University of Santo Tomas: Araneta Center, Inc

University of Santo Tomas
ARANETA CENTER, INC.

A
Strategic Management Paper

Submitted to
Sir Real Carpio So

In
Partial Fulfillment
Of The Requirements
In
Entre 7 Strategic Management

Submitted By: Mayryjoy
E. Endaya
4M6

1

I. ACKNOWLEDGEMENT

First and foremost, my utmost gratitude to our strategic management professor, Mr.
Real C. So, who always gave valuable suggestions, guidance and help us understand
and remember important information that would be very helpful for the completion of our
strategic management paper.
Ms. Marjorie Go, our supervisor and Araneta Centers Marketing Admin Manager, who
became one of the major contributor of my paper and she who patiently answers and
give valuable insights that I needed about the company.
To Rachel Pedraja and Miguel Buco my fellow co-interns from University of Santo
Tomas, for uncomplainingly answering all my questions and for giving me relevant
information needed in our paper and for their unfailing dedication in completing our
marketing plan for the companys upcoming Easter and mothers day event. Without
them success wouldnt be possible.
Last but not the least, my family and the one above all of us, the omnipresent God, for
answering my prayers for giving me the strength to finish this paper despite my
procrastination and wanting to give up, thank you so much Dear Lord.

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II. TABLE OF CONTENTS

PAGE

I. Acknowledgement 1
II. Table of Contents 2
III. Executive Summary 3
IV. Introduction 4
V. External Environment Analysis 5
1. Definition of Industry 7
2. Analysis of Present Task Environment 14
3. Analysis of Potential Changes in the Macro-environment 21
4. Threats and Opportunities 21
4.1 Effect of potential changes on the task environment 24
4.2 The resulting changes in the present task environment 25
5. External Factors Evaluation (EFE) Matrix 29
6. Industry and Competitive Analysis 31
6.1 Strategic Map 36
7. Competitive Performance Matrix (CPM) 39
VI. Analysis of Internal Environment 41
1. Company Overview 41
2. Corporate Values 43
3. Value Chain Analysis 47
4. Financial Analysis 53
4.1 SEC Financial Statement 56
4,2 Financial Ratios 71
5. Strengths and Weaknesses/Competitive Advantage 73
6. Internal Factors Evaluation (IFE) Matrix 76
VII. SWOT/TOWS Matrix 77
VIII. Strategic Plan 78
1. Vision and Mission 78
2. Objectives: Strategic and Financial 80
3. Evaluation of Present Corporate Strategies 81
4. Proposed Corporate Strategies 82
4.1 Description of the strategy 82
4.2 Basis of the Corporate Strategy 84
IX. Quantitative Strategic Planning Matrix (QSPM) 85
X. References 88

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III. EXECUTIVE SUMMARY
Araneta Center, Inc. is the owner, developer and manager of the Araneta Center, an
established 35-hectare (90 acre) retail, entertainment, residential, and office
development situated right in the center of Metro Manila. The Center brings in an
estimated 1,000,000 visitors daily.
Araneta Center is in the midst of a Master Plan that will transform it into one of the
countrys largest mixed-use real estate development. New developments are underway
to create a mix of state-of-the-art retail, entertainment, commercial, hotel and residential
uses in a complementary, transit oriented development pattern within a lush garden
city environment that will attract a wide range of public and private activities. Integrated
in the development will be an information technology backbone to nurture the
development of new, information technology-oriented companies and business process
outsourcing firms.
Philippine Pizza Inc., the franchise owner and operator of Pizza Hut, Taco Bell, and
Dairy Queen has over 200 restaurants nationwide and is committed to growth. Its
locations are strategically located from Ilocos Norte to Mindanao. Worldwide, Pizza Hut
is the largest and most recognized pizza chain with over 12,500 restaurants in more
than 90 countries, while Taco Bell and Dairy Queen are also number one in their
respective categories.
Uniprom Inc. manages the leisure and entertainment ventures of the Araneta Group:
SMART Araneta Coliseum, TicketNet, Binibining Pilipinas, Gateway Cineplex 10, and
Alimall Cinemas.

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Progressive Development Corporation (PDC)
As the overall management arm of the Araneta Group, Progressive Development Corp.
provides the overall strategic direction and shared services. PDC is also involved in
formulating business development plans for the Group. Through the vision of the
Araneta family, the Araneta Center was and still is instrumental in cementing Quezon
Citys mark in the countrys leisure and entertainment development. Today, the Araneta
Center is in the midst of its comprehensive redevelopment master plan that will
transform it to an ultimate lifestyle destination in Quezon City.

IV. INTRODUCTION

In 1952, Araneta purchased the 35-hectare Cubao property that is now the Araneta
Center from Radio Communication of America (RCA). The property which includes the
Araneta family home is bounded by Edsa, Aurora Boulevard, P. Tuazon and 15th
Avenue. It is the centerpiece of the Araneta Center, offering a one-stop shopping, dining
and entertainment experience. Some of the other establisments in the Araneta Center
are Ali Mall - the first multi-level commercial mall in the country, New Frontier Cinema -
the largest theater in the country with over thirty-five hundred (3,500) seats, Fiesta
Carnival - the Philippines' first all-year indoor amusement center.

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V. EXTERNAL ENVIRONMENT ANALYSIS

1. DEFINITION OF THE INDUSTRY

Property Development Industry

Property developers particularly those that have focused in residential condominiums,
office building and commercial developments now are considering joining the industrial
foray.
1
Property industry consists of land and buildings on it. The company owns
shopping centers and entertainment and other development centers. The company that
also belongs to the same industry is involved in activities wherein they provide food,
leisure and entertainment activities in one area. They do leasing or rental on their
property.

1.1 OVERVIEW OF THE PROPERTY DEVELOPMENT INDUSTRY

The property development industry will be continually propelled by favorable
fundamentals and pleased business sentiment in the country. Demand for all segments
trigger supply pressure particularly for residences and offices. Expatriates will further
accelerate demand in the luxury residential segment while developers will remain
nested on the middle-income segment for new projects. The entrance of international
brands and new establishments drives demand in the shopping malls backed by
improving consumer sentiments. Successful promotional campaigns by the public and
private sectors do not only increase revenues for the tourism industry but also the
leisure and hotels and resorts segments of the property industry.
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1.2 MAJOR SEGMENTS IN THE PROPERTY DEVELOPMENT INDUSTRY

It covers four segments:

Residential
Commercial (malls and offices)
Hotels and Resorts

1.3 The Philippine Property Development Industry

There is a positive movement in the property industry and investors should consider the
companies' revenue composition to separate those who can deliver better. Malls
provide a more stable position in terms of revenue generation since the Philippines is a
consumption-driven country compared to the residential projects. Property developers
of shopping centers and retail districts are more flexible during economic distress
because it is more likely to be hit by higher interest rates and lower consumer
confidence in purchasing illiquid assets.
In a Market Insight Report entitled Manufacturing Renaissance: Philippine Economy
Witnesses the Rebirth of the Industrial Property, released by Pinnacle Real Estate
Consulting Services Inc., it appears that the industry shows no signs of slowing down in
general.
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Amid the current geopolitical issues, Pinnacle reported that it continues to be buoyed by
the notion of improving governance complemented by the liquid banking system, a
relatively young labor pool with purchasing power, as well as improved consumer and
business confidence.
7

Foreign investors have started to set their sights on the Philippines over the last three
years given the peoples renewed confidence in the state, among others, leading to its
credit-ratings upgrade.
SM Prime Holdings (SMPH) grabs the lion-share of the shopping mall developments in
the country while ALI catches the high-income segment in its retail centers such as
Glorietta, Greenbelt, Marquee Mall, and Trinoma. Both ALI and MEG are large
proponents of creating sustainable communities through their growth centers and
township developments in NUVALI, Makati Central Business District, Bonifacio Global
City, Ortigas City, and Eastwood City.
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2. ANALYSIS OF PRESENT TASK ENVIRONMENT

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2.1 Bargaining Power of Suppliers- LOW

The presence of powerful suppliers reduces the profit potential in the industry. By
threatening to raise prices or reduce the quality of goods and services, suppliers
increase competition within an industry. As a result, they reduce profitability in an
industry where companies cannot recover cost increases in their own prices.
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In the property development, suppliers can be considered weak because of the
appearance of many suppliers making it easy to bargain with them. Giving the industry
a high profit potential by getting the best possible offer they could make out of a deal.
The bargaining power of suppliers can be considered weak because of the following
reasons:
The item being supplied is a commodity, that is, an item readily available from
many suppliers
Industry members such as the principal contractors and construction materials are
readily available thus making it easy for the industry to choose from one company over
the other. The industry has more power over the suppliers especially that they do it on a
contractual basis and bidding is needed when looking for their potential suppliers.
Seller Switching cost to alternative suppliers is low
When the industry doesnt like their previous supplier they can easily change and look
for another one easily. It all depends on what the company in the industry is looking for
whether they prefer cost, quality or quantity of the product or services they are going to
purchase.
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There is a surge in the availability of supplies (thus greatly weakening supplier
pricing power)
Here in the Philippines a lot of places supplies rocks, cement, sand and other raw
materials needed in making buildings. And there are also imports from other countries,
because of the availability and the supply is high thus it greatly affects the pricing power
of the suppliers.
2.2 Bargaining Power of Buyers-HIGH

The bargaining power of buyers in an industry affects the competitive environment for
the seller and influences the sellers ability to achieve profitability. Strong buyers can
pressure sellers to lower prices, improve product quality, and offer more and better
services. All of these things represent costs to the seller. A strong buyer can make an
industry more competitive and decrease profit potential for the seller.
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The bargaining power of buyers can be considered high because of the following
reasons:
Identity of buyer adds prestige to the sellers list of customers
Known personalities, celebrities and other big business tycoons can add prestige, giving
added value not only to the industry but also to the organization. Giving them more
benefits and greater deal than anyone else because of the bigger profit and status they
may get when they close a deal with these buyers.

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Quality and Quantity of information available to buyers improve
The generation today becomes more exposed to all kinds of information. Buyers are
becoming more sophisticated due to the knowledge and experiences they had learned
through time. They know whether it is a good catch or not and they can always search
for more who offers a better deal.
Buyers have the ability to postpone purchases until later if they do not like the
present deals being offered by sellers
Buyers can always postpone their purchase especially if they are not on rush and when
there are a lot of offers made by other sellers in the industry. They know that eventually
they will lower their prices sometime. Buyers are very knowledgeable and they can see
if the offer is worthy enough or not because they can easily obtain information
anywhere, anytime and they can opt to just wait until they see it as a great catch.
2.3 Intensity Rivalry among Competitors-HIGH

The degree to which rivalry exists among competitors varies between industries and the
market sectors within them. Regardless of the number of key competitors your
organization faces it is vital for its longevity that you understand the differences between
your rivals.
7
Competitors are not only classified as the one competing on the same
industry but also indirect competitors who are in a different industry.

