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Far Eastern University

Nicanor Reyes St. Sampaloc Manila

Institute of Tourism and Hotel Management

Institute of Accounts, Business, and Finance

A Strategic Management Paper

On SMDC

In Partial Fulfillment of the Requirements in the Course

Strategic Management

Presented to

Prof. Sofronio S. Dulay

Facilitator, BME1102 Sec 14

Presented by

GROUP 5

Valdez, Ron Aenar

Calicoy, John Cesar

Perez, Karl Brian

Landa, Andrei John

Reyes, Ericka Adrielle

Torres, Ranzimiel Kay

Jino-o, Ashley Anne

Tapucol, Happy Aira

Table of Contents

I. Executive Summary……………………………………………………3

II. Internal Assessment……………………………………………….5

A. Corporate Profile…………………………………………………………5

B. Company Vision and Mission…………………………………....………………..7

C. Corporate Officers…………………………………………………………8

D. Product Line……………………………………………………………….9

E. Internal Factor Evaluation Matrix…………….................38

III. External Assessment………………………………………………………………...41

A. Porter’s Model Analysis………………………………………………………..41

B. External Factor Evaluation Matrix ……………………………………………44

C. Competitive Profile Matrix …………………………………………………...47

D. Key External Factor……………………………………………………………49

IV. Strategy Formulation …………………………………………………………………...52 A. Boston Consulting Group Matrix………………………………………………53

B. Strategic Position and Action Evaluation Matrix……………………………..55

C. Grand Strategy Matrix………………………………………………………….60

D. Internal - External Matrix……………………………………………………….62

E. Strength - Weaknesses- Opportunities - Threats Analysis…………………63

F. Quantitative Strategies Planning Matrix……………………………………..75

V. Strategy Recommendation……………………………………………………………79

VI. Action Plan……………………………………………………………………………...82

VII. Conclusion……………………………………………………………………………...83

VIII. Financial Projection………………………………………………………………………86

IX. References…………………………………………………………………………………93

I. Executive Summary

SM Development Corporation (SMDC) is considered as one of the largest and fastest-growing real estate developers in the country. It was originally incorporated on July 12, 1974 as Ayala Fund, Inc. however, renamed as SM Fund, Inc. in March 1986 after SM group of companies took the majority of ownership in the firm. SM Fund, Inc. back then was an investment company committed solely in providing its investors with professionally managed vehicles to invest in diverse businesses in the country. In May 1996, it was again renamed as SM Development Corporation to reflect on its new business endeavor which is to venture into the real estate industry.

In the Philippines, there are two major competitors of SMDC: Ayala Land Corporation which, based on the CPM has a total rate of 3.26 (strong competitor) and Megaworld Corporation which has 2.75 (average competitor). SMDC has a total rate of 2.65 which manifests the idea that despite the fact that both of these companies are top performers, SMDC continues to create its name in the industry and achieve greater heights. In the recently concluded 8th Property Guru Awards 2020, SMDC bagged numerous awards including the Best Developer Award, Best Developer Lifestyle Award, etc. (SMDC, 2020). For over 25 years of being in the real estate industry, the company has provided quality condominiums, residences and comfortable homes at the most affordable price.

Based on the IFE matrix, the company’s strength is their capability of providing modern lifestyle amenities without compromising the safety and security of the people. Furthermore, its accessibility to various infrastructures such as shopping malls and its flexible mode of payment attracts a huge number of investors. However, its IFE rating is only 2.48 mainly because of the non-liquid asset which can lead to a possible loss in value and high maintenance cost. SMDC could further improve its performance by generating alternatives and feasible solutions that could effectively address these issues.

The overall responsiveness of the SMDC to its external factors is satisfactory at a rate of 3.22. This is due to the company’s external strategies effectively taking advantage of existing opportunities and minimizing the potential adverse effects of external threats. Currently, SMDC is ranked as the 3rd best real estate developer in the country based on the data released by Property Consultancy & Sales Associates Inc. in 2019. Thus, if they can further examine and analyze the opportunities and threats for the upcoming years in a wider perspective, they could create excellent plans that will surely benefit the company and improve its rank in the industry. In addition, being able to take advantage of the possible threats that may hinder a company's triumph is vital to leverage success. Towards its strategic goal in becoming one of the top competitors and leading real estate developers in the country, SMDC should highly consider market penetration and product development strategies as the suitable strategy for the company. Market penetration will equip the company in perfuming its name in the market, fueling great sales, revenues and attracting a wide range of customers by: (1) launching more projects not just in NCR but in the entire Philippines and (2) penetration pricing without compromising the quality of the properties.

Product development strategies include: (1) Expanding the company’s services which will thoroughly help in providing a much better experience and comfort of living to its investors and (2) Improving and adding modernly designed amenities which will enhance the appearance of every property and cater new demands of its investors for their very own satisfaction.

Other instinctive strategies include horizontal integration strategies through (1) purchasing new lands and building new real estate properties and (2) acquiring or seeking ownership/control over company’s investors. With the utilization of these strategies, the company’s vision of becoming the leading developer of world-class residences in the Philippines and a catalyst for a better life will be realized with high sales and revenues in the upcoming years.

With the appropriate execution, performance management and coordination with the operation and the corporate affairs, these recommended strategies will serve as the primary driver of SMDC triumphs not just in being one of the top competitors in the industry but also in magnifying its coverage and competencies, boosting the economy and company’s growth

INTERNAL ASSESSMENT

A. Corporate Profile

SM founder Henry Sy. laid the groundwork of and piloted the development and evolution of SM Investments Corporation (SMIC). What started out as a dream of selling a good pair of shoes to every Filipino has turned into one of the country’s largest holding companies today. In the six decades since, it has become a leading presence in retail, banking, and property development in the country and a rising presence in China. It has since innovated its products and services providing the best value in both aspects for its customers.

