A system study on the capital planning and management process at CBP Philippines Corporation

• Main Author: Elizaga, Fernando P., Jr.
• Format: text
• Language: English
• Published: Animo Repository 2012
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/4278
• Institution: De La Salle University

CBP Corporation is a company with proven track record in the manufacturing of hard disk drives and magnetic heads. It develops advanced HDDs used to store and preserve the worlds most valued data. After its merger with another industry giant in 2003, it became a company to beat in the market with a broader range of market segments that includes hard drives for desktops, laptops, servers, consumer electronics, and surveillance hard disk drives. The global industry for HDDs is very tough, competitive and only the best manufacturers remain in the business. Industry market share for Q4 2006 showed that CBP Corporation ranked third among six major manufacturers where Seagate ranked # 1 followed by Western Digital. To stay in the industry, the company must continue to invest in capital to secure growth and new developments. But being a global company also means that processes currently in place are mostly complex and that people tend to overlook at things. Thus, if capital is not managed well the money released for the investments will just to go waste. In this study, the strengths, weaknesses, opportunities and threats of the capital planning and management process at CBP Philippines Corporation was analyzed and evaluated using WOT-SURG methodology. Results showed that the most critical problem the present system is currently facing is the long capital PR to PO approval lead time with a total average of 37 days per shopping cart from 3Q09 to 1Q10. This condition is a deviation from the defined Capital Review Board (CRB) target of 14 days per shopping cart incurring the company an opportunity loss in revenue of $1,376,320 Million dollars factored by the 8.5% bank interest rate. After clarifying and analyzing the problem using tools like process mapping, waste identification, Pareto chart, graphical analysis, and Kepner-Tregoe Problem Analysis, several probable causes were identified. Validation table was performed to identify the true causes and a Why-Why analysis was then used to determine the root causes. Alternative solutions were recommended to reduce the approval lead time. These solutions were then evaluated using the Kepner-Tregoe Decision Analysis tool to determine the best solutions. Cost and Benefit analysis was also conducted to determine if investing in the chosen solutions is feasible or not. Results of the analysis showed that the Net Present Value (NPV) of Php24,317,000 is considered positive, Internal Rate of Return (IRR) of 2867% was also found better than the 8.5% hurdle rate, and the Payback period is less than 1 month - which means that the chosen solutions are feasible.