De La Salle-College of Saint Benilde MODULE III : ENVIRONMENTAL SCANNING: INTERNAL ANALYSIS A. Company Profile 1. Brief History of the Company In 1980, Mr. Eduardo Ngan Tian opened R&W Foods at Virra Mall, Greenhills in San Juan, Manila to sell snack items. In 1986, he found a promising spot in San Beda ‘College-Mendiola, where he could expand his small food business. Out of his meager savings, he borrowed capital and constructed ten food stalls intending to occupy three stalls for his R&W Foods and lease out the rest. But only three were leased out, leaving four stalls vacant. Needing to fill up the vacant stalls, he tried serving lunch to students and hit upon the idea of putting up a pizza parlor and named it as Lots’A Pizza, At that time, pizzas were outpacing hamburgers in terms of market demand worldwide. It was to be the first Lots’A Pizza outlet. As LAP slowly became successful, he then asked his wife, Mrs. Teresita Ngan Tian, to leave her day job and help out in the business. She grabbed the opportunity and flew abroad to the United States to take up a pizza technology course at the prestigious American Institute of Baking in Kansas City. With that, the unique par baked crust and signature sauce of Lots’A Pizza was created. To keep abreast with the latest in pizza, both of them regularly attend the annual Pizza Expo in Las Vegas, Nevada as well as the National Restaurant Association Convention in Chicago, Illinois. All the efforts put in by the couple has come to fruition in the pizza empire they manage today. They have successfully achieved their goal of developing the “Filipino Pizza” that caters especially to both the Filipino palate and pocket. Realizing how this formula could helpDe La Salle-College of Saint Benilde other budding entrepreneurs earn their slice of success, Mr. and Mrs. Ngan Tian consulted a franchise firm to guide them in setting up a system, and in 2000, Lots’A Pizza began franchising. Today, 215 outlets as far as Vigan City, Ilocos Sur in Northern Luzon, and Coron, Palawan in Southern Luzon, Being a consistent Franchise Awardee, LAP has been inducted to Entrepreneur ‘Magazine’s Franchise Awards Hall of Fame in 2014, For years, BPI Family has been recognizing outstanding franchisors with their BPI Family Ka-Negosyo Best List. This year, while continuously creating new opportunities for franchisees, Lots’ A Pizza has been included in not just the best, but in Best of the Best List. It received the following, awards: Top 15 Fastest Growing Franchise (2013); Best In Franchise Support (2013); Best Franchising Support (2012); Special Citation, Research and Development (2012); Special Citation, New Distribution Models (2012); Most Promising Franchise (Gold) (2010); Best in Franchising Support (Gold) (2010); Best Local Homegrown Franchise (Gold) (2010); Best Local Homegrown Franchise (2009); Fastest Growing Franchise (2009); Most Promising Franchise (2009); Best Franchise Support (2008); Best Local Homegrown Franchise (2008); and Best in Franchising Support (2007). Lots’A Pizza, Inc. is a stock corporation duly registered with the Securities and Exchange Commission, registration number C$200603267. Its primary purpose is to establish, operate and maintain restaurants, coffee shops, refreshment parlors, cocktail lounges and cater foods based on its Articles of Incorporation,De La Salle-College of Saint Benilde 2. Board of Directors and Top Management Lots’A Pizza, Inc. is a family-owned business. The Ngan Tian family runs this stock, for-profit corporation for 35 years, under a strong management team. The board operates by abiding the by-laws of the corporation. Listed below are the names of the Board of Directors (BOD) and top management of LAP with their profile. © Eduardo Ngan Tian He is the founder and chairman of Lots’A Pizza, Inc. He is a certified public accountant (CPA) who formerly worked at SyCip, Gorres, Velayo & Co. (SGV), the country’s largest accounting and consultancy firm. As the highest ranking officer, he is the final decision maker who presides over board meetings. © Teresita Ngan Tian She is the co-founder, president and treasurer of the company. Like her husband, she also worked at SGV as an accountant. In order to focus on their growing business, she left her job as a Finance Director at San Beda College-Alabang and studied pizza technology courses at the American Institute of Baking in Kansas City. In line with this, she has been awarded as an inspiring women entrepreneur for her exceptional achievements in the business industry during the “Go Negosyo Women Entrepreneurship Summit and Expo: Babae Kapuso Ka Ng Bayan.” Also, as the president of LAP, she is responsible for managing the company’s operations and performance. She also represents the organization in public by giving speeches, writing articles and attending functions on behalf of the organization. She typically reports to BODs.De La Salle-College of Saint Benilde © Robert Francis Ngan Tian He is the eldest son of Mr. and Mrs. Ngan Tian who is currently the vice president and general manager of Lots’A Pizza, Inc. He earned his Degree in Marketing at San Beda College and his Masters in Entrepreneurship at Ateneo University. He oversees the company with his vice presidential role, at the same time, proposes strategic business plans as a general manager. * Waldo Rafael Ngan Tian He is a board member of the corporation but a preferred shareholder which means he does not mingle with the business operations of the company. During his college days, he studied information technology (IT). And now, he is working abroad. Anna Katerina Ngan Tian-Barrameda She is the youngest child and only daughter of the couple. She is also a preferred shareholder of the firm and an IT graduate like her brother. She used to handle Metro Pizza before but currently she is focusing on her career as a mom, Other top management members include the following: Zoroaster Monleon (Franchise General Manager) Reygan Culatic (Marketing General Manager) Edna Cuya (Accounting General Manager) Eric Liao (Human Resource General Manager) Luisito Gonzales (Operations and Logistics General Manager) Mary Ann Hipolito (Commissary General Manager)De La Salle-College of Saint Benilde 3. Corporate Governance An: Based on Article III of Lots’A Pizza's Articles of Incorporation, the corporate powers of the corporation shall be exercised by the Board of Directors (BOD), who were elected by and from among the stockholders, unless otherwise provided by law. From time to time, they can make and change rules and regulations for the business. BODs also have the power to take or acquire properties in the name of Lots’A. Pizza, including securities and bonds. Subject to the approval of the stockholders, they ‘may invest the funds of the company in other corporations. The Board can also create incentive and compensation plans for the benefit of the employees. Even so, they have the right to delegate such powers to any officer or agent of LAP when needed, Organizational Chart ‘The organization’s structure is usually represented by an organizational chart ~ in other terms, hierarchy chart. It is used to illustrate the relationships within the firm. Job titles or positions are generally depicted in boxes or circles with lines linking them to other departments. By looking at the company organizational chart, people can gain a quick understanding of how the organization is designed, its number of levels, and where each employee fits into the organization. ‘As shown in the organizational chart, Lots’ A Pizza, Inc. is headed by Chief Executive Officer (CEO) Eduardo Ngan Tian followed by President Teresita Ngan Tian, his wife. Next to her is Vice President (VP) Robert Francis Ngan Tian, who also functions as the overall General Manager (GM).De La Salle-College of Saint Benilde Figure 3.1. Organizational Chart of Lots’A Pizza, Inc. Under the VP are the GMs of its subsidiaries. The GM for the Commissary has its own Warehouse and Logistics Supervisor, who leads both