A strategic management paper Sabang Sea Ferry Multi-Purpose Cooperative / Ravie D. Piansay

Thesis (M.A)--Pamantasan ng Lungsod ng Maynila, 2019.

A strategic management paper presented to the Faculty of the College of Business and Government Management Graduate School of Business in partial fulfillment of the requirements for the degree Master in Business Administration.

Sabang Sea Ferry Multi-Purpose Cooperative (the Company) is the exclusively accredited by the Protected Area Management Board of the Puerto Princesa Subterranean Underground River National Park (Puerto Princesa Underground River or PPUR for brevity). It current owns 81 out of the 87 motorized bancas or motor-bancas, that service tourist from Sabang Wharf to PPUR. The Company received a total of P62.72 million (61.04 or 97 percent, came from ferry service to PPUR) in 2018 and it has a total capital amounting to P40.93 million employing 182 employees.

The external environmental analysis revealed that the Company opportunities are 1) continuous growth of the tourism industry; 2) Palawan and PPUR remains one of the top tourism destinations in the Philippines; 3) low competition; 4) there exist islands near PPUR that can be develop as a tourist attraction, 5) gradual stability of inflation; and 6) tax exemption of cooperatives under R.A. No. 9520. On the other hand, its threats are: 1) volatile prices of petroleum and related products, 2) ferry modernization program; 3) park ferry service in PPUR is highly regulated and controlled; 4) uncertainties arising from possible changes as a result of changes in leadership in the local government Increase in educational standards for boat crew: and 5) effects of climate change.

Likewise, its internal environment analysis showed that the Company's strengths are: 1) it is the major park ferry service provider in PPUR; 2) adequately capitalized and with sufficient external credit resources; 3) strategic alliances and support to/from regulators and other tourism players in the community; 4) responsive to major and minor repairs of motor-bancas; 5) responsive to its lean organizational structure, the Company is more flexible and can effect organizational changes and improvements quicker; 6) strong support and goodwill from the community as it is one of the major sources of income and employment in the community. In addition, its weaknesses are: 1) revenues are heavily dependent on park ferry service; 2) high opportunity cost arising from a high level of cash and cash equivalents; 3) lack of a close supplier of fuel and absence of appropriate storage facilities; 4) the Company has no formal tools in measuring performance, i.e., performance standards, key performance indicators, key risk areas; 5) despite volume and value of transaction information are still processed manually.

Using the various tools and methodologies, i.e., SWOT-TOWS Matrix, SPACE MATRIX; Boston Consulting Group Matrix, Internal-External Matrix; and The Grand Strategy Matrix, the following are the recommended strategies: 1) market development, 2) market penetration, 3) product development, 4) integration (forward, backward and horizontal); and 5) diversification (related and unrelated).

The strategies that are recommended are product development and backward integration. Also from the analysis the objectives set are: 1) to create new business lines to compliment and support its current tourist transport activities that is profitable and viable as evidenced by positive net surplus; 2) increase Company's net surplus by an average of 25 percent over the next five years; 3) increase rate of interest on share capital by an average of at least five percent over five years; 4) reduce Company's external borrowings by at least 40 percent at the end of five years.

To address these strategies and objectives, the following actions were recommended 1) offer trips to new tourism sites; 2) expansion to gasoline station business; 3) savings mobilization of member; 4) acquire and set up an automated management information system, 5) establish of Company's performance standards and key measures.

As a result of the strategies, the Company is expected to increase its net income by an average of 25 percent over the next five years, increase in rate of interest on share capital by at least five percent over the next five years, and reduce total external borrowings from P30.0 million to at most P18.0 million by the end of five years.