Case 4.

JONA CAR RENTAL: Before the Next Teardrop Falls (Page 66-67)

For fourteen months, Mr. Jose Naguimbing acted as general manager of Jona
Car Rental. The company has branches in Angeles City, Olongapo City and
Baguio City. The main office is located in Makati City. Jose succeeded his
brother Pedro who founded the company and was well-liked by his
subordinates. The car rental company was very lucrative when Pedro left it to
establish another business. Jose was very enthusiastic during the first few months
of his stewardship. At the fifth month, his staff members began losing confidence
in his abilities to run the firm. One time, when a purchase order for three units of
Toyota car was presented to him by the office manager for his signature, he
signed it immediately. The manager filed the order with a dealer on the same
day. The next morning, however, Jose instructed the office manager to cancel
the order. He also directed the manager to buy three units of Mitsubishi cars
from a dealer. When the position of branch manager for Angeles City became
vacant, he appointed someone whom his immediate staff thought to be the
least deserving of the three candidates. After three months, his staff members
were proven right: the revenues of the branch was drastically reduced.
Compared with a competitor in the area, the performance of the branch was
dismal. When Jose decided to establish another branch he asked his staff to
identify three potential sites for him to choose from. He picked Laoag City. It
turned out that Laoag has the weakest potential. In contrast, the competitor
who put up a branch in Santiago City in the same year was registering
substantial revenues. Santiago City was one of the potential sites forwarded to
Jose for consideration.
QUESTIONS:

1.) What would you suggest to Mr. Jose Naguimbing to improve his
performance?

Answer: I suggest to Mr. Jose Naguimbing to follow the decision-making

process to improve his performance. If he follows the right process he will never
failed again in making decisions for the company. For example, in choosing the
right place for his another branch, he will not going to pick Laoag rather than
Santiago City because in decision-making process it includes analyzing the
environment. If he analyzes the environment properly he will know that Laoag
has the weakest potential to make his another branch to be successful.
 2.) Is there anything that Pedro missed when he allowed his brother Jose to
succeed him? What should have been done by Pedro before leaving the
company?

Answer: Pedro missed to consider his brother’s capability in running the

company. He should’ve taught first his brother about decision making and some
techniques to do for the company’s benefit, before he leaves the company.

Case 5. CAMELOT RECORDS: Those Were the Days (Page 82-84)

Mr. Miguelito Salde worked very hard as salesman of recorded music. He

represented a company which distributes compact discs and cassette tapes
with foreign labels. For about ten years, he personally called on dealers in Metro
Manila and the provinces to convince them to buy his products. His exposure to
the industry provided him with the right mindset to establish his own recording
outfit. With his mind working, Miguelito hatched a plan on how he will go about
operating his own company: the Camelot Records. In addition to his knowledge
about the market, he collected information on the production aspect of
recording. The plan and the required information were all stored in Miguelito’s
memory. Later, Miguelito mentally prepared a financial plan, as well as a
personnel recruitment program, no matter how crude they are. When he
thought that his business plan is complete, he began to implement it with the
required speed. He worked systematically by following a procedure he alone
knows, and explaining to his recruits the exact functions of each of them. Within
a few months of operating, the company was able to produce two long playing
cassette tapes and CDs with recordings of original Filipino music. Local singers
and composers were tapped. The market received moderate response.
Miguelito went on producing more recorded music until one of the first ten
albums became a commercial hit! This feat catapulted the company to
recognition by the industry. The company’s commercial hits were followed by
other hits in succession. All of the successful moves of the company were made
without the benefit of a written plan. What Miguelito did was to personally
supervise all activities from hiring talents to providing directions to salesmen. This
he did vigorously with the company’s total workforce of 51 employees. As the
company grew with more productions and more than 200 employees,
Miguelito’s immediate subordinates are getting worried that their boss must be
feeling the burden of a workload that is getting heavier as the years pass. The
staff feels that their leader must begin to delegate some of the responsibilities to
qualified persons. They thought that to be fully organized, a written plan must be
devised so every employee could effectively assist in implementing the various
projects of the company. When the staff mentioned to Miguelito about the
importance of a written plan, Miguelito replied by saying: “This company was
organized without written plan; it became successful without a written plan; it
will continue to be so without a written plan.”

