C

ollege of Arts and Sciences

Summer Term 2023

In Partial Fulfillment of the Requirement in the Course

Strategic Management and Business Policy (STRAMAN)

Submitted by: SANTOS, Dave Gabriel C.

Submitted to: Prof. Racquel Castro

Submitted on: August 5, 2023

Table of Contents

I. Introduction
II. Research Design and Methodology
2.1 Sources of information
2.2 Assumptions
2.3 Scope and Limitation
III. Company’s Vision and Mission
3.1 Vision Statement and Evaluation
3.2 Mission Statement Analysis and Evaluation
3.3 Recommendations
IV. External Analysis
4.1 Economic Factors
4.2 Political/Legal Factors
4.3 Technological Factors
4.4 Socio-cultural Factors
4.5 Environmental
V. Industry and Competitor Analysis
5.1 Company shares of Baked Goods in the Philippines
5.2 Porter’s Five Forces
VI. Competitive Profile Analysis
6.1 Critical Success Factors
6.1 Competitive Profile Matrix (CPM)
6.2 EFE Matrix
6.3 McKinsey 7S Framework
Strategy
Shared Values
Structure
Systems
Style
Staff
Skills
6.4 Internal Factor Evaluation
Strengths:
Weaknesses
6.5 IFE Matrix
VII. Strategy Formulation
7.1 SWOT Matrix

2
 7.2 Integration Strategies
Intensive Strategies:
Diversification Strategies:
Defensive Strategies
7.3 SPACE MATRIX
A. Financial Position
B. Industry Position
C. Competitive Position
D. Stability Position
7.4 IE Matrix
7.5 Boston Consulting Group (BCG) Matrix
7.6 Grand Strategy Matrix
7.7 Quantitative Strategic Planning Matrix (QSPM)
VIII. Objectives, Strategy Recommendations, and Action Plans
8.1 Financial Objectives
Gardenia Bakeries (Philippines) Inc. Income Statement
Gardenia Bakeries (Philippines) Inc. Balance sheet
Key Ratios
8.2 Strategy Objectives
8.3 Strategy Recommendations
8.4 Financial Projections
8.5 Strategy Map
8.6 Balanced Scorecard
IX. Appendices
X. References

3
 I. Introduction

“So good… You can even eat it on its own!”. This tagline is what you always

see on the packaging of the famous Gardenia Bread. The man behind Gardenia

bread is Uncle Slocumm, sometimes known as Horatio Sye Slocumm, was a baker

from North America. He was deployed to Sabah in 1969 by the International

Executive Group Corps, a non-profit volunteer group whose goal is to aid the

economies of Third World Countries. He had 35 years of experience baking bread

with one of America's top chain bakeries. On September 15, 1997, Singapore-based

Gardenia International and local Filipino investors formed Gardenia Bakeries

Philippines, Inc. as a joint venture. Simplicio Umali Jr., the president and general

manager of Gardenia International, started the business. Gardenia International had

already built prosperous bakeries in other Asian nations, and they recognized the

enormous potential in the expanding Filipino market.

The primary areas of focus for Gardenia Bakeries Philippines are the creation

of excellent bread and other baked items. Their soft, freshly made bread, which

includes sliced bread, buns, rolls, and numerous specialty items, is well renowned.

Modern manufacturing facilities strategically positioned around the Philippines are

used by the company to ensure effective product distribution and availability across

the country.

To accommodate various client preferences, Gardenia has developed a wide

variety of bread kinds over the years. This includes flavored loaves, whole wheat

bread, pandesal (a favorite breakfast roll in the Philippines), white bread, and more.

The brand Gardenia is well-known and has a significant market share in the

Philippines. Across the nation, supermarkets, convenience stores, and other retail

4
establishments carry a variety of its products. To respond to shifting consumer wants

and preferences, the organization consistently focuses on product innovation and

research. Additionally, Gardenia Bakeries Philippines has been involved in a number

of corporate social responsibility (CSR) projects, such as helping out local

communities, raising awareness of nutrition and health issues, and incorporating

sustainable practices into its daily operations.

Gardenia is one of the subsidiaries of QAF Limited Company. According to

the 2021 annual report of QAF Limited Company, Gardenia’s market share was 65%

in the packaged bread industry. Gardenia is also the dominating packaged bread

company in the Philippines with its wide variations of bakery products. According to

QAF Limited, they have an estimated 10,000 employees all in all, and according to

[Link] Gardenia Bakeries Philippines have 580 employees.

Gardenia Bakeries also commits to the requirements and standards in

compliance with statutory laws and regulations of HALAL in their products,

ingredients, processes, and facilities. Gardenia was also awarded ISO9001:2015

quality certification and HACCP Food Safety Certified assuring their products are of

excellent quality and adhere to international standards.

II. Research Design and Methodology

2.1 Sources of information

The sources of information that I will be using for this paper are the Gardenia

Bakeries (Philippines) Inc. website, the QAF Limited annual reports, considering only

the majority of Gardenia Philippines’ information, other articles that I can find on the

5
internet, Euromonitor International and Orbis that are accessible through the San

Beda University Online Library.

The financials and other internal information of Gardenia Bakeries (Philippines) Inc.

will be taken from Orbis - Asia Pacific and the annual reports of QAF Ltd.

2.2 Assumptions

Gardenia Bakeries (Philippines) Inc. is a private corporation and their financial

information is not available on SEC. Earnings per share and other financial ratios

that are related to shares are not computed because Gardenia Bakeries (Philippines)

Inc. is not a publicly listed company hence, they do not issue shares of stock.

Since Gardenia Bakeries (Philippines) Inc. is not a publicly listed company and their

financial information is not widely available on the internet, the source of financial

information of the company is merely from the e-libraries Orbis Asia-Pacific and

Euromonitor.

2.3 Scope and Limitation

This paper will be focusing on Gardenia Bakeries (Philippines) Inc. which is

based in Laguna and not be confused with other subsidiary companies that also use

the Gardenia logo such as Philfoods Properties Inc., Philfoods Fresh-Baked

Products Inc., Nutribaked Food Products Inc., Nutrimax Fresh-Baked Inc., Vitabread

Food Products Inc. Though all of these companies are owned by QAF Limited and

are working with Gardenia Bakeries (Philippines) Inc., the different names is to

differentiate the different plants and warehouse of Gardenia Bakeries (Philippines)

Inc. Nutribaked Food Products Inc. is the manufacturer of Gardenia Bakeries

(Philippines) Inc. in Cebu, Nutrimax Fresh-Baked Inc. is the manufacturer of

Gardenia Bakeries (Philippines) Inc. in Misamis Oriental, and Vitabread Food

6
Products Inc. is the manufacturer of Gardenia Bakeries (Philippines) Inc. located in

Pampanga.

The latest available financial information and other information about Gardenia is the

financial year 2021. Due to the requirement of this paper, the oldest information will

be from the financial year 2018. With the available given annual reports of the

company, from FY 2018 to FY 2021, the information for 2022-2024 will be forecasted

and will be estimated based on previous annual reports.

Gardenia Bakeries (Philippines) Inc.

III. Company’s Vision and Mission

3.1 Vision Statement and Evaluation

The vision statement of Gardenia is: “Be the premier company in the baking, food,

and beverage industry that provides best quality products and services enjoyed,

valued and loved by consumers.”

Vision Statement Evaluation

Parameter Yes/No Remarks

Does it clearly answer the Yes Statement is clear about

question: What do we what they want to become
want to become? which is to be the premier
company in the industry.

Is it concise enough yet Yes Statement is inspirational

inspirational? enough that can be
continuously attained in
long-term scenarios.

Is it aspirational Yes Statement aspires to be

the premier company in

7
 its specified industry. The
market “consumers”
though is vague and lacks
a target.

Does it give clear No The statement does not

indication as to when have any time-bound
should be attained? element.

3.2 Mission Statement Analysis and Evaluation

The mission statement of Gardenia is: “To provide an assortment of best

quality, great-tasting, nutritious and enjoyable bakery, food and beverage products,

that are within sight, within reach and within the hearts of consumers; produced

using world-class manufacturing facilities and processes utilizing quality and safe

ingredients; thereby creating values beneficial to stakeholders including employees,

suppliers, trade partners, financial institutions, investors and the community.”

Mission Statement Evaluation

Parameter Yes/No If Yes, which part of

statement

Customers Yes “Within reach and within

the hearts of consumers”

Products and Services Yes “Bakery, food, and

beverage products”

Markets Yes “The community”

Technology Yes “World-class

manufacturing facilities
and processes”

Concern for Survival, Yes “beneficial to stakeholders

Growth, and Profitability including employees,
suppliers, trade partners,
financial institutions,
investors and the
community.”

8
 Philosophy Yes “Utilizing quality and safe
ingredients”

Self-concept Yes “Assortment of best

quality, great-tasting,
nutritious and enjoyable
bakery, food and
beverage products within
sight, within reach, and
within the hearts of
consumers”

Concern for public image Yes “Safe ingredients”

Concern for Employees Yes “Creating values

beneficial to stakeholders
including employees”

For the mission statement, all of the parameters or elements of a mission

statement from the guideline of Fred David is existing. For customers, the mission

stated “within the reach and hearts of consumers” but in the point of Fred David

regarding customers, this should identify who are the firm’s customers thus making

the mission statement of Gardenia vague when it comes to customers. For products

and services, the mission statement stated “bakery, food, and beverage products”.

For markets, the mission statement stated “the community”. For technology, the

mission statement stated “world-class manufacturing facilities and processes”. For

concern for survival, growth, and profitability, the mission statement stated

“beneficial to stakeholders including employees, suppliers, trade partners, financial

institutions, investors, and the community”. For philosophy, the mission statement

stated “utilizing quality and safe ingredients”. For self-concept, the mission statement

stated “assortment of best quality, great-tasting, nutritious and enjoyable baker, food

9
and beverage products within sight, within reach, and within the hearts of

consumers”. For concern for public image, the mission statement stated “safe

ingredients”. For concern for employees, the mission statement stated “creating

values beneficial to stakeholders including employees”.

3.3 Recommendations

“To provide an assortment of best quality, great-tasting, nutritious and

enjoyable bakery, food and beverage products, that are within sight, within reach and

within the hearts of consumers of any age; produced using world-class

manufacturing facilities and processes utilizing quality and safe ingredients; thereby

creating values beneficial to stakeholders including employees, suppliers, trade

partners, financial institutions, investors and the community.”