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The following determinants proved that the intensity rivalry among competitors is
considered moderate:
Competing sellers are active in making fresh moves to improve their market
standing and business performance
Competing sellers are doing many fresh ideas and new things to offer to the people to
grab their attention and attract more customers. This new moves and new strategies is
only an indication that there is an intensity of rivalry going on. Putting up new buildings
for different use like what the SM Prime holdings Inc. did they open up their own
coliseum which is the SM Moa arena to compete with Smart Araneta Coliseum.

The number of rivals increase and rivals are of roughly equal size and
competitive capability
A lot of high rising to middle rise buildings are built not only around the metro but also in
other places. The industry promises a lot on their amenities but most of them are
cluttered in the same city especially around the business centers. They do not only
focus on condominiums, apartments but they also do have their own malls. They do
have almost the same size and competitive capability like what BGC, Newport, Circuit
Makati and Araneta Center is offering. And a lot of new rivals are becoming known
making it more intense.

One or more rivals are dissatisfied with their current position and market share
and make aggressive moves to attract more customers
SM Prime Holidng inc. is considered to be one of leading company in the industry but
they dont want to be out beaten by their rivals, Araneta Center Inc. is dissatisfied with
their current position and market share thus they do make aggressive moves to attract
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more customers like opening up extension to their malls having more condominiums
around and with their competitor being around the area they dont want to let them grab
their revenues and market share. It greatly shows how intense the rivalry is between
competitors.
2.4 Threat of substitute products-HIGH
It occurs when companies within one industry are forced to compete with industries
producing substitute products or services. Substitutes limit an industrys potential
returns by placing a ceiling on the prices that firms within that industry can charge to
make a profit. As the price-performance alternative offered by substitutes becomes
more attractive, it becomes even more difficult for those firms to make a profit. Demand
for substitutes can also reduce the demand for industry products and services.
Substitutes can create intense competition during normal economic times, and reduce
potential profit increases during positive economic times. Identifying substitutes involves
searching for other products or services that can perform the same function as the
industrys product or service.
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The following are the determinants:
Readily available and attractively priced
Tiangges, flea market, and online shops are considered substitutes since they dont
belong to the same industry. Many people prefer to buy in those substitutes because
Many people prefer to buy in those substitutes because of the convenience and it is
readily available and attractively price. E-commerce is also booming today, making
online shops really popular especially in the younger generations and it can be
considered a big threat to the physical stores.
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Substitutes as being comparable or better
It can be observed that malls are becoming crowded if there is a sale and discounts
offered. But substitutes are offering everyday low price and some shops do sell clothes
and other things that are considered to have the same quality as what you can see from
malls or even better and it is a threat for the malls especially that some flea markets are
selling things that are imported from neighbor countries like South Korea, Bangkok and
other Asian countries that really catches attention of the buyers since the styles are
really unique.
2.5 Threat of New Entrants- LOW
The threat of new entrants in the market depends largely on what barriers to entry exist
in the industry. Conducting an analysis of these barriers can help determine the
potential attractiveness of the industry
The following are the determinants:
Capital requirements and/or other specialized resource requirements
It is often too expensive for small players who lack adequate cash for investment to
enter the market. High capital requirement is needed in this kind of industry thus making
it hard for new entrants to enter. It can also be difficult to enter a given market if one
does not have the specific product or process expertise that is required. Entering this
industry needs a lot of thinking and a plan has already made to make sure all the efforts
wont go to waste. And because of the big competitors small players are having doubts
if they could even enter the industry.
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Regulatory policies
Tough laws or regulations can have cost or bureaucratic implications. For example, if
government permits required operating the business are difficult to obtain. Getting the
necessary documents is a very long process depending on several factors. Permission
on the government and municipality is needed. Sometimes conflicts arises that it
prolongs the process of getting things done to officially start.
3. ANALYSIS OF THE POTENTIAL CHANGES IN THE MACRO

These are the factors in the macro-environment that will affect the decisions of the
managers and head of the organization in the property industry. To analyze these there
are five categories to help us examine the industry.
The major categories of the Macro-environment analysis are the following:
Political and Legal Segment
Socio- cultural segment
Economic Segment
Technological Segment
Demographics Segment
3.1 Political and Legal Segment
Real Estate Investment Trusts (REITS)
Upon issuing REITS, companies may enjoy its tax exempt consequences but
requirement remains to the property if REITS will directly affect the marketability of its
securities. Investors could only reap returns if such instrument underplays its value on
projects with recurring income shopping centers and offices (residential developments
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imposes more volatile revenue due to its vulnerability to the twists and turns of the
economy). There are only few. Established developers of large retail areas in the
country while growth in the outsourcing industry may in one day, burst into bubble.
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National Smoke-Free Legislation
The 2003 Tobacco Regulation Act prohibits smoking in all centers of youth activity,
elevators and stairwells, locations where fire hazards are present, health facilities,
public conveyances, public facilities, and food preparation areas. However, the Act
requires the designation of smoking and non-smoking areas for enclosed places that
are open to the public. Moreover, owners can determine the size and specifications of
the smoking and non-smoking areas on their premises. Enclosed areas are tightly
defined. The Act states that, the mere presence of a roof or ceiling over the structure
but without walls or partitions... does not constitute an enclosed area It also states that,
the walls or partitions must be continuous interrupted only by doors and windows.
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REPUBLIC ACT NO. 7279
An act to provide for a comprehensive and continuing urban development and housing
program, establish the mechanism for its implementation, and for other purposes.
Section 1. Title. This Act shall be known as the "Urban Development and Housing
Act of 1992.
Sec. 2. Declaration of State Policy and Program Objectives. It shall be the policy of
the State to undertake, in cooperation with the private sector, a comprehensive and
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continuing Urban Development and Housing Program, hereinafter referred to as the
Program, which shall:
Development of urban areas conducive to commercial and industrial activities which can
generate more economic opportunities for the people
Adopt workable policies to regulate and direct urban growth and expansion towards a
dispersed urban net and more balanced urban-rural interdependence.
2) Optimization of the use and productivity of land and urban resources
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3.2 Socio-cultural Segment
Given their convenient locations and wide arrays of products and services, malls are
favored when consumers look for apparel, footwear, and beauty and personal care
products. Right before school starts and the Christmas season, bargain hunters still
flock to market districts which sell a variety of goods at very low prices, but malls offer
more comfort. Besides, malls appear to have replaced parks on weekends. Families go
to malls to shop, eat, catch a movie, or simply spend time together. In a news report,
Filipinos were found to derive enjoyment from grocery shopping. Trips to the
supermarkets, at least in the Philippines, seem like family affairs, with parents bringing
their children and, sometimes, their babies, too, noted one observer. Filipinos visit
department stores and stand-alone stores at the malls to shop for clothing, footwear,
beauty and personal care products.

Department stores constitute the bulk of outlets and sales in mixed retailers. The
dominance of department stores in the non-grocery landscape is attributed to the
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presence of huge shopping centers which have these outlets as flagship stores. Filipino
buyers are perceived to be more discriminating as they continuously look for non-
grocery products which boast of higher quality. This is especially true in apparel and
health and beauty where purchase decisions are often based on the perceived efficacy
of brands.
Going to the mall is the most common leisure activity within Metro Manila. A mall has
almost everything, from dining to movies and handy service centers, such as those
processing bill payments. We live and breathe mallsit's ingrained in our cultureand
it's just so difficult to imagine being in a city without one. We spend a lot of time and
money at the mall; and in return, they give us dining experiences, numerous shopping
options, entertainment and, on sweat-inducing days, free air-conditioning, explained a
frequent mall visitor. Between a mall and a museum, most Filipinos choose going to the
mall: a curator of a museum that is adjacent to a mall observed that, even if the
museum is attached to a mall, few people visit the museum.
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3.3 Economic Factors
Economic Macro Environment

PHILIPPINE STOCK MARKET COMPOSITE INDEX

end of period

Financials Industrial Holding Firms Property Services Mining & Oil

Total

2012

Jan

1,052.57

7,247.37

3,739.70

1,692.89

1,724.59

25,967.07

4,682.44
Feb

1,179.43

7,244.13

3,956.72

1,827.59

1,791.56

25,573.13

4,897.65
Mar

1,263.83

7,815.83

4,243.85

1,881.71

1,751.93

25,978.59

5,107.73
Apr

1,287.42

7,866.46

4,459.46

1,932.39

1,723.19

27,009.51

5,202.70
May

1,255.03

7,839.19

4,471.06

1,822.77

1,640.36

23,686.67

5,091.23
Jun

1,304.42

7,839.57

4,488.80

1,927.48

1,759.02

24,629.48

5,246.41
Jul

1,320.32

7,905.82

4,477.78

1,998.50

1,798.21

23,679.09

5,307.66
Aug

1,290.03

7,904.24

4,333.35

1,989.01

1,761.55

20,960.73

5,196.19
Sep

1,370.60

8.138.57

4,492.12

2,073.88

1,799.85

19,838.99

5,346.10
Oct

1,374.73

8,536.60

4,625.22

2,107.37

1,754.28

19,912.88

5,424.51
Nov

1,488.30

8,803.31

4,956.22

2,153.37

1,734.58

18,043.13

5,640.45
Dec

1,525.95

8,877.29

5,150.76

2,304.63

1,724.65

19,408.38

5,812.73

2013

Jan

1,616.60

9,504.39

5,555.78

2,514.12

1,850.32

21,550.13

6,242.74
Feb

1,787.10

10,171.52

5,813.06

2,784.07

1,959.50

22,186.09

6,721.45
Mar

1,780.95

10,274.29

5,959.38

2,831.61

2,014.38

21,504.34

6,847.47
Apr

1,825.68

10,750.32

6,368.00

2,920.49

2,048.34

20,322.98

7,070.99
May

1,797.01

10,611.17

6,218.63

2,885.89

2,062.53

17,280.13

7,021.95
Jun

1,623.84

9,815.78

5,799.23

2,524.98

1,940.20

13,631.84

6,465.28
Jul

1,574.05

9,856.72

6,163.14

2,580.69

2,035.01

14,586.46

6,639.12
Aug

1,467.91

9,362.44

5,284.67

2,319.44

1,945.75

13,858.19

6,075.17
Sep

1,534.33

9,181.94

5,473.27

2,369.42

1,993.33

12,250.69

6,191.80
Oct

1,618.26

9,380.11

5,983.26

2,652.51

2,004.20

12,824.29

6,585.38

Source of data: Philippine Stock Exchange (PSE)

IMF Forecasted
Economic Growth Rate

Source: World Bank
19

Gross Domestic Product, Philippines (at Constant 2000 Prices)
Annual Percentage Change

Note: aGDP from 2007 to 2012 sourced from Bangko
Sentral ng Pilipinas Web site. Gross National Income
(GNI) by Industrial Origin (at Constant 2000 Prices).
bGNP from 2013 to 2016 projected using regression
analysis where a=-1,449,647.783 and b=725.71.
Source: Bangko Sentral ng Pilipinas Web site. Gross
national income (GNI) by industrial origin (at constant
2000 prices).