SM Prime Holdings, Inc. (SMPH) also has become the largest integrated property developer in Southeast Asia. In terms of assets, it is the largest in the country. Offering innovative and sustainable lifestyle cities alongside developing malls, residences, offices, hotels and convention centers, it has become the biggest retail shopping center developer and operator in the Philippines. From starting out as a humble mall developer and operator, it has currently established 76 malls in and outside Metro Manila and 7 shopping malls in China with 17,937 tenants in the country and 1,857 tenants in China.

Besides mall development and management through its units and subsidiaries, it also has commercial business units, the Commercial Property Group (CPG) which engages in developing and leasing office buildings in Metro Manila. SM Development Corporation (SMDC), their residential business component, also sells affordable condominium units. Their Hotels and Convention Centers business unit is also engaged in developing and managing various hotel and convention centers across the country.

SMDC prides itself in the style, comfort, and convenience Filipinos experience with them. Offering the makings of the next dream home, it provides quality amenities and top-notch services. With the commitment to provide access to luxurious urban living through vertical villages perfectly integrated with a commercial retail environment, it aims to give its residents access to a truly cosmopolitan lifestyle. Their properties are strategically positioned across Metro Manila with their focus being the Central Business Districts of Mall of Asia Complex, Makati, Ortigas, Taguig, Quezon City, Manila, Pasay, Parañaque and Las Piñas. In addition, they can also be accessed from neighboring provinces like Cavite, Bulacan and Pampanga.

Corporate Head Office:

One E-com Center, 10th Floor Harbor Drive

Mall of Asia Complex, CBP-IA

Pasay City 1300, Philippines

B. Company Vision and Mission

SM Development Corporation

Vision

We envision SM Development Corporation to be a leading developer of world-class residences in the Philippines, uplifting Filipino lifestyles into one that is convenient, upscale yet affordable, and environment friendly.

Mission

· Ensuring that its homebuyers enjoy the best value for their investment with an upscale lifestyle, generous amenities, and a safe, secure, and friendly neighborhood;

· Providing an excellent after-sales and maintenance service that will preserve and enhance the long-term value of its residences;

· Delivering sustainable long-term growth and increasing shareholder value by exercising prudence in resource management based on the principles of good corporate governance;

· Becoming an employer of choice, offering comprehensive opportunities for career growth and enhancement; and,

· Assisting and nurturing the communities in which it operates by progressively building on its role as a responsible corporate citizen;

C. Corporate Officers

SM Development Corporation Properties

Air Residences

Price range: Php 6,300,000 - Php 7,500,000

Meaningful relationships. Career opportunities. Personal well-being. All these define your story of success, and it all begins at SMDC Premier’s Air Residences

Coast Residences

Price range: Php 5,500,000 - Php 23,000,000

Designed to capture your eyes with its seagull-inspired façade design, Coast Residences soars 41 storeys high.

Fame Residences

Price range: Php 5,100,000 - Php 6,800,000

Strategically located, Fame Residences rises in Central EDSA, providing you easy access to everything that matters. This iconic development offers an address that truly compliments a desired lifestyle. When you live at the center of it all, you live life in the spotlight.

Blue Residences

Price range: Php 2,000,000 - Php 5,000,000

SMDC Blue Residences promises to help you maximize your student life as it is located at the corner of Katipunan Avenue and Aurora Boulevard, near colleges and universities like the University of the Philippines, Ateneo De Manila University and Miriam College.

Bloom Residences

Price range: Php 4,600,000 - Php 7,100,000

Bloom Residences is a home where you can plant your roots as you start your career, grow the love for your family, care for your little buds and eventually carve some names in the family tree.

Breeze Residences

Price range: Php 12,400,000 - Php 14,500,000

Enjoy the convenience of the city while luxuriating amidst the quiet calm of Manila Bay.

Cheer Residences

Price range: Php 3,200,000 - Php 3,500,000

Take your life to new heights as Cheer Residences introduces a fresh perspective to residential living in Marilao, Bulacan. It is the first vertical development of its kind in the area that offers the convenience of having its own mall within the complex. First-rate amenities elevates the quality of life of the residents as they get to enjoy an array of activities daily.

Cheerful Homes

Price range: Php 1,100,000 - Php 1,700,000

SMDC Cheerful Homes has its own transport hub located within the community’s commercial area, for the convenience of its residents. Plus, it’s just a short ride away from various points of interests in Pampanga.

Cool Suites

Price range: ₱/mo.

Cool Suites is the newest garden complex in the flourishing Wind Residences estate. Nestled inside the complex is an array of lush foliage and greenery that serve as a private retreat where you can relax and recover from the busy work week. With SMDC’s signature 5-star amenities, it is a perfect holiday home for those who enjoy the cool wind of Tagaytay.

Field Residences

Price range: Php 5,000,000 - Php 5,600,000

Just across SM City Sucat, Field Residences is located along Dr. A. Santos Avenue (formerly Sucat Road), Barangay San Dionisio, Parañaque City. International and domestic airports are also close at hand, as well as the Entertainment City where endless leisure, shopping, and dining selections abound.

Gem Residences

Price range: Php 5,200,000- Php 9,400,000

Standing gorgeously along C-5 Pasig, the thriving center of economic activity east of Metro Manila, Gem Residences brings you world-class amenities that cater to your need for both productivity and leisure.