regular and contractual, production crews and delivery drivers. The GM for Operations and Logistics handles its Offcer-In-Charge (OIC), service crews and riders. Lastly, the GM for Franchising has subordinating Franchise Area Managers (FAMs) controlling franchisees in regions. On the contrary, the GMs for these departments - Accounting, Human Resource (AR) and Marketing - are directly reporting to the President because their funetions are shared by the holding company, Lots’ Pizza, Inc., and its subsidiaries. The Finance Department is composed of the Accounting GM, assistant and billing staff while theDe La Salle-College of Saint Benilde HRD has a GM, assistant and administrative staff as well. Meanwhile, the Marketing ‘GM has two teams - Sales, and Research and Development (R&D) ~ which also have ‘managers and staff. The Information and Technology (IT) team is also common for all. ‘companies under LAP. 5. Company Vision — Mi ‘Company Vision “Lots’A Pizza will become the No.1 Quick-Serve and Take-Out Pinoy-Style Pizza Chain in the Philippines. Explanation The corporation aims to focus on its Filipino-style pizza produets to capture the fast food market in the Philippines, with its dine-in, delivery and take-out services. LAP wants to be the leading pizzeria as it becomes close to the heart of every Filipino, ‘Company Mission “Lots’A Pizza will provide total satisfaction to our customers and will generate ‘excellent profits for our franchisees by aggressively opening more outlets and improving the lives of our employees.” Explanation Being in the food service industry, the primary purpose of the firm is to provide total customer satisfaction, leading to higher profits and business expansion. Yt it should also be noted that these profits are not just for the owners of the entity, but also.De La Salle-College of Saint Benilde for its several franchisees and employees. Helping people to improve their lives and become successfill is one of the goals of Lots’A Pizza. 6. Current Objectives/Strategies The current corporate objectives of the firm are as follows. 1, To create a work environment that promotes employee productivity 2, To improve or raise employee performance in 2019 and 2020 Explanation ‘The current objectives of the company are in line with its vision and mission. These statements manifest that Lots’A Pizza is an employee-centered organization; however, it lacks the quality of a good objective - SMART (Specific, Measurable, Attainable, Realistic, Time-bound).De La Salle-College of Saint Benilde B. Functional Areas 1. Operations and Logisties ‘a. Description of Operations of Firm The firm’s operations supervises the manufacturing and production activity, including purchasing, logisties and facilities management, It is also responsible for redesigning necessary business operations. Midwest Food Industries, Inc., a subsidiary ‘company of Lots’A Pizza, Inc., is responsible for the operations and logisties in Metro Manila, Meanwhile, Doughmate Manufacturing and Trading Corp. takes charge of the ‘warehouse and logistics located in Pampanga as DoughPro Manufacturing and Trading Corp. holds Cavite. ‘Table 3.1. Commissary Operations of Lots’A Pizza, Inc. (MCE = Value Added Time _1.12 Throughput Time 4.22 MCE = 26%De La Salle-College of Saint Benilde Table 3.1 shows that the commissary operations make parbaked crusts using a standard procedure. Each process has a corresponding tact time to be followed in order to be productive and efficient. Before start-up, warehouse and logistics will take charge to check the incoming flow of the ingredients and other raw material. After clearing-up, they will take control of the outgoing flow of finished products to the outlet stores. b. Supply Chain ‘As discussed in Module II, supply chain is actually the process of producing and delivering products and services to end users. Lots’A Pizza's supply chain starts from the suppliers to customers as presented in the diagram below. Logistics Logistics Figure 3.2. Supply Chain of Lots’A Pizza, Inc. Since pizzas are overloaded with toppings, LAP has many suppliers which are as follows: Edwart Trading Corp, its subsidiary company, responsible for providing its ‘customized signature sauce, canned goods and boxes; San Miguel Foods, Inc. for its customized ham and mushroom; Marina Sales, Inc. (CDO) which delivers fresh meat; Dole Phils., Inc. that offers pineapple tidbits and free taste; General Milling Corp., for the soft, hard, bakery and specialty flour; Puratos (Philippines) Inc.; KLG International Inc.; and Food Zone Inc. Then, these supplies are delivered to LAP’s manufacturers.De La Salle-College of Saint Benilde Its manufacturers are all subsidiary companies which are also responsible for the commissary, warehouse and logistics of the entire firm. As mentioned earlier, ‘Midwest Food Industries, Inc. operates in Manila while Doughmate Manufacturing and ‘Trading Corp. is located in Pampanga, and DoughPro Manufacturing and Trading, Corp. in Cavite. For the logistics part, the company has five (5) L-300 trucks used for transporting the goods in 2 to 3 days to its designated outlet stores in Manila. LAP’s 215 outlets nationwide, which act as the retailers of the firm, are classified into two categories — company-owned and franchised stores. Freshly baked pizzas and pastas are served in every dine-in, take-out and delivery order. Some outlets have a few motorcycles for its pizza delivery for customers, which include the buyer ‘and consumer of the products ¢, Comparison of Operations with Closest Rivals or Benchmark Being in the same industry, Pizza Pedrico’s Food Corporation (PPFC) has the ‘same operations and supply chain with Lots’A Pizza. It also has its own commissary. PPEC invested heavily on its commissary in Manila, Cebu and Davao to supply the raw ‘materials for its outlets (Antiporda, 2014), Every recipe is fresh, including the dough. In fact, most of the ingredients used are imported from Europe and New York even though it is locally-owned because the owner, Mr, Tansekiao, wants to maintain the good taste ‘and high quality of Pizza Pedrico’s. Then, for its logistics, it takes 3 to 5 days to transport the prepared ingredients and materials from the manufacturer to its many outlets using trucks.De La Salle-College of Saint Benilde 2. Marketing This functional area is responsible for identifying opportunities in the market. It ‘creates branding and advertising strategies to communicate with potential customers. It often works with the research and development team. The marketing team is central to the business’ success since it is tasked with everything from building awareness of the brand, promoting products or services, and providing customer service and engagement in public forums. a, Description of the Target Market ‘The potential customers of Lots’A Pizza are segmented into two as follows. Parents/Moms Parents or moms ages 30 to 50 from socio-economic class C to D are the target market of Lots’A Pizza, Most of them are housewives with two to four kids. They are responsible for taking care of the house needs and do groceries on weekends, handling a tight budget for their houschold expenses. ‘Young Adults/Young Professionals This segment belongs from class C to D as well with ages ranging from 25 to 35 years old. In this case, they may be first time jobbers or first time parents. Oftentimes, they purchase groceries and other items during their payday, weekends or last day of the work week which is on Friday.De La Salle-College of Saint Benilde b. General Description of 4P’s Marketing mix is a set of marketing tools used to pursue the firm's marketing objectives in the target market. Product Lots’A Pizza’s flagship is its pizza products. Its pizza is uniquely Filipino-style with its parbaked crust and signature sauce, created by the owner, Ms, Tess Ngan Tian, after she studied a pizza technology course in Kansas City, USA. Its pizza products are divided into three categories namely Premium (Manhattan Deluxe, Hawaiian