Year Gross Domestic Product (In Billion Pesos)

The more vibrant economic growth in 2012 brought better business and consumer
confidence that accelerated the spending on leisure and personal goods. The rising
employment rate and disposable income among urban dwellers have been instrumental
in generating demand for products used to support fitness and hobbies. Rebounding
from 2011, leisure and personal goods specialist retailers reports 5% sales growth
during 2012. The total revenue from this channel reached Ps97.5 billion and is mostly
generated from the middle-income buyers.
According to the Philippine stock market composite index (end of period) property had
2,652.51 at the end of October having a good indication that it is performing well. The
economic growth rate as forecasted is growing from 4.20% to 4.70% this 2013 and will
become 5% in the year 2017.
2007a 6,892.7 6.6
2008 7,720.9 4.2
2009 8,026.1 1.1
2010 9,003.5 7.6
2011 9,735.5 3.9
2012 10,568.4 6.6
2013(Projected)b 11,198.4 6.0
2014 (Projected) 11,924.1 6.5
2015 (Projected) 12,649.8 6.1
2016 (Projected) 13,375.5 5.7
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And based on the figures shown in the gross Domestic product, Philippines for the
annual percentage change the GDP of the Philippines is steadily increasing. It means
that Araneta Center, Inc particularly Gateway mall had a big opportunity to further
strengthen the company and eventually outshine the other competitors that are being
the market leader in the industry.
The economy is slowing but it is still growing faster than potential. Real GDP should
grow by 6.6% in 2013 down from 6.8% in 2012. Support comes from domestic
demand and government spending. Fixed investment is also rising. Despite the
economys rapid growth employment creation is a challenge. Officials hope to hold the
budget deficit to 2% of GDP through 2015. If this target is met, it will substantially
improve investor confidence and bolster the governments ability to respond to shocks.
3.4 Technological
The Philippines technology, communications and media (TCM) sector grew below its
potential during 2006-2011 due to a lack of investment and an existing rural-urban
digital divide. Broadband Internet penetration and consumer spending on
communications are expected to post stronger gains in the coming years, backed by
network expansions and rising incomes. The level of social media usage is high among
Filipino Internet users, which will give a boost to online advertising and retailing.
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The digital divide the difference in Internet access and usage between emerging
market economies (EMEs) and advanced economies grew marginally wider between
2007 and 2012 but is set to narrow over the coming years up to 2020.
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EMEs, however, continue to have the highest number of Internet users and subscribers
in the world having significant implications on the business environment and consumer
markets.
Crowd sourcing, the outsourcing of tasks to the online public, is close to reaching its
peak as the initial trend-led phase begins to recede, with the next stage of development
likely to be crucial in determining the segment's future. In developed markets, the online
tool's usage is increasingly moving to niche projects and state-led initiatives, while
emerging Asian economies may hold the key to future growth as crowd sourcing
platforms gradually enter the local mainstream.
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2.3.5 Demographic
Factor Implication Effect
The NCR population is
expected to increase from
12,500,421 in year end
2013 to 12,722,928 by
year end 2014
A 1.74 % increase in the
total market for the property
industry
Potential Increase in
Customers going to malls
that will lead to greater
sales and revenue.

4. THREATS AND OPPORTUNITIES
Threats
These are the dangers the firm can face outside their organization and should not be
ignored.
Changes in Macro-
Environment
Effect on Determinants Conclusion
More improvements and More promising results Increase intensity of rivalry
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new and developments by
competitors

and higher performance
to attract more
consumers and beat the
other players within the
industry
among competitors
Substitute like E-commerce
(online shops) is growing
People are becoming
more inclined in using
this kinds of new
substitutes, posing a
threat to physical stores
Increase the threat of
substitutes
Events of Competitors
offered in their malls
Buyers tend to weigh
things out and becoming
more sophisticated when
choosing. But events can
be one they look for
when choosing which
malls they want to go
Increase the bargaining
power of buyers
The companies within the
industry is becoming
cluttered already because
of New Entrants
Competitors becoming
only a mile away from
each other. Making the
competition more intense
Increase intensity rivalry
among competitors
Growing number of
substitutes that offers
comparable or better
People tend to switch to
substitutes because of
the perceive value it
Increase the threat of
substitutes
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products and services gives to the customers

OPPORTUNITIES
These are opportunities that a firm can tap because it may provide a growth in the
different aspects of the organization such as increased market share or increased profit.
Changes in Macro-
Environment
Effect on Determinants Conclusion
Modernization of Filipino
life
People will not only stay on
their house to spend time
with family but there is a
change of behavior were
they usually spend their
time going out
among competitors
The Development in the
economic growth of the
country is improving
Increase in the number of
purchase and rentals by the
tenants and customers
because of the good
performance of the country
Decrease bargaining power
of buyers
Increased demand for
condominiums and
apartments because of
the growing population
and people residing in
More buildings will be built
around the metro to cater
all the working
professionals that will
reside near business
Increase demand of buyers
24

business centers centers and because of the
growing population
Online Growth People are now into social
networking sites thus there
will be new ways to tap on
new customers
among competitors
Movement of the property
development industry on
malls and retail district
rather than relying alone
on real estate
Property developers now
focus on shopping centers
and retail districts because
of flexibility during
economic distress because
it is more likely to be hit by
higher interest rates and
lower consumer
confidence.
Decrease bargaining power
of suppliers

4.1 BASIS: EFFECT OF POTENTIAL CHANGES IN THE MACRO-
ENVIRONMENT
IMPACT ON THE RIVALRY AMONG COMPETITORS
Increasing number of new entrants make the firms do certain strategies and tactics to
protect their market share or grab it from the other players in the industry. Thry seek
more projects and more interesting and unique ideas on how they can attract and grab
their target market more than the other firms in the industry. And because of increasing
attractiveness in these industry new entrants are coming and trying to put up more in
25

places the competitors doesnt reach yet and these attractive places are being eyed on
many companies. That they often end up being cluttered in the same areas in the
region.
IMPACT ON NEW SUBSTITUTES
In the era of having advanced technology and open information it is becoming easy to
make replicas or substitutes on the things people normally used to buy. They are now
being offered with lots of options by a lot of companies.
And also innovation can be one they offer something different at a much lower price and
it really catches the attention of the shoppers.
IMPACT ON BARGAINING POWER OF THE BUYERS
It always boils down to the supply and demand, and because of having a lot of
companies offering the same service and products then people have a lot of choices to
choose from thus they have more power than the suppliers. Especially that midnight
markets and other bazaars are sprouting then malls are now experiencing threat and is
force to make new strategies to gain more trust towards the price/quality capped
shoppers.
4.2 THE RESULTING CHANGES IN THE PRESENT TASK
ENVIRONMENT
Summary of the determinants and how it affects Michael Porters 5 forces model:

Determinants of
Competitive
Forces

Analysis of
Determinant

Impact to
Competitive
Force

Conclusion
Bargaining Power of LOW
26

Suppliers
The item being
supplied is a
commodity, that
is, an item readily
available from
many suppliers
High Increase
Seller Switching
cost to alternative
suppliers is low
High Increase
There is a surge in
the availability of
supplies (thus
greatly weakening
supplier pricing
power)
High Increase
Bargaining Power of
Buyers
HIGH
Identity of buyer
adds prestige to
the sellers list of
customers
High Increase
Quality and
Quantity of
information
High Increase
27

available to buyers
improve
Buyers have the
ability to postpone
purchases until
later if they do not
like the present
deals being
offered by sellers

High Increase
Intensity Rivalry
among Competitors
HIGH
Competing sellers
are active in
making fresh
moves to improve
their market
standing and
business
performance
High Increase
The number of
rivals increase and
rivals are of
roughly equal size
and competitive
High Increase
28

capability
One or more rivals
are dissatisfied
with their current
position and
market share and
make aggressive
moves to attract
more customers
High Increase
Threat of substitute
products
HIGH
Readily available
and attractively
priced
High Increase
Substitutes as
being comparable
or better
High Increase
Threat of New
Entrants
LOW
Capital
requirements
and/or other
specialized
resource
requirements
High Increase
Regulatory High Increase
29

policies

5. EXTERNAL FACTOR EVALUATION MATRIX (EFE)
Factor Weight Rating Weighted
Average
OPPORTUNITIES
Modernization of
Filipino life
0.1 3 0.3
The Development in
the economic
growth of the
country is improving
0.2 3 0.6
Increased demand
for condominiums
and apartments
because of the
growing population
and people residing
in business centers
0.03 4 0.14
Online Growth
0.02 3 0.06
Movement of the
property
development
industry on malls
and retail district
0.05 4 0.2
30

rather than relying
alone on real estate
THREATS
More improvements
and new and
developments by
competitors
0.4 3 0.12
Substitute like E-
commerce (online
shops) is growing
0.1 2 0.2
Events of
Competitors offered
in their malls
0.05 3 0.15
The competitors
within the industry is
becoming cluttered
already because of
New Entrants
0.03 3 0.09
Growing number of
substitutes that
offers comparable or
better products and
services
0.02 3 0.06
Total 1.00 1.92
31

6. INDUSTRY AND COMPETITIVE ANALYSIS
DIMENSION DEFINITION
PRICE/QUALITY RANGE
Is the process of determining what a
company will receive in exchange for its
product. Pricing factors are manufacturing
cost, market place, competition, market
condition, brand, and quality of product.
GEOGRAPHIC AREAS
The coverage of a firm in local, regional,
national or global. It is also the market
that a company caters to in their
respective industry.
DEGREE OF VERTICAL
INTEGRATION
It is the extent of value added that can be
seen in the level of forward or backward
integration including whether the firm has
confined distribution, exclusive or owned
retail stores.
PRODUCT LINE BREADTH
It is the number of product lines offered by
a company
USE OF DISTRIBUTION
CHANNELS
A chain of intermediaries that is passing
the product down the chain to the next one
before it finally reaches the customer. This
process is called distribution channel and
they have their own logistics.
32

DEGREE OF SERVICES OFFERED
The degree to which it provides additional
services with Its product line. This kind of
strategy could be seen as part of vertical
integration but is usefully divided for logical
purposes