QUESTIONS:

1.) How sound is Miguelito’s arguments?

Answer: I think Miguelito’s arguments has a point too because it is true that
the company was organized without a written plan and it became successful.
So there’s a chance that he can still continue running the company without a
written plan, but his perspective should only implement if he has a small
company.

2.) Assuming that Miguelito will welcome suggestions, what will you say to
effectively counter his arguments?

Answer: Now that his company has grow, I think he should make a written
plan for his company to be fully organized because he can’t control and
organized the company by himself, he need the help of a qualified person to do
it. He need to make a written plan so that his employees will know their functions
and obligations for the company. In a written plan all the employees will also
know what to do to achieve the desired situation of Mr. Miguelito. So the written
plan will really help Mr. Miguelito to continue running successfully his company.

Case 6. HILLBILLY CABLE COMPANY: All Kinds of Everything (Page 107-108)

The adjoining towns of Gapan, San Isidro, and Cabiao in Nueva Ecija were
identified by Mr. Rodolfo Fajardo as the right area for the proposed company:
the Hillbilly Cable Company. Together with two other former classmates, Efren
Puyat and Lamberto Buluran, they were able to raise more than P1 million as
initial capital. The trio initially determined the market and technical feasibility of
the project. They were satisfied with their findings. The last aspect that they will
have to work out is the organizational set-up of the firm. The partners agreed
that the structure will depend on the various activities inherent to the firm. So,
they sat down and prepare a list of the activities involved which are as follows:
 1. Soliciting subscriptions
2. Installing cable connections to the subscriber’s homes
3. Billing subscribers
4. Bookkeeping and related matters
5. Procurement of transmission rights
6. Actual operation of the network
7. Receiving payments from subscribers
8. Repair and maintenance of facilities
9. Disbursement of funds
10. Coordination of the various activities
11. Securing the office and transmission facilities
12. Typing and filing
13. Delivering subscribers’ bills
14. Driving the service vehicle of the company

The partners want to produce an organization chart and job descriptions of the
various positions that will e identified. However, they find it little difficult to begin
drawing the chart.

QUESTIONS:

1.) If you were assigned to draw the organization chart of the firm, how will it
appear?
PRESIDENT
Answer:

-RECEIVING -PROCUREMENT -BOOKKEEPING -DISBURSEMENT -ACTUAL -SOLICITING

PAYMENTS OF AND RELATED OF FUNDS- OPERATION SUBSCRIPTIONS,REPAIR
FROM TRANSMISSION MATTERS- OF THE &MAINTENANCE OF
SUBSCRIBERS- RIGHTS- -BILLING NETWORK- FACILITIES,COORDINATI
SUBSCRIBERS- ON OF THE VARIOUS
-TYPING AND -INSTALLING ACTIVITIES,SECURING
FILING- CABLE THE
CONNECTION OFFICE&TRANSMISSION
S TO THE FACILITIES,DELIVERING
SUBSCRIBER’S SUBSCRIBER’S
AREA 1 AREA 2 AREA 3 AREA 4 AREA 5 HOME- BILLS,DRIVING THE
SERVICE VEHICLES OF
THE COMPANY-
 2.) How would you divide the organization into units? What units will be
formed?

Answer: I divided it using the Hybrid Design, combination of divisional units

and functional departments located at corporate headquarters. The units that
formed are Sales, Legal, Audit, Finance, Production, and Human Resources.