I suggest that something that will specify the customers such as age groups

and demographics. For example “within the reach and within the hearts of

consumers of any age…

All in all, Gardenia’s statement of mission and vision gives us the complete

elements that are needed in a mission statement according to Fred David. With this

new mission statement, the addition of something that will specify the customers

such as age groups and demographics will have a more solid and identified market.

IV. External Analysis

A. General Environment

4.1 Economic Factors

1. Inflation (Opportunity)

10
Overall inflation in the Philippines, or headline inflation, decreased from 6.6 percent

in April 2023 to 6.1 percent in May 2023. The nation's headline inflation rate has

decreased for four months in a row. The inflation rate was lower, at 5.4 percent, in

May 2022 despite the reduction. Food and non-alcoholic beverages is one of the top

three commodity groups contributing to the 6.1 percent headline inflation in May

2023 with 46.0 percent share or 2.8 percentage points.

Milk, other dairy products, and eggs are the third primary driver of slower food

inflation which recorded a lower inflation rate of 12.1 percent in May 2023 from 13.0

percent in the previous month.

Food inflation share 42.5 percent or 2.6 percentage point to the overall inflation in

May 2023. Cereals and other cereal products which includes rice, corn, flour, bread,

and other bakery product are the top contributions to food inflation during the month

of May with 26.7 percent share or 2.0 percentage points.

Relevance:

11
 Since the inflation declined in the first quarter of the year 2023, the prices of

products are lower and increasing the purchasing power of consumers. This can be

an opportunity for US exporters of baking ingredients to enter the market, promote

their brands, and offer new product variants.

2. Russian war in Ukraine (Threat)

Direct supply lines with Russia and Ukraine, as well as supply chains that go

through Russia to reach Asia, have all collapsed as a result of the start of the conflict

and the ensuing sanctions. Because of this, the cost of various raw materials,

energy, intermediate goods, and transportation services has dramatically increased.

Relevance:

Since prices of materials and ingredients are increasing, the costs of

businesses in gathering materials is also high resulting in high selling prices. High

selling prices can affect the purchasing power of customers and can decrease

competitiveness in the industry. This is important because not increasing the selling

price while costs are also high will decrease the business profitability. Hard wheat

prices are also increasing and can affect the bread industry regarding their costs.

3. Interest Rates (Opportunity)

12
Source: Central Bank

Banks increase the cost of company loans when interest rates rise. This

implies that you'll have to set aside a larger portion of your income to cover loan

interest, which lowers profitability. When financing rates are high, you can decide

against starting new initiatives or expanding your business, which would hinder its

development (Johnston, 2019).

The interest rate in the Philippines still remains at 6.25 percent.

Relevance:

The less money customers have in their pockets, the higher the interest rate.

This might make it harder for them to purchase goods and services, which could hurt

business sales (Johnston, 2019).

13
4.2 Political/Legal Factors

4. Labor Code of the Philippines (Opportunity)

The laws regulated labor that covers minimum wage, overtime pay, working

hours, and discrimination.

Relevance:

Complying with the labor code of the Philippines and having a good working

environment might increase employee relationships. Failure to comply can also lead

to criminal charges.

5. Republic Act No. 7394

“The Consumer Act of the Philippines” - It is the policy of the state to protect

the interest of the consumer, promote his general welfare and to establish standards

of conduct for business and industry.

Relevance:

This law can help the bakery industry to achieve safe and healthy products

that will be offered for public consumption. This is also for the protection of the

consumers against deceptive, unfair, and unconscionable sales acts and practices

that will lead to better customer relationships and reputation.

6. Halal Policy (Opportunity)

According to [Link], a product's manufacturing in full accordance with

Islamic Law is attested to by halal certification, which is used in the food, cosmetics,

and pharmaceutical industries. Halal certification also confirms that a product has not

14
come into contact with any items or substances that are deemed "impure" or to have

been "forbidden" in any way. This certification serves to assure Muslim customers

that their religious principles have been upheld, ensuring the product is highly

hygienic and secure, and heed the expanding demand for halal goods on the

national and international markets.

Relevance:

Your bakery can serve Muslim customers who actively look for halal-certified

items by obtaining a halal certification. This can increase the number of prospective

customers you have, particularly in places with a sizable Muslim community. Offering

halal goods promotes inclusion and sensitivity to cultural differences, which can

improve the bakery's reputation and draw in clients from a variety of backgrounds.

A halal policy and certification are frequently necessary for market entry and

acceptance if you're thinking about exporting your bakery goods to nations with a

majority-Muslim population.

4.3 Technological Factors

7. Packaging Innovation

New packagingDeveloping innovative packaging for a more green and

environmental-friendly movement. Fresh produce, meats, and fish are traditionally

preserved by using modified atmosphere packaging (MAP), which regulates

biochemical processes like respiration. Because there is a rapidly expanding

demand for minimally processed fruits and vegetables, non-frozen cold meats,

ready-to-eat meals, and semi-processed bulk goods, the usage of MAP systems is

appealing to the food sector.

15
 The shelf life of packed food goods is significantly increased by modified

atmosphere packaging (MAP), and in some circumstances, MAP products don't

need any further treatments or special handling during distribution.

Relevance:

Innovating new packaging can attract more customers. It is not just eco-

friendly but also will keep the products fresh and extend shelf life. Meaning, there will

be a lower risk of consuming expired products.

8. E-commerce convergence

In the food business, particularly bakeries, online ordering platforms, mobile

apps, and delivery services have grown in popularity.

Relevance:

By utilizing digital media, bakeries may reach a wider audience, provide

convenience, and adjust to shifting client demands.

9. Enterprise Resource Planning (ERP)

Integration of software systems in daily operations to improve their performance.

Relevance:

Having an effective ERP system can make a business more effective and

efficient when it comes to operations. This can help reduce costs by having business

partners that will supply chain operations. It also affects the financial performance of

the industry by budgeting and performance management.

10. Food Safety and Traceability

Food traceability refers to the capacity to track a food product's and its

16
ingredients' movements through all supply chain stages, both backward and forward.

The production, processing, and distribution chains of food items and ingredients are

tracked and linked through traceability (FDA, 2022).

Relevance:

Bakery businesses can employ digital systems to track production processes,

keep track of materials, and maintain quality control, lowering the likelihood of recalls

and foodborne diseases.

4.4 Socio-cultural Factors

11. Demographic Trends (Opportunity)

Demographic trends are the population differences in different areas as to

gender and age. In 2020, there were 108.67 million households with 108.02 million

males and 53.65 million females living in them. Young dependents were 33.4 million

(30.7%) people under the age of 15 overall.

Relevance:

17
 Demographic trends can help the business in formulating new products to

cater to different audiences. With this information, we can see the percentage of

people who are working people, who are going to school, etc. This is important for

the business to know what kind of products they will make to cater to the most

number of customers possible. The median age was 25.3 years old as of 2020 (PSA,

2022).

12. Buying Habits (Opportunity)

The tendencies consumers have when making purchases of goods and

services are known as buying habits. Numerous factors, many of which seem

obvious and inconsequential, contribute to these tendencies (ThriveHive, 2016).

Relevance:

There are consumer preferences existing when it comes to goods with

alternatives. Factors can be price, quality, and brand name. Some want healthier

options but some also want the sweeter option. This factor is important for the

business to adapt and know what products they can make to satisfy the needs of

potential customers.

13. Cultural diversity (Opportunity)

There are different cultures in the market that separates the preferences of

customers. The HALAL Policy is also applicable to this factor since offering halal

goods demonstrates inclusion and cultural sensitivity, which can improve the

bakery's reputation and draw clients from different backgrounds.

18
Relevance:

A bakery can draw and serve the Muslim population by upholding the halal

standards. Muslims frequently look for halal-certified goods to make sure they

adhere to their Islamic principles. This can broaden the customer base and raise

sales. Having a halal policy can be essential if the bakery sponsors events in order

to be considered for occasions where halal food is required, such as Islamic

weddings, celebrations, or corporate events.

14. Educational Attainment

After reviewing research, Pellegrino and Hilton (2013) came to the conclusion

that educational attainment is a better indicator of success on the job market than

tests of cognitive abilities, personality traits, and intra- and interpersonal

competencies. Compared to individuals who have attended school for less years,

workers with more education are better able to perform a given task, learn more from

complex task training, and allocate work resources more effectively.

Relevance:

Countries understand the value of education to the economy since, logically, a

workforce with more years of education will be more productive and better

competent, resulting in a higher output of products and services and, ultimately, a

stronger economy (Barro & Lee, 2001).

4.5 Environmental

15. Water source (Opportunity)

19
 This is the availability of water in a specific area since water is used as an

ingredient in making bread. But there are also important factors regarding water that

affects the quality of final bread products. Chlorine significantly affects pulp quality,

particularly when it comes to fermentation. A chlorine concentration that is too high

can be harmful to yeast. The performance of flour, specifically the enzymes, is also

impacted by excessive chlorine levels. It has been observed that using chlorinated

water shortens the fermentation process and enhances bread quality, especially

when using weak flour. Chlorine's influence can differ depending on whether it is

present or mixed with other chlorine residues throughout the water sterilization

process.

The number of minerals in the water dictates its hardness and softness; hard

water has a high concentration of minerals, whilst soft water has a very low

concentration. The amount of minerals in the water can impact the quality of the

dough since minerals are a nutrient for the yeast and can change the fermentation

process. As a result, the qualities of the dough will fluctuate depending on the

fermentation, becoming stronger or weaker.

Relevance:

This is important for the bakery industry because it is one of the ingredients to

make their products. Without water, there will be no products produced. A business

can also implement water management to reduce costs and also follow regulations

in the bakery industry. According to Hanna Instruments, water is a crucial component

in the dough that makes up baking goods. Industries frequently utilize tap water to

produce the dough. Technically speaking, dough qualities and the features of the

finished product will be directly impacted by water quality. Regarding water quality, a

20
few aspects need to be taken into account. They are flavor, chemical composition,

and mineral content.

16. Climate and weather (Threat)

Climate and weather can affect the quality of raw materials. In the Philippines,

the climate is either sunny or rainy. Research of Glenn Fitzgerald at the Australian

Grains Free Air CO2 Enrichment (AGFACE) facility mimicking the CO2 levels that

are likely to be found in the year 2050. They found out that high levels of CO2 will

like to reduce the concentration of grain protein and micronutrients such as zinc and

iron in cereals (Fitzgerald, 2017).