Extreme ‘and Pure Beef Supreme), Best Sellers (Great Manhattan Delight, Hawaiian Delight, Pure Beef Special and Pepperoni N’ Mushroom) and Classics (Bacon Blaze, Double ‘Whammy, Pure Beef N’ Cheese and Garden Harvest). The company also offers other products like pastas which include spaghetti, carbonara and baked macaroni Price Ithas mid-range pricing. Without sacrificing taste and quality, Lots’A Pizza ‘wants to ensure that its products are accessible to the broad C market, thus, keeping the prices lower than the big pizza restaurant chains. However, it is also priced at a certain premium in order to maintain a level of high quality and image. To be more accessible, Lots’A Pizza provides price-off promotions and product bundling for its combo meals. This pricing strategy also depends on the size of the pizza ordered for example, solo, medium, large or extra large. Its ingredients are standardized across all the outlets in the country.De La Salle-College of Saint Benilde le 3.2. Lots’A Pizea’s Menu Great Manhattan 255 | —p303| [Manhattan De Wxe | 319 Pi75 | —p205 | —265| [Hawailan bareme [6279 175 |—p205 | —265| [Pure Beef Supreme | #279 Pepperoni N' Mushroom [®175 | p20 | e265. Sate ss Bacon Blaze m3) in| =| Double Whammy e149 | piss} p29] | Spaghew * 9 Pure BecfN'Choese | p149| pans | 249] | carbonara P59 Garden Harvest pia9[ piso |—p249| [Baked Macaront [> 59 8 Place ‘As of today, there are over 215 branches of Lots’A Pizza scattered around the country, Its outlets are primarily located in Luzon area, majority of which are in Metro Manila, Each store is strategically located in malls with high foot traffic or in sub-urban. residential areas. Several LAP branches offer online pizza delivery with GrabFood, FoodPanda, LalaFood, and DeliRush - its third-party apps. Its outlets are designed as family style in dine-in locations with stand-alone full stores, depots and stalls in mall food courts and kiosks. Due to the fact that pizza is actually a type of food that requires communal consumption, it is essential that the product must be available in places where families or groups of friends dine in or order for delivery to bond through food. Promotion Lots’A Pizza is known for its Let's Pizza, a form of invitation to a collective ‘group of people to bond over pizza. Its promotions usually provide customers more chances to enjoy the products through discounts and price-offs. This promotional strategy focuses on complete marketing campaigns via TV, print media, online ads and engagement in social media though it has not yet entered TV commercials.De La Salle-College of Saint Benilde ¢. Current Marketing Objectives, Policies and Programs Since marketing is engaged with various promotions to help increase the sales of the company, this department is assigned to create objectives and programs that are congruent to such goals. Marketing Objectives 1. Increase brand awareness and product knowledge. 2, Generate buzz through engaging digital content. 3, Develop strong pull in-store through creative merchandise. 4, Initiate marketing support for franchisees for local store marketing initiatives. Programs Marketing Program: Marketing Support Services For Improved Franchise Relationship ‘Table 3.3. Marketing: Increase Cash Inflows by Increasing RevenuesDe La Salle-College of Saint Benilde 1, General Marketing Services: These include target market analysis, sales analysis, new product development, product improvement and market research or marketing plan. 2, Advertising Services: These include advertising standards to inform new produets and advertising standards to persuade old products. The advertising methods to be used are social media, print, radio, billboards, point of purchase displays, newsletters and 3. Field Marketing: An on the spot marketing service, field marketing, often assists franchisees in analyzing the local market situations and conditions. It recommends advertising and marketing procedures to maximize business opportunities and profits. A field marketer must be able to provide complete advertising and marketing resources to franchisees including the provision of ready-to-use materials like giveaways, promo items and public relations (PR) materials, 4, Marketing Research: The marketing research must be based on the updated TNS (Taylor Nelson Sofies) report and extemal assessment. 5. Franchisor Support: This includes national advertising support like billboard, TV ‘ads, social media and national marketing campaign based on 4Ps, Marketing calendar ‘must show the marketing activities for the year.De La Salle-College of Saint Benilde 6. Other Marketing Support Packages: Grand Opening Procedures LAP provides prepared articles for distribution to the local newspapers and magazines. They also have opening activities like ribbon cutting and promotions like “Pree pizza for the first 100 customers,” banners, flyers, brochures, and newspaper ads. ‘ontinuous Advertising Support This includes retail partnerships, offsite and event staging, sponsorships for both local and national with movies, sporting events or special holiday season. They also have marketing and promotional items with Lots’A Pizza logo like clothing items, t= shirts, caps, jackets and mugs. d, Comparison of Marketing with Closest Rivals or Benchmark Pizza Pedrico’s is recognized as one of the Top 13 Philippine Brands in the Entrepreneur Magazine Franchise Hall of Fame along with the following given awards: Special Citation for Corporate Social Responsibility, Best in Franchise Support, Special Citation for Product Innovation, Fastest-Growing Franchise and Best Homegrown Franchise. Pizza Pedrico has been recognized as the largest pizza network in the Philippines with over 1,300 serving stations nationwide. It is also targeting mothers and ‘group buyers from social classes B, C, and D, or those who used to buy family-sized pizza. Thus, the firm came up with the four-pizza-in-a-box concept, wherein four solo- sized pizzas of any variant from X-treme Loaded and Supreme Combo can be chosen.De La Salle-College of Saint Benilde ‘Table 3.4. Pizza Pedrico’s Menu [ema se [rr | “or] Hawaiian Supreme ero Chee eer ree ene) Vee ess ae Scenes (ae [Spee sao [wero [aoe] [ravaion 195 Sa Fee resneremee| he | pomp Saumge-Pererenandceer| ea | ozo | oso | See oe] are = ra re ena te Pizza Pedrico’s is actually distribution-driven with its vision of offering a whole new pizza experience for every consumer, every time in every comer of the world, Its target locations include canteens, convenience stores, schools, hospitals, offices, coffee shops, airports and seaports, markets, food courts and internet cafes. It is now available for pickup and delivery through its third-party apps - FoodPanda, GrabFood, StoreHub, ‘Mr. Speedy, ShopBuddy with Getmo, Pasugo, and Maxim in selected areas nationwide. ‘As part of its marketing and promotions, Pizza Pedrico’s is looking for qualified individuals who want to be part of the official Club Paborito Dealer Community. This aims to provide entrepreneurs and businessmen nationwide an opportunity to ean even during times of erisis. Pizza Pedrico’s Club Paborito was launched to satisfy the pizza cravings of loyal customers at the safety of their own homes and communities. Frozen- fresh, ready-to-bake pizzas are available in selected stores nationwide. 82De La Salle-College of Saint Benilde 3. Human Resource a, General Description of Human Resource Programs and Practices The Human Resource Department (HR or HRD) is responsible for recruiting, hiring, developing and supporting employees. In short, it oversees everything about ‘employees, ensuring that the company operates in compliance with employee rights and safety of the workplace. At Lots’A Pizza, Ine., this department offers shared services for both the mother company and its subsidiaries. ‘Table 3.5. Internal Customers’ Expectations from Human Resource Department Lots’A Pizza has three types of internal customers — its franchisees, the firm itself, and its service and support units. Each group expects the HR team to provide ‘competent employees, of course, with proper training, during the specified deployment date, Moreover, rewards and benefits which correspond to employee’s performance are highlighted, to encourage them to boost their sales.De La Salle-College of Saint Benilde Programs ‘Human Resource Program: Training Support 1. Training Component of the System: The training unit is composed ofa team or a faculty which is headed by a training director. Training programs are held at the training center. 