Case 7. LIGHTHOUSE INSURANCE COMPANY: Help Me Make It Through the Night

(Page 125)

The Lighthouse Insurance Company was founded in 1970. It is engaged in selling

non-life policies specifically those related to fire and allied lines, motor car,
marine, personal accident, bonds, and miscellaneous lines. The company is a
stock corporation with 51 branches all over the Philippines from Northern Luzon
to Southern Mindanao. It employs a total of 305 employees manning the head
office in Makati City and all the branches. The company’s Human Resource
Department is composed of five employees including its head, Ms. Emerenciana
Soriano. The department maintains a file of the company’s record of personnel
who are trained at the head office from one week to one month. When the
position of branch manager (BM) becomes vacant, the general manager pulls
someone out from the Marketing Department to fill the vacancy. The
performance of new branch managers is lackluster in the first few months. After
a year, either their performance improves, or they fail totally. When a BM’s
position becomes vacant, the HRD immediately coordinates with the Vice
President for Marketing and without much fuss, facilitates the transfer of the most
senior of the eligibles to assume the BM’s post. This year, the vacancies for the
BM’s was unusually higher than last year. Last year’s vacancy for BM consists of
only one and it was immediately filled up. At the beginning of the third quarter
of this year, six vacancies have already occurred of which only three could be
filled up. After five months, still no suitable replacements could fill the other three
vacancies. Ms. Soriano is now thinking of the best move to solve the problem.

QUESTIONS:

1.) If you were in Ms. Soriano’s position, what will you do?

Answer: If I were in Mrs. Soriano’s position I will open a big hiring for the
position of the branch managers to solve the problem. I will recruit and select
qualified persons for the job and before they work for the company I will train
them properly to have a consistent and productive employees/branch
managers.

2.) How could such embarrassing situations be prevented from happening?

Answer: To prevent such embarrassing situations from happening, Mrs. Soriano

should give monetary rewards or promotions to the branch managers and other
employees if they did a good performance. In such way she can motivate the
persons to have a good performance and to stay longer with the company.

Case 8. JUPITER DRUG CORPORATION: Crying Time (Page 142-143)

Ms. Justina Concepcion has been working for the past three years as branch
manager of Jupiter Drug Corporation in Cabanatuan City. As branch manager,
she oversees the operations of five stores located in different parts of the city.
The stores open at 8:00A.M. Each store is manned by a store manager plus nine
other employees consisting of an inventory clerk, a cashier, a utility boy, and six
salespersons. Ms. Concepcion has the full authority to hire and fire any
employee within her branch except the store managers. It was one morning
when she was browsing on various documents forwarded to her, that she
noticed four letters of resignation. The letters were prepared by two cashiers and
two salespersons. She thought that she must act quickly on the resignations. The
letters indicated reasons that she finds hard to accept. One employee stated
that he is resigning because he would attend to the needs of the family farm.
With Ms. Concepcion’s experience with the company, one resignation per year
is considered normal, but four resignations in a month is too much, she thought.
She immediately contacted a trusted employee to seek out the real reasons.
She found out that the two cashiers made a written request two months earlier
about swapping assignments with one another. They said that once approved,
their new assignments will bring them within walking distance of their residences.
One of the salespersons resigning indicated that she was confused in doing her
job. Most of her time is spent on entertaining customers, but at other times, she is
ordered to perform bookkeeping functions. When she was reprimanded by the
store manager for logging in the lowest sales records, she filed her resignation.
The other salesperson resigned because he thought the store manager was
unfair to him when an amount equivalent to three days absence was deducted
from his weekly earnings. The salesperson objected by saying he only made one
day absence on account of illness. The store manager, however, was not
convinced. Ms. Concepcion is now considering the moves she will have to
make.

QUESTIONS:

1.) What possible communication errors may have been committed by the
branch manager? By the concerned store managers?

Answer: * The possible communication error that may have been committed
by the branch manager is that she did not properly communicated and explain
well the responsibilities and obligations of her employees, that’s why one of the
salesperson was confused in doing her job. A proper understanding of
responsibilities is a function of effective communication. A person will perform
according to what she perceives she is supposed to do.

