Pamantasan ng Lungsod ng Marikina

Brazil St., Greenheights Subdivision Concepcion Uno Marikina City

College of Business Administration and Accountancy

in partial fulfillment with the req. of

Distribution Management

Puregold Price Club Inc., (PGOLD.PS)

Submitted by:

Casio, Claudine

Estoras, Ruby

Huarde, Keren Keziah

Morada, John Nicko

Murciano, Clarence Claire

Submitted to

Mr. Norman Afable

Chapter 1. Executive Summary

1.1 Objectives

1.2 Major Findings

Chapter 2. Background of the Study

2.1 Objectives of the Study

In this research, first, we are investigating the legal aspects of

Puregold Price Club Inc., (PGOLD.PS). There are legal issues regards

to the President and owner of PGOLD.PS who is Mr. Lucio Co. Based on

our research, Mr. Lucio Co was involved in a Multi-Million Peso Smuggling

Issue, supported by Former President Joseph Ejercito Estrada. We will

find out if the issue is still currently discussed. And in spite of the issue,

why that PGOLD.PS is one of the competitive Retail Store in the

Philippines.

2.2 Scope of Limitation of the Study

In our investigation, we will search for the Puregold’s company

profile, current competitive performance, financial aspect of the company,

Political, Economic, Social, Technological, Environmental, and Legal

Aspects of the Company (PESTEL), company strategies, Internal

Environment of the Company, SWOT Analysis, and also, we will

benchmark Puregold and it’s competitors.

2.3 Description of the general context in which the problem is to be

viewed and discussed.

Three close associates and a mistress of former president Joseph

Ejercito Estrada will be investigated following reports that they are

involved in the smuggling of goods into the country.

Justice Secretary Hernando Perez said the four will be summoned by a

task force created specifically to check out reports that some people close

to Estrada have been involved in smuggling activities.

"I have organized a task force to check on these smuggling cases. We

have received reports that these were perpetrated by persons close to the

former president I cannot reveal the names of those we are investigating

but I have talked to (Titus) Villanueva of the Bureau of Customs and he is

also creating a team to coordinate with us," Perez told reporters in a

briefing.

He cited reports that Estrada's associates tried to sneak in various goods

ranging from food items like sugar and rice and electronics although the

Department of Justice has yet to verify these reports.

He confirmed that one of the four alleged smugglers is Lucio Co, an

alleged supplier of smuggled goods to duty-free shops all over the

country. Co's name has been consistently dragged into allegations of

smuggling activities.

Co had been investigated before in connection with the smuggling of

frozen chicken into the country, which found its way to duty free stores he

owned. Co at the time was perceived to be close to Estrada and nothing

came of the investigation.

It will be recalled that at the height of Estrada’s impeachment trial at the

Senate in January, former Finance secretary Edgardo Espiritu testified

before the impeachment trial that bigtime smugglers were closely

associated with Estrada. Espiritu, however, refused to name these people

fearing for his life.

Perez said he has designated senior state prosecutor Leo Dacera III and

five other prosecutors to handle the smuggling probe.

Aside from Customs commissioner Titus Villanueva and the panel of

investigators he created to verify the smuggling attempts, Secretary Perez

said that some agents of the National Bureau of Investigation have also

been tasked to coordinate with the Bureau of Customs to dig deeper into

the case.

2.4 Description of the situation in and the process by which the problem

arose and developed

Two warehouse operators have identified Lucio Co of the

supermarket chain Puregold Price Club Inc. as the owner of imported

goods believed to be part of the cargoes of some 1,900 containers

reported missing from the Port of Manila and the Manila International

Container Port early this year, according to an intelligence officer of the

Bureau of Customs (BOC).

Simeon Caparroso Jr., a member of the BOC intelligence division, said

Jimmy Go of Uni-Nexus Trading and Conrado Ybañez of Intercontinental

Trading, who were arrested in separate raids, told him that Co had

ordered a change in delivery plans a week before the raids last week.

(Go’s brother-in-law, Sonny Angeles, was the listed owner of Uni-Nexus

Trading.)