2. Critical Topics for Training Program: The critical topics for discussion are production and operations methods of the franchised business; finance, marketing and HR practices; and effective methods of developing and maintaining franchisee relationships. 3. Training venue: The venue for the training program is at LAP Training Center. 4, Training Faculty Composition: The training director and faculty members from both internal and external facilitates the program. 5. Training Program: This includes training methods, skills to be leaned by franchisees, training objectives and EDS. It must be a blend of lectures, group discussions, situational problem analysis and independent hands-on performance and ‘actual application at the training center and at the franchisee’s own store.De La Salle-College of Saint Benilde 6, Major Components of Training Program: Pre-Opening Training The pre-opening training has a one-week duration or 300 hours which is subject to classroom and hands-on experience. Subjects for training include planning the franchised business, hiring, purchasing, merchandising, advertising, business ‘management, cash and inventory control, and production/operational methods. Grand Opening Training This consists of one to two weeks of training conducted by FAMs. They train the staff and franchisee on operating procedures associated with production, finance, ‘marketing and operations. FAMs must stay with the franchisee until the newly-opened unit is running smoothly. They will be allotted one week for soft-opening and another week for grand opening. Continuing Training Program These are advanced training for franchisees who are about to expand like locational analysis, market analysis, and lease negotiation or building design. Specialized training is also provided on marketing plans development (LSM, 4Ps Programs, ete.), which is a franchisee-funded program. Other training programs include marketing updates, industry trends, new product development and franchisor policy procedure changes. The franchisor has the responsibility to provide continuing improvement in operational procedures which reflect the latest and best techniques for providing products to customers.De La Salle-College of Saint Benilde b. Current HR Objectives Its current objectives are in line with the company’s vision and mission, focusing more on its employees to establish a harmonious relationship with them. Objectives 1. To create a work environment that promotes employee productivity 2. To provide the right employees for LAPFSI and LAPCo 3. To improve/raise employee performance c. Comparison of HR Practices with Closest or Benchmark Pizza Pedrico’s Food Corporation HR secks people who are results-driven and who share the drive for its success just like Lots’A Pizza, It offers a workplace that values performance, a strong customer service orientation and integrity. Each Pizza Pedrico’s store is composed of a young, dynamic team of individuals who continuously strive to deliver excellent and quality products and services to its customers,De La Salle-College of Saint Benilde 4. Information Systems a. Description of MIS or ERP System of Company In this technological era, computers and information systems are very essential in running a business. The Information Technology (I) Department acts as the backbone of a smooth operation involving the latest technology relevant to the food service industry. It is responsible for ereating softwares, which provides direct operating ssistance to maintain the functional areas in the organization, Its systems promote communication and information for both internal and external use. ‘able 3.6. Enterprise Resource Planning System of Lots’A Pizza, Ine. LotsA Pizza ERP System asyA Accounting Software: ERP Functional Module: Sales Invoice, Job Order, Purchase Order, item Inventory, Payroll System Programming Made or Platform: _|Visual Basic Database Name: Microsoft SQL Manufacture Made: Internal / In-House Programme [Connection Type: Local Area Connection Lots"A Pizza IT System Inventory and Management [Application Name: [LAP System Inventory and Management [Application Functional Module: [Desktop Inventory, Laptop Inventory, IT JAssets Inventory, Desktop Support Ticketing, IP Address Management, Preventive Maintenance Log Programming Made or Platform: _|PHP, Laravel, jquery, ISON Database Name: MySQL [Manufacture Made: internal / in House Programmer LowA Plaza Endpoint Security [Application Name: [Bitdefender Endpoint Security [Application Functional Module: |Malware, Endpoint Detection Response, Firewall, DLL Attack, Ransomware Vaccine, Port Scanning, Sandbox Analyzer, SMTP fand POP Scanning, Patch Management, Device Management Programming Made or Platform: _|PHP, Condeigniter, Jquery, JSON, Angular Database Name: [MongoDB: Manufacture Made by: Bitdefender [connection Type: WAN.De La Salle-College of Saint Benilde Enterprise Resource Planning (ERP) is a type of software that organizations use to manage the day-to-day business activities such as accounting, procurement, project ‘management, risk management and compliance, and supply chain operations. LAP uses EasyA Accounting Software - an ERP system with an advanced programming platform ‘of Visual Basic from Microsoft SQL. This is used to keep records of sales invoice, job order, purchase order, item inventory and payroll system, It is manufactured by an in- house or internal programmer of Lots’A Pizza, b. Comparison of ERP System with Closest Rivals or Benchmark Pizza Pedrico uses a Management Information System (MIS) for its technology. ‘The Information Technology Department, headed by the MIS manager, develop and analyze systems used by the employees and the managers of the company; develop strategies to be used in implementation of software and hardware systems in the ‘organization; look after the maintenance of the computer systems and make sure that all the departments are functioning properly; collect necessary specifications for each department and make sure that their requirements are met; develop and manage staff to ‘monitor technology staff and oversee policies and procedures of the company; look after the purchase of the software and hardware systems and plan proper budget and ‘quotations for the systems; provide training and necessary assistance for employees involved in implementation and maintenance of the software systems; and train the employees in using information systems and help them understand the configuration of the systems.De La Salle-College of Saint Benilde 5. Research and Development a. Description of General Practice, Policies, Programs on R&D Innovation is the key to every business’ future. This in tum will open new ‘competitive advantages for the company. The Research and Development (R&D) team, ‘sometimes called as product design or engineering, acts as the catalyst in the innovation process. This functional area is responsible for conceiving and designing new products by being updated with the latest technological and economical trends. In some ‘companies, it is a part of the marketing department, As for Lots’ Pizza, before launching a new product or new pizza flavor in the market, a product presentation among chefs, top management and the president must be done first. Once it is approved, it will be exposed through marketing media such as advertisements and promotions, Subsequently, this new product will be launched at ‘company-owned outlets and franchised stores. b. Comparison of