Relevance:

The rise in CO2 levels can affect the quality of food, especially bread

products. Reduced grain protein will also have an impact on nutrition, especially in

underdeveloped nations where food access is more constrained. This poses a

serious threat to food security. People who have limited access to food may need to

eat more (at a higher cost) in order to meet their basic nutritional demands if the

protein concentration of grains drops.

17. Plastic usage (Threat)

The World Bank Organization's 2021 study estimates that the Philippines

produces an astounding 2.7 million tons of plastic garbage each year, 20 percent of

which ends up in the ocean, much of it in the form of single-use, non-recyclable

sachets.

Relevance:

21
 Using other alternatives for the packaging of bread products may be difficult

since plastic has been very effective when it comes to preserving food and plastic is

very easy to use. Using other packaging aside from plastic can also affect the quality

of the products. In the meantime, while there are no alternatives to plastic that can

be used in packing bread products, plastic is still the superior packaging when it

comes to preserving food. On the other hand, a business can sacrifice their

reputation when they do not value the environment which can result in loss of

customers and interest.

V. Industry and Competitor Analysis

5.1 Company shares of Baked Goods in the Philippines

Company name Sales in 2022 %CAGR Growth % Share in 2022

(2017-2022)

1. Gardenia P9.75B 9.7 16.9

Bakeries
(Philippine
s) INc.

2. Goldilocks P4.868B 1.3 8.4

Bake Shop
Inc

3. MLM Foods P2.605B 5.0 4.5

Inc
(Fortune
Bakeshop)

4. Regent P1.750B 4.7 3.0

Foods
Corp

5. Manila P1.738B 4.0 3.0

Bambi
Foods Co

6. Big E Food P1.581B 5.0 2.7

Products

7. Universal P1.209B 7.6 2.1

Robina

22
 Corp

8. Red P1.175B -2.2 2.0

Ribbon
Bake Shop

9. Artisanal P22.401B 2.5 38.8

10. Others P10.606B 7.8 18.6

11. Total P24.184B 100

Source: Euromonitor International

Gardenia Bakeries (Philippines) Inc. under QAF Ltd. takes the number 1 spot

in the percentage of brand share of baked goods in the Philippines with a rate of

17%. Gardenia also remained at the top since 2018, then Goldilocks, then Fortune

(MLM Foods Inc.). Gardenia has an operating revenue (Turnover) of $156m in 2021.

Gardenia had a 13.3% brand share in the Baked Goods category in 2017 and had

increased until 2020. The brand shared decreased from 16.7% in 2020 to 16.6% in

2021 but then again increased to 16.9% in 2022.

23
 Year Baked Goods Gardenia Bakeries (Philippines) Inc

2018 6.8 14.0

2019 7.6 18.0

2020 4.5 12.0

2021 0.1 -0.5

2022 4.3 6.2

Source: Euromonitor

Comparing the whole industry of Baked Goods to Gardenia Bakeries

(Philippines) [Link] to the industry of baked goods acquired the major

24
There are 4 plants in different areas of the country including the main plant in Binan

Laguna. The 3 other plants are a separate entity from Gardenia Bakeries

(Philippines) Inc. These plant manufacturers are Vitabread Food Products Inc. which

is located in Pampanga, Nutribake Food Products Inc. in Cebu, and Nutrimax Fresh-

Baked Inc. in Misamis Oriental.

Based on the information from Euromonitor International, the majority of baked

goods are retailed in Grocery Retailers such as supermarkets and hypermarkets.

Price

When it comes to prices, Mr. Simplicio Umali Jr., Gardenia President, said in

an Youtube video interview from TribuneNow that they sell their products at a

premium at the time of his early years working in Gardenia. Despite selling the

products at a premium, they are still able to market them because people wanted to

pay for such quality products and other factors that customers can exclusively enjoy

5.2 Porter’s Five Forces

Rivalry of competition - Strong

Gardenia is one of the Philippines' most famous bakeries. It has been

operating for 25 years since 1996. There are 4 factories in the country located in

Laguna, Cebu, Misamis Oriental, and Pampanga. Competitors such as Rebisco and

Monde Nissin (Owler), despite the latter being a publicly listed company, are both

versatile, offering wide options for customers when it comes to their product line can

also be matched by Gardenia. Though these 2 competitors do not offer the exact

same products or indirect competitors they all still play in the industry of food and

25
beverage. With that, Gardenia can still have a competitive advantage when it comes

to bread products and other pastries. Gardenia is also the rank 1 in the baked goods

industry with a 13.3 percent brand share.

Potential for New Entrants - Medium

Gardenia might have achieved economies of scale since it has already been

running 4 plants nationwide. There is also a specific formula and ingredients needed

for each product line. The company is running for 25 years now, so we can say that

Gardenia is experienced enough in its industry. Gardenia is also a brand owned by

QAF Limited that also operates in Australia, Malaysia, Singapore, and others so

Gardenia is a famous brand and has strong brand preferences. The capital

requirements are not very high since there are small businesses playing in the

bakery industry. The distribution of products is very widely implemented throughout

supermarkets, convenience stores, and sari-sari stores locally. In the PESTEL

Analysis, one political/legal factor that was given was the laws and regulations on

food and health safety. This is also a requirement for new entrants which is already

been observed by Gardenia. Gardenia also was recently awarded Outstanding

Employer and Taxpayer Awards. This means that regulations on wages for

employees and payment of taxes are being strictly complied with. Gardenia also

stated that their products, ingredients, processes, and facilities are in accordance

with HALAL requirements and standards that comply with statutory and regulatory

requirements. They also have an ISO9001:2015 quality certification award.

The prices of the products are reasonable and affordable given their quality and

branding. Some competitors such as Rebisco and Monde Nissin which is a cookie

and cracker industry but can be included as competitors because they are all

26
pastries and are all big companies.

Bargaining Power of Suppliers - Strong

Gardenia is a food and beverage business which means that its products are

from commodities such as wheat. Gardenia operating for about 25 years now can be

a factor for suppliers to continuously supply them. Also having a good credit score

and sales margin can attract more suppliers in the bakery industry.

Bargaining Power of Buyers - Strong

Customers are ranging from children to senior citizens. They also offer

different kinds of products such as white bread, low-fat bread, whole grain bread,

flavored bread, sandwich bread, and cereal bread. There are also products

specifically for children such as Muffins, Fun Buns, Toasties, and Bread Rolls. For

older customers, there is also a healthier option which is raisin bread, wheat bread,

pandesal and buns, and white bread. For white bread, there are different versions;

the Classic and the Neubake which is the cheaper alternative to the Classic.

Potential for Substitutes - Weak

There has yet to be information about the company’s market shares. They

have a very high marketing aggressiveness with their colorful packaging with

different colors for every product. There is also a variety of baked products offered

for a lower price.

VI. Competitive Profile Analysis

Key Competitors of Gardenia Bakeries (Philippines) Inc.

27
Competitor #1 Golidlocks Bake Shop Inc.

Milagros, Clarita, and their sister-in-law Doris made the decision to start a

modest bakery on Pasong Tamo Street in Makati in 1966. Maria Flor, the third sister,

recommended naming the company "Goldilocks" after the main figure from a fairy

tale. The name of the bakery was chosen with the purpose of helping children and

their mothers remember it, as well as because it denoted luck and prosperity.

Goldilocks is also the 2nd highest brand share in the baked goods market just below

Gardenia. My reason for choosing this competitor is because both of them provide

the same products in the market such as bread and other baked products.

Competitor #2 MLM Foods Inc. Fortune Bakeshop

Fortune Bakeshop is owned by MLM Foods Inc. which also produced baked

goods in different locations in the country. Fortune Bakeshop started its operations in

1974. Since 1985, MLM Foods, Inc. has been supplying the Philippines with

premium breads and processed meat products. By 2025, it wants to be the most

admired and favored food manufacturing company, according to its five-year plan.

Competitor #3 Marby Food Ventures Corporation

Marby Food Ventures, a pioneering business in the Filipino baking sector that

was founded in 1976, is entirely manufactured and operated by Filipinos, for

Filipinos. Para sa Bayan, in fact. Since the 1970s, the business has offered baked

goods that are regarded as the industry standard for quality by the bakery sector, as

well as being affordable and available to the average home, making the Marby name

well-known across the nation. The reason why I chose this as a competitor is its

white bread alternative which is more affordable.

28
6.1 Critical Success Factors

CSF#1 Quality products

The quality of the products is essential because this determines how well the

product is made, the healthiness of the product, and how good the product tastes.

This also facilitates a good reputation, higher brand value, and compliance with the

standards of the industry. Securing and maintaining the quality of production also

gives employees motivation. This will make them more inclined to their job as they

see it ethical hence, lowering employee turnover.

Importance Weight: 0.3

CSF#2 Price Competitiveness

The quality of the products is essential because this determines how well the

product is made, the healthiness of the product, and how good the product tastes

Price can be an important factor in the strength of a business because this is what

the customers are going to pay for.

Importance Weight: 0.2

CSF#3 Market Share

This is an important factor to see how significant is the business.. A higher

market share means the firm dominates its market, gaining more popularity and

sales. Market share also indicates how profitable a company is.

Importance Weight: 0.2

CSF# 4 Production efficiency

Sales are lost when they cannot be brought to end buyers so availability and

quantity are important to make sure that everyone can buy your products. With

29
efficient production, the firm can cut its costs and achieve economies of scale.

Investment in factories and equipment for large companies may be beneficial to

facilitate faster production. These assets also need to be maintained because of

depreciation and require periodic inspection.

Importance weight: 0.15

CSF#5 Product Line

The product line is only 0.15 because this can only affect customers'

preferences and other buying habits. A firm can increase its market if they will also

offer products that can cater to different consumer wants. With new product lines,

your firm can attract new customers and improve productivity by not just producing

one kind of product. However, developing a new product line can be costly, and

requires a research & development team, and marketing support for it to have

recognition and reach customers.

Importance Weight: 0.15

Gardenia Bakeries CSF Ratings

CSF#1 Gardenia’s Product Quality (4)

Gardenia’s products are always delivered to stores freshly baked. With their

“Guaranteed fresh” seal, it guarantees that the bread is new. Gardenia in their first

years of operation had already developed their own research & development team

that allowed them to come up with their own unique recipe of white bread.