In his spot report to the BOC intelligence division chief, Caparroso said Co

had asked Go and Ybañez to bring the goods to other warehouses that

the two were running instead of bringing the shipments to a Pasig City

warehouse. However, the two refused to reveal the locations of the other

warehouses.

The BOC intelligence team has identified the new warehouse destinations

of the commodities and has secured a warrant to conduct a raid on it this

week, Caparroso said.

2.5 Sources of Data and Information

Philippine Daily Inquirer:11:43 pm | Sunday, September 11th, 2011

http://www.interaksyon.com/business/...l-trade-sector

http://archive.malaya.com.ph/2012/03292012/busi4.html

www.puregold.com.ph

http://www.reuters.com/finance/stocks/overview?

symbol=PGOLD.PS

http://www.iligan.gov.ph/puregold-buys-operator-of-eunilaine-

grocer-e-marts/

www.Inquirer.net

http://www.stockmarketpilipinas.com/thread-278.html

http://www.securities.com/Public/company-profile/PH/

Puregold_Price_Club_Inc_en_1674059.html

http://www.securities.com/Public/company-profile/PH/

Puregold_Price_Club_Inc_en_1674059.html

http://www.reuters.com/finance/stocks/companyOfficers?

symbol=PGOLD.PS

http://www.insideview.com/directory/puregold-price-club-inc

http://www.reuters.com/finance/stocks/companyProfile?

symbol=PGOLD.PS

http://business.inquirer.net/70531/puregold-widens-public-

ownership-to-32

http://business.inquirer.net/45935/puregold-price-club-net-profit-

tripled-to-p1-54b-in-2011

http://business.inquirer.net/45423/lucio-co-starts-talks-on-merger-

of-sr-puregold

http://business.inquirer.net/35953/puregold-%E2%80%98on-track

%E2%80%99-to-hit-net-profit-target-of-p1-5b

http://business.inquirer.net/102585/puregold-buys-operator-of-

eunilaine-grocer-e-marts

http://business.inquirer.net/93224/puregold-9-month-profit-up-67

http://business.inquirer.net/84260/puregold-eyes-upsize-of-debt-

notes-sale-to-p8b

http://business.inquirer.net/83800/puregold-eyes-p5b-debt-offer

http://business.inquirer.net/76951/puregold-nets-p1-in-1st-half-of-

2012

http://business.inquirer.net/57737/puregold-vows-to-support-small-

entrepreneurs

http://business.inquirer.net/55445/puregold-nets-p469m-in-q1

http://business.inquirer.net/47531/puregold-goes-for-25-profit-

growth-in-%E2%80%9912

www.puregold.com.ph

http://www.pse.com.ph

http://investing.businessweek.com/research/stocks/snapshot/

snapshot.asp?ticker=PGOLD:PM

http://markets.ft.com/research/Markets/Tearsheets/Forecasts?

s=PGOLD:PHS

www.lawphil.net

http://www.pse.com.ph/stockMarket/companyInfo.html?

id=629&security=567&tab=0

Chapter 3. Company Profile

3.1 Vision and Mission

Vision

To be the Most Customers-Oriented Hypermart offering a One-Stop

Shopping convenience and Best Value to our Customers.

Mission

Our Mission is to Provide Products, Services and Business

Opportunities to Every Filipino Family.

We Establish Lasting Relationship with Our Suppliers and Business

Partners.

We Strive to Promote the Personal and Professional Development

of our Employees.

We Commit Profitable Results to the Stockholders.