R&D Practice with Closest Rivals or Benchmark The research and development team of Pizza Pedrico’s identifies the critical processes pertaining to food quality and safety during the product development phase, that it regularly updates and provides a shelf-life guide for its ingredients, Similar to Lots’A Pizza, Inc., itis supported by experienced people in culinary, finance, ‘management and marketing to know the feasibility of the product before it is launched in the market. It aims to continuously innovate its products,De La Salle-College of Saint Benilde 6. Finance Cash flow is the lifeblood of any business. Since the company cannot operate without money, itis important to manage its cash outflows and inflows because if not, the entity may lose control of the business. This is where finance comes in. Presentation of Financial Statements (Lots’A Pizza vs. Pizza Pedrico’s) i, Vertical Analysis of Income Statement The vertical analysis of the income statement or statement of comprehensive income is used to compare similar periods such as months, quarters, or years wherein net sales serve as the basis for evaluation of other line items. ‘Table 3.7. Lots’A Pizza, Ine. - Income Statement Net Sales '45,489,802.00) 45,084,253.00 | 36,129,758.00 | 34522,055.00 | 35,557,726.95 Less: Cost of ales 26,820,40400) 26,712977.00 | 19,749,43200 | 18,475817.00| 15,978,591 51 (Gros Profit 19,669,398.00 | 19371,27600 | 16,380,326.00 | 16 096,248.00 | 16579,135.44 Less: Operating Expenses 193546,278.00| 19,267748.00 | 17,680,745.00 | 15435,659.0 | 15,779.03443 Income Before Tax 123,12000 | 103,527.00 | (1,300,419.00)/ 660,588.00 | 800,101.01 Less: Income Tax Expense 393,288.00, 38742600| 327,60700| _321,92500| 24003030 Net Income/toss) [270,268.00)| (28388.00)/ (,628,02600)| 336,654.00 | $60,070.71 ‘Note: Forecasted sales (*) based on 2019 inflation rate of 3%. Table 3.8, Lots’A Pizza, Ine. - Vertical Analysis of Income Statement (Net Salex 1100,00%| ess: Cost of Sales 57.5956, (Gross Profit 42.3196) Less: Operating Expenses 42.04%, Income Before Tax 0.26% Less: Income Tax Expense 0.85% [Net income/Loss) 58%De La Salle-College of Saint Benilde za Pedrico’s Food Corporation - Income Statement IetSales (costof Sales 244 051.274.58 13756873082 198585148 67 983965235 168 169 904.08 4952.68.77 187 664870.22 81 002,653.06, 7201,804,57.00 1108158129 (ross Profit les: Operating xpenses 73482,53476 8249.46 100188 625.42 90,178,197.48 841779031 99580 069.27 10667220726 111731035 08 9138887581 105 095885.00 Iincome/Loss Before Tax less: Income Tax Expense (8.929914.70) (267897.41) ‘008.94 3907 g2a 38 (1547232696) (5,108887.83) (13,708,009.19} [Net income/{Loss) (6,250,940.23) 7006 388.5 (3547232896), _(5106897.83) (13,708,008.19) Net sales cost of Sales 100.00%| 49.98% ‘Table 3.10, Pizza Pedrico’s Food Corporation - Vertical Analysis of Income Statement 100.00%| 43.18% (Gross Profit lLesst Operating Expenses 50.02%| 59.22%| 56.82% 59.54% Iincome/Loss Before Tax Less: Income Tax Expense -9.20%| 0.0% 2.72%| 0.00% [Net income/{Loss) -9.20%| 2.72%| Tabke 3.10 indicates the income statement of Pizza corporations within a five~ year time frame. The analysis shows that Lots’A Pizza gained 44.59% of gross profit ‘on an average basis. It should be noted that the company incurred total losses of -0.63% since its operating expenses comprise almost half of the net sales. On the other hand, its closest rival, Pizza Pedrico’s, obtained a higher profit of 47.48% and higher net loss of -3.63% for its 51.06 % of expenses. As a result, Lots’A Pizza obtained better results based on the vertical analysis of the income statement since it incurred lower losses.De La Salle-College of Saint Benilde ii, Horizontal Analysis of Income Statement To examine the changes in the line items of the income statement from year to year, a common technique called horizontal analysis is used. The most popular format is to display the variance of each nominal account in its percentage form, ‘Table 3.11. Lots’A Pizza, Inc. - Horizontal Analysis of Income Statement Net Sales “O.87%| -21.60%| “5.98% Less: Cost of Sales -0.40%| _-26.07%| 754%6| (Gross Profit =1.5236) 15.4404 =3.9256 Less: Operating Expenses 142%] -8.20%| -5.03%6| Income Before Tax 15.91% -1356.12%| “375.433 Lese: Income Tax Expense 1.52%, 15.44% -11.03%| Net income/iLoss) 5.0836] 473.0594 -73.08%, ‘Note: Forecasted sales (*) based on 2019 inflation rate of 3%. ‘Table 3.12. Pizza Pedrico’s Food Corporation - Horizontal Analysis of Income Statement INet Sales “S.91%| -15.32%5|_11,50%|__7.5396| _-0.52% cost of Sates 28.47%) 14.58%] 3.58%] 36.2436] 2.60% ‘Gross Profit ‘36.24%| 46.0496] 26.7596] 24.2054] 8.2996 Less: Operating Expenses 9.42%| 10.04%) 12.10%| _-s.04se] 6.5396 Iincome/Loss Before Tax 72.09%) -254.5a%| _-66.08%| _168.32%| 10.20% Less: Income Tax Expense 112.09%| -100.00%| _0.00%|__0.00%| _3.02% [Net income/{Loss) 12.09%] 20.83%) 66.08%) 268.32%| 111.01% Based on the horizontal analysis of Lots’A Pizza, its net sales has averaged - 5.98% for the past consecutive years. Meanwhile, its net income dropped at -73.08%, which resulted in net losses for the first few periods. Pizza Pedrico’s, on the other hand, ‘has an average variance of -0.52% for its net sales and -111.01% for its net income. Even most of the accounts in the income statement decreased annually, Lots’A Pizza has a more stable standing based on its variances.De La Salle-College of Saint Benilde Vertical Analysis of Balance Sheet This financial tool is similar to the vertical analysis of the income statement; however, instead of net sales, total assets, liabilities and stockholders’ equity are used as a basis for the computation of each real account. ‘Table 3.13. Lots’A Pizza, Inc. - Balance Sheet last lcortent assets ‘cash in Bank 1,584185.00) 1,724838.00| 2,265,140 196485500] 1,645,531.36 ‘Accounts Receivable ‘955,209.00 970,079.00 a1aaio00| 5,772.00 495,982.45 Merchandise Inventory 314,624.00) 508,404.00] 466,488.00 387,726.00 357,868.55 other Current asses 1,470,505.00| 1,638 543.00 | 1,501,20900 | 1503,8400| _1,410,505:98 ‘Total Current Aseete 7433559300] 4841,864.00| —4,54501.00 | 3992257.00 | 3.905,50833 Nn Current seat Propety and Eulpment- Net 77023000) 357,857.00] 166,165.00] 25801200) 348,133.82 other Non-Curent Assets 2.423,785.00|_2,353,26000| 2302,77700 | 1426,13000|_1,850,683.21 Total Non-Curent Assets 3,193,585.00 | 2,730,817.00 | —2,468,943.00 | 2,084,142.00 | ~2,198,847.03 [TOTAL ASSETS 7,529,578.00 | 7,552,681,00| —7,116,964.00 | 60267900 | 6 108,725.37 \usbties and stockholders Eauity (caren isis Trade and Other Payables 5913,122.00] 6.220,125.00| _7412.433.00 | 5,983,183.00| 505,459.66 “otal Current abilities 5,913,122.00 | 6,220,125.00| _7412.433.00 | 5,983,18500 | —5,505,459.65| Non Current abies ‘vances rom Officers em1752.00) _241,752.00| _e11,75200| 24175200 | _ 941,752.00 “otal Nor-Current weit 41,752.00] 641,752.00] — sa1,752.00| _9m752.00| 841,752.00, {TOTAL UABILTIES 75487400] 7,061,877.00| 8,258,185 00 | 682493500 | 647,211.66 ‘stockholders Eouty 774,704.00] 496,805.00 1,137,223.00)| — (758,557.00)] (238,486.25) froTaL UABIUTes AND EQUITY 77529,578.00 | 7/552,602.00] 7,116,964.00 | 6026,37800 | 6108 725.37 ‘Note: Forecasted sales (*) based on 2019 inflation rate of 3%.De La Salle-College of Saint Benilde ‘Table 3.14. Lots’A Pizza, Inc. - Vertical Analysis of Balance Sheet lassets Icurrent Assets Cash in Bank 27.05% ‘Accounts Receivable 2.21% ‘Merchandise Inventory 5.95% Other Current Assets 22.07% Total Current Assets 63.28% Non-Current Asset Property and Equipment Net 5.46% ther Non-Current Assets 31.26% Total Non-Current Assets 36.72% [TOTAL ASSETS 100.00%| Liabilities and Stockholders’ Equity lcurrent Libilties ‘Trade and Other Payables 78.53%] 82.3636] 104.15%| 99.28% 90.89% Total Current Liabilities 78.53%) 82.36%] 104.159] 99.28%) 20.89% INon-Current Liabilities ‘Advances from Officers au.ae%6|_ 11.15%] 11.83%] 13.97% 12.38%| Total Non-Current Liabilities 1.de%| 11.15%] 11.83%) 13.97% 12.38% [TOTAL ABILITIES 89.71%| 93.50%) 115.98%] 113.2554 103.27%| [Stockholders' Equity 10.29%] 6.50%] -15.98%] -13.25% 3.27% [TOTAL UABILITIES AND EQUITY 100.0%] 100.0%] 100.00%| 100.00%| 100.00%| Note: Forecasted sales (*) based on 2019 inflaton rte of 3%De La Salle-College of Saint Benilde ‘Table 3.15. Pizza Pedrico’s Food Corporation - Balance Sheet current Assets cash 3508776 0 DecounsReciabe 2,193,725) Merchandise nvemory 2581.26.17 ther Curren Assets se 98852.7| 14,19909180| +495,01905| 44739,42833| 33293,21497| 19,24056650 515,656.60, 1458940839 33,69005310 44698,35081 3935057474 387.2096, 1,518.582.26, 2056,440.32 40,89,117.09 “Total Curent Aste 70,173308.12 32,788 75477 9 75.55 $3,119,835 95. 