Glam Residences

Price range: Php 5,900,000 - Php 11,500,000

Surround yourself with the spectacular at Glam Residences. Envisioned as a complete, cosmopolitan home for success-driven singles, it is built for your utmost convenience and indulgence.

Gold Residences

Price Range: Php 7,400,000 - Php 17,000,000

An 11.6- hectare master-planned community right across the Ninoy Aquino International Airport, the concept for SMDC’s first township is to be the gold standard- a convergence of modernization, dynamism, innovation, and prestige, assured in all its areas.

Grace Residences

Price range: 3,300,000 - Php 5,600,000

Located close to Bonifacio Global City and the Makati Central Business District so you can enjoy the convenience of staying within proximity of the top schools, hospitals, malls and other institutions.

Grass Residences

Price range: Php 3,700,000 - Php 6,400,000

SMDC Grass is located in Quezon City, connected to SM City North Edsa via bridge way. It’s definitely a convenient, exciting and entertaining place to come home to. It is also situated in a highly accessible area. It is right by main roads both for going to the North and South side of the metro.

Green Residences

Price range: Php 5,100,000 - Php 5,700,000

Located right beside De La Salle University in Taft Avenue for the stress-free, easy and fun life every college student ought to experience.

Green2 Residences

Price range: Php 3,300,000 - Php 5,600,000

Breeze through your college years as you live in the home that passes all the marks when it comes to convenience, location, security and amenities.

Hope Residences

Price range: Php 3,000,000 - Php 3,600,000

Hope Residences is strategically located at the heart of Trece Martires City, Cavite. It is right within the complex of the newly opened SM City Trece Martires along Governor’s Drive.

Jazz Residences

Price range: Php 4,900,000 - Php 19,000,000

Situated in the Reposo District in Makati, SMDC Jazz Residences is surrounded by some of the best restaurants, as well as a supermarket nearby.

Lane Residences

Price range: Php 3,600,000- Php 5,500,000

Located in San Antonio Agdao, it lies within the SM City Lanang Premier complex. Its close proximity to Davao International Airport and Seaport gives you that added level of convenience. You get easy access to major land, sea, and air transportation centers to help get you to your next destination. Rounding out the area are the many businesses and offices for enterprising individuals.

Leaf Residences

Price range: Php 4,400,000 - Php 6,200,000

Let nature nurture your family at Leaf Residences. With its unique design reminiscent of a tropical rainforest getaway, it offers the first taste of condominium living surrounded by all the greenery sought after in the South.

Light Residences

Price range: Php 3,700,000 - Php 9,100,000 & above

Located along EDSA and Madison Street, Light Residences sits at an advantageous location, linked to BONI-EDSA MRT where you can access any point of Manila.

Light2 Residences

Price range: Php 5,400,000 - Php 11,200,000

Spacious, inviting, and thoughtfully planned. Light 2 Residences provides you with everything you need to create a beautiful home for you and your family.

Lush Residences

Price range: Php 6,800,000 - Php 9,800,000

Lush Residences is an iconic landmark located north of the Makati Central Business District. A development that seamlessly blends elements of nature throughout the property.

Mezza Residences

Price range: Php 1,000,000 - Php 6,000,000 & above

SMDC Mezza Residences is in one of the most convenient areas; located at the corner of Aurora Boulevard and Araneta Avenue in the heart of Sta. Mesa, near SM City Sta. Mesa.

Mezza II Residences

Price range: Php 8,200,000

Experience all the best at the heart of Sta. Mesa with Mezza II Residences.

Mint Residences

Price range: Php 6,400,000 - Php 8,200,000

A nearby respite striking the perfect balance between modern city convenience and a natural environment. Situated within the progressive district of Makati giving you access to everything the city has to offer: commercial, recreational, and professional.

MPlace at South Triangle

Price range: Php 4,100,000 - Php 4,300,000

MPlace Residences is a conveniently located condominium at the heart of South Triangle in Quezon City.

Park Residences

Price range: Php 3,400,000 - Php 3,900,000

Located right in front of SM City Sta. Rosa, this community is surrounded with opportunities for you to live your best life! Everything the family needs is right here – with schools, parks and shops around every corner.

Princeton Residences

Price range: Php 2,000,000 - Php 4,000,000

Convenient, practical and fun, Princeton Residences is strategically located within close proximity to Tomas Morato and Greenhills, and right beside the LRT 2 Gilmore Station.

Red Residences

Price range: Php 6,500,000 - Php 9,000,000

Red Residences is located at the heart of Chino Roces, a thriving neighborhood west of Makati City, known for its row of concept restaurants, food finds, art galleries and creative business enterprises.

S Residences

Price range: Php 6,600,000 - Php 17,500,000

With its stunning boutique-hotel designed lobbies and luxurious amenities, S Residences is the choice of successful and stylish individuals. Live in an address where business meets pleasure, where business suits and swim suits are both on-trend.

Sail Residences

Price range: Php 11,200,000 - Php 13,000,000

Welcome to Sail Residences, the gem of the Mall of Asia district. Explore a vast wealth of shops, restaurants and entertainment spots as endless as the horizon beyond Manila Bay, just waiting for you to discover. Truly a home worthy of the most memorable individuals, couples, and families.

Sands Residences

Price range: Php 7,600,000 - Php 9,400,000

Welcome to Sands Residences. A luxurious, 51-floor master-planned community by Manila Bay where the sun and sand amidst a sea of luxury await you.