3.2 Goal

To be the Top Retail Store in the Philippines

3.3 Organizational Structure

Because of the confidentiality of the confidentiality of the company,

here is the list of the executives and Board of Directors of Puregold Price

Club Inc.,

KEY EXECUTIVES

Name Age Since Current Position

Lucio Co 58 1998 Chairman of the Board

Leonardo Daya

o

68 1998 President, Director

Susan Co 55 1998 Vice Chairman of the

Board, Treasurer

Aida de

Guzman

51 1999 Senior Vice President

Denise

Maria Carolin

o

47 1999 Vice President -

Administration

Erlinda Orro 54 2005 Financial Comptroller

Elvira Gutierr

ez

40 2011 Senior Manager -

Human Resources

Pamela

Justine Co

28 2003 Merchandising Manager,

Director

Lalette Alea 38 2009 Site Identification and

Acquisition Manager

Edison Angg

ala

35 2001 Senior Store Manager

Anabelle Kahi

wat

39 2011 Senior Manager - Audit

Baby

Gerlie Sacro

34 2000 Corporate Secretary

Candy Dacan

ay-Datuon

33 Assistant Corporate

Secretary, Compliance

Officer

Ferdinand

Vincent Co

31 2003 Director

Edgardo Lacs

on

67 2010 Independent Director

Marilyn Pardo 74 2010 Independent Director

Lucio Co

Mr. Lucio L. Co serves as Chairman of the Board of Puregold Price Club

Inc since September 1998. He is also currently the Chairman of Puregold

Finance, Inc., Puregold Duty Free Subic, Inc., Puregold Realty Leasing

and Management, Inc. and President of Bellagio Holdings, Inc., Ellimac

Prime Holdings, Inc., Cosco Prime Holdings, Inc., Forbes Corporation,

LCCK & Sons Realty Corporation, Patron Supermarket, Inc., Puregold

Junior Supermarket, Inc., Puregold Duty Free, Inc. and Puregold

Properties, Inc. He is also a Director of Alcorn Gold Resources, Inc. and a

member of the Board of Trustees of Adamson University. Mr. Co has been

an entrepreneur for the past 40 years.

Leonardo Dayao

Mr. Leonardo B. Dayao serves as President and Director of Puregold

Price Club Inc since 1998. He is also currently the Chairman of PSMT

Philippines, Inc., President of Puregold Finance Inc. and Alcorn Gold

Resources, Inc., and Vice-President of Ellimac Prime Holdings, Inc.,

Bellagio Holdings, Inc., Pajusco Realty Corporation, Puregold Properties,

Inc., VFC Land Resources, Inc., and Cosco Prime Holdings, Inc. Mr.

Dayao is also a Director of Fontana Development Corporation. Mr. Dayao

was previously connected with Ayala Investment and Development

Corporation as Vice-President from 1980 to 1984 and Bank of the

Philippine Islands as Vice President from 1984 to 1994. Mr. Dayao

received a Bachelor of Science degree in Commerce from the Far Eastern

University.

Susan Co

Mrs. Susan P. Co serves as Vice Chairman of the Board and Treasurer of

Puregold Price Club Inc since September 1998. She is also currently the

Chairman of Cosco Price, Inc., President of Pure Value Foods, Inc., and

Treasurer of Bellagio Holdings, Inc., Pajusco Realty Corporation, Puregold

Finance, Inc., and Puregold Leasing and Management, Inc. She received

a Bachelor of Science in Commerce from the University of Santo Tomas.

Aida de Guzman

Ms. Aida B. de Guzman serves as Senior Vice President of Puregold Price

Club Inc since September 19, 1999. Prior to her engagement with

Puregold, she was employed by Royal Duty-Free Shops, Inc. as Assistant

General Manager and Rustan’s Supercenters, Inc. (Shopwise) as Senior

Manager for Supermarket Merchandising from 1993 to 1999. She received

a Bachelor of Science in Commerce Major in Economics degree from the

Polytechnic University of the Philippines, Cum Laude. She also studied

Supermarket Management Operations at Fleming Institute in Oklahoma

City, Oklahoma, USA.

Denise Maria Carolino

Ms. Denise Maria D. Carolino serves as Vice President for Administration

of Puregold Price Club Inc since 1999. Prior to joining the Company, she

served as Purchasing Manager at Uniwide Sales, Inc. Houseware

Department from 1987 to 1992. Ms. Carolino received a Bachelor of

Science degree from the University of Santo Tomas and passed the

Architects’ Licensure Examinations in 1986.

