A case study on Magnate Food Inc.: focus on the fish sauce operations

Date

2002

Degree

Bachelor of Science in Agribusiness Management

College

College of Economics and Management (CEM)

Adviser/Committee Chair

Depositario, Dinah Pura T.

Abstract

Patis is consumer used for food seasoning by many Filipinos. It is used like salt in Western cooking and soy sauce in Chinese cooking. This condiment is used in various food preparations and sometimes even for preservation. It is preferred by many Filipinos for the combined taste of fish and salt in one. Hence, it has become a popular table fare in many Filipino houses it plays an important part in the eating habits of most Filipinos and is the most popularly known condiment in the Philippines, ever since its accidental discovery in 1935 Mrs. Rufina Lucas, the first known patis producer. Hence, the fish sauce industry is believed to be a flourishing industry in the country, a potential income generator. Few study have been done on the fish sauce industry. However, this case was limited to one industry player, specifically, Magnate Food, Inc. The general objective of this study was to describe the status, problems and prospects of the fish sauce product line of MFI. The specific objectives of the study were to evaluate the fish sauce operations of MFI in terms of its four functional areas; to identify the strengths, and weaknesses, opportunities and threats for MFI's fish sauce product line; and to come up with recommendations for the improvement of the fish sauce operations of MFI. Primary data was obtained by interviewing key personnel and by doing actual observations in MFI's manufacturing plant and main office. Secondary data was obtained by soliciting files such as historical background, annual reports, financial statements, and other relevant information from the company's files. Also, industry notes were gathered from government agencies. newspapers, and other supplementary journals from the Bureau of Fisheries and Aquatic Resources, Department of Trade and Industry, Technology and Livelihood Resource Center and the Securities and Exchange Commission. MFI is a company known basically for its vinegar (*Sakai), soy sauce (*Sakai) and meat sauce (*Sarsa). It has fully integrated manufacturing, sales and marketing operation with annual sales revenue of close to Php 1.5 billion and with respectable profits. It was established by a group of Filipino businessmen through a series of mergers of several large companies engaged in the manufature and distribution of well-known food products specializing in condiments. The fish sauce division represents 4% of the total sales that MFI generates. Profitability wise, it maintains a higher return on equity than the current inflation rate. Hence, the real value of the financial investment of MFI's stockholders is not eroded. Essentially, the Sakai brand of fish sauce comes over as a new brand, being in the market for only 4 years. With an increasing volume of production annually, the fish sauce product line may well be in its growth stage, considering that is has only been in the market for a short period of time compared to the other major players. The growth of the fish sauce product can be promoted by capitalizing on MFI's financial strength and overcoming the threat of cheaper fish extracts available abroad. This can be done by linking with supplier of low cost fish extracts. A potential problem of MFI is the cumulative downtime. Compared to the total possible production, it is relatively high, amounting to 21%. It reduces the volume of total possible production. This may disrupt the production volume of MFI should it happen on a regular basis. An increase in the possible downtown would result to an increase in the volume of production loss. The volume purchases is directly affected by the changes in the price of unit cost of fish extracts and raw fish. These changes brought about by the varying cost may institute a problem in the supply available for the Malinta plant to process. The 12 week production schedule may be disrupted due to unavailable raw materials. The agreed volume of products placed by the dealers in representation of retailers, etc. may not be met, thus encouraging the possibility of a negative feedback . With adequate capitalization and marketing experience, the number one position that MFI is bidding for in the fish sauce market within the next three to five years would be attainable, should they materialized and act on present and potential problems.

Language

English

Location

UPLB Main Library Special Collections Section (USCS)

Call Number

LG 993 2002 M17 B36

Document Type

Thesis

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