Sea Residences

Price range: Php 8,300,000 - Php 14,200,000

Sea Residences Mall of Asia is a modern resort-inspired condominium development

Shell Residences

Price range: Php 32,200,000 - Php 37,400,000

Shell Residences Mall of Asia is a 2.2-hectare resort residential complex. Come home to resort-inspired amenities, and hold memorable events with friends and family at your own exclusive clubhouse.

Shine Residences

Price range: Php 4,000,000 - Php 4,100,000

SMDC Shine Residences stands tall within a prestigious community called the Renaissance Center. Having entertainment, business and leisure in close proximity, Shine Residences Ortigas is another distinctive addition to an impressive locale.

Shore Residences

Price range: Php 6,700,000 - Php 33,200,000

The entire Shore Residences complex combines the luxury of a 5-star vacation resort and the comfortable, cozy home you’ve always dreamed of.

Shore 2 Residences

Price range: Php 6,000,000 - Php 11,100,000

Set in a 9-hectare property, this exclusive development consists of three expansive luxury resort-inspired enclaves that provide the best in premier waterfront living in the metro, all bridged together by elevated linear parks.

Shore 3 Residences

Price range: Php 10,500,000 - Php 24,500,000

Conveniently located at the SM Mall of Asia Complex in Pasay City, Shore Residences offers the finest in resort living, with an exclusive beach-like amenity right at the heart of the development.

Smile Residences

Price range: Php 3,800,000 - Php 5,500,000

You’ll find a lot to be happy about at Smile Residences! As a premier residential development within SM City Bacolod Complex, it offers attractive lobbies, amenities, and a convenient location.

South Residences at SM SOUTHMALL

Price range: Php 3,500,000 - Php 6,100,000

South Residences offers the seamless fusion of the life and lifestyle you’ve always dreamed of.

South 2 Residences

Price range: Php 3,700,000- Php 7,500,000

Situated in Southmall complex, South 2 Residences has everything you need within reach. It is just a few steps away from the array of shopping, dining, and entertainment choices at SM Southmall, and a few minutes away from busy transport terminals and vibrant work hubs.

Spring Residences

Price range: Php 4,200,000 - Php 5,400,000

Celebrate new beginnings at SMDC Spring Residences.

Style Residences

Price range: Php 3,400,000- Php 5,200,000

Style Residences can be found within the complex of SM City Iloilo – the city’s vibrant lifestyle and progressive business district. It offers an impressive collection of shopping, dining, and entertainment options, as well as easy accessibility to the local transportation hubs, including the Iloilo International Airport and Seaport.

Sun Residences

Price range: Php 2,000,000 - Php 4,000,000

Life meets luxury at the roundabout of Quezon City and Manila. SMDC Sun Residences addresses the need for a more balanced lifestyle, with amenities like lounges, landscaped gardens and swimming pools

Trees Residences

Price range: Php 2,000,000 - Php 3,300,000

Escape the mundane clamor of the city and go home to Trees Residences. A place of solitude right at the heart of Novaliches, Quezon City brimming with life through pristine natural gardens, relaxing stroll paths, and SMDC’s five star amenities.

Vine Residences

Price range: Php 3,300,000- Php 6,200,000

With its great location inside the SM City Novaliches complex, the residents are right in the heart of a progressive hub in Quezon City. Being near major thoroughfares, terminals, and transport hubs makes traveling very easy. Nearby institutions like schools and hospitals will just be a few minutes away..

Wind Residences

Price range: Php 4,700,000 - Php 36,400,000

Feel the breeze along Aguinaldo Highway in Tagaytay City where SMDC Wind Residences and Cool Residences are situated. It is in its own a convenient complex with everything you can ever need, but it’s also a plus that there are dining establishments nearby.

0.0 = not important

1.0 = Important

Rating

(Rating = 1) - Major Weakness

(Rating = 2) - Minor Weakness

(Rating = 3) - Minor Strength

(Rating = 4) - Major Strength

Analysis

The Internal Factor Evaluation matrix is a tool used for auditing and evaluating major strengths and weaknesses of an organization or company. The average weighted score for the IFE Matrix is 2.5 above while 2.5 below is considered weak. The total weighted score for SM Development Corporation (SMDC) is 2.48 or 2.5 which means that the company is responding to a low average score that pertains to internally weak business. Therefore, the IFE Matrix concludes that SM Development Corporation (SMDC) is in a weak position.

Analysis

1) Rivalry Among Competing Firms - Rivalry among competing developers of retail space is deemed moderate due to the three main players' aggressive expansion plans for the near future and their offering of essentially the same product (retail and food space, cinemas, etc.), only slightly differentiated for different income segments. However, the fierceness of this rivalry is somewhat tempered by the strong continued growth in household consumption, which leaves room for much more retail space to be built. However, due to SMPH's significant advantages in terms of size, mall count, and land bank location, it is in the best position to capitalize on this demand for more retail space.

2) Potential Entry of New Competitors - Although, again, customers (in this case, companies seeking to buy or lease office space) are not particularly loyal to a specific developer, the potential entry of new competitors is tempered by the fact that the demand for new commercial space is concentrated in Metro Manila, where most available land is already in the portfolio of established players. Moreover, economies of scale are advantageous to established players because it allows them to accommodate the space requirements of large firms and therefore secure the most lucrative contracts. SMPH's advantage lies in its network of strategic partnerships, building only when it has 60% commitments, and in its integration of its land bank in its long-term expansion plans.