4851471 32 Non surere Assets FroperyandEquipment-Net_| _7405,07305| 984,30343| 6393,75563 3,013,10687, [TOTAL AsseTs 77578387.17 55,745 058.20, 60,403541.22 729457819 lusbities and stoctholer uty current ities Trade snd ter Parables — | 148779914. stots Eau (7220152634) 148156140} 190,971,803.22] 369,812, 788.78 103 408208.57] 365971,378.70 (17.476 568:53] 181758,22642 (n33,969,54823] Toran uaBumes ANDEQUITY | _7,578.387.47 5374405820 60,403,581.21 4849481407 4729457819 ‘Assets [current Assets Cash Accounts Receivable Merchandise Inventory Other Current Assets 4.22% 0.05% 2.5054 81.14% ‘Table 3.16. Pizza Pedrico’s Food Corporation - Vertical Analysis of Balance Sheet Total Current Assets 88.92% Non-current Assets. Property and Equipment - Net 11.08%) ‘TOTAL ASSETS 100.0% Liabilities and Stockholders’ Equity [current Liabilities Trade and Other Payables | 191.78%| ‘Stockholders’ Equity -91,78%| 281.3% -181.13%| 342.25%| 242.2584 TOTALLIABILITIES AND EQUITY —_| 100.00%| 100,00%| 100.00%De La Salle-College of Saint Benilde Based on Lots’A Pizza’s balance sheet, 63.28% of its total assets is composed of current assets, primarily of cash, while the remaining is part of non-current assets, wherein 5.46% belongs to property and equipment. As for the total liabilities and shareholders’ equity, 90.89% of it are actually current liabilities. On the contrary, Pizza Pedrico’s has no non-current liabilities but its current liabilities account for 266.48% of the total liabilities and equity. It has greater current assets compared to the firm being studied; however, it has a lesser shareholders’ equity, resulting in negative percentages. Consequently, Lots’A Pizza is in a better financial standing based on the vertical analysis of the balance sheet,De La Salle-College of Saint Benilde iv. Horizontal Analysis of Balance Sheet The horizontal analysis for balance sheets has the same format as of the income statement, but the real accounts are used for the calculation. Two consecutive periods are compared with their variances in percentage form, 'izza, Inc. - Horizontal Analysis of Balance Sheet lassets current assets Cashin Bank 16.2594 ‘Accounts Receivable 478.21%| Merchandise Inventory 7.70%| Other Current Assets 6.21% Total Current Assets “0.87% INon-Current Asset Property and Equipment - Net 30.93%) Other Non-Current Assets 1.34% Total Non-Current Assets 5.5054 [TOTAL ASSETS 137%| Liabilities and stockholders’ Equity Icurrant Liabilities ‘Trade and other Payables sass] 19.17% -0.73%| ‘Total Current Liabilities 5.19%] 19.17% 0.73% Non-Current liabilities Advances from Officers 0.00%] 0.00% 0.00% “Total Non-Current Liabilities 0.00%] 0.00% 0.00% [TOTAL UABILTIES a.5a%6] 16.889 -0.72%| [Stockholders' Equity 36.65%) 33.71% “7.07% [TOTAL LIABILITIES AND EQUITY ost] 5.77% ~A.85%| ‘Note: Forecasted sales (*) based on 2019 inflation rate of 3%.De La Salle-College of Saint Benilde ‘Table 3.18. Pizza Pedrico’s Food Corporation - Horizontal Analysis of Balance Sheet ‘Assets (Current Assets Cash Accounts Receivable Merchandise Inventory Other Current Assets 81.07%) 5780.89%| 21.08% 3.9194 -18.64%| 1403.54%6) 11,98%| -4.89%| ‘Total Current Assets 4.0234 -9.65%| INon-current Assets| Property and Equipment - Net 43.38%) -18.36%| [TOTAL ASSETS -1.24y| =10.71%| Liabilities and Stockholders’ Equity (Current Liabilities Trade and Other Payables ‘Stockholders’ Equity 0.70% 26.50%| 13.35%| 21.47% -2.26%| 7.37% six 13.95%| 5.32% 17.32%| [TOTAL LIABILITIES AND EQUITY 22.99%) 1.1034 “13.72% | “1.24y| =10.71%| ‘The total assets as well as the total liabilities and shareholders’ equity of Lots’A Pizza rapidly decreased through the interim years with its negative percentages, having stockholders” equity or retained earnings as the most impacted account with -117.07% variance, Meanwhile, Pizza Pedrico’s incurred higher negative percentages. Its total variances have been relatively unstable from -22.99% to 1.10% to -19.27% and -1.24%, from years 2015 to 2019 respectively. The real accounts of the two corporations have been unstable since their variances have moved upward, downward and upward. Yet, Lots’A Pizza obtained better results because its average total assets, liabilities and ‘equity of -4,85% is higher than the -10.71% of Pizza Pedrico’s.De La Salle-College of Saint Benilde y. Financial Ratio Analysis To measure the financial performance, liquidity, leverage and asset usage of the business, financial ratios are used by comparing the results in different line items which are then contrasted with its competitor to determine its overall financial performance over time, Table 3.19. Lots’A Pizza, Inc. and Pizza Pedrico’s Food Corporation - Performance Ratios Reece PERFORMANCE RATIOS Performance ratios measure the utilization of resources as well as the business performance over a period of time. These are evaluated using gross profit margin, net profit margin, retum on assets, and return on equity ratios. Higher ratios indicate better performances in this industry.De La Salle-College of Saint Benilde Based on Table 3.19, the gross profit margin of Lots’A Pizza has a steady growth from 42% to 47%. This indicates that sales are higher than the cost of sales. On the other hand, Pizza Pedrico’s ratios tend to move up and down with minimal variances yet it is still good because the values are all positive, By comparing their averages, Pizza Pedrico’s has a better gross profit margin since its average is higher than Lots’A Pizza, which indicates that the firm is producing its products more efficiently. As for the net profit margin, both companies have negative average ratios which means that sales are not converted into profits and expenses are higher than sales. Yet, Lots’A Pizza has a better net profit margin since its average ratio of -1% is higher than its benchmark with -4%, Then, based on the return on assets ratio, Lots’ A Pizza incurred negative values during the first three years which means that the firm hhas not generated earings through its assets. However, it has recovered during the next, ‘two years. On the contrary, Pizza Pedrico’s obtained negative ratios all throughout ‘except for 2016. Both companies produce negative average return on assets but Lots’A Pizza is in a better position compared to the latter. Lastly, the return on equity ratio measures the efficiency of the firm to generate income and growth from financing its equity. However, since both companies incurred losses and negative equities, itis pretty ‘obvious that there is no return on equity. Also, even if these ratios are calculated, it will not provide useful information for the analysis.101 De La Salle-College of Saint Benilde ‘Table 3.20. Lots’A Pizza, Ine. and Pizza Pedrico’s Food Corporation - Liquidity Ratios 228 PEDRICD'S UQUIDITY RaTios Liquidity ratios measure the ability of the firm to pay its obligations using its assets, without raising extemal capital, The acceptable industry standard ratio for this is 1:1. Table 3.20 indicates thatLots’A Pizza’s current ratios range from 60% to 80% with an average of 70%, This value is lower than the ideal rate of 100%, Probably, the firm takes on too much debt or their cash balance depleted, which may be a solvency concern in the future if it worsens. As for Pizza Pedrico’s, it has a decreasing trend with ‘an average of 33%. This