6.1 STRATEGIC MAP
Company Description
Trinoma
TriNoma is located at the corner
of EDSA and North Avenue in Quezon
City. Strategically located in "North
Triangle", the mall is bound by three major
thoroughfares, namely, North
Avenue, EDSA and Mindanao Avenue
Extension. Located on a 20-hectare parcel
of land, TriNoma has a gross leasable
area of 195,000 square meters, which
includes the mall's major anchor, The
Landmark Supermarket and Department
Store. It is directly connected to the North
Avenue MRT Station as the mall itself sits
atop the MRT-3 Depot. It will be almost
connected to the Yellow Line's
33

proposed North Avenue LRT Station. A
pedestrian overpass has also been
constructed to connect with SM City North
EDSA.
16

Glorietta
Glorietta is a large shopping mall in
the Ayala Center, Makati, Metro
Manila, Philippines. The mall is owned by
the Zobel de Ayala family and operated
through its holding company, the Ayala
Corporation. The mall is divided into five
sections (named Glorietta 15) and
contains many shops and restaurants, as
well as cinemas, a gym, arcades and a
large central activity center, often used to
stage special events. Glorietta 1-4 is
integrated with the nearby Greenbelt
Mall, SM Makati, Rustan's Makati and The
Landmark, a department store. Glorietta 5
is fully detached, located in front of
Hotel InterContinental Manila and beside
Rustan's Department Store.
17

Greenbelt
Greenbelt is a shopping mall located
at Ayala Center, Makati City, Metro Manila,
which is just near Glorietta and SM Makati.
It is owned by Ayala Malls, a real-estate
34

subsidiary of Ayala Land, which is an
affiliate of Ayala Corporation. It opened in
the 1980s and it is one of Ayala
Corporation's flagship projects. The mall
offers a mix of high-end retail shops,
restaurants, amenities, leisure and
entertainment in the Philippines. Currently,
the mall has five sections, two are indoor
buildings and the other two buildings are
open-air shopping. The most recent
addition, Greenbelt 5, opened in 2007.
18

BGC
The Bonifacio Global City Center forms the
physical core of the Bonifacio Global City
and is essentially designed as a three-by-
three matrix of high-tech offices and
residential buildings, bustling retail outlets
and pedestrian-friendly roads and
walkways. The grid approach ensures a
city center that is easy to navigate. The 5th
and 11th Avenues and 32nd and 26th
Streets serve as the boundaries of the city
center.
The Retail Promenade which
encompasses the 29th Street is
characterized by abundant landscaped
areas. Its design concept is centered on
an east-west central access with well-
known brands and activity pods. It offers
retail at the ground level and offices at the
second floor.
The City Square Blocks feature
landscaped areas and parks. This is the
place for community activities, where
people in Bonifacio Global City can come
together. It is an ideal location for hotels,
conference facilities and entertainment
venues.
The Garden Square Blocks offer mixed-
use neighborhoods, each oriented toward
a green landscaped park with informal play
35

areas.
The Main Boulevard Blocks mark the
visual edge of the city centre. The area is
ideal for ground-level retail and public-
oriented uses close to the transit center.
19

SM mall of Asia
More than just a Mall, the SM Mall Of Asia
is a tourist destination that has raised the
standard of shopping, leisure and
entertainment in the Philippines.
Almost four hectares of floor area. 8,000
parking slots. 5,000 square meters allotted
for public utility vehicles. 100 slots for
tourist buses. Almost one kilometer in
length, and a perimeter of almost 2
kilometers. Close to 2 million bags of
cement used to build it and 44,000 gallons
of paint consumed. It also has 1.9 million
floor tiles installed in it. One wonders if this
scale of development was for an airport
terminal, a seaport, or an industrial
complex. Interestingly, however, these
facts speak about the Philippines largest
and worlds third largest mall, the 407,000
square-meter SM Mall of Asia.
20

36

Strategic Mapping

HIGH

MEDIUM

LOW

NARROW WIDE

GATEWAY

SM MALL OF
ASIA

BGC

TRINOMA
Cover same
geographic areas
GREENBELT
Product line breadth

GLORIETTA
37

High

Medium

Low

NARROW WIDE

SM MALL OF
ASIA
GREENBELT

GATEWAY

BGC

TRINOMA
Product line breadth
Offers buyers similar services

GLORIETTA
38

High

Medium

Low
Narrow WIDE

Same Price Quality
Range
Cover same
geographic areas

GATEWAY

TRINOMA

SM MALL OF
ASIA
GREENBELT

BGC

GLORIETTA
39

7. COMPETITIVE PERFORMANCE MATRIX (CPM)
The competitive performance matrix (CPM) identifies a firms major
competitors and its particular strengths and weaknesses in relation to sample
firms strategic position.
Gateway BGC SM Mall of
Asia
Critical
success
factors
Weig
ht
Ratin
g
Weighte
d score
Ratin
g
Weighte
d score
Ratin
g
Weighte
d score
Advertising 0.3 3 0.9 3 0.9 4 1.2
Strategic
placing of
infrastructure
s
0.2 4 0.8 4 0.8 3 0.6
Price
competitivene
ss
0.11 2 0.22 2 0.22 4 0.44
Management 0.08 2 0.18 3 0.27 5 0.45
Sales
distribution
0.09 3 0.27 3 0.27 4 0.36
Product
offerings
0.03 2 0.06 3 0.09 4 0.12
Customer
loyalty
0.04 2 0.08 3 0.12 4 0.16
40

Interior
Design
0.15 2 0.3 4 0.6 3 0.45
Total 1 2.81 3.12 3.93

Glorietta Trinoma Greenbelt
Critical
success
factors
Weig
ht
Ratin
g
Weighte
d score
Ratin
g
Weighte
d score
Ratin
g
Weighte
d score
Advertising 0.3 2 0.6 3 0.9 2 0.6
Strategic
placing of
infrastructure
s
0.2 3 0.6 3 0.6 3 0.6
Price
competitivene
ss
0.11 3 0.33 4 0.44 2 0.22
Management 0.09 2 0.18 3 0.27 2 0.18
Sales
distribution
0.09 3 0.27 3 0.27 3 0.27
Product
offerings
0.03 3 0.09 3 0.09 3 0.09
Customer
loyalty
0.04 3 0.12 3 0.12 4 0.16
41

Interior
Design
0.15 3 0.45 3 0.45 3 0.45
Total 1 2.64 3.14 2.57

VI. ANALYSIS OF INTERNAL ENVIRONMENT
1. COMPANY OVERVIEW
The Araneta Group is a progressive and diversified group of companies anchored on
food, leisure, and property development. With a long history of embarking on business
ventures that are characterized as the first, the biggest, and the best in its class, and
with more than 70 years of diverse business experience, the Araneta Group is prepared
to take up the challenges of the 21st Century. The groups 4,000 officers and
employees are committed to a culture of excellence, integrity, loyalty, and pride.
The Araneta Group is composed of four strategic business units, namely the Araneta
Center Inc., Philippine Pizza Inc., Uniprom Inc. and Progressive Development
Corporation.
PROPERTIES OF ARANETA CENTER, INC.
Gateway Mall
A complete environment tailored to the sophisticated shopper, Gateway Mall comprises
five levels of the finest in shopping, dining and entertainment.
42

Gateway Mall boasts of multiple anchors, plus the flagship stores of leading world-class
brands. Shoppers have a wide range of options, with more than 200 shops supported
by five-star customer service to make shopping convenient and enjoyable.
From its visionary plan to its fulfillment, Gateway Mall has brought elegance to shopping
and set the standard for the upscale malling experience.
Ali Mall
Named after legendary boxing champion Muhammad Ali, Ali Mall was the very first truly
modern shopping mall in the Philippines. It continues to be one of the finest shopping
addresses around. With its signature skeleton escalators, sparkling hallways and
breathtaking atrium, the mall provides four floors of bustling, simply gorgeous shopping
space.
Over 250 stores anchored by Handyman, Mercury Drug, National Bookstore &
Rustans Expresslane.
Food Strip and Food Gallery offering a variety of food choices: Gerrys Grill, Pancake
House, Tokyo Tokyo, Maxs Restaurant, and many
Farmers Plaza
A 5-level shopping complex boasting a complete mix of international and local shops,
dining outlets and entertainment facilities, Farmers Plaza puts special attention to its
world-class facilities and amenities, resulting in the safety, security and convenienceof
all its patronsand visitors.
Over 230 stores anchored by National Bookstore, Handyman, Mercury Drug & Value
Point.
Directly linked to the MRT-3 station
43

Strategically located along Metro Manilas 2 busiest thoroughfares: EDSA and Aurora
Boulevard
Smart Araneta Coliseum
Smart Araneta Coliseum, also known as the Big Dome, is what makes Smart Araneta
Center unique. It has been the centerpiece of the Philippines entertainment world for
more than forty five years. It houses different events ranging from entertainment events,
business ventures, religious events to sports events. The Araneta Coliseum is and will
remain to be the number one entertainment venue in the Philippines and it will hold this
distinction well into the 21st century.
Farmers Market
Farmers Market is the cleanest, the largest, and the best wet market in the country. We
take pride in bringing you only the freshest fish, meat, vegetables, fruits, and flowers at
the most reasonable prices. Overall strategic direction and shared services. PDC is
also involved in formulating business development plans for the Group.

2. CORPORATE VALUES
Araneta Center to launch eco-friendly Green & Go Shuttles
Araneta Center moves forward with its environment preservation goals as it launches
the operation of its Green & Go Shuttles along with the companys CSR program for
environmental awareness, Oplan Araneta Center, on June 23, 2009, at the Araneta
grounds. Four environment-friendly shuttles (e-shuttles) will be inaugurated in simple
ceremonies graced by Quezon City Mayor Sonny Belmonte, Bb. Pilipinas beauty
queens, and some of the countrys top PBA cagers.
44

The e-shuttle is a battery-powered vehicle that guarantees no harmful emissions such
as particulates (soot), hydrocarbons, carbon monoxide, or various oxides of nitrogen. It
has a seating capacity of 14 that transports Araneta Center customers between
Gateway Mall and Ali Mall for free. Although this free transport service is open to
everybody within Araneta Center, it also promises to be beneficial for senior citizens
and the disabled who would want to go around the area for recreation purposes. Like
everything else in Araneta Center, the comfort and convenience of our patrons come
first, confirms Rene De la Cruz, COO of the Araneta Group.
The Green & Go shuttle and Oplan Araneta Center, which promotes recycling and trash
segregation, are just some of Araneta Centers green efforts in collaboration with ABS
CBN Foundations Bantay Kalikasan, and endorsed by the Quezon City government
and the Philippine Basketball Association. It complements the Quezon City
governments eco-awareness campaign involving a green building ordinance and green
fuels provision. While the e-shuttle ride is being offered to the public for free, there are
plans to include waste management as an integral part of the environment conservation
program.