3) Potential Development of Substitute Product - The threat of the development of substitute products for commercial space is moderately low, largely because there are currently no substitutes in the market, and no current market players are actively seeking out the development of such substitutes. Moreover, customers do not necessarily seek new kinds of office space, particularly as there are high costs to selling of buildings or ending leases early, as well as high transitioning costs once they have secured new office space. SMPH in particular keeps its tenants satisfied through its competitive prices and the close proximity to retail and transportation centers that its commercial developments offer.

4) Bargaining Power of Supplier - Despite the large number of construction firms and raw materials suppliers in the market, the bargaining power of suppliers remains moderate, due to the high values of commercial development contracts with major players, which has given rise to the popularity of long-term partnerships and/or construction subsidiaries. SMPH, for example, has the Associated Development Corporation.

5) Bargaining Power of Consumers - The bargaining power of consumers is moderately high in the commercial development market, primarily due to the fact that contracts with these customers are extremely high in value, as firms tend to buy or lease a large number of units at a time. Commercial space offerings, as mentioned earlier, are also largely undifferentiated, and offered to the same customer segment. SMPH addresses this threat with its approach of building strong and healthy long-term relationships with tenants, and leveraging on its strategic location.

Weight Ranges:

0.0 = not important to 1.0 = very important

Ratings:

4 = the response is superior, 3 = the response is above average, 2 = the response is average, and 1 = the response is poor.

Analysis

The total weighted score for SM Development Corporation (SMDC) is 3.22 which is equivalent to the company’s responding in an above average way to existing opportunities and threats in the industry. Moreover, the firm’s external strategies are effectively taking advantage of existing opportunities and minimize the potential adverse effects of external threats. It is a good evaluation of the organization that needs to focus on their least average to obtain the high weights in order to become a big competitor.

The matrix shows the different types of key external factors and its total weighted score; it has been separated in two parts: Opportunities and Threats. Inside opportunities are Geographic Location, Competitors’ price, fast site Improvement, Increasing Number of Tourists, Corporate sponsorship, National trends like modern facilities, Investor high activity, offering new products, and Offering new types of services. Then the total weighted score for opportunities is 2.16

In view of the table, threats for key external factors got a weighted score of 1.06. Within the threats, the global crisis got the highest weighted score while the least one is the increasing inflation rate.

Combining opportunities and threats weighted score is equal to 3.22

Notes:

The weights and total weighted scores in both a CPM and an EFE have the same meaning.

0.0 = not important to 1.0 very important

Critical Success Factors in Competitive Profile Matrix include both internal and external issues; therefore, the ratings refer to strengths and weaknesses, where 4 =major strength, 3 = minor strength, 2 = minor weakness, and 1 = major weakness.

Results Legend:

4- Strongly competitive

3- Averagely competitive

2- Competitive

1- Incompetent

Analysis

According to Inquirer net (2020), SM Development Corporation, it is not just about being an infrastructure that serves a place for a group of residents. The organization creates a community where people can live the best for their lives. Being healthy, happy, and secured.

In the table, it shows the several important Critical Success factors that rates each major competitor and its particular strengths and weaknesses. In CPM, the total rating and total weighted scores are for the rival data firms that can be compared to the other organization. This Matrix analysis provides important internal and external strategic information that can help each company to distinguish their strengths and weaknesses.

As stated in the matrix, Ayala land is the strongest competitor with a total weighted score of 3.26. The company has clearly got a high rating of 4 in Advertisement, Customers Loyalty, Supply of land, Grand service and amenities, Market share and Organization structure. While Megaworld acquired the next place with a total weighted score of 2.73. In addition, Ayala Land and Megaworld are the big competitors in the real estate industry in the Philippines. SM Development Corporation obtained a total weighted score of 2.65. Vista land’s total weighted score is 2.61. The next is Filinvest Land got a total weighted score of 2.53. The last one among the 6 organizations is Alveo land with a total weighted score of 2.32.

Furthermore, SM Development Corporation is one of the strongest competitors in real estate in the country. It shows that they have a stable and good stand in the industry of real estate. Hence, SMDC still needs to take action in their weaknesses to improve their route for being the strongest competitor.

D. Key External Factor

Cultural Factor

Product Design & Quality

It is very important to have a face-paced that can attract the consumers to be globally competitive. It is a step to have an activity in many firms because releasing a new product and high-quality land, house, buildings, and more can contribute to improvement of sales revenue. The objective of product design and its quality is to give new experiences to the consumers.

Price Competitivenes

Competitive pricing gives a high quality for a rival organization. It basically prevents it from losing customers and its market share to the other organization. This is highly important because it is advantageous to enable the organization to respond if the rivals release new products such as modern buildings, hi-tech homes, and more. Being in competitive pricing advantages can have a quality positioning in the business.

Economic Factor

Customers’ Loyalty

Customer’s Loyalty plays a strong part in advertising and running a business. Customer’s themselves can introduce the product, services and even the whole organization when they are satisfied. Having a loyal customer, they will spend more and support your business. Moreover, they help you to keep your high profile better and grow.

Tourist Demand

It is practically a major need of an establishment or organization because it helps to boost the revenue of the company. It creates and develops infrastructures if the organization is related to tourism. Once a tourist finds your company attractive, they will be willing to try it. Tourism is a vital point to achieve a high success in a field of business and economy.

Investor Activity

It is one of the most important lines in the business along with sponsorship. Once you invest there will be a cash flow statement that can help to boost your revenue and establishment itself. Investing in a trusted organization is a good investment in terms of capital assets. It basically means that the business will even grow in the future and has a high chance to earn a good revenue.