There are also physical barrier between the branch manager and the two
cashiers because Mrs. Concepcion found out that the two cashiers made a
written request TWO MONTHS EARLIER about swapping assignments with one
another. She didn’t able to provide feedback maybe because of physical
barrier. A communication channel that is overload may also prevent important
information to reach the intended user. While, the possible communication error
that may have been committed by the concerned store manager is that there
is a personal barrier between the store manager and the other salesperson.
People with different values will find it hard to communicate with each other.
Poor listening habits of a receiver (store manager) frustrate the communication
efforts of the sender (salesperson) that’s why the salesperson decided to resign.

2.) What measures must be instituted to prevent the recurrence of such

problem?

Answer: To prevent the recurrence of such problems the branch manager

and the store manager should learn from their errors. They should also do the
following:

 Use feedback to facilitate understanding and increased the potential for

appropriate action
 Repeat messages in order to provide assurance that they are properly
received.
 Use multiple channels so that the accuracy of the information may be
enhanced.
  Use simplified language that is easily understandable and which
eliminates the possibility of people getting mixed-up meanings.

Case 9. INDIANA SALES: Skyline Pigeon (Page 160-161)

Five years ago, Mr. Narciso Cortes was hired as salesclerk by Indiana Sales, a firm
engaged in retailing and financing motorcycle sales. He was the first employee
recruited by the newly assigned manager of Santiago City branch. When Mr.
Cortes was hired, the branch was only one week old. Within five years, the
branch has a full complement of twenty persons including the branch manager,
a cashier, a credit and collection supervisor, a sales supervisor, and a parts and
services supervisor. Mr. Cortes’ record as salesclerk was commendable and the
branch manager was considering him for promotion as sales supervisor. The
salesclerk’s job consist of entertaining inquiries from prospective customers. If a
sale is made, he prepares the various documents required including the deed
sale, invoice, and receipt. The sales supervisor, on the other hand, is responsible
for overseeing the activities of the salesclerk, the utility boy, the driver, the
records clerk, the documents clerk, and the stock clerk. Oftentimes, the sales
supervisor has to leave office at 8:00 PM due to the requirements of the job. Mr.
Cortes indicated to the branch manager that he is happy with his job as
salesclerk and he does not aspire to have bigger responsibility. The branch
manager, however, was very insistent, and he informed Mr. Cortes that next
month, he will be replacing the current sales supervisor who will be promoted as
branch manager and will be assigned to another area. Since the
announcement of the impending promotion, Mr. Cortes’ behavior began to
change. Although the reports he previously prepared were error-free, the ones
he is currently accomplishing are filled with some mistakes in computation. His
perfect attendance record is now marked with a few absences. He easily gets
irritated when customers ask a lot of questions. The branch manager is
perplexed and is now pondering on the wisdom of pushing through with the
promotion of Mr. Cortes.
QUESTIONS:

1.) What could be the reason for the change of behavior of Mr. Cortes?

Answer: I think the reason why Mr. Cortes suddenly change his behavior is
because he doesn’t want to be promoted as a sales supervisor. If he disappoint
the branch manager about his change of behavior the branch manager might
change his decision about the promotion of Mr. Cortes.

2.) If you are the branch manager, what would you do?

Answer: If I were the branch manager, I will try to convince/motivate Mr.

Cortes to accept the promotion by giving him rewards to improve his
performance, but if he still insist to reject the promotion, I will respect his decision.
I will not pursue to promote him as a sales supervisor because if I do, he might
not perform well as a sales supervisor and it will affect the firm. In order to have a
good performance Mr. Cortes should have the willingness to do the job,
unfortunately he doesn’t have that willingness; so as a branch manager, I will
not continue to convince him if he really don’t want the promotion.