45

46

RECENT CSR CAMPAIGN

Araneta Center Eco Bag
One Araneta Center Eco Bag goes a long way to help preserve the environment. Made
from muslim cloth, these bags are reusable, biodegrable, and built to last!
Details:
For every P500 single receipt from any Araneta Center store or restaurant, or every 4
cinema tickets from Gateway or Ali Mall cineplex, you can get one Eco Bag for only
P50! Available till February 28 only. Inquire at the mall concierge for more details.

47

3. VALUE CHAIN ANALYSIS

PRIMARY ACTIVITIES

SUPPLY CHAIN MANAGEMENT

Supply
Chain
management

Operations

Service

Distribution

Sales and
Marketing

Profit
Margin

Primary
Activities
Product R & D, Technology, and Systems
Development
Human resource Management
General Administration
Support
Activities
48

Araneta Center, Inc. is responsible in sourcing and managing various product groups
that will cater to each business units requirements. Having different malls under one
company makes them have the same suppliers to make everything less hassle. This is
to make sure that they would be able to trace everything when the supplies and other
requirements are not met by the suppliers. Araneta Center, Inc has their own Supply
Chain Manager that will be responsible in sourcing and managing various product
groups that will cater to each business units requirements, making sure that new and
existing products are sourced at the lowest cost of acquisition in line with the
established cost objectives. They have a system in receiving, monitoring and storing
supplies, materials and equipment.

Operations

Araneta Center, Inc always improve their operational and strategic purchasing tools and
processes required. They also monitor office consumption behavior as well as to stay
up-to-date on new and emerging products in the market in order to provide all
departments with adequate quality supplies thereby supporting them in their daily
business operations. They always check the vicinity to make sure everything is safe
especially that a lot of people come to malls and they also make sure that their tenants
are not violating any terms and conditions in their agreement and operating at a orderly
manner.

49

Distribution

The marketing department is in charge of the distribution in Araneta Center, Inc. They
are in charge of releasing announcements and the things that are needed by the
tenants in the malls to always keep up to date. They always perform ongoing efforts to
improve implemented systems, procedures and delivery processes that will increase the
efficiency, and effectiveness and flexibility of the team and their services.

Marketing and Sales

The marketing department comprises of several units. Each employee under the
marketing department of Araneta, Inc has their own respective jobs. They have pr
officer and managers that are in charge of doing press release for the media for the
events being held in malls and in Smart Araneta Coliseum. And Brand alliance
manager that makes defining partnership opportunities, responsible for executive
relationship development, strategic planning, program development and field channel
engagement. And promotional manager that do all the promotions needed to increase
brand awareness and do strategic plans to attract customers. And officers designated
to each malls (snaxx and foodcourt, alimall, gateway, farmers market and farmers
plaza) and creatives team that are in charge of the posters and design in the press
release. And market researchers. All of them have the same aim to make the company
increase profit and market share and making their best to make the brand that they
represent to be the best among all the competitors.

50

Service

The leasing department are the ones that interact with potential and interested clients
that wants to partner with Araneta Center, Inc. they make sure that the demands of the
clients are being met and if any revisions if needed in the contract to benefit both
parties. They handle big and small accounts depending on how big the area and how
many many they will rent in the mall. They are hands on with their clients calling them
and keeping them updated to all important matters.

Support activities

Product R & D, Technology and System Development

SAP Business All-in-One is the newly software being implemented by Araneta Center,
Inc. to increase efficiency and to make transactions faster. IT infrastructure will support
the companys growth; having a unified business management solution on an integrated
platform that offers the flexibility to adapt to changing business requirements. With SAP
All-in-One, It can help the organization focus on customers and gain key business
benefits.
Comprehensive Provides broad and deep business functionality that leverages
industry-specific best practices and streamlines processes
Scalable Can grow and adapt as your business needs change
Reliable Is built on a proven foundation of SAP software and technology
Predictable Ensures rapid payback with predictable time to value at an affordable
cost with SAP Business All-in-One you can:
Get full visibility across your entire business
51

Address your industry-specific requirements
Connect with your network of customers, suppliers, and business partners
Accounting and Financials Create accurate financial statements and integrate all
operative transactions throughout the company. Sales and Service Meet customer
demands, support the entire order-to-cash process, and provide after-sales support.
Procurement and Logistics Execution Control costs and manage the full
sourcing and procurement cycle.
Inventory Management Track the quantity, value, and movement of inventory in
real time.
Human Capital Management Manage staffing change and streamline payroll
processes.
Product Development and Manufacturing Improve the product life-cycle
process and manufacturing operations.
Reporting and Analytics Plan, measure, and control organizational processes.
Corporate Services Lower administrative costs, increase transparency of
operations, and improve adherence to corporate, legal, and regulatory
requirements.

Human Resource Management

The hr department of Araneta Center, Inc is the one that looks and hires for all the
employees of all business units. Having several businesses under one company can
be quite hard to manage depending on its size and the hr department is responsible for
all the employees. All interested employees are encouraged to email them that can be
seen in every website of Araneta Center, Inc. They are responsible for Payroll
52

administration, including produce checks, handling taxes, and dealing with sick time
and vacation time. They also have Employee Risk management which includes
workers' compensation, dispute resolution, safety inspection, office policies and
handbooks to make sure every employee will be able to act accordingly to the rules
and regulation of the company.

General Administration
Araneta center, Inc has several departments that support the primary activities of the
company they have purchasing department, finance department and also engineering
and development division. They are billed with the task to research and monitor the
company's buying decisions. They monitor the purchasing process and ensure that it
stays within the parameters of keeping the company profitable. And the finance
department is in charge of all the finances of the company and the engineering and
development division its duties are primarily the detailed planning and construction of
infrastructure to be operated by other departments.

53

4. FINANCIAL ANALYSIS

4.1 SEC Financial Statement

Historical Income Statement

Araneta Center, Inc.
Statement of Income
For the Years Ended December 31, 2010, 2011, 2012

2010 2011 2012

NET SALES P 1, 261,534,857 P 1,371,688,489 P 1,407,554,183

COST OF SALES 758,157,022 777,835,730 835,144,091

GROSS PROFIT 503,377,835 593,852,759 572,410,092

TAX EXPENSE 150,664,800 183,567,990 166,417,831

NET PROFIT P 352,719,035 P 1,410,284,769 P 405,992,261

54

1. Horizontal Analysis

Statements of Income
Horizontal Analysis
For the Years Ended December 31, 2008, 2009, 2010 and 2011

2010-2011 2011-2012
NET SALES 8.73% 2.61%
COST OF SALES 2.60%
________
7.37%
________
GROSS PROFIT 17.97% (3.61%)
TAX EXPENSE 21.84%
________
(9.34%)
________
NET PROFIT 16.32% (1.05%)

55

2. Vertical Analysis

Statements of Income
Vertical Analysis
For the Years Ended December 31, 2010, 2011 and 2012

2010 2011 2012
NET SALES 100.00% 100.00% 100.00%
COST OF SALES 60.1%
_______
56.71%
_______
59.33%
_______
GROSS PROFIT 39.90% 43.29% 40.67%
TAX EXPENSE 11.94%
_______
13.38%
_______
11.82%
_______
NET PROFIT 27.96% 29.91% 28.84%

56

FINANCIAL ANALYSIS

This analysis is where there is transformation of data into a form that can be
used to monitor and evaluate the firms financial position, to plan future financing,
and to designate the size of the firm and its rate of growth.

BELOW ARE THE FINANCIAL STATEMENTS OF ARANETA CENTER,
INC.

STATEMENTS OF FINANCIAL POSITION
December 31, 2010 AND 2009

A S S E T S
2010 2009
CURRENT ASSETS

Cash and cash equivalents (Notes 3b, 3c, 5, 25, &27) P 1,131,190,902 P 487,791,563
Receivables (Notes 3c, 6, 25 & 27) 559,227,902 481,169,243
Inventories 13,061,224 13,104,475
Other current assets (Note 8) 63,789,766 31,645,680
Total Current Assets 1,767,319,094 1,013,710,961

NON- CURRENT ASSETS

Property and equipment, net (Notes 3f, & 9) 17,769,172,997 17,356,849,708
Investments in available for sale securities (3c, 11, 25 &27) 603,120 603,120
Investments in subsidiaries and affiliates (Notes 3a & 12) 1,305,306,995 1,305,306,995
Investments in properties (Notes 3e, 4 & 10) 3,000,000 3,000,000
Other non-current assets (Notes 3k & 13) 2,211,345,117 2,009,526,555
Total Non- Current Assets 21,289,428,229 20,675,286,378

T O T A L A S S E T S P 23,056,747,323 P 21,688,997,339

57

LIABILITIES AND EQUITY
CURRENT LIABILITES
BANK LOANS- CURRENT (Notes 3c, 14, 25, & 27) P 594,816,470 P 439,682,540
Trade and other payables (Notes 3c, 14, 25, & 27) 1,318,833,725 612,121,985
Income tax payable (Note 3h) 57,128,983 36,894,084
Total Current Liabilities 1,970,779,178 1,088,698,609

NON- CURRENT LIABILITES
Bank loans- net of current portion (Notes 3f, & 9) 2,335,089,860 2,427,132,936
Other non-current liabilities (Notes 3c, 14, 25, & 27) 2,008,429,865 1,964,210,023
Total Non- Current Liabilities 4,343,519,725 4,391,342,959
Total Liabilities 6,314,298,903 5,480,041,568

Equity (Exhibit C) (Note 17)
Capital stock P1 par value
Authorized- 1 billion shares
Issued and outstanding 412,218,640 412,218,640
Subscribed capital stock 469,189,498 77,452,547
Distributable stock dividends - 391,736,951
Deposit for future subscription 105,000,000 -
Revaluation increment- Land (Note 3f) 14,000,206,150 14,000,206,150
Appropriated retained earnings 1,200,000,000 700,000,000
Unappropriated retained earnings 555,834,132 627,341,483
Total equity 16,742,448,420 16,208,955,771