Legal Factor

Security and Safety

It is highly important to have quality security in a company. It gives safety to everyone. It protects the property itself. Moreover, it gives more confidence for staff to work because they know that they are protected safely. It can also be related to health due to the fact that having a safe workplace and home can radiate a well-being performance and does not need to worry in anything, just enjoying services and products.

Environmental Factor

Fast Site Improvement

It is important to have a fast site to be able to access it easily. Images and video are prime when advertising. Nowadays, people are searching on the Internet to analyze where to buy. Fast site play a big role in the data, once your site is not working properly it might start to lose visitors.

Government Factor

Corporate Sponsorship

Sponsorship gives a highly competitive edge, and it can also improve the organizations position, image, and credibility. They support their partner and give a quality product that can attract consumers. Once a company has a sponsorship, it means that they are well trusted and have a chance to be well known. Sponsorship gives a particular event that can be very effective in promoting because it can be accessed and available in a wide range of consumers.

IV. Strategy Formulation

As per WorldOMeters, the Philippine population is assessed to be 107,656,644 as of March 22, 2019. Also, with a developing population, the requirements for need is developing as well.

The World Population Review stated that the largest cities in the Philippines such as Quezon City, Metro Manila, Caloocan and Davao city also have large populations. With this data, SMDC can construct or add more branches in the enormous urban communities where they can help for the accommodation of the purchasers.

Today, SMDC keeps on creating properties that objectives the necessities and components reconsidered by those forthcoming purchasers to ensure that they keep up and even increment their piece of the pie in the business. The organization exploits the blast in the economy of the country that is capable most explicitly of expanding the request of the premium center market for properties that are moderate and helpful as well as fits to their way of life of decision.

There are many responsibilities that need to be considered for a business to grow and expand. One can develop the internal capacity to drive the extension of the company, the other one is purchasing a business with a generally evolved mastery in that space of specialization and assemble it out further.

SMDC expands its services and operations through platform companies with developed expertise where they build out. The impact can make incredible worth since the tasks of a few more modest firms join to increase the value of the new firm. In any case, the accomplishment of the mix intensely relies upon the stage organization, which may bring about annihilating worth if the procedure isn't as expected executed.

SM Development Corporation is a notable organization, generally on the grounds that it has acquired the trust and certainty of the Filipinos even before the formation of SMDC as a different element from its parent organizations.

Almost every year, there are various ventures that SMDC dispatches, and not at all like different designers, SMDC doesn't frustrate and really completes on schedule. To contrast it and different organizations in the industry, SM would have a benefit over them in view of the name as well as in light of its notices. SM has notable and regarded money managers taking care of its tasks in addition to the organization has been around for quite a long time, catching the devotion of the Filipinos.

STARS - Based on the BCG matrix the condominium is in the star category because they have the highest market share among SMDC products being offered as of today. Asking several people, the first thing that will come into their mind when you hear SMDC are their prime located condominiums. Being on the high market share, the condominium remains to have a high growth rate and continue to rise their sales.

QUESTION MARKS - Under the question mark categories is the townhouse they have high market growth because they are the second option for the condominiums but on the contrary, they have a low market share because if you seek their opportunities, it is obvious that it was been given to the condominiums released by SMDC rather than townhouses. Another factor is because townhouses are not so up-to-date and convenient in today's setup.

CASH COWS - For the cash cows’ category is the house, obviously because SMDC are known for their prime location and elegant designs and trusted layout of house they have a high market share but low market growth. A primary cause of that is having too many competitors for houses in the real estate industry.

DOGS - For the dog it has a low market share and slow market growth and that is the SMDC lot as they decide to sell lot only slots in their product menu. It was stagnant in terms of sales and again this is because of the competitors in the real estate industry and in today's perspective and aspect it is really convenient and efficient for the people to find and locate for their own lot location.

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aenarz · 4 years ago

Text

Computation:

Y – Axis = FS + ES = 6.33 + (-2) = 4.33

X – Axis = IS + CA = 5.67 + (-1.67) = 4

Analysis

As we can see from the figure above, we can indicate that the SM Development Corporation is placed in quadrant 1 and we can safely describe this company as an aggressive company and competitive one. We can say that it is aggressive because of how quickly this company expands its market by widely increasing its market shares in its own industry by means of acquiring real estate properties and building assets that will help improve their revenue earnings. According to Shaw, A. (2021), many of the successful and big companies used balance integration that’s why the risk that their business will not be in a ‘going concern stage’ lowers because they invested their funds into acquiring the business that provides their raw materials for their market assets and also the distribution channels to control huge part of the contributions that are happening inside their competitive industry. As we can see, SMDC is a huge company and its chance to go bankrupt is definitely low because of the strategies that they are using since then until now. From the experts point of view, we can all say that the strategies that they must continue to do is the market penetration strategy and also product development strategy whereas they must continue to find ways to improve their real estate houses to better serve their present and customers in the future. Another big advantage of this corporation is their financial capacity to buy other competitor’s business and that’s why the number of competitors seem low because of the strategy of acquiring it to increase their market share in the country.

Analysis

Based on the graph, we can identify the SMDC corporation as a company that plays in the rapid market environment because of the data that were collected that reflects their financial capacity, industry strength, stability to the present environment and their long lasting effective management strategies. Their position in the local market in the aspect of real estate services industry is in the top spot and they’re well-known for their competitive strategy and movement in order to remain on top for a long time. SMDC must continue to use market penetration strategy for them to remain on top. Service development should be improved a little more to achieve a continuous growth and popularity among its customers and other potential investors. The company’s financial capacity to acquire competitor’s business is one of their biggest assets to remain competitive for it will be used by the company to integrate in the future to increase its control and to upgrade its market share in the country with respect to the real estate industry.