Gardenia’s white bread had this saying “Masarap kahit walang palaman.” and made

it their tagline for their class white bread. They also provide a color-coded G-lock

which is a piece of plastic that is used to seal their packaging. The different colors of

30
G-lock are distinct as to the date of production of each loaf. The colors are matched

with the days of the week from Monday to Sunday. Their products are also made in a

factory that maintains the process of making bread, making the quality of each loaf of

bread consistent.

CSF#2 Gardenia Bakeries’ Price Competitiveness (3)

Gardenia Bakeries’ Philippines products are priced on different kinds of

product lines. Mr. Simplico Umali Jr. admitted that they are pricing their products at a

premium just and still able to sell and remain dominant in the market.

CSF#3 Gardenia Bakeries’ Market Share (3)

From the last 2021 annual report of QAF Ltd, there was a contraction in the

total bread market by 8% and there are new aggressive competitors. Despite this,

Gardenia Bakeries Philippines maintained its leadership in the packaged bread

industry with a market share of more than 65%

CSF#4 Gardenia Bakeries’ Production Capacity (3)

With top-of-the-line factory equipment, Gardenia is able to produce 10,000

bread loaves per hour. This will be distributed to different parts of the country

including rural areas and provinces. There are times when products cannot be sold

because they are near the expiration date. These will be pulled out from the

inventory of the store and replaced with a new one. Gardenia is able to replace the

old batches with new ones due to their productive bread process and factory.

CSF#5 Gardenia Bakeries’ Product Line (4)

Gardenia is strictly in the industry of bread and baked goods with flour as the

main ingredient. Gardenia offers different kinds of bread products such as pandesal,

muffin, wheat bread, bread spread, etc. Gardenia Bakeries Philippines also just

launched a new brand line that is called Bakers Maison by Gardenia. This is a

31
different franchise by Gardenia that also sells bread but is more innovative.

6.1 Competitive Profile Matrix (CPM)

Critical Weight Gardenia Bakeries Goldilocks Bake MLM Foods Inc.

Success Shop Inc.
Factors
Rating WTD Rating WTD Rating WTD
Score Score Score

1. 0.3 4 1.2 4 1.2 3 0.9

Quality
products

2. Price 0.2 3 0.6 3 0.6 4 0.8

competiti
veness

3. Market 0.2 3 0.6 3 0.6 2 0.4

Share

4. 0.15 4 0.6 3 0.45 3 0.45

Producti
on
efficiency

5. 0.15 4 0.6 4 0.6 3 0.45

Product
Line

Total 1 3.6 3.45 3

6.2 EFE Matrix

Key External Factors Weight Ratin Weighted

g Score

Opportunities

Packaging Innovation 0.1 4 0.4

E-commerce convergence 0.06 2 0.12

Buying Habits 0.1 4 0.4

Cultural diversity 0.05 3 0.15

32
 Laws and regulations on food 0.07 4 0.28

Water source 0.06 4 0.24

Educational attainment 0.07 3 0.21

Inflation decreased from 6.6% in April to 6.1% in 0.04 3 0.12

May

Interest Rates 0.04 3 0.12

Threats

Climate and Weather 0.11 4 0.44

Russian war in Ukraine 0.07 2 0.14

Plastic usage 0.07 2 0.14

COVID-19 Pandemic 0.06 3 0.18

Competitors 0.1 4 0.4

Total 1.00 3.34

Opportunities and Gardenia Bakeries’ responsiveness

O1 - Packaging Innovation

Rating 4 - Gardenia’s products as mentioned acquired the image of an

international brand. As of an interview with Mr. Simplicio Umali, the story behind the

design of the packaging is that the consumers want something that is imported and

looks premium. Today, Gardenia Bakeries’ eye-catching design is what keeps the

customers attracted to their product

Weight: 10% is given because the packaging is what the consumer first sees

before they buy a product. It must be something catchy and attention-grabbing for

customers to be attracted and try the product. This also talks about the material that

is used for the packaging which is plastic that is in fact the only material that will

keep the product sealed fresh without deteriorating the quality.

O2 - E-commerce convergence

33
 Rating 2 - Gardenia Bakeries’ e-commerce is developing but is still not good

as others with built-in e-commerce website that is interactive and straightforward.

Gardenia Bakeries’ e-commerce is through Lazada and Shopee which is a third-

party application. With this, Gardenia may increase or lower their cost depending on

the commission fee of the third-party application.

Weight: 6% is given because e-commerce is now very popular and because

of the pandemic, people tend to order things online. With a better e-commerce

system that is inculcated inside their website directly, it will be easier for buyers to

order without them being redirected to third-party application such as Lazada and

Shopee.

O3 - Buying Habits

Rating 3 - Different buying habits is what facilitates the sales for Gardenia

Bakeries’. Health and diet trends plays an important role for the company since there

are people who tend to consume bread than rice. According to an interview from

Simplicio Umali Jr, Gardenia President, Gardenia products are enriched with

vitamins and minerals that are healthier than rice.

Weight: 10% is given because it is important because there is a need to do

something in the buying habits of consumers that will make them buy more bread

products. Rice is still more popular but there is a fact that Gardenia bread products

are more beneficial when it comes to vitamins and minerals that might make

consumers lean to a more healthy lifestyle.

O4 - Cultural Diversity

Rating 3 - Gardenia has a Halal certification that indicates that their products

adhere to the Islamic law.

Weight - 5% is given due to the diverse cultural beliefs in the Philippines and

34
that may also arise due to an increase in tourists and migrants.

O5 - Laws and regulations on food

Rating 4 - For 16 years, Gardenia started small and became successful as

their parent company introduced Gardenia to the Philippines until now, Gardenia has

been complying with laws and regulations on food safety such as the Food Safety

Act of 2013 where food businesses are required to ensure requirements of food law

to eliminate risk. In the latest report of Gardenia’s parent company, QAF Ltd., it was

reported that “there were no findings of significant incidents of non-compliance

during the 2021 audits.”

Weight - 7% is given because it is a must in every food business. Neglecting

the laws won’t give the firm to operate.

O6 - Water source

Rating 4 - Assuming that the quality of the bread products of Gardenia did not

change at all, then they have a good water source that is being used as ingredients

for their bread products.

Weight - 6% is given due to its crucial effect on the quality of products. Getting

a quality water source and considering the factors that were mentioned, will affect

the quality of bread.

O7- Educational Attainment

Rating 3 - Gardenia’s management program such as the “Weight for Me”, a

three-month program designed to help employees achieve lower BMI by promoting

regular physical activity and diet (QAF Ltd. 2021). There is also a “Covid-19

Preventive Measures Programme” that give employees free face masks, hand

sanitizers, alcohol wipes, and multivitamins. Gardenia Philippines also gave

35
employees an option to increase their PAG-IBIG voluntary contributions (QAF Ltd.

2021). The reason for this is for the employees to take advantage of the

government’s housing loan program and allow the employee to increase

contributions to borrow the maximum allowable housing loan from the government.

With these kinds of employee benefits, the firm can attract and retain more educated

employees.

Weight - 7% is given due to the lack of employees in the firm. This is also the

basis of the unemployment rate in the country. An educated employee is important to

maintain the firm’s values.

O8 - Inflation decreased from 6.6% in April to 6.1% in May

Rating 3 - Keeping a high level of production is the current strategy of Mr.

Simplicio Umali Jr. As per Mr. Umali, by increasing volume, they are able to spread

their fixed cost. Since inflation rates are getting low, this can be a positive thing for

the company and further reduce its input costs.

Weight - 4% rating is given due to the stabilizing economy and a potential lower

inflation rate in the future.

O9 - Interest Rates

Rating 3 - Lower interest rates might affect the decision of Gardenia to further

improve or expand its assets.

Weight - 4% rating is given due to its minor effect on decision-making of firms.

Threats and Gardenia Bakeries’ Responsiveness

T1 - Climate and weather

Rating 4 - Despite changes in climate and weather that can be a factor of

change in the quality of raw ingredients, Gardenia still manages to keep their bread

quality consistent.

36
Weight - 11% is given because when it comes to quality, Gardenia holds the title. A

slight change in the quality of raw materials might affect the final product.

T2 - Russian War in Ukraine

Rating 2 - With commodities increasing in price because of the Russia-

Ukraine war, it is also a factor that will affect the costs of the firm when it comes to

raw ingredients. As mentioned, Gardenia is keeping their production high to control

and absorb its fixed cost while bread consumption sales in the country are declining.

Once the society had recovered, high volumes can be further sold and offered to

consumers.

Weight - 7% rating is given due to its inevitable effect on the world economy.

This increases trade barriers, especially in the Euro areas. Hence, this limits the

supply that is coming from countries affected by the war.

T3 - Plastic usage

Rating 2 - Gardenia Bakeries claim that they continue using plastic in the

packaging of their products to ensure its freshness because there is no other

packaging material that is as effective as plastic. The research and development

team is engaged in the development of eco-friendly packaging that will be an

alternative to plastic that will not affect the quality of the bread products. Gardenia

Bakeries hopes to finalize this new packaging by 2022 (QAF Ltd. 2021).

Weight - 7% rating is given due to the effect of plastic and other non-

biodegradable waste on the environment. A goal of business is not only to make a

profit but also to consider the triple bottom line which is profit, people, and planet.

T4 - COVID-19 Pandemic

Rating 3 - Considering the pandemic as a global crisis, in general, it gave

problems to every business and the whole economy but with Gardenia, they were

37
able to open opportunities as per Simplicio Umali Jr. He stated that the pandemic

made them expand and improve their products that consumers demanded during the

pandemic which improves overall health and products that are enriched with

vitamins. Hence, Gardenia Bakeries brought back their healthy option products and

made a new type of product that has the NutriPlus concept which is basically a

healthier bread that offers different flavors. Despite the threat of COVID-19,

Gardenia was already prepared for a crisis like this because of the prior outbreak,

SARS, in the early 2000s. Gardenia has a set of protocols that are very strict to

ensure safety and health risks. They also provided vehicles that directly pick up their

employees to bring them to the factory. Gardenia Bakeries also improved its digital

networks to allow employees to be digitally connected and continue their work from

their homes.