Erlinda Orro

Ms. Erlinda G. Orro serves as Financial Comptroller of Puregold Price

Club Inc since 2005. She was previously employed by Gregorio Araneta

Management Corporation as Group Internal Auditor from 1984 to 1986,

and served as Finance Manager with Kuwait Asia Corporation, GSA for

Kuwait Airways from 1986 to 1989, Audit Manager with SyCip, Gorres,

Velayo & Co., CPAs from 1990 to 1991, Group Financial Controller with

Blue Horizons Travel and Tours, Inc. from 1992-2000 and Vice President

for Finance with Destiny, Inc. from 2000 to 2004. Ms. Orro received a

Bachelor of Science degree in Commerce from the University of

Pangasinan and is a Certified Public Accountant.

Elvira Gutierrez

Ms. Elvira D. Gutierrez serves as Senior Manager for Human Resources

of Puregold Price Club Inc since April 2011. Prior to joining the Company,

she was employed by Royal Undergarments Corporation of the

Philippines as personnel staff from 1991 to 1993, by Northwest Realty

Corporation as Human Resources and Administrative Manager from 1993

to 2001 and by Super Shopping Market, Inc, (Super SM Hypermarket) as

Personnel Manager from 2001 to 2003. Ms. Gutierrez received a Bachelor

of Arts degree in Psychology from the College of the Holy Spirit.

Pamela Justine Co

Ms. Pamela Justine P. Co serves as Merchandising Manager and Director

of Puregold Price Club Inc since 2003. She is also currently the President

of Fertuna Holdings, Inc., and Treasurer of 118 Holdings, Inc., Cosco

Prime Holdings, Inc., Cosco Price, Inc., Ellimac Prime Holdings, Inc., KMC

Realty Corporation, Patagonia Holdings, Corporation, Patron

Supermarket, Inc., Pure Value Foods, Inc., Puregold Junior Supermarket,

Inc., and VFC Land Resources, Inc. She is also a Director of Pajusco

Realty Corporation, PSMT Philippines, Inc., and Puregold Duty Free

(Subic), Inc, and is the General Manager of Ice Mixx Trading. Ms. Co

received a Bachelor of Science degree in Entrepreneurship from Thames

International Business School.

Lalette Alea

Ms. Lalette Alea serves as Site Identification and Acquisition Manager of

Puregold Price Club Inc since 2009. She previously worked at

International Family Food Services, Inc. as Senior Business Development

Officer from 2007 to 2009. She is a graduate of De la Salle University with

a Bachelor of Science degree in Marketing Management.

Edison Anggala

Mr. Edison T. Anggala serves as Senior Store Manager of Puregold Price

Club Inc since 2001. Prior to joining the Company, he was employed by

Fortune Tobacco Corporation as an internal auditor from 1998 to 2001.

Mr. Anggala has a Bachelor of Science degree in Industrial Engineering

from the University of Santo Tomas.

Anabelle Kahiwat

Ms. Anabelle S.J. Kahiwat serves as Senior Manager - Audit of Puregold

Price Club Inc since April 2011. Prior to joining the Company, Ms. Kahiwat

worked as an Audit Manager with SyCip, Gorres, Velayo & Co., CPAs

from 1991 to 2001. She received her Bachelor of Science degree in

Business Administration, majoring in Accounting from the University of the

East.

Baby Gerlie Sacro

Ms. Baby Gerlie I. Sacro serves as Corporate Secretary of Puregold Price

Club Inc since 2000. Prior to joining the Company, she was employed by

Plaza Fair, Inc. in the Compensation and Benefit Section of the Human

Resources Department. Ms. Sacro received a Bachelor of Science degree

in Entrepreneurial Management as well as completing a post-

baccalaureate course in Management from the Polytechnic University of

the Philippines.

Candy Dacanay-Datuon

Atty. Candy H. Dacanay-Datuon serves as Assistant Corporate Secretary

and Compliance Officer of Puregold Price Club Inc. She is a lawyer and a

member of the Philippine Bar since 2004. She has been employed as

counsel for the Company since 2004. She received a Bachelor of Arts,

Cum Laude in Political Science from the Colegio de San Juan de Letran

and a Bachelor of Laws Degree from the University of Santo Tomas.

