Thesis (Master in Management) -- University of the Philippines Mindanao, July 2021

Central Grocery is a family-owned corporation under the category of Micro, Small, and Medium Enterprises (MSMEs). It is one of the Maramag's major grocery stores of choice with a computed market share of 7.92% of the Php 1.9 billion food and grocery industry in the locality. The company is engaged in wholesale and retail purchases of various products such as grocery items, plastic wares, school supplies, and hardware products. With the company?s growth as well as the emergence of the COVID-19 pandemic last year, the business entity has several strategic issues that need immediate intervention. These issues are 1) negative effects brought about by the COVID-19 pandemic; 2) emergence of a large competitor; and 3) a low customer satisfaction rating. Hence, a strategy is needed for the subject entity to cope with and adapt to the issues identified. In doing the strategic management process, a conceptual framework based on the Reinventing Strategic Management (Planning and Change) Model by Haines (2000) was used. The framework adapted a system thinking approach to strategic planning to have a more holistic view of the organization, as it thrives in today's dynamic environment. In addition, several management tools were used to further deepen the analysis of the entity. Following the framework, the first step in arriving with an appropriate strategy is to identify the Ideal Future Vision of the Company (Chapter 2). The Ideal Future Vision is the desired output of the company or its future state as embodied in its vision, mission and goals. For the enterprise, the Ideal Future Vision is achieved by focusing on costumer value, business efficiency, business profitability, and innovation. The second step is to conduct an external environment scanning using the SKEPTIC framework (Chapter 3). This is an important process to assess the different external factors that may affect the subject entity, thus enabling the company to prepare for possible threats and exploit opportunities in a constantly and rapidly changing environment. Using the SKEPTIC, it was found that a growing population coupled with increasing income and consumer spending of the local consumers are among the consumers are included in the major opportunities of the business. On the other hand, the emergence of a large competitor and changes in consumer behavior as a result of the COVID-19 pandemic are the major problems the company needs to deal with. The third step is to have quantifiable outcomes of the entity?s ideal future vision or key success measures as identified in the external environment (Chapter 4). The key success measures identified for operational efficiency were inventory, day sales and outstanding, and expenses. Market basket rice and gross profit ration were identified as a measure of profitability. Finally, customer satisfaction, market share and the number of customers were found to be measures of customer value. The fourth step is to assess the current state of the business (Chapter 5). The assessment is focused on the key success measures as well as other internal strengths and weaknesses that could be used in formulating a strategy. The assessment identified that inventory turnover is 6.76, day sales outstanding are 178 days and 19.90% of total expenses are inefficient. It was also identified that average market basket price is Php 434.07, gross profit ratio is 5.47%, market share is 7.92, the number of customers is currently an average of 30,000 per month and customer satisfaction is rated at 4 out of 10. In addition, several inefficiencies such as the absence of an inventory system and modern accounting information system lack of employee training, and lack of marketing initiative are also major weaknesses of the company. After the assessment of the current situation of the business, the fifth step is to develop a strategy by bridging the gap between the ideal future vision and the current state of the company (Chapter 6). Using gap analysis, several strategic options were identified which are: 1) Automatic inventory system, 2) Discontinue current credit sales operations and shift to the integration of credit card options, 3) Invest in accounting software and relevant skilled human resource, 4) Market basket-based marketing campaigns, 5) Micro-marketing pricing strategies, 6) Retail revenue management, 7) Development of a customer loyalty program, 8) Quality orientation of employees, 9) Modified e-commerce, 10) Competitive pricing, and 11) Modernization of physical store. These strategic options were then weighted and rated based on their impact on the business entity, as a result, it was found that the modified e-commerce and development of a customer loyalty program are the optimum strategic choices. The sixth step is formulating an implementation plan for the dual strategy of modified e-commerce and a corresponding customer loyalty program (Chapter 7). The implementation plan suggests a development of a new strategic business unit. In addition, different key roles and responsibilities of the different supporting departments are also enumerated. Finally, a monitoring tool or a control system is outlined to measure and monitor the implementation and ensure success (Chapter 8). With the implementation of the strategy, a financial projection is derived. It is projected that sales would increase by 45% and net income would increase by 14% in five years. Furthermore, the total asset would increase by 14% and capital would increase to 44% in five years.