Weight - 6% is given due to its crucial effect. Many businesses closed

because of the threat of the virus and since people cannot go out, sales were

significantly declining. A business that cannot adapt to the pandemic will not survive

and discontinue its operations due to unacceptable losses.

T5 - Competitors

Rating 4 - In the latest statistics available in Euromonitor, Gardenia Bakeries

is above its all competitors such as Goldilocks and Fortune Bakeshop. Gardenia is

leading with 16.9% company shares of Baked Goods followed by Goldilocks Bake

Shop Inc with 8.4% company share of Baked Goods. Technically speaking, Simplicio

Umali Jr. stated in an interview with Tribune Now, that the real competitors of

Gardenia Bakeries are rice products because the rice consumption of Filipinos is

38
significantly higher than bread. Since bread is an alternative to rice for most Filipinos

and Filipinos tend to eat more rice, there is a low bread consumption in the country.

However, if we are only going to talk about the bread industry and bread businesses,

Gardenia Bakeries is still at the number one spot.

Weight - 1% is given due to its importance. This shows the level of the firm’s power

in the industry.

VII. Company Analysis

6.3 McKinsey 7S Framework

Strategy

One of the biggest and most cutting-edge bread production facilities in the

nation, Gardenia Philippines opened its first cutting-edge plant in Laguna

International Industrial Park (LIIP) in Bian when it first established its facility there.

The company achieved economies of scale for its efficiency in production capacity

resulting to lower costs. With research and development, the quality of the products

of Gardenia became the standard to many Filipinos. Their style of packaging also

made it premium and luxury-looking with American colors since many Filipinos tend

to have mentality and tendency to patronize imported or fancy products. With that,

Gardenia had this top-of-the-mind recall when it comes to classic white bread.

Evaluation: Effective

Shared Values

Quality and word-class manufacturing facilities and processes is in Gardenia’s

39
mission statement. This creates values through offering good working environment

for employees, business partners, financial institutions, suppliers, and the community

and deemed beneficial.

Evaluation: Effective

Gardenia is being sold at almost all supermarkets but due to the pandemic,

there had been slow downs in sales due to the limitation of consumers to go outside

and buy what they need. Being a reputational company and having good values,

they are able to still distribute their products in community stores such as sari-sari

stores that are more accessible to homes and villages.

Structure

1. President

a. Sales

i. Business Development

ii. Accounts

b. Marketing Department

i. Digital Marketing

ii. Retail Marketing

iii. Production and food Safety

iv. Document Controller

v. Employee Engagement and Relations

vi. Production Manager

vii. Production Supervisor

c. Finance Department

40
 i. Purchasing

ii. Controller

iii. Financial Analysis

iv. Accounting Specialist

v. Billing and Collection

vi. Accounts Receivable

vii. Branch Accounting

d. Human Resources

i. Talent Acquisition

ii. Training

iii. Operator

iv. Recruitment

v. Communications

e. Product & Engineering

i. IT Projects

ii. Software Developer

iii. Programmer

iv. Helpdesk Support

v. Management Engineer

vi. IT Quality Control

vii. Software Analyst

f. Legal

g. Health

h. Operations

41
The structure of Gardenia is adequate enough to cover all the management needs.

Evaluation: Adequate

Systems

As mentioned, Gardenia has their own research and development team that

works on the formulation of its products to maintain its competitive quality. This is the

strength of the company that they are taking advantage of to penetrate markets and

continue to hold the leading bread brand title.

Evaluation: Excellent

When it comes to quality, Gardenia never fails to offer products consistently in

good quality. They are effectively utilizing their assets such as their top-quality plant

which is their main asset for production and their packaging which keeps their

products fresh. This makes Gardenia true to their mission, to be the premier bread

brand in the industry.

Style

Gardenia Bakeries’ management is very productive and challenging. This

makes a more stressful environment inside the workplace and might affect the

performance of employees. Thus, even though the management is stressful,

Gardenia Bakeries compensates for this by giving employees materials that can

facilitate their motivation and somewhat fulfilling work experience. Gardenia Bakeries

is also known for giving their staff simultaneous tasks forcing employees to multitask.

Evaluation: Needs Improvement

42
 The work-life balance of employees is lacking because of the 12-hour shift,

holiday and weekend work, multi-tasking, and high turnover rates. This makes the

company productive and effective but the employees might be affected negatively

when it comes to their physical and mental health. A higher salary is also needed to

increase employee motivation and empowerment.

Staff

A workplace with adequate benefits and enough to compensate for the

productive and stressful environment is important to keep the employees motivated.

But it is also important to have the right employee who will work in the different

department and make sure that they are capable and has the skill that is compatible

with a particular job. Seeking a compatible employee is important but it is also

important to have adequate employees. The employee recruitment is la

Evaluation: Needs Improvement

Many employees are complaining that there are low employees inside the

company. With less employees, there will be low manpower and it will be hard for

current employees because this will force them to work harder and longer due to lack

of manpower. HR team should find ways to recruit more employees to make the

employees’ task easier and less stressful.

Skills

Based on the Indeed employee reviews from former and present employees

of Gardenia Bakeries, internal and external training are provided. Employee training

is extensive and very helpful hence the very challenging workloads. Gardenia

43
Bakeries is the leading brand in the bread industry making it very competitive and in

order to maintain its competitiveness, a competitive environment is also required.

Evaluation: Good

Employee skills is what’s making the company excel in the industry.

Gardenia’s is doing its job in making the employees competent and excellent. With

extensive training, junior employees can be trained to be professionals and future

managers.

6.4 Internal Factor Evaluation

Strengths:

Products Design

Rating: 3 - Gardenia’s creative design looks more like it's an American brand

because of its classic red, blue, and white colorway. it is more likely to be bought by

Filipinos. Filipinos tend to buy what looks good and also tastes good. The colors of

each product also vary which allows customers to distinguish the kind of product

easily.

Advanced Plant Technology

Rating: 4 - Gardenia’s factory is one of the most advanced and efficient

factories in the country. With their factory, they are able to produce from 6,000 to

10,000 loaves of bread per hour. According to an article back in 2016, Gardenia also

expanded their local plant which was valued at P1 billion. This plant is capable of

producing 150,000 loaves per day.

44
Good Employee Treatment

Rating:3 - From different sources such as Jobstreet, there are online reviews

and ratings that we can get from former and present employees of Gardenia. There

are 51 reviews and an average of 3.98 stars out of 5. All of them are about salary &

benefits. This means that the majority of these reviews are positive when it comes to

employee treatment and benefits that Gardenia provides to their workers.

Product Line

Rating: 3 - Gardenia’s product line is very wide. Even though their main

product is bread and they are strictly leaning toward their industry, they have a wide

variety of bread that customers can choose from and also varies from the kind of

customer. Their products are classic white bread, High Fiber Whole Wheat Bread,

High Fiber Wheat Raisin Loaf, High Fiber Wheat Cranberry Loaf, California Raisin

Loaf, Chocolate Chip Loaf, Double Delights Ube & Chees Laof, Double Delights &

Strawberry Loaf, Amazing Black Forest Loaf, Amazing Butterscotch Loaf, Premium

Pandesal, Soft Delight Pandesal, Whole Wheat Pandesal, Clustered Pandesal,

Cheese Buns, Choco Chip Brioche Bun, Multigrain Soft Bun, Chocolate fun Bun,

Ube Fun Bun, Chocolate Muffin, Blueberry Muffin, Banana Choco Muffin, Butter

Toasties, Butter Toast 5 Slice Pack, Butter Toast 2 Slice Pack, NeuBake White

bread, NeuBake Wheaten Bread, Neubake Monggo Bread Roll, Neubake Choco

Bread Roll, NeuBake Spanish Bread. Some of their products which are also their top

sellers have different sizes that can affect the buying preferences of customers

depending on their household sizes. Gardenia also have a new by product, Bakers

Maison that offers new and innovative kinds of bread in the market such as choco

crinkles, red velvet cookies, and their new frozen breads.

45
Weaknesses

Factory location

Rating:2 - The location of the factory of Gardenia is in Binan, Laguna which is

a rural area. Also, the factories are located in select regions such as Laguna,

Pampanga, Cebu, and Misamis Oriental. Shipping bread to more isolated areas that

are not within the reach of their factories will limit their market and will not reach

more customers. Also, shipping products to these far areas can affect the quality and

freshness of the bread if it will take a longer time for them to reach the final

consumers.

Packaging seal

Rating:1 - The packaging seal of Gardenia which they call the G-lock is a

unique way of packaging and is known for its resealable feature. This is a good thing

but also a bad thing. Using the G-lock is easy and convenient but it also raises a risk

for people especially those who are in charge of handling the packed products to

easily open the package and get pieces of product. This was the case back in

September 2019, when there was a viral video of one of Gardenia’s employees

opening the packed products and stealing pieces of bread from different packaging

to make it not look obvious. This caused many people to switch from different

alternatives. These kinds of cases cannot be ignored because if they will not do

something about this, it will continue to happen especially when people are not

aware.

Price

46
 Rating:2 - When it comes to price, Gardenia sells their products at a

premium. This was also admitted by the President of Gardenia, Mr. Simplicio Umali

Jr. that they sell their products at high prices in the market. The reason for giving

high prices to their products is simply because of their high quality and fresh bread

products. But because of people’s purchasing power especially here in the

Philippines, many low-income families tend to lean more toward cheap products than

those expensive ones when it comes to their needs. Bread is also a type of food that

can be enjoyed with different kinds of filling that can alter the taste of the bread itself.

Hence, the quality or taste of the bread may not matter to others but rather the price

of it.

Company website

Rating: 2 - The website of Gardenia is lacking on the e-commerce side.

When you try to buy products directly from their website, they will redirect you to a

different merchant such as Lazada and Shopee. I think a personal and own e-

commerce that will allow users to order directly from the website, without the need to

log in an account, a customer can just fill in their information and place their order.

When their order is finalized, they will receive an email and will contact them about

the status of their order. They can also provide their own logistics which will deliver

the products directly without the need to outsource other logistics companies. I think

this can be a better approach to also lessen their costs from commission fees and

other additional costs from other entities.

Advertising

Rating: 2 - The advertising can still be improved by being more active in

47
social media accounts that can engage with modern trends. With this, they will be

more noticed or gain more exposure from the public.