Ferdinand Vincent Co

Mr. Ferdinand Vincent P. Co serves as Director of Puregold Price Club Inc

since 2003. He is also the Marketing Director of the Company. Mr. Co is

currently the President of 514 Shaw Property Holdings, Inc., KMC Realty

Corporation, VFC Land Resources, and Pajusco Realty Corporation and

Treasurer of Fertuna Holdings, Inc. He is also a Director of 118 Holdings,

Inc. and Ellimac Prime Holdings, Inc., Patagonia Holdings, Inc. Mr. Co

received a Bachelor of Science degree in Entrepreneurial Management

from the University of Asia and the Pacific.

Edgardo Lacson

Mr. Edgardo G. Lacson serves as Independent Director of Puregold Price

Club Inc since October 20, 2010. He is currently the Chairman of

Metrostore Corporation, MIL Export Philippines, Beacon Environmental

Management Services, Primelode, Managing Director of Link Edge and

the President of MIS Maritime Corporation, Safe Seas Shipping Agency,

Marine Industrial Supply Corporation, and EML Realty. He is also the

President of the Employers Confederation of the Philippines and a

Member of the Makati Business Development Council, Philippine Nippon

Kyokai Technical, Philippine Interisland Shipping Association and the

Management Association of the Philippines. Mr. Lacson received a

Bachelor of Science in Commerce from De La Salle College (now De La

Salle University).

Marilyn Pardo

Ms. Marilyn V. Pardo serves as Independent Director of Puregold Price

Club Inc since October 20, 2010. She is currently the Chairman and Chief

Executive Officer of Asian Holdings Corporation, Downtown Properties,

Inc., Casa Catalina Corporation, and Catalina Commercial Properties, Inc.

Ms. Pardo received a Bachelor of Liberal Arts and an Associates Degree

in Business from Assumption College.

3.4 History

The advent of one-stop shopping convenience began in 1998 when

PUREGOLD opened its first branch along Shaw Blvd. in Mandaluyong

City. The store offered a wide array of goods from groceries, apparel,

household accessories and furniture at very affordable prices. During

that time, the one-stop shopping philosophy was still a novel idea to

consumers but with the excellent service and quality products it provided,

it did not take long for Puregold to make its mark in the retail industry.

Today, it has grown into a giant retail chain with more than 50 stores

nationwide.

Chapter 4; 4. The company and its External Environment

4.4 PESTEL Analysis

Political Factors

For employment legislations, the government encourages retailers to

provide a mix of job opportunities from flexible, lower-paid and locally-

based jobs to highly-skilled, higher-paid and centrally-located jobs. Also

to meet the demand from population categories such as students,

working parents and senior citizens. PGOLD.PS understands that

retailing has a great impact on jobs and people factors (new store

developments are often seen as destroying other jobs in the retail sector

as traditional stores go out of business or are forced to cut costs to

compete), being an inherently local and labor-intensive sector.

PGOLD.PS employs large numbers of; student, disabled and elderly

workers, often paying them lower rates. In an industry with a typically

high staff turnover, these workers offer a higher level of loyalty and

therefore represent desirable employees.

Puregold faces operational and logistical risks of doing business in new

territories. Possible difficulties include obtaining regulatory or local

government approvals and distributing/transporting inventories. Also,

Puregold may experience difficulty in building its brand in these new

areas. While the risks may be substantial, Puregold believes that the

risks are worth taking given its growth potential

Economical Factors

Economic factors are of concern to PGOLD.PS, because they are likely

to influence demand, costs, prices and profits. One of the most influential

factors on the economy is high unemployment levels, which decreases

the effective demand for many goods, adversely affecting the demand

required to produce such goods.

These economic factors are largely outside the control of the company,

but their effects on performance and the marketing mix can be profound.

Although international business is still growing , and is expected to

contribute greater amounts to PGOLD.PS’s profits over the next few

years, the company is still highly dependent on the Philippine market.

Hence, PGOLD.PS would be badly affected by any slowdown in the

PGOLD.PS food market and are exposed to market concentration risks.