TOTAL LIABILITES AND EQUITY P 23,056,747,323 P 21,688,997,339

58

STATEMENTS OF REVENUES
FOR THE YEAR ENDED DECEMBER 31, 2010 AND 2009

Revenues 2010 2009

Rental (Notes 3i, 3j, &4) P 1,248,140,151 P 1,060,462,359
Sales (Note 3i) 13,394,706 -
Total Revenues 1,261,534,857 1,060,462,359
COST OF REVENUES (Notes 3i, &18) 758,157,022 624,324,112
GROSS INCOME 503,377,835 436,138,247
OTHER INCOME
Interest (Note 3i) 25,200,953 18,585,941
Dividend income (Note3i) 70,003,920 87,567,107
Others (Note 3i) 258,137,575 235,120,702
Total Other Income 353,342,448 341,273,750
TOTAL INCOME 856,720,283 777,411,997
OPERATING EXPENSES
General and administrative expenses (Notes 3i & 20) 113,416,269 105,406,949
Financial charges (Notes 3i, 7 21) 164,146,565 191,513,490
Total operating expenses 277,562,834 269,920,439
NET INCOME BEFORE INCOME TAX 579,157,449 480,491,558
INCOME TAX EXPENSE (NOTE 3H) 150,664,800 116,455,686
NET INCOME FOR THE YEARS (TO EXHIBIT C) P 428,492,649 364,035,872

59

STATEMENTS OF CHANGES IN EQUITY
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

SHARE
CAPITAL SHARE DISTRIBUTABLE DEPOSIT REVALUATION APPROPRIATED UNAPPROPRIATED TOTAL
ISSUED & CAPITAL STOCK FOR FUTURE INCREMENT RETAINED RETAINED
OUTSTANDING SUBSCRIBED DIVIDEND SUBSCRIPTION IN PROPERTY EARNINGS EARNINGS

BALANCE, DEC 31, 2008 P 287,218,640 P 77,452,547 P125, 000,000 P - P 14,000,206,150 P 700,000,000 P 653,391,942 P15, 843,269,279
Net income for the year 364,035,872 364,035,872
Distributed Stock Dividend 125,000,000 (125,000,000) -
Distributable Stock Dividend 391,736,951 (391,736,951) -
Prior years adjustment 1,650,620 1,650,620
BALANCE, DEC 31, 2009 412,218,640 77,452,547 391,736,951 - 14,000,206,150 700,000,000 627,341,483 16,208,955,771
Appropriation for the year 500,000,000 (500,000,000) -
Deposits against subscriptions 105,000,000 105,000,000
BALANCE, DECEMBER 31, 2010
(To Exhibit A) P 412,218,640 P 469,189,498 P - P 105,000,000 P 14,000,206,150 P1, 200,000,000 P 555,834,132 P16, 742,448,420

60

STATEMENTS OF CASH FLOWS

2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the years (Exhibit B) P 428,492,649 P 364,035,872
Adjustments to reconcile net income to
net cash flows from operating activities
Depreciation (Notes 9 & 18) 298,623,044 268,742,890
Prior years adjustment - 1,650,620
Changes in operating assets and liabilities
(Increase) decrease in:
Receivables (78,108,659) 68,907,528
Inventories 43,251 (5,551,512)
Other current assets (32,144,086) 13,108,916
Increase (Decrease) in:
Trade and other payables 706,711,740 (19,947,983)
Bank loans current 155,133,930 4,146,826
Income tax payable 20,234,899 3,129,125

Net cash flows from Operating Activities 1,498,986,768 698,222,282

CASH USED IN INVESTING ACTIVITIES
Additions in property and equipment (note 9) (710,946,333) (296,490,632)
Deposits against subscriptions (Note 17) 105,000,000 -
Other non-current assets (210,818,562) (290,769,604)

Net Cash Used in Investing Activities (807,764,895) (587,260,236)

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Bank loans- net of current (92,043,076) 51,388,889
Other non-current liabilities 44,219,842 (91,602,144)

Net cash flows from (used in) financing activities (47,823,234) (40,213,255)
NET INCREASE IN CASH AND CASH EQUIVALENTS P 643,398,639 P 70, 748,791
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 487,791,563 417,042,772
CASH AND CASH EQUIVALENTS, END OF THE YEAR P 1,131,190,202 P 487,791,563
61


A S S E T S
2011 2010
CURRENT ASSETS

Cash and cash equivalents (Notes 3b, 3c, 5, 25, &27) P 1,182,103,498 P 1,131,190,202
Receivables (Notes 3c, 4, 6, 25 & 27) 312,527,115 451,928,901
Inventories (Notes 3d & 7) 10,122,331 13,061,224
Other current assets (Notes 3e & 8) 80,356,749 63,789,766

NON- CURRENT ASSETS

Property and equipment, net (Notes 3g, 4 & 9) 18,210,546,835 17,769,172,997
Investments in available for sale securities (3c, 11, 25 &27) 603,020 603,120
Investments in subsidiaries and affiliates (Notes 3a & 12) 1,563,968,195 1,305,306,995
Investments in properties (Notes 3f, 4 & 10) 3,000,000 3,000,000
Other non-current assets (Notes 3l & 13) 2,481,746,322 2,318,694,118

T O T A L A S S E T S P 23,844,974,065 P 23,056,747,323

62

CURRENT LIABILITES
BANK LOANS- CURRENT (Notes 3c, 14, 25, & 27) P 739,980,038 P 594,816,470
Trade and other payables (Notes 3c, 15, 25, & 27) 671,482,065 1,004,573,324
Income tax payable (Note 3i) 74,898,134 57,128,983

Bank loans- net of current portion (Notes 3c, 14, 25, & 27) 2,716,692,038 2,335,089,860
Other non-current liabilities (Notes 3c, 14, 25, & 27) 2,467,773,336 2,322,690,266

EQUITY (Exhibit C) (Note 17)
Capital stock P1 par value (Note 3m)
Subscribed capital stock 469,189,498 469,189,498
Deposit for future subscription (Note 17) 105,000,000 105,000,000
Distributable stock dividends (Note 17) 88,140,814 -
Revaluation increment- Land (Note 3g) 14,000,206,150 14,000,206,150
Appropriated retained earnings (Note 17) 2,000,000,000 1,200,000,000
Unappropriated retained earnings (Note 3m) 99,393,231 555,834,132
Total equity 17,174,148,333 16,742,448,420


63

FOR THE YEAR ENDED DECEMBER 31, 2011 AND 2010

Revenues 2011 2010

Rental (Notes 3j, 3k, &4) P 1,358,497,691 P 1,248,140,151
Sales (Note 3j) 13,190,798 13,394,706
Total Revenues 1,371,688,489 1,261,534,857
COST OF REVENUES (Notes 3j, &18) 777,835,730 758,157,022
GROSS INCOME 593,852,759 503,377,835
OTHER INCOME
Interest (Note 3j) 26,157,120 25,200,953
Dividend income (Note3j) 2,332 70,003,920
Others (Note 3j) 262,883,184 258,137,575
Total Other Income 289,042,636 353,342,448
TOTAL INCOME 882,895,395 856,720,283
OPERATING EXPENSES
General and administrative expenses (Notes 3i & 20) 138,867,340 113,416,269
Financial charges (Notes 3j, 14 & 21) 128,760,152 164,146,565
NET INCOME BEFORE INCOME TAX 615,267,903 579,157,449
INCOME TAX EXPENSE (NOTE 3i & 22) 183,567,990 150,664,800
NET INCOME FOR THE YEARS (TO EXHIBIT C) P 431,699,913 428,492,649

64

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2011 AND 2010

SHARE

BALANCE, DEC 31, 2009 P 412,218,640 P 77,452,547 P391, 736,951 P - P 14,000,206,150 P 700,000,000 P 627,341,483 P16, 208,955,771
Deposits against subscriptions 105,000,000 - 105,000,000
BALANCE, DEC 31, 2010 412,218,640 469,189,498 - 105,000, 000 14,000,206,150 1,200,000,000 555,834,132 16,742,448,420
(To Exhibit A) P 412,218,640 P 469,189,498 P 88,140,814 P 105,000,000 P 14,000,206,150 P2, 000,000,000 P 99,393,231 P17, 174,148,333

65


2011 2010
Net income for the years (Exhibit B) P 431,699,913 P 428,492,649
Prior years adjustment - -
Receivables 139,401,786 (78,108,659)
Inventories 2,938,893 43,251
Other current assets (16,566,983) (32,144,086)
Trade and other payables (333,091,259) 706,711,740
Income tax payable 17,769,151 20,234,899

Net cash flows from Operating Activities 707,978,960 1,498,986,768
Additions in property and equipment (Note 9) (762,037,608) (710,946,333)
Deposits against subscriptions (Note 17) - 105,000,000
Investments in available for sale securities 100 -
Investments in subsidiaries and affiliates (258,661,200) -
Other non-current assets (163,052,204) (201,818,562)

Net Cash Used in Investing Activities (1,183,750,912) (807,764,894)

CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Bank loans- net of current 381,602,178 (92,043,076)
Other non-current liabilities 145,083,070 44,219,842

Net cash flows from (used in) financing activities 526,685,248 (47,823,234)
NET INCREASE IN CASH AND CASH EQUIVALENTS P 50,913,296 P 643, 398,639
CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 1, 131,190,202 487,791,563
66

CASH AND CASH EQUIVALENTS, END OF THE YEAR P 1,182,103,498 P 1,131,190,202

A S S E T S
2012 2011
CURRENT ASSETS

Cash and cash equivalents (Notes 3, 5, 26, & 28) P 2,615,959,390 P 1,182,103,498
Receivables (Notes 3, 4, 6, 26 & 28) 1,461,472,019 312,527,115
Inventories (Notes 3 & 7) 8,292,960 10,112,331
Other current assets (Notes 3 & 8) 123,725,522 80,356,749

NON- CURRENT ASSETS

Property and equipment, net (Notes 3, 4 & 9) 19,724,942,030 18,210,546,835
Investments in available for sale securities (3, 11, 26 & 28) 603,020 603,020
Investments in subsidiaries and affiliates (Notes 3 & 12) 2,407,706,995 1,563,968,195
Investments in properties (Notes 3, 4 & 10) 3,000,000 3,000,000
Other non-current assets (Notes 3 & 13) 1,661,491,035 2,481,746,322

T O T A L A S S E T S P 28,007,192,971 P 23,844,974,065

67

CURRENT LIABILITES
BANK LOANS- CURRENT (Notes 3, 14, 26, & 28) P 744,890,873 P 739,980,159
Trade and other payables (Notes 3, 15, 26, & 28) 1, 022,307,442 671,482,065
Income tax payable (Notes 3 & 22) 48,645,820 74,898,134

Bank loans- net of current portion (Notes 3, 14, 26 & 28) 4,849,206,348 2,716,692,038
Other non-current liabilities (Notes 3, 14, 26, & 28) 2,730,337,300 2,467,773,336