Case 10. KOOKABOORA CONTAIINER CORPORATION: Maybe Tomorrow (Page

177-178)

When the Clark Special Economic Zone in Pampanga opened its gates for
investors in light and medium industries, the Kookaboora Container Corporation
(KCC) was among the first ten companies to locate in the zone’s premises. KCC
manufactures containers of various shapes and sizes which are used by
manufacturers of industrial chemicals, food products, cooking oil, motor oil, and
others. The production department of KCC is headed by Engineer Nicolas
Aisporna, a licensed mechanical engineer. He is a tickler for discipline. When
even small mistakes happen in his department, he personally calls the offending
employees and metes the appropriate penalty. As a result, his department was
judged best in efficiency. Very minimal wastages in materials and time were
recorded by the department. Under the direct supervision of Engineer Aisporna
are 10 supervisors who are graduates of engineering courses and with an
average of three years work experience. Ten workers report to a supervisor. All of
the workers are high school graduates. All employees including the supervisors
and the workers are paid on a monthly basis. The workers, however, are required
to produce a minimum number of units per day. During slack-seasons, workers
are engaged only from 50% to 75% of their normal working hours due to lack of
sufficient job orders. No worker is laid off by the company and everyone
receives full pay. This is so because of the strong recommendation made by
Engineer Aisporna to the top management. Slack seasons last up to three
months. At the fourth month, job orders begin to pour in and everybody starts to
cover 100 % of their working time. On the seventh month of the current year,
orders were received at more than the normal capacity of the company. For
the first time since the company began operating , the department will be
required to work overtime. No additional compensation will be given except for
free meals in the evening. When Engineer Aisporma called the department’s
entire workforce to a meeting, he explained the importance of accepting the
additional orders and working on them on overtime. He said he is expecting
everybody to lend a hand in the additional effort. When he asked for
comments, only one indicated his availability. Engineer Aisporna could not
believe the cold response of his subordinates. As the hours pass by, the anger
felt by Engineer Aisporna gets deeper and deeper and he thinks he can no
longer contain it. He was thinking aloud: “What kind of people are these? During
periods of less work, they are not laid off; and they don’t think of it as a favor!
They could not reciprocate management kindness!”

QUESTIONS:

1.) What is it that Engineer Aisporna failed to recognize in this case?

Answer: I think Engineer Aisporna failed to recognize in this case is employee

orientation. A leader is said to be employee-oriented when he consider
employees as human beings of intrinsic importance and with individual and
personal needs to satisfy. There’s a reason why only one of his employees
indicated his availability, maybe the other employees save their time for
personal reasons.

2.) What immediate solutions may be used to solve the problem? What long-
term solutions must be put in place?

Answer: An immediate solution to solve the problem is that Engineer Aisporna

should give an additional compensation to the employees to make them agree
for the overtime and also motivate them to work hard. While, the long-term
solution that must be put in place is that Engineer Aisporna should change his
style of leadership, for him to have the support of his subordinates. He should use
the supportive leadership style, so the next time he ask favor from his employees,
they will help him.

Case 11. THIRST FIRST BOTTLING COMPANY: S.O.S (Page 196-197)

Competition in the soft drinks industry is very intense that every means to
improve a company’s sales position is explored. Advertising and promotional
efforts are heavily relied upon by Thirst First Bottling Company to drum up
customers’ interest in the company’s products. The company is engaged in the
production and marketing of soft drinks. It operates plants, warehouses, and
sales offices throughout the Philippines. The company has been serving the
Philippine market for more than 50 years. The manager in charge of advertising
and promotion is Mr. Rolando Calanday, a graduate of a marketing course in
the College of the Immaculate Conception in Cabanatuan City. The advertising
and promotion unit coordinates with advertising firms in the design and
production of advertising materials like billboards, posters, and streamers. The
unit often produces t-shirts printed with advertising messages which are used as
promotional items. The company spend more than P20 million annually for the
purpose. Periodically, the ad and promo unit sends the advertising and
promotional materials to managers of the various sales offices of the company.
The managers, in turn, hand over the materials to their respective sales teams for
proper disposal. The drivers of the delivery trucks with the assistance of helpers
are directed to install the billboards and streamers on appropriate places and
paste the posters in conspicuous corners of retail establishments. At the
beginning, the drivers appropriate for themselves a small portion of the
advertisement and promotional materials. Some of the billboards are used as
partitions in the houses of the drivers. The posters are used to reinforce the walls.
The t-shirts are not handed over to customers but to family members and friends.
The materials are clearly not used as intended but nobody in the sales offices
questions the practice or even care to know. One day, the general manager of
the company, Mr. Marcelino de Vega, received a letter from a concerned
employee reporting about the unethical practice. Immediately, the general
manager called Mr. Calanday and inquired on how he was getting about his
responsibility of promoting the company’s products. Mr. Calanday’s reply did
not satisfy the general manager. On the same day, Mr. Calanday received an
order from the general manager to clear up the problem regarding the
unethical practice or he will be replaced as head of his unit.