Analysis

The total weighted score of SMDC in the EFE Matrix is 3.22 which means the SMDC highly responds to its key external factors. 2.48 is the total weighted score of SMDC in the IFE Matrix earlier, in other words SMDC has a strong external position. Due to this, SMDC falls on the first quadrant of the IE Matrix as shown above.

The first quadrant is referred to as the “grow and build” quadrant. This implies that SMDC may consider any of the following strategies: backward, forward, or horizontal integration, market penetration, market development, and/or product development.

Analysis

STRENGTHS

SMDC is a company that has grown into one with a lot of strengths. It has established an identity of being the most dominant holding company in the country as well as the fastest growing real estate company. It has increased its value of assets overtime and it has become a well-known name for all Filipinos. Its offers of luxurious amenities that are secured and safe and are offered in flexible payment plans have made its market reach wider than its competitors. It takes pride in being accessible in SM Malls – accessible to more and more people, but also prides itself in having employed professional sellers that easily helps customers get the satisfaction they need.

Accessible in SM Malls

- SMDC having a hold on all SM Malls all over the country can be easily accessed by customers easily. Having a foothold in SM malls means having an avenue to gain more and more customers everywhere in the country.

Provides flexible payment

- SMDC offers various payment plans that make their products more affordable to their customers. Besides the image of security and safety that it has established, it has also made sure that its prices are customer-friendly. They are able to market that they accommodate customers from different status because they can adjust their payment plans according to their needs.

Increased value of asset overtime

- Since they are invested in properties, SMDC’s assets only increase in value overtime. Their assets and investments grow as time passes and as the market grows. This allows them to further offer better and more products to the market.

Secured and safe

- SMDC prides itself in offering to their customers: safety and security. They are marketing that their customers can rest well with them because they can ensure their well-being.

Luxurious amenities

- Besides the safety of their customers, SMDC promises a luxurious life. They offer high-quality amenities that ensure that the customers’ needs are met and satisfied. Their products and services hold the highest standards that guarantee an exceptional lifestyle to all who avails them.

Professional sellers

- Though SMDC offers the best products and services, they also attract more customers because of their employment of professional sellers all over the country. They commit themselves to training their people – making sure that the faces and minds that meet their customers are exceptional and competent to the highest standard.

Market influence is wide

- In addition to professional sellers and topnotch products and services, SMDC also takes pride in their capability to accommodate the needs of its customers; both foreign and local. They excel in providing what the customer needs – be it a little more into our culture or maybe a little out of the box for Filipinos. One of their strengths is their capacity to adapt to the various needs and concerns of their customers, regardless of their nationality.

Most dominant holding company in the country

- SMDC holds a great deal of share in the market. As one of the leading companies in the industry, what it produces and how it produces them influence how the market is going to react – thereby, influencing how customers decide. Furthermore, as the dominant holding company in the country, they have managed to get a grip on other companies and therefore their products and services. Their image has grown to be known by all Filipinos and has thus gained a leverage in attracting customers of various kinds all over the country.

Fastest growing real estate company

- SMDC has established a name for itself but it is still continuously growing. Its innovative and high-end offers allow or further reach in the market and a sturdier position in it.

WEAKNESSES

With the strengths comes the costs and further room for improvements. Because of the assurance of safety and luxury, SMDC obviously demands a huge sum of capital and high maintenance costs. The non-liquidity of its assets and limited supply of land poses more challenges on its capability to maintain its operations and to further grow the business. Furthermore, another major weakness of the business is the fact that its products are extremely limited – as they only offer residential types. Their investments and products involve difficult processes to be transferred and are also highly in the danger of accidents and natural disasters. Its vulnerability to uncertain and hazardous circumstances and its above average costs can be a cause for the company to lose its capability to deliver and its identity to provide, if not prevented and taken a hold of.

High maintenance cost

- Because of the nature of the company’s products, the costs necessary to maintain such operations – and the standards that go along with it don’t come in a light cost. While the company earns a large profit in their endeavors, it cannot be taken lightly that the expenses they have to cover in each transaction is high. It is a necessity after all not to falter on the high-quality standards that they have set.

Demands huge sum of capital

- A huge business such as an SMDC certainly did not start off easy. It needed and continuously needed a huge amount of capital in order to maintain their business operation and capacity. Without the appropriate amount, their entire company can easily be put into jeopardy.

Limited supply of land

- The kind of products that SMDC offers requires land – a commodity that doesn’t exactly fall from the heavens. With this natural limitation, the company has to navigate through working only with what they got. Their access to this commodity poses a great challenge in delivering what they have aimed to accomplish in the first place.

Transferring ownership is a difficult process

- SMDC is a huge company and is undeniably a great investment. Nevertheless, all investments still hold risks – especially towards big companies like SMDC. With that being said, one

Non-liquid assets

- Most companies prefer to have assets that can easily be liquified when the need arises. However, given the nature of the business SMDC is in, most of their assets are anything but that. This puts the company at a great risk of not being able to fulfill certain obligations when they come due. Having non-liquid assets, a majority of it, can cause the company problems if not handled properly.

Products are limited to Residential Type

- Despite the size and influence of the company in the market, it has up to now only one kind of product to offer the people. SMDC prides itself in its work to offer the best kinds of homes to the Filipinos. And while that is not an easy feat to achieve, it certainly narrows down their market easily. Limited to only those looking for a home – a personal one at that, gives them not much to cover in terms of variety.

High Selling Price of Shares

- SMDC, having a wide market influence, being the most dominant holding company in the country and the fastest growing real estate company resulted into having a high selling price of its shares. An obvious weakness for the company because they will have limited number of investors that would help them finance its business.

