were still the economic forces affecting the shoe enterprises in Marikina. It was determined that these enterprises were behind the technology of other countries because entrepreneurs were hesitant to new technology. The competition in the local market relative to imports contributed to the moderate to high perception of the entrepreneurs to competitive forces. Using the framework of Michael Porter, it was analyzed that moderate rivalry among competing firms, low threat of entrants, high threat of substitutes, low bargaining power of suppliers and high bargaining power of buyers were experienced. High tax rates and the threat of hazardous chemicals used in leather were also perceived. Recently, the whole Marikina was flooded due to super typhoon Ondoy which severely damaged the shoe industry of the city. Internal operations of the enterprises were also evaluated through the four business functions: marketing, production, personnel and finance. In marketing, wide distribution network was highlighted through the Marikina Shoe Caravan but the lack of initiative in finding market niches and implementing strategies were still manifested. Leather as raw material was the basic in production but low quality local leather made other entrepreneurs to resort to imports. Skilled workers were a must in hiring but they were already demanding for increase in compensation. Continuous generation of working capital was needed in finance in order to avoid running out of budget for the acquisition of raw materials. The super typhoon also caused major losses in the shoe industry. Finished goods, work in process and raw materials inventory were damaged. Machines and equipments used in shoe making also needed repair and replacements. These enterprises took one week to almost two months to recover because of the extent of damaged brought Ondoy. Supply chain analysis and Michael porter’s framework were also executed. It was determined that the acquisition of raw materials were the crucial part in the shoe supply chain. It was also known that moderate competition, low threat of new entrants, high threat of substitutes, low bargaining power of suppliers and high bargaining power of buyers were seen in the industry. The micro, small and medium scale shoe makers were relatively distinct given the different production capacities of each. It was recommended that micro-scale enterprises focused on production standardization to maintain the durability of the product as their primary competitive edge. For the small-scale shoe enterprises, concentric diversification and market development were proposed in order to take advantage of the rising bag industry in Marikina to include as additional products in diversifying. Market expansion was needed in medium-scale enterprises since they were able to practice semi- mechanization thereby high production capacity. Overall, the shoe industry in Marikina should be guided by institutions through development programs for its manufacturers.

Language

English

Location

UPLB College of Economics and Management (CEM)

Call Number

LG 993 2010 M17 T53

Document Type

Thesis

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