6.5 IFE Matrix

Strengths

Key Internal Weight Rating Weighted Score

Factors

Strengths

Products Design 0.09 3 0.27

Advanced Plant 0.14 4 0.56

Technology

Good employee 0.12 3 0.36

treatment

Product Line 0.12 3 0.36

Quality control 0.15 4 0.6

Weaknesses

Factory location 0.10 2 0.2

Packaging seal 0.06 1 0.06

Price 0.12 2 0.24

48
 Company website 0.05 2 0.1

Advertising 0.05 2 0.1

Total 1.00 2.85

Gardenia’s product design is very eye-catching because of its colorful and its

American looking packaging. Their production capacity is also very good because

according to their website, their factories produce 6,000 loaves of bread every hour

and they have 4 plants in different areas in the country. They have a 6k plant that is

the largest and most advanced technology today that allows them to deliver high

input and efficiency. They also recently received an award last June 18 on

Outstanding Employer and Taxpayer awards. These awards reflect their high

commitment to quality not only in their products but also in HR and operations.

Gardenia also has a good product line being offered keeping in consideration the

demographical differences in different areas in the country. There are many kinds of

bread to choose from that attract young and older audiences. Their quality is one of

the best in the bread business. They have been awarded a certification by

International Organization for Standardization which means that they have a world-

class Quality Management System. This assures the high quality of their products in

the market. Their products aren’t only good tasting but also very healthy.

On the other hand, Gardenia has areas that are lacking. The location of their

factories is in a rural area which will affect the time of delivery longer to reach the

49
market. There is also an issue with their packaging seal last September 2019 that

involves an employee opening their products and getting pieces of bread. This

became viral and affected the image and reputation of Gardenia because this

doesn’t only violates the work ethics of Gardenia but also the health of the

consumers. They can be forced to change their product packaging for a more secure

seal. They are also using plastic seals that may harm the environment. Gardenia’s

pricing is reasonable for their quality but being bread as their primary product, there

are lots of substitutes to bread that are cheaper. Their famous brand also contributes

to their high pricing of products. Their website can also be improved when it comes

to customer inquiries. Lastly, their advertising can also still be improved to reach

more platforms and gain more audience.

VII. Strategy Formulation

7.1 SWOT Matrix

SWOT Matrix Strengths Weaknesses

1. Products Design 1. Factory location

2. Advanced Plant 2. Packaging seal

Technology 3. Price

3. Good employee 4. Company website

treatment 5. Advertising

4. Product Line

5. Quality control

Opportunities SO Strategies WO Strategies

50
Packaging Innovation S1-S2, O1 - Invest on W2,O1- Research on how

new technologies that can to achieve better

improve current factory packaging seal that is

efficiency and capacity more secure and safe

E-commerce convergence S4,O2 - Establish own W1,O2- establish physical

logistics and online stores nationwide to make

payment option for online products available to

transactions on own more customers

website

Buying Habits S1,O3- To make products W5,O3- Collaborate with

that have a more other franchise that

distinguished target directly target trends that

market that will attract will pull customers into

current market trends buying the product

Cultural Diversity S1 & S3,O4 - Develop W3,O4- Open a new

products that are lawful to product line that allows

all consumer beliefs and the company to reduce

work values that respect cost and lower price

other cultural beliefs.

Laws and regulations on S2 & S5, O5 - Observe W2, O5 - Replace

food strict ethical values in the packaging seal that is

workplace and have clean more secure and air tight

and safe working to avoid compromisation

51
 environment that adheres of products

to policy on food products

Water Source S5 & O6 - Hire employees W1, O6 - Install a cleaner

that will take care of water source for use in

quality of water used for the factory

the ingredients to make

sure quality is attained

Educational attainment S3,O7 - Raise employee W4,O7- Seek an IT

benefits and integrate professional that will

extensive trainings to gain improve the company

more skilled employees website

and employee retention

Inflation decrease from S4, O8 - Increase W3, O7 - Acquire

6.6% in APril to 6.1% in production of necessary company company who

May products to increase sales will provide raw materials

to reduce costs and to

lower price

Interest Rates S2, O9 - Improve capacity W1, O9 - Borrow from

of factory and conduct banks for financing for

frequent factory building of physical stores

inspection and repair

Threats ST Strategies WT Strategies

52
Climate and Weather S4,T1- Cut product lines W2, T1 - Avoid packaging

that are costly and focus seals that are easily

on product that are more affected by temperature

profitable and available and humidity

Russian war in Ukraine S2, T2- Reduce on W3,T2 - Lower price to

capacity during inflation to increase purchasing

control and lower variable power of consumers

costs

Plastic Usage S1,T3 - Make a program W2, T3 - Make

that will allow company to biodegradable packaging

collect used bread seals

packaging for recycling

COVID-19 Pandemic S5, T4 - Maintain W5, T4 - Include more

production quantity to information about health

push more sales despite benefits of products in

decline in bread advertisements to pull

consumption consumers to a healthier

lifestyle

Competitors S4 & S5,T5- Consistently W1, T5 - Establish more

produce products with physical stores locally

consistent quality despite (NCR and other

competitors’ lower prices metropolitan areas) for

53
 to suffice customer more exposure and bring

satisfaction pressure to current

competitors

7.2 Integration Strategies

Forward Integration.

W1,O2- establish physical stores nationwide to make products available to more

customers

W1, T5 - Establish more physical stores locally (NCR and other metropolitan areas)

for more exposure and bring pressure to current competitors

W1, O9 - Borrow from banks for financing for building of physical stores

W3,T2 - Lower price to increase purchasing power of consumers

Horizontal Integration.

W1, O6 - Install a cleaner water source for use in the factory

Backward Integration:

W4,O7- Seek an IT professional that will improve the company website

W3, O7 - Acquire company company who will provide raw materials to reduce costs

and to lower price

Intensive Strategies:

Market Penetration.

54
S1 & S3,O4 - Develop products that are lawful to all consumer beliefs and work

values that respect other cultural beliefs

S1,O3- To make products that have a more distinguished target market that will

attract current market trends

S5 & O6 - Hire employees that will take care of quality of water used for the

ingredients to make sure quality is attained

S4, O8 - Increase production of necessary products to increase sales

Market Development.

S4 & S5,T5- Consistently produce products with consistent quality despite

competitors’ lower prices to suffice customer satisfaction

Product (Service) Development.

S2 & S5, O5 - Observe strict ethical values in the workplace and have clean and

safe working environment that adheres to policy on food products

S3,O7 - Raise employee benefits and integrate extensive trainings to gain more

skilled employees and employee retention

S2, O9 - Improve capacity of factory and conduct frequent factory inspection and

repair

W5, T4 - Include more information about health benefits of products in

advertisements to pull consumers to a healthier lifestyle

W2,O1- Research on how to achieve better packaging seal that is more secure and

safe

W3,O4- Open a new product line that allows the company to reduce cost and lower

55
price

Diversification strategies:

Related Diversification.

S1-S2, O1 - Invest on new technologies that can improve current factory efficiency

and capacity

W2, O5 - Make and replace packaging seal that is more secure and air tight to avoid

compromisation of products

W2, T1 - Avoid packaging seals that are easily affected by temperature and humidity

W2, T3 - Make biodegradable packaging seals

S3,O7 - Raise employee benefits and integrate extensive trainings to gain more

skilled employees and employee retention

Unrelated diversification.

S4,O2 - Establish own logistics and online payment option for online transactions on

own website

S1,T3 - Make a program that will allow company to collect used bread packaging for

recycling

Defensive Strategies

Joint Venture.

W5,O3- Collaborate with other franchise that directly target trends that will pull

customers into buying the product

Retrenchment.

56
S2, T2- Reduce on capacity during inflation to control and lower variable costs

S4,T1- Cut product lines that are costly and focus on product that are more profitable

and available

7.3 SPACE MATRIX

The Strategic Position and Action Evaluation or SPACE Matrix is a strategy

matching tool. It has four quadrants which indicates whether aggressive,

conservative, defensive, or competitive strategies are the most appropriate for a firm.

The SPACE Matrix represents two internal and two external dimensions. For Internal

dimensions, there is financial position (FP) and competitive position (CP). For

external dimensions, there is stability position (SP) and industry position (IP). These

factors may be the most important basis of a firm’s overall strategic position.

A. Financial Position (FP) +1 (worst) to +7 (best)

Cash Ratio (Cash ratio of Gardenia Bakeries is 0.86 for the FY 2021): +1

Gardenia’s Cash Ratio or also known as Acid-Test ratio is the ratio of current assent

less inventories over current liabilities. This measures the firm’s liquidity and how

much the firm can pay its debts with cash. In this case, Gardenia has 0.86 cash for

every 1 liability. This means that Gardenia does not have enough cash to fulfill their

short-term liabilities.

Debt-Equity Ratio (Debt-Equity Ratio of Gardenia Bakeries is 1.34 for FY

2021): +2

57
To interpret this, for every 1 peso of the firm’s equity, the firm owes 1.34 pesos of

debt to creditors. Hence, the company has greater liabilities than equity and might

not be in a good position to cover its debts.

Times Interest Earned (Times Interest Earned of Gardenia Bakeries is

1.08:1 for FY 2021): +2

This means that Gardenia Bakeries pay their interest 1.08 times in a year. This

number is relatively low when compared to the ideal TIE. Gardenia Bakeries can be

burdened with interest if they cannot pay their annual interest. A low TIE ratio can

affect relationships with business partners such as suppliers (Cook, n.d.).

Working Capital (Working capital for the FY 2021, Gardenia Bakeries has

over P148M): +4

This is the difference between the firm’s current assets and current liabilities.

Gardenia Bakeries has P148M of working capital. This isn’t always a good thing

because it might tell us that the firm is holding too much inventory, not investing its

current cash, or not capitalizing on low-expense debt opportunities. All of these can

hinder the firm’s liquidity and how well it can utilize its short-term assets to fund its

operations and invest for future growth (Fernando, 2023).

Return on Assets (Return on Assets of Gardenia Bakeries is negative

0.0990 or -9.90% for FY 2021): +1

You can get the return on asset by dividing the net income of the current year by the

average assets of the firm (beginning total assets plus ending total assets). This

means that for every 1 peso of the firm's total average assets, there is a -0.099 peso

net income. The result is negative meaning that the firm is incurring loss for the

current financial year available.

58
 B. Industry Position (IS) +1 (worst) to +7 (best)

Growth potential. Gardenia Bakeries is still leading in the industry of baked

goods. As reported in the recent country report in Euromonitor Gardenia Bakeries

(Philippines) Inc. is the leading player in 2022, with a retail value share of 17%.

