A strategic management paper for DM Consunji, Inc.

• Main Author: Timoteo, Ma. Theresa H.
• Format: text
• Language: English
• Published: Animo Repository 2002
• Subjects: Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2820
• Institution: De La Salle University

DM Consunji, Inc. envisions itself to be the leading integrated Philippine construction company, with strong technical and commercial performance adhering to the highest ethical standards, that will provide the most innovative and cost-efficient comprehensive construction services and to be committed to the economic and social development of the country by providing opportunity for employers to develop talents, skills and personality, rewarding merit and hard work with fair compensation to live in dignity. DMCI belongs to the construction industry that provides its clients with the following construction services: a) General building - building and industrial plant, sewerage and sewage treatment/disposal plant system, water treatment plant system, park, playground and recreational work. b) General engineering - road, highway, pavement and bridge, irrigation and flood control, dam, reservoir and tunneling, port, harbor or offshore engineering. c) Specialty contractor - foundation works, structural steel works, concrete pre-casting and pre-stressing, plumbing and sanitary works, electrical works, mechanical works, ventilation-refrigeration, elevator-conveyor, fire protection works, waterproofing, painting works, well drilling, navigation facilities, and communication facilities. The industry's clients are the government and private institutions. The most significant clients are: Ayala Group of Companies, Kuok Philippine Properties, Inc., JG Summit Holdings, Inc., SM group of companies (developer of malls), San Miguel Corporation, various Government agencies and the Philippine subsidiaries of Caltex, Motorola, Nissan Motors, Philips Semiconductors, Procter & Gamble and Shell Petroleum Company, to name a few. The industry satisfies the clients' need for construction services by delivering quality projects on time and at favorable costs. The key players of the industry are the construction firms belonging to the AAA category of the Philippine Constructors Association (PCA), which is the oldest trade organization in the country and serves as the voice of the Philippine construction industry and the guardian of construction professional integrity. Belonging to the AAA category means that the firm has adequate construction experience and financial capacities and, therefore, can undertake large-scale construction projects that are in excess of P3million. While other players of the industry are those belonging to the AA, A, B, C, D, and Trade categories. The construction firms that fall under the AAA category can provide the full line of construction services to both the private and government entities. Further, they have extensive technical capabilities and financial capacity of investing in cost-minimizing facilities, equipment and technology, thus, they can compete in all price positions and all geographic markets. While the firms belonging to the lower categories are capable of providing its clients, either private or government entities only, with selected or only a few of the construction services previously enumerated. The firms have lesser investments in cost-minimizing facilities, equipment and other construction techniques, thus, they compete in limited price positions and geographic markets. Since the liberalization of the construction industry on October 1997, foreign construction firms have also become very good players in the industry. Their technical experience and financial capabilities are not only at par wit, but sometimes better than the local players. There are already a number of foreign construction firms that have successfully penetrated the Philippine construction industry, through partnership with local firms. DMCI belongs to the AAA category of construction firms. It can attain its vision by setting objectives that are specific, measurable, attainable results of activities and time bound. For the years 2001 until 2004, the company's objectives are the following: a) Achieve total sales revenue of Php 3,780 billion in 2001, and 40% thereafter until year 2004. b) Projected gross profit rate shall be 12% for 2001 and 20% thereafter until year 2004. a) Desired average collection period shall be: 120 days for 2001, 100 days for year 2002, 80 days for year 2003, and 60 days for year 2004. b) Capture a bigger market share. DMCI has to craft the strategies to achieve its desired objectives. The strategies must be based on the following: a) The external environment or factors external to DMCI which are: i. Industry opportunities and threats ii. Societal expectations b) The internal environment or factors internal to DMCI which are: i. The company's strengths and weaknesses ii. The personal values of the decision maker. Based on the analysis of the changes in the segments of the macroenvironment (economic, political, institutional, technological, social and ecological), the construction industry will bounce back because of the following opportunities that will be available: a) Government consumption for the construction industry will be 4.3 to 4.7 percent of GNP on average in 2001-2004 while GDP growth reaching 4.6 to 5.0 percent on average in the same period. Thus, it is expected that the construction industry will grow to 5.1 to 5.5 percent on average. b) The government's shelter and urban development will include the promotion of innovative building, planning and management technology that are both affordable and technically feasible to local government units and community groups. However, the construction industry must protect itself from the following threats that will also be the effect of the changes in the segments of the macroenvironment on the forces that drive competition: a) Intensity of rivalry among existing firms will continue to be high. b) The barriers to compete globally