Equity (Exhibit C) (Note 17)
Capital stock P1 par value (Note 3)
Subscribed capital stock - 469,189,498
Deposit for future subscription (Note 17) 105,000,000 105,000,000
Distributable stock dividends (Note 17) - 88,140,814
Revaluation increment- Land (Note 3) 14,000,206,150 14,000,206,150
Appropriated retained earnings (Note 17) 3,300,000,000 2,000,000,000
Unappropriated retained earnings (Note 3) 237,050,086 99,393,231
Total equity 18,611,805,188 17,174,148,333


68

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

Revenues 2012 2011

Rental (Notes 3) P 1,392,153,164 P 1,358,497,691
Sales (Note 3) 15,401,019 13,190,798
Total Revenues 1,407,554,183 1,371,688,489
COST OF REVENUES (Notes 3 & 18) 835,144,091 777,835,730
GROSS INCOME 572,410,092 593,852,759
OTHER INCOME (Note 3)
Interest 35,124,203 26,157,120
Dividend income 1,034,993,512 2,332
Others 272,698,247 262,883,184
Total Other Income 1,342,815,962 289,042,636
TOTAL INCOME 1,915,226,054 882,895,395
OPERATING EXPENSES
General and administrative expenses (Notes 3 & 20) 121,534,139 138,867,340
Financial charges (Notes 3, 14 & 21) 189,617,229 128,760,152
NET INCOME BEFORE INCOME TAX 1,604,074,686 615,267,903
INCOME TAX EXPENSE (NOTE 3 & 22) 166,417,831 183,567,990
NET INCOME FOR THE YEARS (TO EXHIBIT C) P 1,437,656,855 P 431,699,913

69

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2012 AND 2011

SHARE

BALANCE, DEC 31, 2010 P 412,218,640 P 469,189,498 P - P 105,000,000 P 14, 000,206,150 P 1,200,000,000 P 555,834,132 P16, 742,448,420
BALANCE, DEC 31, 2011 412,218,640 469,189,498 88,140,814 105,000, 000 14,000,206,150 2,000,000,000 99,393,231 17,174,148,333
Capital Stock issued 557,330,312 (469,189,498) (88,140,814)
Net income for the year 1,437,656,855 1,437,656,855
Appropriation for the year 1,300,000,000 (1,300,000,000) -
(To Exhibit A) P 969,548,952 P - P - P 105,000,000 P 14,000,206,150 P3, 300,000,000 P 237,050,086 P18, 611,805,188


2012 2011
Net income for the years (Exhibit B) P 1,437,656,855 P 431,699,913
Interest (35,124,203) (26,157,120)
Dividend (1,034,993,512) (2,332)
Financial charges 189,617,229 128,760,152
Net Cash Flow before Working Capital Charges 873,649,942 854,964,383
Receivables (1,148,994,904) 139,401,786
Inventories 1,829,371 2,938,893
Other current assets (43,368,773) (16,566,983)
Trade and other payables 350,825,377 (333,091,259)
Income tax payable (26,252,314) 17,769,151

Net cash flows from Operating Activities 12,649,413 810,579,660
Additions in property and equipment (Note 9) (1,830,888,768) (762,037,608)
Investments in available for sale securities - 100
Investments in subsidiaries and affiliates (843,738,800) (258,661,200)
Other non-current assets 820,255,287 (163,052,204)
Dividend 1,034,993,512 2,332
Net Cash Used in Investing Activities (819,378,769) (1,183,748,580)

CASH FLOWS FROM FINANCING ACTIVITIES
Bank loans- net of current 2,132,514,310 381,602,178
Other non-current liabilities 262,563,964 145,083,070
Interest 35,124,203 26,157,120
Financial Charges (189,617,229) (128,760,152)
Net cash flows from (used in) financing activities 2,240,585,248 424,082,216
NET INCREASE IN CASH AND CASH EQUIVALENTS P 1,433,855,892 P 50, 913,296
71

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 1, 182,103,498 1,131,190,202
CASH AND CASH EQUIVALENTS, END OF THE YEAR P 2,615,959,390 P 1,182,103,498
4.2 FINANCIAL RATIOS

Financial ratios are useful indicators of a firms performance and financial situation. Most
ratios can be calculated from information provided by the financial statements. Financial
ratios can be used to analyze trends and to compare the firms financials to those of other
firms. In some cases, ratio analysis can predict future bankruptcy.
PROFITABILITY RATIOS:
Financial managers and analysts can discern how profitable a company is based on
profitability ratios. A company is profitable when its expenses and other costs associated
with producing products or offering services for customers is lower than its related
earnings and income. A company may not generate profit but be able to stay in business
for some period.
Many growth-oriented start-up companies initially run their business based on investors'
capital before they earn any income or profit. However, a business without profit cannot
sustain its business in the long run.
Ratio Formula 2012 2011 2010
1. Gross Profit
Margin
Gross
profit/sales
40.67% 43.29% 39.90%
2. Operating
Profit Margin
Net profit
before income
tax/sales
113.96% 44.85% 45.91%
3. Net Profit
Margin or Net
Return on
Sales
Net income
after tax/sales
102.14% 31.47% 33.97%
4. Net Return
on Total
Assets (ROA)
Net income
after tax/total
assets
5.13% 1.81% 1.84%
72

LIQUIDITY RATIO:
It provides information about a firms ability to meet its short term financial obligations.
They are of particular interest to those extending short term credit to the firm.
1.Current
Ratio
Current
asset/curre
nt liabilities
2.32% 1.07% 0.90%
2.Working
Capital
Current
assets-
current
liabilities
2,393,605,756 98,749,335 (203,460,084)

Leverage ratio:
It provides an indication of the long term solvency of the firm. It measures the extent to
which the firm is using long term debt.
1. total debt-
to-assets ratio
Total debt/total
assets
2.23% 4.21% 3.57%
2. long term
debt-to-capital
ratio
Long term
debt/total equity
0.51% 0.39% 0.38%

Activity ratio:
It measures a firm's ability to convert different accounts within its balance sheets into cash
or sales. Activity ratios are used to measure the relative efficiency of a firm based on its
use of its assets, leverage or other such balance sheet items. These ratios are important
73

in determining whether a company's management is doing a good enough job of
generating revenues, cash, etc. from its resources.
1. days of
inventory
365 days/
inventory
turnover
0.47 0.78 0.01
2. inventory
turnover
Annual sales/
inventory
769.42 466.74 29167.76
3.average
collection
period
Accounts
receivable/
average daily
sales
378.98 83.16 161.80

5. STRENGTHS AND WEAKNESSES

STRENGTHS WEAKNESS
The exquisite interior
design of the mall

Its not tailored to their
target market
Condominiums,
apartments and residential
areas are near the mall

Small space of the mall
Lrt 2 and Mrt 3 as the main
transportation of the
people

Weak Promotional
Activities

BPO companies around
the area

Low top of mind

Strengths

The exquisite interior design of gateway mall

The interiors of the gateway mall were carefully and meticulously designed by local and
international companies to create a world-class center. It was successful in adhering to
74

the concept of creating an urban structure with state of the art retail and entertainment
center. The bright lighting and vibrant colors give a festive impression to the shoppers.

Condominiums, apartments and residential areas are near the mall

Going to gateway mall is now easier because Araneta Developed high rise residential
buildings that makes it more convenient. People dont have to go far away because
everything they neede is within their reach. From entertainment,leisure,food and other
attractions can be found within the Araneta Center area.
Lrt 2 and Mrt 3 as the main transportation of the people
The link between LRT and MRT has caused an increase in foot traffic inside the mall as
the commuters leave the train stations to switch trains or to go to desired destination. And
it creates a bigger chance of people going to the mall and soon they will patronize it.

BPO companies around the area

An increasing number of BPO companies around the area make the place a center for
businesses and a lot of BPO employees eat in gateway and do other recreational
activities inside the mall. When events are being organized by these different BPO
companies they partner with gateway to hold certain events. And because of the opening
of the new Gateway Tower some BPO companies soon lease a space inside the mall for
their operation thus, increases more people doing activities inside the mall.

Weaknesses

Its not tailored to their target market

Gateway mall is known for targeting upper class shoppers because of its high-end stores
75

and luxurious designs. But after several years they had a hard time coping up and didnt
respond fast to the changing environment and soon the competitors opened a more
attractive malls where people soon opt to switch. The Gateway mall now becomes just a
connection for the LRT 2 and MRT for their main transportation. And the people going
there are what they really cater to.

Small space of the mall

Gateways rentable space is limited due to the small land area of the mall. This in turn
results to smaller retail stores and incomplete products available. Small spaces also
hinder other international brands that the upper class market is looking for to lease inside
the mall.

Weak Promotional Activities

Even bthough they do have facebook and twitter accounts it seems that they are not fully
utilizing it. And other media platforms are being neglected as it can also increase the
reach of the people. Posting different promotional activities within the area is not enough.
Having more marketing efforts is needed to widen their coverage.

Low top of mind

Gateway mall is only being populated mostly because it became the way when going to
LRT and MRT and other nearby places around the mall. But only a small portion of the
people do actually buy and patronize the mall they still prefer going to trinoma,SM Malls
and Robinsons because of limited stores resulting to low top of the mind awareness of
the people.
76

6. INTERNAL FACTORS EVALUATION (IFE) MATRIX
Key internal
factors
Weight Rating Weighted
score
strengths
The exquisite
interior design
of the mall

0.05 3 0.15
Condominiums,
apartments and
residential
areas are near
the mall

0.06 4 0.24
Lrt 2 and Mrt 3
as the main
transportation
of the people

0.12 4 0.48
BPO companies
around the area
0.09 3 0.27
Weakness
Its not tailored
to their target
market
0.09 3 0.27
Small space of
the mall

0.13 3 0.39
Weak
Promotional
Activities

0.06 3 0.18
77

Low top of
mind

0.4 3 1.2
Total
1 3.18

VII. TOWS MATRIX

Internal Strengths Weakness

External
1. The exquisite interior
design of the mall
2. Condominiums,
apartments and
residential areas are
near the mall
3. LRT 2 and MRT as
the main transportation
of the people
4. BPO companies
around the area

1. Its not tailored to their
target market
2. small space of the
mall
3.weak promotional
activities
4.low top of mind
Opportunities
SO WO
1. Modernization of
Filipino life

2.The Development in
the economic growth
of the country is
improving

3.Online Growth
4. movement of the
property
development industry
on malls and retail
district rather than
relying alone on real
Advertise gateway to
new social
networking sites
(S
1
,S
2
,O
3
)

Promote the
residential properties
to increase mall
goers(S
2
,O
3
)

Retain and bring
more by advertising
more of the place
(S
1
,S
2
,S
3
,O
3
)
Create a more
interactive
website(W
3
,O
3
)

More promotions
especially to the
families who usually
went to malls on
weekends(W
3
,W
4
,O
1
,O
3
)
78

estate
5. Growing
population and
people residing in
business centers
Threats ST
WT
1. More improvements
and new and
developments by
competitors
2. E-commerce
3.events of competitors
offered in their malls
4.the companies within
the same industry is
becoming cluttered
already because of new
entrants
5. growing number of
substitute that offers
products or services
Update their website
and focus more on
their marketing
strategy (S
1
,T
1
,T
2
)
Intensive advertising
and bigger space to
accommodate more
stores
(W
2
,W
3
,T
1
)

VII. STRATEGIC PLAN

1. MISSION AND VISION

ARANETA CENTER, INCS PRESENT MISSION STATEMENT

To be a progressive, diversified and socially responsible group anchored on property, food
and leisure, committed to providing globally competitive products and services to the
greatest number. Having faith in Divine Providence and in our capabilities.

