Thesis (Master in Management) -- University of the Philippines Mindanao, April 2018

The egg industry has displayed strong growth over the past decades due to the rising per capita consumption of eggs. It has been regarded as one of the most popular forms of poultry farming not just in the Philippines but worldwide. Iluminada Farms, Inc. (IFI) is a family owned corporation specializing in chicken egg production. Through the years, the company had experienced the ups and downs of the industry. In 2013-2014, IFI was greatly affected by negative sales, high cost of production and petition to ouster in the area. Soon, talks of bankruptcy and shutdown proliferated among IFI?s competitors damaging its profitability and corporate image. Thus, the management decided to sell the business to Santos Land Development Corporation (SLDC). In 2015, SLDC took over the management of IFI and replaced the name of the company to Syntek Agri-Bio Corporation (SABC). This paper is intended to formulate strategies for the transition of Iluminada Farms, Inc. (IFI) to a newly established corporation?Syntek Agri-Bio Corporation (SABC). It will also talk about the transition from manual operations of the old IFI to highly sophisticated operations of Syntek. Currently, the company is confronted with high raw material cost, cut-throat competition in the market and high costs of inefficiency due to its operating environment. In turn, this has greatly affected the company's profitability and cash flow position. Competitor process are so low that the company can barely compete. Apart from this, the threat of eviction from current farm area continues to loom. In order to address the pressing issues and concerns of the farm and respond to the tight competition in the market, the proponent identified the following strategies: 1. Relocation and Re-organization Strategy, 2. Automation Strategy, 3. Market Penetration and Development Strategy, and 4. Product Innovation and Development Strategy. These strategies were evaluated to the extent of its impact on the company. The proponent recommends to simultaneously implement the automation and relocation and re-organization strategy. By doing so, the company will be able to save a total of PhP 41,072,999 per year in terms of production efficiency, feed costs efficiency and labor efficiency. Though it is true that some of the major industry players in Mindanao are automated. In order to gain competitive advantage, the proponent will focus in positioning the company as the provider of quality table eggs that is affordable to every Filipino family especially those who are less-fortunate since Nutri-egg is already known in the market for its quality brand. The implementation of this strategy will be a collaborative effort from the different departments of the Santos Land and Syntek. Automating and relocating the farm operations will incur a total project cost of PhP 310,020.922. this will be financed partly by debt financing and equity financing.in order to justify the feasibility of the said strategy, the proponent made some capital budgeting analysis which reveals that the payback period in automating the farm is around 8 years with a positive net present value of 12,948.966, profitability index of 1.03 and an internal rate of return of 9%-10%. This means that expected cash flows of the project are higher than is expected outflow with consideration on the factors affecting the time value of money like inflation. In short, the benefits of the strategy are expected to exceed its costs. Moreover, the result of the projected income statement reveals that when transitioning the company from manually operated to highly mechanized environment will result to an increase in net income to PhP 30 million pesos and achieve the long-term goal of the company to earn PhP 1.00 per egg in the next 5 years. This means that the transition process will enable the company to earn above-average returns and in return, it will be able to provide sustainable income to its stakeholders as what it envisions to be. With much being said, the company's existence in this business is very much commendable. Should be able to sustain for 35 years is no ordinary achievement. The challenge now however, is not to just be in the business but be in a profitable business in the years to come. However, implementing the strategies identified to make the business grow in the competitive landscape of the 21st century, is now up to the decision of the top management