Thesis (Master in Management) -- University of the Philippines Mindanao, July 2022

Coscao Chocolate Manufacturing (CCM) by Ecoveritas Agriculture Technical Assistance Services is a social enterprise participating in the Philippine artisanal chocolate industry as a small-scale bean-to-bar manufacturer of chocolate products. The entity practices fair trade in its dealings with cacao farmers, where they are paid 130% of the prevailing market price for cacao beans. through the advocacy and technical expertise of the owner, the farmers are also assisted with trainings on sustainable and organic farming practices, and on the proper cacao fermentation process to produce quality organic cacao beans, in order for them to command a higher price in the market. CCM exclusively manufactures its own brand, Coscao Chocolate, positioned as a healthy confection of choice being plant-based, organic and low-glycemic. the chocolate bars are made available to end consumers through its retail partners, to which the entity sells the product on wholesale. In 2019, the first year of commercial operations, CCM has had a relatively impressive start wherein an equivalent 6,721 chocolate bars were sold to yield PhP 816,259.00 in revenue. similarly, it was able to maintain the same level of average revenues from 2020-2021 despite the COVID-19 pandemic, save some timing adjustments due to related logistical concerns. however, the sustained performance has only earned the entity a meager 4% annual net profit (NPR) and a 10% return on equity (ROE) on average, while the targeted range is at 7-10% and 13%, respectively. As a capital-intensive business, the entity would need to increase sales to cover for the high fixed costs of operations. Further, the entity is also in a situation of high customer concentration risk wherein its retailer Healthy Options, solely constitute 70-75% of sales since 2019. this situation was furthered in 2021 by a decrease in its B2B customer portfolio, which has not expanded since the beginning of operations. the issues identified may hinder CCM from becoming a financially sustainable business in the long-run. This may, in turn, impede in its underlying social mission. As such this strategic plan is devised, through an integrative approach, to aid the entity towards becoming a well-adapted and resilient enterprise. The strategic management framework used for this plan is adapted from Fred A. David, which follows a four-phase process. the first phase entails the situational analysis, wherein the key external and internal factors were identified and evaluated. The results thereof provided the baseline from which the long-term and short-term strategic goals were defined. the second phase entails the strategy formulation and selection. the SPACE and SWOT Matrices were used as tools for matching the internal and external factors to generate the strategic options. thereafter, the QSPM was used as a decision-making tool to select the strategy to be implemented among the options. With this, the grand strategies market penetration and product development were selected for implementation. for market penetration, the specific strategies identified include the intensification of marketing activities to increase the entity?s distribution base in Metro Manila and Metro Cebu; and the establishment of an online distribution channel for Davao. for product development, the addition of new chocolate flavor variants and product line was identified. the foregoing strategies are expected to be achieved within a four-year timeline, from 2022 to 2026. the third phase is the strategy implementation, wherein an implementing program was devised for each management area. a set of projected financial statements was also prepared to present the financial performance, cash flows, and financial position that are to result from successful implementation. the fourth and final phase entails the placement of a control system to ensure that favorable results are achieved as projected. with this, the key performance areas and indicators were identified, which will form the criteria for monitoring and evaluation. a management information system was also designed to support the collection and reporting of information thereto. As a result of the strategy, sales are expected to increase in the fourth year by 187% from the 2021 baseline average. this will bring about significant improvement to NPR to 10.33% and ROE at 16.19% for the period. Further, this will result to an increase in the owner's net worth by 17.68% at the end of 2026.