San Beda University

College of Arts and Sciences

Total Quality Management Paper on

Macay Group of Companies

Delos Santos, Lea Victoria F.

Perez, Fidez

Santos, Marrion Jhenjelica M.

3AMC
 Table of Contents

I. Executive Summary

II. Introduction : Background of Macay Group of Companies

A. Company Profile

B. Vision Mission Statement

C. Products and Services Offered

III. Total Quality Management in Macay Group of Companies

A. Definition of Quality by Macay Group of Companies

B. TQM practices implemented by Macay Group of Companies

IV. Conclusions and Recommendations

V. References
I. Executive Summary

Macay Holdings, Inc. is an investment holding company that serves as the parent

company of ARC Refreshments Corporation, a company engaged in the bottling,

distribution, marketing and sales of RC Cola and other popular carbonated drinks, and

ARC Holdings, Inc. As an investment holding company, Macay aims to expand the

presence and market share of ARC brands as well as enter into the manufacturing,

distribution, and sale of other consumer-focused products in the Philippines and the Asian

region.

In this strategic management paper, the researchers made use of the name “The

Group” to address the companies as a single entity, in accordance with IFRS 10 —

Consolidated Financial Statements, since both ARC Refreshments and ARC Holdings are

fully-owned by and are the only subsidiaries of Macay Holdings, and the financial

statements used were consolidated. More so, the strategic management paper focuses on

the distribution, bottling, marketing, and sales of the carbonated drinks. Furthermore, the

researchers made use of the external and internal factors to determine the Group’s overall

success. The organization garnered a total weighted score of 2.49 in external factor

evaluation while earned a total weighted score of 2.39 in internal factor evaluation. In

addition, a competitive profile matrix was also used to reveal the Group’s performance

wherein the company landed third in the industry. Moreover, different strategic

formulation tools were then used such as Strengths-Weaknesses-Opportunities-Threats

Matrix, Strategic Position and Action Evaluation Matrix, Internal-External Matrix,

Grand Strategy Matrix, and Quantitative Strategic Planning Matrix, to identify what
 strategies are appropriate for the Group to have the competitive advantage against other

rivals.

II. Introduction

A. Company Profile

Macay Holdings, Inc. is an investment holding company which serves as the

parent company of ARC Refreshments Corporation (“ARC”) which produces, bottles,

markets, and distributes a wide range of carbonated beverages, including the popular RC

Cola and its variant RC Free as well as other soft drinks, namely: Fruit Soda Orange,

Juicy Lemon, Arcy’s Rootbeer. Rite n’ Lite and Seetrus. In 2015, Macay acquired control

of ARC Holdings, Inc., the entity holding the concentrate supply and trademark licensing

agreements with Royal Crown Cola International, owner of the RC Cola brand. Macay

and its subsidiaries are collectively referred to as “the Group.” Over the years, the Group

has carved out a slot in the Philippine soft drinks industry. It significantly grew its

footprint to a total of nine bottling facilities, which it owns and/or operates. These

bottling plants are situated in various locations nationwide. The Group’s mass market

distribution network covers both the traditional trade (sari-sari stores and carinderias)

and modern trade (supermarkets, groceries and convenience stores) channels throughout

the country. Macay was formerly known as Maybank ATR Kim Eng Financial

Corporation (“MAKE”). The shareholders of MAKE undertook a reorganization that

resulted in the sale of all of its operating subsidiaries. Upon completion of this

reorganization, the majority ownership of MAKE was acquired on 25 October 2013 by an

investor group led by Alfredo M. Yao to serve as the vehicle for the consolidation of

various businesses engaged in soft drinks bottling, distribution and sales and eventually
 other consumer-focused businesses to be identified in the future. The Company and its

senior management team continues to expand the presence and market share of the

Group, as it prudently plans its entry into the manufacture, distribution, and sale of other

consumer-focused products in the Philippines and in the Asian region.

B. Vision and Mission Statement

B.1 Vision Statement

We are in the business of building a portfolio of consumer products and services

that enable us to provide superior value for our customers in the Philippines and other

Asian countries.

B.2 Mission Statement

We provide opportunities for growth and enrichment to our employees and

contribute to the success of our business partners in the communities where we operate,

and realize financial gains for our shareholders.

