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GACUTAN
MATILDO
SANCHEZ
A FRIENDLY TAKEOVER Pedro and Maria were classmates and friends in High School and College. Now in their thirties, they have established their own respective businesses. Maria owns two companies: a cake and bakeshop, and a small restaurant/bar business. Both businesses, situated near Picnic Grove in Tagaytay, have been profitable and a success in the last five years. Pedro on the other hand, owns five laundry shops and three water refilling stations. In addition, he also owns a small gasoline station. Similar to Maria’s ventures, the businesses of Pedro are profitable. The laundry shops and water refilling stations are located in condominium buildings, while his gasoline station is situated along the busy street of Cabuyao, Laguna. Both Pedro and Maria are looking to expand their businesses and they are in constant search for a location strategically fit to their respective companies. During their batch reunion, Pedro and Maria discussed business opportunities and were surprised to find out that their next business prospective location is actually the same place! The friends decided to do an ocular inspection the following week.
THE LOCATION
The place is located along Tagaytay Road, about 2 kilometers from Taal Vista. The area is about 2,500 square meters (corner lot) and the main road is the gateway to major Batangas towns. The other road leads to two, large, newly developed and completed subdivisions. Population is growing and a new condominium unit is being constructed. There is an existing two-story structure which occupies about 400 square meters, while the remaining space are open. VACANT LOT TO NEW SUBDIVISIONS HI-WAY SITE GAS COMPETITOR SITE LOCATION FIGURE 2. UTILIZATION The old building, located at one side of the area, can still be utilized for restaurant business (with renovations), with the open space good enough for at least 20 passenger cars to park on. The location can also be converted into a gasoline station with a service area and a convenience store. The area has attracted people who would like to eat (breakfast to dinner) as a stopover before either going to nearby Batangas towns or go back to Manila. These people prefer to eat in the area because of the overcrowded Taal Vista area. A few restaurants and bars are present in the area, but these hangouts are always filled up with customers. One major gas station (situated beside the prospective site) is present with average sales, while two condominiums are already operational.
presence in the two new subdivisions influenced the cake and bread preferences of the residents nearby. However, the space for the businesses appeared to be too small. The customers of the resto- bar are creating traffic especially during lunch and dinner. The bakeshop’s parking space seems to small, limiting convenience in buying the products. Two years after the start of operations, Pedro has realized that he had made miscalculations on establishing the gas station. Profit expectations were not achieved. The venture appears to be a losing proposition. The two gas stations (Pedro’s gas station and the competitor) cannot simply co-exist at the same time in the same place. The laundry and water refilling station, however, appeared to have moderate success as customers have been increasing in the last 12 months. But the space utilization appears to be too low. The profits generated by the laundry and water station could not support the existence of the gas station (combined profitability). THE BUSINESSES TODAY After two years Pedro had realized that he cannot sustain his losses from the new gas station. Despite increasing profits, his water refilling station and laundry services were simply not enough to cover for the loses. He knew that he had lost his gas station battle against the competitor. Admitting his miscalculation, he sold the property to his friend, Maria, who was searching for a bigger area for her expansion of business. Pedro had requested that his water refilling station and laundry services be retained on a “friendly lease basis”, and Maria agreed. Upon the consummation of sale, Maria transferred her business to the newly acquired property (formerly owned by Pedro), and moved the laundry and refilling station to the 1, square meter property. Maria also opened the unused space in the 1,000 square meter property for lease (rent) to would-be tenants (not necessarily in the food business). Questions for Discussion
- Pedro’s miscalculation may have been brought about by different factors in environmental scanning. Elaborate on possible reasons. Pedro's calculations are caused by poorly planned or lack of implemented marketing efforts, as well as a lack of appropriate business strategy and exposure. There is also a lack of business competence on the part of the management or the owner of the company. While the owner may have the abilities to develop and market a
profitable product or service, he lacks the qualities of a good manager and lacks the time to effectively manage others. A business owner with no dedicated management staff is more likely to mismanage key elements of the firm, such as finances, recruiting, or marketing.
- If Pedro had the financial capability to sustain losses in the gas station for the next three years, would you advise him to continue his business? Yes, I would advise him to continue his business. He just needs to implement an effective business and marketing strategy. The company can adapt a penetration pricing strategy to attract customers. They can create social media accounts to display its company background, products and services and create flyers that indicate the product details, pictures, and contact details.
- What are the advantages and disadvantages for Pedro in continuing his businesses (gas station, water refilling, laundry services)? One of the most significant benefits of expanding is the ability to employ additional, highly skilled team members. People are frequently regarded as a company's most valuable asset, thus expanding a team of talented and competent employees is an obvious benefit. These individuals will offer fresh ideas to your company and assist in the streamlining of operations. Expansion of a business has the ability to expose products and services to a larger market. Increasing your client base will enable you to convert more leads and increase your revenue. Profits increase as a result of this. Customers, like your team members, are critical to your company's success.
- If you can summarize the major reason why Maria’s business fared better than that of Pedro’s business, what would it be? I would say that the chosen location of Pedro was not a fit for his nature of business. When it comes to starting a business, positioning has always been crucial. Your company's success is determined on how effectively you are positioned to be found. Location, pricing of your product or service, and the messaging you utilize to advertise