OPPORTUNITIES

Beyond the walls of the corporation lies chances to improve and grow. Finding a geographic location – and ensuring fast site improvement can help the company grow. Since the industry the company is in is one that is wide and continuously growing, there is much room to offer new products, offer new type of services, increase the number of tourists and attract more customers – and investors. Especially in today’s time wherein innovation keeps on reaching new heights; modern facilities and housing are starting to saturate the nationwide markets. And with its well-known image, it can influence the market broadly attracting higher investor activity and maybe even to seek corporate sponsorships. The company can also do well in working around and with the competitors’ price and use it to their advantage and growth.

Geographic Location

- The accessibility of SMDC and its wide market influence allows it to easily canvass locations all over the country. Given the nature of the business, wider and more geographic location means more products which means more customers and thus, more revenue to come into the company’s hands. If the company can exploit this, they can grow even more than the company they are now.

Competitors’ price

- With SMDC’s market share in place, they have a good vantage point in seeing how the market moves and how each player in the field does. This allows them a view of the possible shortcomings of their competitors and give them the opportunity to analyze them – and maybe fulfill them. SMDC can use their position to their advantage, providing what their competitors couldn’t or accommodating the capabilities of their customers in terms of pricing.

Fast Site Improvement

- SMDC has connections all over the country. They have established relationships with excellent and competent workers and contractors. This gives them the opportunities to employ the best people for jobs involving their projects and products. An efficient production results after all to more possibilities of sales and revenue.

Increasing Number of tourists

- SMDC doesn’t only set high standards that accommodate all Filipinos – but their products and services are deemed esteemed by foreigners as well. Thus, the increasing number of tourists can be a big target market that the company can also focus on; that is, in addition to their local customers. Tapping into the international tastes can allow the company to widen their reach and establish a stronghold in the global market.

Corporate sponsorship

- SMDC’s image puts them in a position of power as their image itself sells. They can utilize this image more to gather up and acquire corporate sponsorships. This kind of marketing will allow them to further expand their reach and even their capital.

National trends like modern facilities

- Keeping in mind their vision and identity, SMDC can do well in still keeping up with trends that arise in the market. That is, they can take advantage of the innovations that are introduced in the markets but they must also maintain the standards that they have already set - the standards that they have thrived with. These trends will allow them to stay relevant and connected.

Investor high activity

- SMDC has established an image that not only makes them attractive to customers, but investors as well. As one of the most well-known companies in the country and the fast-growing investor’s pool in the country, the company can further market themselves in order to encourage more investments to come into the company.

Offering new product

- As a company with a stable position in the market, the company can invest time, energy and attention into bringing new items on their ticket. That is, the company would benefit in coming up with new products that can accommodate needs of Filipinos that they fail to attract with their current product line.

Offering new type of services

- Besides the possibility of putting out a new product, the company might as well take it all the way by coming up with new ways to improve their customers’ experiences. If they can produce more ways to possibly assist, help and serve their customers, then they do not just get more customers, their hold on the market strengthens even more.

THREATS

However well the company is managed on the inside, there will always be certain circumstances that can endanger the company’s health and position in the market. With the industry such as the company is in, there is always the threat of substitute goods and services as there are more and more innovations and entrepreneurs that emerge from the market every day. There is also the chance of its competitors’ gaining leeway and improving in terms of services and prices. There is also the unavoidable increasing taxes and increasing inflation rate that will always affect companies in the country as well as the underlying risk of a global crisis or national disasters. All of which can lead to a low count of buyers and further threaten the company’s capability.

Improving competitor’s Service

- SMDC might be an established company already, but the fact is that their competitors can and may always find ways to improve their own services and products. That is, their competitors strive to also get ahead and so, there is a constant threat of them achieving it. This threat emphasizes the importance to always be on the watch to maintain their standards while also keeping up with the times.

Global Crisis

- Any company is always under the threat of a possibility of a global crisis. But with a company as huge as SMDC, with numerous investments both in its products and other companies, the consequences when such a threat arises are exponentially higher. The assets that they take pride in can easily become liabilities when such circumstances arise.

Inevitable Accidents and Natural Disasters

- As high-quality and exceptional as the products of SMDC are, it cannot withstand the fact that it is at the mercy of accidents and natural disasters. It can even be said that it is prone to that. This gives the company much to consider in terms of contingency plans as major ones can easily derail their whole operations.

Increasing taxes

- Because of its size and the amount of revenue it racks up daily, SMDC owes taxes that continue to rise as they do. And since they cannot stop the increase in their revenue, an increase in taxes can be expected and must be anticipated. The amount that this can cost them is no joke and cannot be taken lightly.

Increasing 4% Inflation rate

- The economic state of the country SMDC is established in certainly isn’t the most stable one. Thus, the fluctuations of the economy in general can easily influence the transactions and operations of the company. Its wide market share and its product widespread cannot dodge the bullet of an increase in inflation rate.

Threat of substitute goods and services

- The market is continuously growing and it’s no secret that more and more innovative entrepreneurs are in the market. Thus, companies who offer similar services and products as SMDC are right around the corner. There is always a possibility that customers might shift to another company that can better accommodate and provide their needs.

Low count of buyers

- The market being wide and the company having a vital space in the market does not diminish the fact that the company is still prone to the risk of having not enough buyers. Like every other company, they also face the risk of having less than their expected number of customers to breakeven and/or earn a profit. And if they do not address the market’s response and movements, they may still be left behind by their own customers.

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