We strive for honesty, fairness and integrity in all our dealings under high

standards of corporate governance.

C. Products and Services Offered

Macay Holdings, Inc. is an investment holding company which serves as the

parent company of ARC Refreshments Corporation (“ARC”) which produces, bottles,

markets, and distributes a wide range of carbonated beverages, including the popular RC

Cola and its variant RC Free as well as other soft drinks, namely: Fruit Soda Orange,

Juicy Lemon, Arcy’s Rootbeer. Rite n’ Lite and Seetrus.

Total Quality Management can be defined as a management tool, philosophy and

set of principles which guide each and every member of the organization to work for

meeting customer satisfaction. Development and reputation of any industry depends upon

the quality of the products or services it penetrates in the market. It ensures superior

quality products and services which can be evaluated in terms of performance. Total

quality management also plays a vital role in increasing revenue by minimizing the input

and maximizing output. Due to the proper management of inventory control, it ensures

high productivity levels of an organization. In order to stay competitive in the market,

Macay Holdings, Inc.’s total quality management is one of the key factors they should

improve continuously. A quality control department is established in order to build

quality and to provide overall direction for the total quality management engine in the

company.

A. Definition of Quality by Macay Group of Companies

Macay Holdings, Inc. defines quality as: “The key to satisfy the ever-changing

needs of our customers, vendors, and employees, with value added products and services

emphasizing a continuous commitment to satisfaction through an ongoing process of

education, communication, and evaluation and constant improvement.”

B. TQM practices implemented by Macay Group of Companies

Total quality management practices of Macay Holdings, Inc. are done by Pareto

Chart and Cause-Effect Diagram or Fish-bone Chart as tools. By using Pareto Chart,

Macay Holdings, Inc. can sort and determine majority defect thereof, and also determine

the factors of defect. They can fix their majority defects then so that it won’t be intrusive
of the quality of the company itself. The highest chart in Pareto Chart shows the majority

defects occur, and result of defect then will be the priority of Macay Holdings, Inc. to be

focused on.

By using Cause-Effect Diagram or Fishbone Chart, Macay Holdings, Inc. can get

the information related to the factors causing the defects in production or filling or

packaging process. Cause-Effect Diagram will help the company in identifying the main

causes of the problem and generating ideas for the solution and also assisting in the

investigation or further research of the facts.

The quality of packaging used in the subsidiary company of Macay Holdings, Inc

uses Electronic Bottle Inspection (EBI) operational system as a control measure. EBI is

the machine used for inspecting or detecting the bottles’ quality that is going to use the

package of RC, whether the bottles are appropriate and clean enough to use. It can be said

as appropriate if the bottles have been spared from residue liquid, dirt, corrosion,

scuffing, breakage, blurred bottle, and so on. Basically, EBI is divided into two main

parts which are inspection unit and rejection unit. In inspection unit, the bottles will be

inspected by the sensor, from detecting color of bottle, censoring the height of the bottles

whether it’s too long or too short, detecting bottles’ position, detecting the base of the

bottles, detecting the neck of the bottles and detecting residue liquid. If there are

deviations of quality, the sensors will send the data to computerization programs of EBI.

It will then be rejected from the machines and directed to the bottles’ tank. Through the

EBI, the quality of Macay Holdings, Inc. products’ packaging will be more secure and

hygienist because it passed the parts of EBI that inspect and detect the quality of the

bottles.
III. Conclusions and Recommendations
Total quality management (TQM) is one of the most popular modern management

concepts. It refers to a quality emphasis that encompasses the entire organization, from

supplier to customer. In this paper, the TQM practices in Macay Holdings, Inc. are

analyzed. The key finding from the research is that a growing number of companies in

the Philippines are willing to implement TQM to generate competitive advantage. It was

also found that important factors for a successful implementation process are upper

management support, employee involvement and commitment, customer focus, quality

education and training, teamwork, and use of statistical techniques.

tight competition in the market. To be able to survive in such dynamic competitions, it’s

important, as one of the main players in the beverage industry to have good quality

management. By combining all the total quality management tools Macay Holdings, Inc.

is using, the company can achieve sustainability as long as they could provide good

quality for their customers who will render their loyalty to the products offered by Macay

Holdings, Inc.
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