A strategic management plan for Obando-Uy Development Corporation

• Main Author: Medina, Arnel O.
• Format: text
• Language: English
• Published: Animo Repository 2001
• Subjects: Real estate business > Philippines; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2808
• Institution: De La Salle University

The Company. Obando-Uy Development Corporation (OUDC) is a 100% Filipino owned and managed company. It is purely owned by the Obando-Uy family headed by Mr. Arturo Jimenez Uy as its Chairman and Chief Executive Officer and Mrs. Leoncia Obando Uy as its President. To date, the first and only development project of the company is Secondina Place. The project is combined residential and commercial building which us for lease or rent. It is located on a 450 square meters site along P. Noval St., Sampaloc, Manila, just a stone awat from the University of Sto. Tomas. The amenities of the project include: (1) receiving area/lobby to screen visitors for the protection of the tenants (2) an ample parking area in the front and back building (3) fire sprinkler system for the safety of its tenants (4) 4,000 gallon tank dedicated for fire protection alone (5) 12,000 gallon underground water reservoir for domestic use with a pumping outlet/system to accommodate water deliveries by trucjs in case MWSS fails to supply the water requirements of the project (6) 2,500 gallon elevated water tank designated to supply at least 6-8 hour domestic demand (7) open-air multi-purpose function area located in the roof deck (8) generator set for uninterrupted power supply and (9) elevator system for ease of access to higher floors. The Secondina Place project started commercial operation in 1999 and was able to generate rental revenues amounting to more than P4 million on its second year of commercial operation. It contributed 95% of the gross revenue of the Company of the Year 2000. Despite losing P3.9 million in Year 2000, Secondina Place achieved a remarkable feat by aaatining 60% occupancy level even if the company did not invest in any promotional activities. The sttrong market response is attributable to the project location which is accessible to vital infrastructure (such as school, road network, church, hospital and business and commercial establishment). Substantial portion of the company's costs and expenses are fixed in nature. Such accounts include depreciation and amortization, salaries and interest expense. These accounts exceed rental revenues in year 2000 by 25%.. Real Estate Development Industry. OUDC belongs to the real estate development industry. The real estate development industry consists of firms engaged primarily in the conversion or redevelopment of land area into residential subdivisions, residential buildings, commercial centers, office buildings, industrial estates and tourism-related ventures and eventually selling or leasing these to customers. The framework of Michael Porter using the Five Competitive Forces was used in analyzing, the threat of new entrants is low because of the high barrier to entry. The high entry barrier is brought by the high capital requirement and presence of government policy limiting foreign ownership. The bargaining power of supplier is low because of the existence of numerous suppliers and the influx of cheaper imported construction materials. On the other hand, the bargaining power of buyers is high because of the existing oversupply in the real estate market. The intensity of rivalry in the real estate development industry is high because if the existence of numerous competitors trying to bag the dwinding number of development projects following the contraction in the Philippine economy. There exist no threat of substitute due to the absence of any substitute product for real estate. Threat and Opportunities. Threats (a) Declining trend in rent and capital values of real estate. (b) Increasing trend in lending rate. Opportunities (a) Receptiveness of real estate market for premium charging for choice location. (b) Increasing popularity of the studio-type and bedroom-type of condominium units. (c) Expansion of the housing sectors particularly mid-income projects (d) Increasing popularity of joint venture agreements. Strengths and Weaknesses. Strengths (a) Good planning for site-use/purpose evaluation. (b) Good site selection. Weaknesses (a)Tall organizational structure (b) High fixed costs and expenses (c) single-source revenue stream (d) Lack of operating system. Vision. Obando-Uy Development Corporation envisions to be a respected professional developer or real estate in the country advocating a total community approach, and a morally and ethically driven provider of quality shelter.' Corporate Objectives. The proposed objectives are: (1) to achieve at least 15% average of annual growth in net income for the next five years , and (2) to provide a return on shareholder's investment of at least 10% annually in the next fie years. Generic and Specific Strategies. Focus-differentiation is the proposed generic strategy of Obando-Uy Development Corporation. The specific strategies that must be undertaken to attain corporate objectives are as follow: (1) Expand into mid-income housing through joint venture partner (2) continue to offer high quality product to meet the target market needs )a) continue to offer high quality products (b) strengthen the company's premium-pricing position (c) focus on medical students of University of Sto. Tomas (3) integrate high quality service level with existing product offerings (4) create more value to existing products by providing ancillary service (5) implement a pro-active marketing program aimed at soliciting product loyalty and (6) fast-track development of operating system. Implementation/ The 7S framework espoused by Robert Watherman, Jr., Thomas J. Peters and Julien R. Phillips was utilized in determining the company's capabilities to implement strategies. Moreover, the 8-tasks model was used to identify the activities to be performed by the company to implement strategies.