Russian war on Ukraine also affected the industry market and caused skyrocketing

prices of raw materials such as sugar, margarine, milk, etc. Bread sales volumes fell

by 0.4% while still incurring high costs, but higher retail prices resulted in growth in

value sales by 5.9%. To address the high costs of materials, Gardenia Bakeries Inc.

slightly shifted their raw materials and used coconut flour which was popularized by

a group of commercial bakers by using 90% flour and 10% coconut flour in their

products. Hence, the rating for Gardenia Bakeries’ growth potential is 6.

Declining bread consumption. The pandemic affected the overall growth of

the industry and this gave Gardenia a negative growth in 2020-2021 but is currently

recovering. During 2020, the pandemic induced people into home-baking rather than

going outside to buy bread and get exposed to the risk of getting the virus. This trend

slowed down during 2021 as the situation also slowly returns to normal and stores

were reopening. With Gardenia Bakeries remained to be the leading bread brand

and recovering from these situations, it is given a rating of 5.

Ease of Entering the Market. With adequate capital, a bakery business is

quite easy to start. You will only need proper equipment for baking, a place where

your bakery can operate. Its overall costs are dependent on the owners' experience

and the goal to penetrate to market. Hence, in the case of Gardenia, as the leading

bread brand in the country and with its goal to be the best bread brand, the new

59
entrants will require years of experience and expansion in order to have a

competitive role in the industry of bakery. With that, Gardenia’s rating for ease of

entering the market is 7.

Productivity. As mentioned, Gardenia Bakeries is the top manufacturer when

it comes to bread production with their 4 plant factories located in central areas in

different regions of the country. With factories that are capable of producing 150,000

loaves of bread per day, there is little to no possibility that they will run out of supply.

The rating for Gardenia for productivity is 6

Availability of Substitutes. As mentioned, the bread industry is an industry

that is easy to enter. There are many artisanal bakeries all over the country. The

artisanal baked goods shares are at 38.8%. Comparing that with Gardenia’s % share

in the baked goods category which is 16.9%, it is indeed that Gardenia’s share is

small against the artisanal bakeries. The rating for Gardenia regarding the availability

of substitutes is 1.

C. Competitive Position (CP) -1 (best) to -7 (worst)

Location. The location of Gardenia Bakeries is mainly in retail stores such as

supermarkets, hypermarkets, and some convenience stores. In the interview of Mr.

Simplicio Umali Jr. with the Daily Tribune, he mentioned that they shifted their

strategy to bring their products to customers that are affected by the pandemic.

During the lockdown and the severe cases of COVID-19, people do not go outside

their homes so the company focused on distributing in community stores such as

sari-sari stores to make their products more accessible. Gardenia also marketed its

products through e-commerce such as Lazada, Shopee, Pandamart, and Grab

60
Supermarket to offer convenience to customers. The distribution of outlets also grew

by 31% (QAF Ltd. 2021).

With Gardenia adapting to the pandemic, they did what they had to do during

the pandemic in order to gain sale and reach as many customers as possible by

integrating e-commerce and saturating community stores. Although Gardenia shifted

to this strategy during the pandemic, since society is now going back to normal, they

can open more brick-and-mortar stores to consider physical factors in the tendency

of customers to buy such as attracting customers’ attention through looking and

touching. The rating for location is -5.

Product Life Cycle. During 2021, Gardenia responded to the demand of

consumers to improve the benefits that their products can offer. Because of the

COVID-19, many consumers shifted to a more healthier lifestyle to develop a strong

immune system. Gardenia responded to this by introducing their new Nutri+Plus

Advantage concept in its bread by relaunching the Gardenia Black Forest Loaf. It is

believed that this product is fortified with high levels of minerals such as Zinc,

Vitamins D3 and E and other vitamins that can promote overall health.

With Gardenia’s wide variety of products, they can release old product

segments in the past that didn’t receive the attention it needed. The pandemic

allowed Gardenia to once again offer this product due to consumer demands in the

market and due to societal factors such as the pandemic. The rating for product life

cycle is -2.

Capacity Utilization. Gardenia Bakeries is able to produce 150,000 loaves of

bread in their main factory in Binan Laguna. Since there was a decline in bread

consumption, there are products that do not meet end users, hence, getting pulled

out from retail stores to be replaced with new ones to ensure that customers

61
consume new and fresh bread. If Gardenia continues to follow this policy of pulling

out bread in only a span of 2 days from retail stores, they can lose sales. Proper

monitoring of the quantity that is being distributed in different areas must be precise

to avoid wastage. The rating for capacity utilization is -4

Product Quality. The famous Gardenia white bread was originally made

possible by a North American baker, Horatio Sye Slocumm or also known as Uncle

Slocumm. He was the one who developed this recipe that is being continued and

maintain until today. With Gardenia’s consistent quality despite having several

branches worldwide, Gardenia Philippines was awarded International Organization

for Standardization ISO 9001:2015 and HACCP certifications in compliance with

Quality Management System and certification for product quality (QAF Ltd. 2021).

The rating for product quality is -1.

Customer Loyalty. In an interview with Simplicio Umali Jr. in Tribune Now

(2022), customers like the softness and aroma of the Gardenia White Bread. This

consistent quality of the bread attached to Filipino consumers makes it the brand

with the highest brand share percentage in the market. Looking at statistics,

Gardenia Bakeries Inc. has a CAGR of 9.7% and retail value sales of about Php9B

out of Php57.7B of retail value sales in Baked Goods in the Philippines (Euromonitor

2022). The rating for customer loyalty is -1.

D. Stability Position (SP) -1 (best) to -7 (worst)

Technological changes. With Gardenia Bakeries (Phils.) Inc. being just a

subsidiary of QAF Ltd., it is possible to bring technological advances from its sister

companies worldwide. With these advanced products, Gardenia can make more

products to the extent of its category such as the sandwich spread. In fact, there are

products being offered in different countries that were once not available in the

62
Philippines such as the Delicia Chocolate Spread. Umali also mentioned that

retooling factories and incorporating technologies made this possible and had a

potential for more product innovation and expansion. The rating for technological

changes is -1.

Rate of inflation. The rate of inflation has been lowering from 6.6 percent in

April 2023 to 6.1 percent in May 2023. Major factors such as the Ukraine-Russia war

can affect the inflation of the country because of trade barriers. With high inflation

rates, input costs in making products will also be higher, hence increasing the sales

price and will lead to lesser competitive pricing. The rating for the rate of inflation is -

4.

Risk involved in the business. Looking at the financial position of the

Gardenia Bakeries, its liabilities are higher than its equities for the financial year

2021. This increases the risk of being unable to pay their debts. Along with the

company's liquidity, they might not have the current assets that will cover their

obligations. Hence, it is not going very well as we look at the financial position of the

company. The company is risky and for this factor, the rating that will be given is -7.

Competitive Pressure. Since not only Gardenia is affected by external

factors that also negatively affect their profits, their competitors in the industry are

also struggling to keep up. Gardenia being the leading brand in the bread market

gives them an advantage despite the low sales in the year 2021. The rating for this is

-3.

Barriers to entry into market. The bakery industry is very common,

especially in small communities and it can be easy for business owners to start their

own business. Small businesses and homemade baked goods became a trend since

the pandemic hence barriers to entry for bakery businesses are low. -6

63
Space Matrix for Gardenia Bakeries (Philippines) Inc.

Financial Position (FP) Ratings

Cash ratio of Gardenia Bakeries is 0.86 for the FY 2021: +1 1

Debt-Equity Ratio of Gardenia Bakeries is 1.34 for FY 2021: +2 2

Times Interest Earned of Gardenia Bakeries is 1.08:1 for FY 2

2021: +2

Working capital for the FY 2021, Gardenia Bakeries has over 4

P148M): +4

Return on Assets of Gardenia Bakeries is negative 0.0990 or - 1

9.90% for FY 2021: +1

Total 10

Average 2

Industry Position (IP)

Growth potential 6

Declining bread consumption 5

Ease of Entering the Market 7

Productivity 6

Availability of Substitutes 1

64
Total 25

Average 5

Competitive Position (CP)

Location -5

Product Life Cycle -2

Capacity Utilization -4

Product Quality -1

Customer Loyalty -1

Total -13

Average -2.6

Stability Position

Technological Changes -1

Rate of Inflation -4

Risk involved in the business -7

Competitive Pressure -3

Barriers to entry into market -6

Total -21

Average -4.2

65
Conclusion

X - axis (CP average + IP average) = 2.4

Y - axis (SP average + FP average) = -2.2

Space Strategy Conclusion

Competitive

Backward, forwards, horizontal integration

Market Penetration

Market Development

Product development

7.4 IE Matrix

An organizational division's income and percentage of profit are compared

using the Internal-External (IE) Matrix, a portfolio management tool, together with the

66
scores from the Internal Factor Evaluation (IFE) matrix and the External Factor

Evaluation (EFE) matrix (Samuel, 2022).

Total IFE Weighted Scores

Strong Average Weak

3.0-4.0 2.0-2.99 1.0-1.99

High I II III
3.0-4.0

Medium IV V VI
2.00-2.99
Total EFE
Weighted
Scores
Low VII VIII IX
1.0-1.99

EFE Rating: 3.34

IFE Rating: 2.85

7.5 Boston Consulting Group (BCG) Matrix

The product portfolio matrix (BCG matrix) developed by the Boston Consulting group

is intended to support long-term strategy planning by assisting a company in

considering growth potential by analyzing its product portfolio to determine where to

invest, where to cease, or where to develop goods (Hanlon, 2022).

67
 Cash Generation

High Low

High Stars Question Marks

Market Growth
Low Cash Cows Dogs

High Low

Market Share

The industry has a CAGR of 5.1% for the year 2017-2022 but the current

CAGR of baked goods is 3.

7.6 Grand Strategy Matrix

Competitive Position

Gardenia Bakeries’ competitive position is relatively high as we can see from

the conclusion of SPACE matrix mentioned. With a good research and development

and quality control team, the company maintained quality and continues to provide

satisfaction to customers.

Market growth

The sales of bread from 2020 to 2022 declined from 5.6% to 3.8% but it was

forecasted to increase over time from 2022 to 2027 (Euromonitor 2022). This is the

case for all baked goods but the majority of sales are still coming from the bread

68
category. The sales of bread have a current CAGR of 3.8%. The pandemic seemed

to be the cause of the decline in sales. The sales from 2020-2021 decreased by 2%.