is relatively low, which means that it does not have enough. assets to cover its current liabilities. In terms of quick ratio, both firms are not capable of paying their debts using their quick assets as Lots’A Pizza gained 64% ,while Pizza Pedrico’s has 31%. Despite this, Lots’A Pizza has a greater ability to pay its bills on time compared to Pizza Pedrico’s, which is attractive to creditors.102 De La Salle-College of Saint Benilde ‘Table 3.21. Lots'A Pizza, Inc. and Pizza Pedrico’s Food Corporation - Leverage Ratios ae LEVERAGE RATIOS Based on Table 3.21, both firms have high debt-to-total-asset ratio, reflecting their poor leverage. It should also be noted that since Pizza Pedrico’s obtained a higher average ratio, Lots’ Pizza has a better financial standing, For the debt-to-equity ratio, both firms incurred negative values which indicate risk for bankruptcy. Then, for the long-term debt-to-equity ratio, Lots’A Pizza incurred negative values again , indicating its poor leverage. Pizza Pedrico’s, on the other hand, do not have long-term liabilities which make this ratio as not applicable. Lastly, values derived from equity multiplier ratio are negative. This means that both companies’ liabilities exceeded their total103 De La Salle-College of Saint Benilde assets which when accumulated tuned into loss over time. Both firms exhibit poor leverage ratios, Table 3.22. Lots’A Pizza, Ine. - Activity Ratios ae. ACTIVITY RATIOS. ‘Activity ratios include inventory turnover, fixed assets turnover, total assets ‘turover, accounts receivable tumover, and average collection period, Lots’A Pizza has a higher turnover ratio compared to its benchmark company. This indicates that it has healthy sales and efficient use of inventory. To increase its sales, the firm may considerDe La Salle-College of Saint Benilde clearing the inventory to convert it into cash for the formulation of a new strategy. In terms of fixed asset turnover ratio, Pizza Pedrico’s obtained a higher ratio of 36.38 which indicates an efficient management of fixed assets. As for the total asset turnover ratio, Lots’A Pizza gencrated 5.78 in sales while the latter has only 3.38, resulting in a better financial position for LAP. The high accounts receivables turnover ratio of Pizza Pedrico’s indicate the efficiency of its creditors’ to pay their bills. Meanwhile, Lots’ A. Pizza must reassess its credit policies to ensure the timely collection of its receivables. Lastly, the average collection period indicates how fast the receivables are converted to cash, Since Pizza Pedrico’s has a low amount of accounts receivable, there is a chance that its collection period is also low. On the other hand, Lots A Pizza has a faster average collection period. Moreover, the firm shows a better financial standing and ‘greater value, b, Summary of Assessment of Financial Health of the Firm vs. Benchmarked Player Four main areas of financial health that are examined are liquidity, solvency, profitability, and operating efficiency; however, of the four, the best measurement of a ‘company's health is the level of its profitability. There are a number of financial ratios that can be reviewed to gauge a firm's overall financial health and to make a determination of the likelihood of the company continuing as a viable business. Standalone numbers such as total debt or net profit are Jess meaningful than financial ratios that connect and compare the various numbers on.105 De La Salle-College of Saint Benilde ‘a company's balance sheet or income statement. The general trend of financial ratios, whether they are improving over time, is also an important consideration, Founded by an accountant couple, Lots’A Pizza, Inc. has found itself in a better financial position than its benchmark company, Pizza Pedrico’s Food Corporation, in ‘most of the financial analysis performed, making it attractive to ereditors. Yet it should be emphasized that the firm needs more financial management and strategies to ‘compensate for the losses it incurred in the previous years.106 De La Salle-College of Saint Benilde C. Value Chain Analysis The value chain framework represents the internal activities a firm engages in ‘when transforming inputs to outputs. The primary and support activities that add value to its final product are analyzed to reduce costs and increase differentiation. 1. Value Chain Analysis of Company Figure 3.3. Lots’A Pizza, Inc. - Value Chain Analysis The value chain analysis (VCA) of Lots’A Pizza, Inc. is exhibited above. The primary activities are firm infrastructure, human resource, technological development ‘and procurement while the support activities include inbound and outbound logisties, ‘operations, marketing and sales, and after-sales services. Some of its activities are as follows: in-house commissary, manufacturing of dough, fast and reliable logistics, strategic location of stores, affordable quality products and good customer service.107 De La Salle-College of Saint Benilde 2. Value Chain of Closest or Benchmarked Rival FIRM INFRASTRACTURE ++ Established brand name, Strong management team, Funds collection, Quality-control mechanism HUMAN RESOURCE + Hiring and training of employees, Rewards and appraisals, TECHNOLOGICAL DEVELOPMENT ‘+ MIS database system, Research and development work PROCUREMENT ‘+ Purchasing of ingredients and raw materials from local and foreign suppliers INBOUND | OPERATIONS | OUTBOUND | MARKETING | AFTER-SALES Loaistics Loaistics ANDSALES | SERVICES J+ In-house | Manufacturing |» Transporting |» Strong = Good commissary | of dough pizza bases | distribution | customer ‘= Customization | via channel service of pizza temperature: | « strategic '» Advanced controlled location of production trucks stores equipment * Aggressive product, innovation + Wide breadth of product line * Strong advertising Figure 3.4, Pizza Pedrico’s Food Corporation - Value Chain Analysis ‘The VCA of Pizza Pedrico’s is presented in the diagram above. Most of its activities are similar to LAP since they belong to the same industry; however, the results indicate that the firm is engaged in activities that add more value to its product which in turn, gives the company a more competitive advantage. Some of its additional activities include advanced production equipment, strong distribution channel, aggressive product innovation, wide breadth of product line and strong advertising.108 De La Salle-College of Saint Benilde D. Summary of Functional and Value Chain and Determination of Strengths and Weaknesses Strengths Figure 3.5. Strengths Established Brand Name In 1986, the Ngan Tian couple introduced Lots’A Pizza, a Filipino-style pizza, to the local market, After several years in the industry, it became an established brand. Soon, the corporation started franchising and has been a consistent Franchise Awardee since 2009, According to Lardizabal (2019), it is also recognized by the BPI Family as ‘one of the best companies in the industry. Moreover, Mrs. Teresita Ngan Tian, the co- founder, president and treasurer of Lots’A Pizza, has been awarded as one of the inspiring women entrepreneurs in the Philippines for her exceptional achievements in the business (Filipino Pizza Woman Founder Awarded Best in Business Excellence, 2011). Most Filipinos are familiar with Lots’A Pizza. Its established brand name is a strength because it enables the firm to build loyal customers, similar to Pizza Pedrico’s which also possess the same strength.109 De La Salle-College of Saint Benilde Strategic Location of Stores Each Lots’ Pizza store is strategically located in malls with high foot traffic or in sub-urban residential areas - positioning its outlets near residential areas, schools and stores — like Pizza Pedrico’s since their target market is composed of both mothers and groups from socio-economic classes C to D. Hence, its outlets are designed as a family style in dine-in locations with stand-alone full stores, depots and stalls in mall food courts and kiosks, which are strategically