PROPOSED MISSION STATEMENT

To set the standard of high performance and manage residential, food and leisure
properties successfully striving for competence and committed to providing globally
79

competitive products and services Our strength comes as a result of what we believe in:
Customer satisfaction, Innovation, Honesty, People participation and the quest for
excellence.

The proposed mission statement still have the same idea as the current mission statement
of the company but adding more words to express the companys purpose and reason for
existence.

Its mission statement clearly shows how committed they are in achieving their objectives
and being able to provide globally competitive products and services to many people as
possible. And they add that having faith in divine providence must always be present and
believing in their capabilities. That they will reach their goals if they do believe that it will
work and with skills and through the management they will achieve success.

ARANETA CENTER, INCS PRESENT VISION STATEMENT

To be the leader in our chosen fields by creating value through change, utilizing our
empowered workforce, appropriate technology, and our groups knowledge capital. To be
committed to a culture of excellence, integrity, loyalty and pride.

PROPOSED VISION STATEMENT

To become the leader in our chosen fields providing full service and care to our clients and
properties. Creating value through change, utilizing empowered workforce, appropriate
technology, and the groups knowledge capital. United in a shared commitment to
excellence and working for the greater welfare of society to help build the nation
80

The proposed vision mission is almost the same as the current vision statement but it
states that they are doing it for the greater welfare of the society and not just business
alone. It will help shape the employees to the right path same as what the company wants
it to be headed. The values that the company preserves, showing it to the customers to
make them understand why they should patronize not just the products and services but
also the company.
The current vision statement expresses the companys objective in the future. They
envision themselves to become the leader in the industry they are in and showing that
they will become the leading company by creating value through change, utilizing our
empowered workforce, appropriate technology, and our groups knowledge capital. And they will
ony achieve it if they are committed to a culture of excellence, integrity, loyalty and pride.

2. COMPANY OBJECTIVES
The objectives of the company are important in creating its strategies and tactics
throughout the coming years. It must be aligned with its mission and vision statement to
become more effective and wont be able to step out of its main goal. These objectives
must be specific, measurable, attainable, realistic, and time-bound. And with
Environmental scanning the organization would be able to monitor both the internal and
external environment to see opportunities and threats that can influence their strategies
and future plans as well as its currents plans and tactics.
OBJECTIVES:
Increase sales by system wide sales by 9%
Increase awareness, conversion, and retention of the three malls by 10%
81

Continue to grow FB and Twitter base by 50% by year end 2014 but alsi build base
for other social sites like Instagram and Pinterest to atleast 5,000 each by year end
2014
Increase PR Values by 50% for ACI(e.g. redevelopment,mall activities, etc.)
The proposed objectives for the company are as follows:
To create promotions that will highly encourage people to visit the Araneta Center
Redefine the Araneta Center brand and increase relevance to target market
To maintain companys financial stability and be able to preserve a distinction to its
competitors.
To increase customer satisfaction and customer participation
3. EVALUATION OF PRESENT CORPORATE STRATEGIES

Companys current strategies
Develop central theme that is authentic and relatable and will serve as anchor for
all communication
Focus on contact-driven programs
Build on 2013 success
Engage loyal customers, residents, office workers
Further strengthen partnership with brand alliance partners and form new ones

Gateway mall offers a unique experience to its customers, with its exquisite facilities and
exceptional services. For the past year it has aimed to increase its sales through seasonal
promos, events, and advertising. It has also intended to help promote their lessees by
having them participate on different activities of the mall especially the fashion and the
dining lessees. Every month of the year has at least one promo or event that would benefit
82

both the customer and the lessees.
The mall has utilized the new media as part of strengthening their online presence.
Gateway has its own website and it also makes use of araneta centers facebook page
which currently has fans for its promotion

4. PROPOSED STRATEGIES
Do bigger events that are well supported with tri-media advertising
Redevelop their website
Launch CSR and PR program that will promote relations to the customers and
enhance public perception

4.1 DESCRIPTION OF THE STRATEGY

Do bigger events that are well supported with tri-media advertising
They should create more events that can accommodate more people and this activities
needs to have more customer participation to increase retention and attract more
shoppers. With bigger events they can get new ones and retain old ones. There are a lot
of holidays that can be celebrated and they can advertise it on all media platforms to
increase reach and to make more people aware of the event that will happen. They can
also hold more fun contests and other gimmicks in Facebook and twitter to get more
attention. Having all kinds of social networking sites that are in these days is needed to get
in touch with all their target market.
To increase website visits they need to make their website more attractive and user
friendly. All information should be updated regularly and it should be interactive. They can
83

have it done on a third party to make it less hassle and because they do have more
expertise in developing such sites. People are spending most of their time facing the
computer and having an interactive website can increase popularity and can increase
more customers going to the mall.

Launch CSR and PR program that will promote relations to the
customers and enhance public perception
Launching CSR can be a good indication that the company is concerned to the well being
of the people. That they are concerned and willing to help those who are in need and it will
give shoppers a perception that the company has good values. And with PR program that
would create more people being aware of the activities that Araneta is engaged with.
Publicity is really important especially when in this kind of business. Having CSR programs
for Yolanda victoms where people can contribute even in their own little ways can help not
only the people in devastated areas but also their image aqs a good company. And more
efforts in PR activities by communicating all possible editors and other media partners tov
enhance public perception.

84

4.2 BASIS OF THE CORPORATE STRATEGY

Proposed strategies Basis Companys mission, vision and
objectives
Do bigger events that are well
supported with tri-media
advertising

OPPORTUNITIES
Develop central theme that is
authentic and relatable and will
serve as anchor for all
communication
Increase awareness, conversion,
and retention
build base for other social sites
utilized the new media as part of
strengthening online presence

STRENGTH
Growing and strong fan base online
Known company name

OPPORTUNITIES
Advance technology
Utilized the new media as part of
strengthening their online presence.
85

STRENGTH
Gateway has its own website
Progressive company

Launch CSR and PR program that
will promote relations to the
customers and enhance public
perception

OPPORTUNITIES
Further strengthen partnership with
brand alliance partners and form
new ones
Increase PR Values through mall
activities
STRENGTH
Socially responsible group

IX. QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)

Redevelop website make bigger events
and improve to increase retention
capabilities and attract new ones
of existing digital
platforms

KEY FACTORS Weight AS TAS AS TAS
OPPORTUNITIES
1. Modernization of
Filipino life

0.1 3 0.3 4 0.4
2. The Development
in the economic
growth of the country
is improving

0.02 - 4 0.08
86

3.online growth

0.02 3 0.06 3 0.06
4. movement of
the property
development industry
on malls and retail
district rather than
relying alone on real
estate
0.05 - 4 0.2
5. Growing
population and
people residing in
business centers
0.03 - 3 0.09

THREATS

1. More
improvements and
new and
developments by
competitors

0.04 4 0.16 4 0.16
2.E-commerce 0.1 - -
3. Events of
competitors offered
in their malls

0.05 3 0.15 4 0.2
4. the companies
within the same
industry is becoming
cluttered already
because of new
entrants

0.03 3 0.09 4 0.12
5. growing number of
substitute that offers
products or services
0.02 - -

STRENGTHS

87

1. The exquisite
interior design of
gateway mall

0.05 - -
2.Condominiums,
apartments and
residential areas are
near the mall

0.06 - -
3. LRT 2 and MRT as
the main
transportation of the
people

0.12 - 3 0.36
4. BPO companies
around the area
0.09 - 3 0.27
WEAKNESSES
1. Its not tailored to
their target market

0.09 - -
2. small space of the
mall

0.13 - -
3.weak promotional
activities

0.06 3 0.18 3 0.18
4.low top of mind 0.04 3 0.12 3 0.12
Total 1.00 1.06 2.24

88

X. REFERENCES

1
http://manilastandardtoday.com/2013/10/21/rebirth-of-industrial-property-sector-seen-
manufacturing-renaissance/
2
http://www.abcapitalonline.com/content/pdf/20120709-PropertySector.pdf
3http://businessmirror.com.ph/index.php/en/business/companies/20416-study-cites-
rebirth-of-phl-industrial-property-sector
4
5
http://www.marsdd.com/articles/bargaining-power-of-suppliers/
6
http://strategiccfo.com/wikicfo/buyer-bargaining-power-one-of-porters-five-forces/
7http://www.free-management-ebooks.com/faqst/porter-02.htm
8
http://www.marsdd.com/articles/threat-of-substitutes/
9
http://www.thesojo.net/threat-of-new-entrants-barriers-to-entry/
10
11
http://www.doh.gov.ph/sites/default/files/National%20Tobacco%20Control%20Strategy%
20(NTCS).pdf
12
http://www.chanrobles.com/republicactno7279.htm#.UpmfwcSSzE013
13
euromonitor, consumer lifestyle and trends
14
http://browse.feedreader.com/c/All_About_eBusiness_Articles_for_free/148161856
15
euromonitor, technology

http://en.wikipedia.org/wiki/Pricing#Price.2Fquality_relationship-price(table)
89

16
http://en.wikipedia.org/wiki/TriNoma
17
http://en.wikipedia.org/wiki/Glorietta
18
http://en.wikipedia.org/wiki/Greenbelt_(Ayala_Center)
19
http://en.wikipedia.org/wiki/Fort_Bonifacio
20
http://smmallofasia.com/moa/?p=1097
http://www.netmba.com/finance/financial/ratios/
http://www.ehow.com/info_8770638_profitability-ratio.html#ixzz2mPoFjHqu
http://www.investopedia.com/terms/a/activityratio.asp
https://drive.google.com/folderview?id=0Byq4Kncvh4IRW5QZVJFanVqZDQ&usp=sharing
&tid=0B-yq4Kncvh4IQUhUMmRNOUJsajg
http://www.aranetagroup.com/
http://www.aranetacenter.net/2008/

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