Gardenia Bakeries also has a 13.9% brand share in the baked goods category

(Euromonitor, 2022). This means that Gardenia Bakeries is at the top among its

competitors when it comes to baked goods.

Market development.

Market Penetration.

Product development.

Forward integration.

Backward integration

Horizontal integration

Related diversification

Summary of Matrices for Gardenia Bakeries Inc.

69
Strategy Options SPACE IEM BCG GRAND Total

Integration Strategies

Forward Integration 1 1 1 3

Backward Integration 1 1 1 3

Horizontal Integration 1 1 1 3

Intensive Strategies

Market Penetration 1 1 1 1 4

Market Development 1 1 1 1 4

Product Development 1 1 1 1 4

Diversification Strategies

Related Diversification 1 1

Unrelated Diversification

Defensive Strategies

Joint Venture

Retrenchment

Divestiture

Liquidation

7.7 Quantitative Strategic Planning Matrix (QSPM)

Key Factors Distribute Buy/rent areas Include more

products to for Gardenia health benefits in
rural Physical stores current products
community
stores at lower
prices

Weight AS TAS AS TAS AS TAS

Opportunities

70
Packaging 0.1 2 0.2 1 0.3 4 0.4
Innovation

E-commerce .06 - - - - - -
convergence

Buying Habits .1 2 0.3 3 0.3 4 0.4

Cultural .05 4 0.2 2 0.1 3 0.15

Diversity

Laws and .07 3 0.21 3 0.21 4 0.28

regulation on
food

Water source .06 - - - - - -

Education .07 1 0.07 2 0.14 4 0.28

attainment

Inflation .04 - - - - - -
decrease from
6.6% in April
to 6.1% in
May

Interest Rates .04 - - - - - -

Threats:

Climate and 0.11 - - - - - -

Weather

Russian war 0.07 - - - - - -

in Ukraine

Plastic Usage 0.07 - - - - - -

COVID-19 0.06 1 0.06 2 0.12 4 0.24

Pandemic

Competitors 0.1 3 0.43 2 0.2 4 0.4

Total 1.0

Strengths

Products 0.09 2 0.18 1 0.09 4 0.36

design

Advanced 0.14 3 0.42 4 0.56 1 0.14

Plant

71
 Technology

Good 0.12 - - - - - -
employee
treatment

Product Line 0.12 3 0.36 2 0.24 4 0.48

Quality 0.15 2 0.3 3 0.45 4 0.6

Control

Weaknesses

Factory 0.10 4 0.4 3 0.3 1 0.1

location

Packaging 0.06 - - - - - -
Seal

Price 0.12 4 0.48 2 0.24 3 0.36

Company 0.05 - - - - - -
website

Advertising 0.05 3 0.15 2 0.1 4 0.2

Total 1.00 3.76 4.16 4.36

On Opportunities

Market penetration such as distribution of products to rural community stores

at lower prices can possibly increase the sales of the firm. Even though selling the

bread at a lower price can seem to be burdensome, since rural areas can often be

associated with low literacy levels and low-income levels (Indiafreenotes, n.d.), there

is a low purchasing power. Adjusting the price depending on the characteristics and

social status of an area can attract consumers. Lowering the price does not

necessarily mean lowering the quality of the products. It’s still important to maintain

the quality of the products to also maintain the satisfaction of consumers regardless

of their location. With that, the Gardenia brand can be known by people in rural

areas and patronize Gardenia products.

72
 In expanding physical stores, factors such as cultural diversity and buying

habits require analysis and research on the literacy and household income of the

areas the firm wants to build its stores. This strategy requires equipped and

professional people who will be in charge of the research to see what location is the

best to put the physical store.

Improving the characteristics of the product can also be a good strategy.

Since the pandemic, consumers changed their buying habits and tend to eat

healthier. Making products that are healthier and improve the overall health of the

consumers is one way to give what consumers want.

On Threats:

COVID-19 is a general threat to the world of business but many business

owners also claimed that the pandemic was not only seen as a threat but also an

opportunity. Since restrictions are slowly easing and infrastructures are now opening,

Gardenia Bakeries can use its powerful field in quality and control in its products. As

mentioned, because of the pandemic, people shifted to different buying habits such

as eating healthy, altering their diet, and consuming products with more minerals and

vitamins that their body needs. In fact, the last report from the parent company, QAF

Ltd., that led to an 18% increase in the total bread market.

Gardenia’s new product line with a Nutri+Plus advantage label that is packed

with more levels of immunity-boosting nutrients to increase the immune systems of

consumers and lower the risk of getting the virus.

On Strengths:

73
 Despite the new competition that entered the market during 2022, Gardenia

kept its place at the top of the market. Gardenia Bakeries also launched a variant of

their existing product, NeuBake Choco Bread Roll and NeuBake Monggo Bread Roll

that is more affordable.

On Weaknesses:

One of the weaknesses of Gardenia Bakeries is the lack of physical stores

just for their products. Their products can be seen at almost any grocery and

convenience stores locally but we never saw a real brick-and-mortar Gardenia Store.

Since the brand had already made its mark as the best bread brand in the

Philippines, many consumers love their products, and having a physical store can

attract fanatics. When people are shopping, there are two kinds of motivation

present. Intrinsic motivation is the motivation given to a buyer for the reason that the

product has good quality. Extrinsic motivation, on the other hand, is the motivation

that is brought to a buyer because of an external reason such as social status or

brand popularity (Ambrose, 2020).

VIII. Objectives, Strategy Recommendations, and Action Plans

8.1 Financial Objectives

The financial information that was used at the time of this paper was only from

the unaudited financial statements for the year 2018-2021 and is the most relevant

and timely data that I could get. Gardenia should have sustainable profitability and

positive annual net income within the next five to ten years.

74
Gardenia Bakeries (Philippines) Inc. Income Statement

Gardenia Bakeries (Philippines) Inc. Balance sheet

Key Ratios

Liquidity Ratio

75
 Current Ratio = Current assets/Current Liabilities

Quick Ratio/Acid Test Ratio = Cash + Account Receivable + Cash

Equivalents/Current Liabilities

Leverage ratios

Debt Ratio = Total Liabilities/Total Assets:

Debt-Equity Ratio = Total Liabilities/Total Equity

Equity Ratio = Total Equity/Total Assets

Times Interest Earned = Operating Income/Interest Expense

Activity ratios

Inventory turnover = Cost of Goods Sold/Total Average Inventory

Fixed Assets Turnover = Sales/Total Average Fixed Assets

Total assets turnover = Sales/Total Average Assets

Accounts Receivable turnover = Net Credit Sales/Average Accounts

Receivable

Average collection period = 365/ Accounts Receivable Turnover Ratio

Profitability ratios

Gross profit margin = Gross profit /Sales

Operating Profit Margin = Earnings before interest and taxes (EBIT)/Sales

Net Profit Margin = Net Income/Net Sales

Return on Total Assets = Net income/Total Assets

Return on Stockholders’ Equity (ROE) = Net Income/Total Stockholders’

Equity

Key Ratios 2021 2020 2019 2018

76
Liquidity Ratio

Current Ratio 1.08 1.16 0.94 1.09

Quick 0.86 1.02 0.83 0.97

Ratio/Acid

Test Ratio

Leverage

ratios

Debt Ratio 0.57:1 0.56:1 0.64:1 0.57:1

Debt-Equity 1.34:1 1.28:1 1.75:1 1.34:1

Ratio

Equity Ratio 0.43:1 0.44:1 0.36:1 0.43:1

Times Interest -0.07 0.12 -0.13 -0.02

Earned

Activity ratios

Inventory 12.33 17.64 17.27 22.98

turnover

Fixed Assets 4.77 4.21 3.27 4.17

Turnover

Total assets 1.41:1 1.43:1 1.24:1 1.72:1

turnover

77
Accounts 5.63 5.48 4.66 6.88

Receivable

turnover

Average 64.85 66.63 78.34 53.05

collection

period

Profitability

ratios

Gross profit 0.22 0.28 0.22 0.25

margin

Operating -0.02 0.03 -0.03 0.25

Profit Margin

Net Profit -0.5 -0.001 -0.05 -0.03

Margin

Return on -0.07 -0.002 -0.06 -0.05

Total Assets

Return on -0.15 -0.004 -0.16 -0.12

Stockholders’

Equity (ROE)

78
8.2 Strategy Objectives

In making a strategy that will best fit Gardenia Bakeries and is in line with their

vision and mission is to give the company proper CIM measures or continual

improvement management. Maintaining the place of Gardenia Bakeries is very hard

especially in an industry that has low barriers to entry. Gardenia Bakeries should

continue and should not lack in what they are doing as the industry can become

more and more competitive. With this, Gardenia Bakeries can live up to its mission to

be a premier bread brand that will leave consumers satisfied.

Reaching new customer segments and expanding product offerings are also helpful

in attracting more consumer demands and trends. Researching future trends to be

ahead of the consumer habit can also be included since this can affect the sales of

the company.

Financial Objectives

8.3 Strategy Recommendations

Market penetration strategies

Market development strategies

Product development strategies

Finance Strategies

8.4 Financial Projections

For financial projections, 2021 will be the basis for the percent increase of the

years that will be forecasted.

The market share will increase by 10% for the implementation of market penetration,

market development, and product development strategies.

79
Operating expenses will be decreased by 10% because of the cost-cutting strategies

To forecast the expenses and other accounts, a percentage of the sales method will

be used.

8.5 Strategy Map

8.6 Balanced Scorecard

80
IX. Appendices

Income Statement for the year 2018-2021

81
Projected Income Statement 2021-2026

82
X. References

[Link]

[Link]

83
[Link]

[Link]

[Link]

[Link]

[Link]

[Link]

[Link]

[Link]

[Link]

[Link]

Pellegrino, J. W., & Hilton, M. L. (Eds.). (2013). Education for life and work:
Developing transferable knowledge and skills in the 21st century. Washington, DC:
National Academies Press.

Barro, R. J., & Lee, J. W. (2001). International data on educational attainment:

updates and implications. oxford Economic papers, 53(3), 541-563.

[Link]

[Link]

[Link]

[Link]

[Link]

[Link]

-END OF PAPER-

84