located nationwide to easily capture existing, ‘and new markets. This is a strength for Lots’ Pizza because this internal factor helps in generating sales and profit for the firm. Fast and Reliable Logi In comparison with the outbound logistics of the benchmark company, Pizza Pedrico’s, Lots’A Pizza has a fast and reliable logistics since it transports the goods and other necessary deliverable items to its designated LAP company-owned and franchised stores within 2 to 3 days while the latter takes 3 to 5 days, given that Pizza Pedrico’s has more outlets and few commissaries, Moreover, based on the inventory turnover ratio which can be used in determining the efficiency of this factor, the company being studied has sold its inventory 56.14 times on average while Pizza Pedrico’s has sold 45.80 only. Though there is only a minimal difference, it is still a strength for the firm because it attracts both franchisees and customers with its fast and reliable logistics which the company should maintain.De La Salle-College of Saint Benilde Affordable Quality Products Both corporations aim to serve Filipino communities by offering affordable quality products. Moreover, Lots’A Pizza’s signature dough has the desired chewiness ‘and crunchiness - without the toughness that Pizza Pedrico’s has. Its crust is formulated with very low sugar and oil which makes it a good source of complex carbohydrates. In spite of its good quality, LAP has a mid-range price. Its 6.5” solo pizza costs P59 while 5” solo pizza at Pedrico’s costs P42. As for the 10” x 10” (L) pizzas, Classics (Bacon Blaze, Double Whammy, Pure Beef N’ Cheese and Garden Harvest) are priced at P189 ‘and Best Sellers (Hawaiian Delight, Pure Beef Special and Pepperoni N’ Mushroom) are priced at P205. Meanwhile, PP’s 10” x 10” Paborito Square Pizzas (Hawaiian Supreme, Pedrico’s Supreme and Meat Lover's Supreme) ate priced at P250 each. By constantly offering affordable quality products to satisfy the Filipino palates, Lots’A Pizza entices more customers which is deemed as a strength for the company. Strong Management Team Lots’ Pizza has a strong management team under the supervision of the Ngan ‘Tian family for 33 years. It is supported by several experienced people and those who specialized in the field of culinary, finance, marketing, management and information technology. On the other hand, Pizza Pedrico’s has a strong, experienced management, ‘team as well, led by Mr, Kerwin Thomas Tansekiao who received an Outstanding Achievement in Entrepreneurship during the 39th Agora Awards in 2018, Both firms are composed of a dynamic team of individuals who are results-driven. Their strong 110De La Salle-College of Saint Benilde ‘management teams are clearly evident with their continuous success in the business ‘venture in the food service industry. ‘Weaknesses Figure 3.6. Weaknesses Weak Distribution Channel Even Lots’A Pizza outlets expand as far as Vigan City, locos Sur in Northern Luzon, and Coron, Palawan in Southern Luzon area, its 215 outlets are no match to Pizza Pedrico’s 1,300 serving stations nationwide. It has a fewer number of company- ‘owned and franchised stores, meaning it has a weak distribution channel to cater its potential customers in different regions across the nation, This is a weakness for Lots’A Pizza, however, this could be tumed into an opportunity by opening more outlets in some areas. Slow Product Innovation Despite the regular attendance of Mr. and Mrs. Ngan Tian in the annual Pizza Expo and National Restaurant Association Convention overseas to keep updated with112 De La Salle-College of Saint Benilde the latest in pizza, the firm is still slow in product innovation compared to its rivals in the food service industry like Shakey’s and Domino's Pizza. Meanwhile, its closest ‘competitor, Pizza Pedrico’s, continuously innovates its pizza and pasta products but not {as fast as Shakey's and not too slow as Lots’A Pizza. Now, it has been retailing one of its recent innovations, frozen fresh pizzas, in dealer communities. Limited Breadth of Product Line Both Lots’A Pizza and Pizza Pedrico’s offer pizzas and pastas to customers but the latter does not only serve hot newly baked pizzas but also frozen-fresh pizzas and sandwich bars that taste like pizza. With this, Lots’A Pizza has a limited breadth of product line, which is deemed important for the industry. Lack of Equipment in Production Lots’A Pizza, Inc. uses DMC deck rotary ovens for its production, which is ‘manufactured in stainless steel with revolving carts devised for rapid insertion and removal, operating with electricity. On the other hand, Pizza Pedrico’s uses conveyor type pizza ovens to cook their pizzas, which is done around about 350-450° F and features a continuous cooking platform that constantly churns out pizzas fast. Once the dough is placed on the conveyor belt, the oven does the rest of the work by pulling it through a set temperature at a set speed. Its total cooking time takes 4 to 5 minutes to cook a pizza, Also, because the pizzas are passing under or through the constant heating elements, there is no time lost for heat recovery. It is a great option in settings where efficiency is the biggest priority. Thus, it is a weakness for Lots’ A Pizza.113 De La Salle-College of Saint Benilde Low Advertising Lots’A Pizza has reached people most likely to entice them to buy the products with its digital advertisements displayed over the internet and digital devices. It has been featured in several newspapers and magazines before. However, its advertising is, Jow compared to its competitors. Recently, Pizza Pedrico’s is generating a buzz on the internet and printing ads with its ready-to-bake frozen pizzas affiliated with online delivery services and dealership communities. Moreover, the advertising of Shakey’s is strong since it has television commercials, flyers and billboards as well4 De La Salle-College of Saint Benilde E. Analysis of Strengths and Weaknesses using ASSIST and VRIO Framework ‘The VRIO framework is used to uncover and protect a firm’s internal resources and capabilities which give it a long-term competitive advantage. Four dimensions are emphasized questioning the value, rarity, imitability and organization of these aspects. Ithelps to understand the business’ unique advantages to stay ahead of its competitors and increase its growth, ‘Table 3.27. ASSIST and VRIO Framework See [esata bans name Yes [Sustained compete advariage [Song aston channel i [consetve party [Srateg locaton of stores Ye [Sustained compete advariage [Ragressive product inovaton Ne [Temporary competve advartag| [Breach of product ne [oonpetive party ‘As shown in the table above, two of the resources and capabilities are deemed as valuable, rare, costly to imitate and organized to capture value. Therefore, having an established brand name and strategic location of stores are strengths for Lots’A Pizza since these are sustained competitive advantages. Meanwhile, its capabilities for having a strong distribution channel and breadth of product line are not rare because more than few companies have the same resources and also use the capabilities in a similar way. ‘These lead to competitive parity, which is not the desired position for the firm. Thus, it should not neglect its resources which are valuable but common. Lastly, the aggressive product innovation of the corporation implies a temporary competitive advantage for the firm since it is easy to imitate. Lots’A Pizza can improve in these areas to achieve a sustained competitive advantage.5 De La Salle-College of Saint Benilde SUMMARY OF MODULE IV: STRATEGIC INPUT + The External Factor Evaluation Matrix (EFE) reveals that the current strategies of Lots’A Pizza are well-designed for the potential changes, + The Internal Factor Evaluation Matrix (IFE) depicts that Lots’A Pizza is neither weak nor strong against its competitors. + The Competitive Profile Matrix (CPM) shows that Pizza Pedrico’s has a competitive advantage over Lots’A Pizza.