QUESTIONS:

1.) What important management function was neglected by the company?

Answer: The important management function that was neglected by the

company is Controlling. They also failed to check of their advertising products
were properly distributed. Mr. Rolando Calanday didn’t supervise the advertising
products that’s why he didn’t know what happened to the advertisements.

2.) If you were Mr. Calanday, what will be your first move?

Answer: If I were Mr. Calanday my first move will be is to fired the drivers,
because if I didn’t fire them, they might continue their unethical practice. And
also I will make them pay for the portion of advertising products they take.

Case 12. SERVI-QUICK MOTOR REPAIR: It’s Just a Matter of Time (Page 218-219)

Mr. Apolonio Angeles is a highly skilled mechanic who is patronized by

discriminating car owners for the repair of their vehicles. The heavy demand of
his services prompted him to open a shop in a 500 square meter lot. He was able
to convince a sister in the United States to finance the construction of a suitable
building and the purchase of needed equipment. The shop was patronized by
customers so he hired five experienced mechanics, a specialist in electricals,
and twelve assistants. Apolonio took care of supervising the work of the
mechanics and the specialist. He provided them with direction and expert
advise whenever required. For the past two years, Mr. Angeles was able to
attend every important training sessions in motor car repair and maintenance
handled by experts along the line. He shared with his subordinates the
knowledge he acquired. The facilities of the shop are updated every now and
then. The tools used are the latest models available and are kept in tip-top
condition. The shop is even equipped with computerized engine analyzer. Major
repairs like engine overhaul are accepted. Repair of malfunctioning electronic
systems of cars are also accepted. Because the shop’s services are varied and
specialized, customers just keep coming in. The shop is open from Monday to
Saturday, 9:00 A.M to 9:00 P.M. Customer traffic is heaviest on Saturdays and
lightest on Wednesdays. When Mr. Angeles drew a graph of the demand for
services provided by the shop, he did not like what he saw. Mr. Angeles feels
that if only 5 of the 25 units served during Saturdays could be moved to
Wednesdays, his subordinates and facilities will not be overburdened during
Saturdays. He really wants to improve the situation but he is at a loss on what to
do.

QUESTIONS:
 1.) If you were asked to help Mr. Angeles to solve his problem, what would
you advise?

Answer: I suggest to Mr. Angeles, if he really wants to lessen the works on

Saturdays I think he should change and lessen his time schedule during
Saturdays, or he can do some discounts during Wednesdays. Also, he can hire
more employees to be not overburdened during Saturdays.

2.) Will there be other disadvantages if nothing is done about the problem?

Answer: The disadvantage of this problem is that Mr. Angeles might not finish
all the works on time, during Saturdays because of the loads of work. Also, the
quality of his work might lessen because he was hurrying to finish the work.

Case 13. CUTIE PIE FOODSHOPPE: The Name of the Game (Page 232)

After thirty years of serving the Metro Manila market, the management of Cutie
Pie Foodshoppe (CPF) decided to open branches in provincial cities. CPF’s
traditional products consist of bread and cakes. After so many years of
operation, the original shop expanded its store to accommodate fast food
customers. The company also expanded its assortment of products by adding
more options in terms of variety and price. The original shop located in Quezon
City became the model for all branches. The original shop is well patronized by
customers who are either Metro Manila residents or transients. The branches
within Metro Manila are moderately successful, but most of those in the
provinces could not duplicate the performance of the original shop. Miss
Teodora Payumo, a resident of Malolos, Bulacan often dines at the CPF’s original
shop. This she does whenever she goes to Manila. She has been a faithful
customer since she was a college student in one of the well-known universities of
Metro Manila. When CPF opened a shop in Malolos, Miss Payumo anticipated
the delicious meals she used to have at CPF Quezon City. She was surprised,
however, when she found out that the quality of the food served cannot be
compared favorably with those served at the original shop. After five months of
operation, the Malolos branch of CPF could not generate enough sales to justify
its continued existence. The branch manager, Isidro Castillo, is not even aware
of the case of Miss Payumo. Mr. Castillo keeps on producing advertising posters
to stimulate demand. He even hired a person to distribute leaflets to prospective
customers. The effort, however, do not seem to produce the desired effect. Mr.
Castillo sought the opinion of the general manager in Quezon City but he could
not get the insights he needed. He was told to observe the original shop and
duplicate its activities. He thought that this will be difficult for him to do because
he cannot afford to leave even for a day his shop in Malolos.

QUESTIONS:

1.) What do you think is the problem with the Malolos branch?

Answer: The problem with the Malolos Branch is that the quality of the foods
served cannot be compared favorably with those served at the original shop.
The taste of the products might changed by the Chef of the Malolos branch,
that’s why it is not good enough compared to the one’s served at the original
shop.

2.) What would you advise Mr. Castillo?

Answer: I suggest to Mr. Castillo to follow the opinion of the general manager
because if he follows that opinion he might notice the problem about the
change of quality of the foods served at his branch and also he should sought
some opinions from the customers about the taste of his foods served from his
branch.

Case 14. QUE SERA CERAMICS COMPANY: I’m Leaving It All Up to You (Page
251)

The sales generated by Que Sera Ceramics Company is growing at a steady

rate of 15% annually. The firm has been in existence for 25 years and its products
consist of plain and decorative wall tiles, floor tiles, cement tiles, cappings and
fittings. The company maintains a network of dealers in Metro Manila and the
provinces. Majority of the company’s stocks are owned by the Soriano family.
Specifically, fifty one percent (51%) of the company’s total capitalization of P265
million is jointly owned by the Soriano sisters and brothers. The president and
general manager of the company is Miss Dalisay Soriano. The 15% sales growth
of the company is limited only by the available capital. A growth rate of 25%
can be achieved if an additional P50 million is added to the company’s
finances. Miss Soriano figured out that the company has three options:

1. To require her siblings to invest more money;

2. To invite new investors through the sale of additional shares of stocks;
 3. To borrow from banks.

If Miss Soriano chooses to seek additional funds from her siblings, only P30 million
will be available immediately, the rest will be handed over after 12 months. If
inviting new investors becomes the choice, it will take five months of good
financial work before the cash requirement comes in, assuming that there will
be a sufficient number of investors interested in buying the company’s stocks.
Borrowing from banks will take a few months of paperwork before the loaned
amount is actually delivered to the company. Miss Soriano is preparing her list of
criteria before she submits her recommendation to the board of directors.

QUESTIONS:

1.) What factors must Miss Soriano consider before she submits her
recommendation to the board?

Answer: The factors that Miss Soriano must consider before she submits her
recommendation to the board is that the various fund sources have their own
individual strengths and limitations, it is wise to find out through analysis which will
benefit the business firm most.

2.) What other possible sources of funding must be investigated first before a
decision is made?

Answer: The other possible sources of funding are cash sales, collection of
accounts receivable, loans and credits, sales of assets, ownership contribution
and advances from customers.
 CASES IN
MANAGEM
ENT1

Submitted By:

IRISH T. BARCELON

Submitted To:
Mrs. Evangeline P. Dayao