Social/Cultural Factors

Current trends indicate that Filipino customers have moved towards ‘one-

stop' and ‘bulk' shopping, which is due to a variety of social changes.

PGOLD.PS has, therefore, increased the amount of non-food items

available for sale.

Demographic changes such as the aging population, an increase in

female workers and a decline in home meal preparation mean that

Filipino retailers are also focusing on added-value products and services.

In addition, the focus is now towards; the own-label share of the business

mix, the supply chain and other operational improvements, which can

drive costs out of the business. National retailers are increasingly reticent

to take on new suppliers. The type of goods and services demanded by

consumers is a function of their social conditioning and their consequent

attitudes and beliefs. Consumers are becoming more and more aware of

health issues, and their attitudes towards food are constantly changing.

One example of Tesco adapting its product mix is to accommodate an

increased demand for organic products. The company was also the first

to allow customers to pay in checks and cash at the checkout.

Technological Factors

Technology is a major macro-environmental variable which has

influenced the development of many of the PGOLD.PS products. The

new technologies benefit both customers and the company: customer

satisfaction rises because goods are readily available; services can

become more personalized and shopping more convenient. The launch

of the Efficient Consumer Response (ECR) initiative provided the shift

that is now apparent in the management of food supply chains

The adoption of Electronic Point of Sale (EPoS), Electronic Funds

Transfer Systems (EFTPoS) and electronic scanners have greatly

improved the efficiency of distribution and stocking activities, with needs

being communicated almost in real time to the supplier (Finch, 2004).

Environmental Factors

In 2003, there has been increased pressure on many companies and

managers to acknowledge their responsibility to society, and act in a way

which benefits society overall. The major societal issue threatening food

retailers has been environmental issues, a key area for companies to act

in a socially responsible way. Hence, by recognizing this trend within the

broad ethical stance, PGOLD.PS’s corporate social responsibility is

concerned with the ways in which an organization exceeds the minimum

obligations to stakeholders specified through regulation and corporate

governance. They also support the city ordinance of Marikina for echo

bags instead of plastic bags.

Legal Factors

There is an issue during the presidency of former President Joseph

Ejercito Estrada. this issue was about smuggling issue of Lucio Co and

some other businessman, revealed by the mistress of the former

president.

"I have organized a task force to check on these smuggling cases. We

have received reports that these were perpetrated by persons close to

the former president I cannot reveal the names of those we are

investigating but I have talked to (Titus) Villanueva of the Bureau of

Customs and he is also creating a team to coordinate with us," Perez told

reporters in a briefing.

He cited reports that Estrada's associates tried to sneak in various goods

ranging from food items like sugar and rice and electronics although the

Department of Justice has yet to verify these reports

He confirmed that one of the four alleged smugglers is Lucio Co, an

alleged supplier of smuggled goods to duty-free shops all over the

country. Co's name has been consistently dragged into allegations of

smuggling activities.

Co had been investigated before in connection with the smuggling of

frozen chicken into the country, which found its way to duty free stores he

owned. Co at the time was perceived to be close to Estrada and nothing

came of the investigation.

It will be recalled that at the height of Estrada’s impeachment trial at the

Senate in January, former Finance secretary Edgardo Espiritu testified

before the impeachment trial that bigtime smugglers were closely

associated with Estrada. Espiritu, however, refused to name these people

fearing for his life.

Perez said he has designated senior state prosecutor Leo Dacera III and

five other prosecutors to handle the smuggling probe.

Aside from Customs commissioner Titus Villanueva and the panel of

investigators he created to verify the smuggling attempts, Secretary

Perez said that some agents of the National Bureau of Investigation have

also been tasked to coordinate with the Bureau of Customs to dig deeper

into the case.

4.2 Industrial Analysis

4.2.1 Bargaining power of suppliers

This force represents the power of suppliers that can be influenced

by major grocery chains and that fear of losing their business to the

large supermarkets. Therefore, this consolidates further leading

positions of stores like PGOLD.PS in negotiating better promotional

prices from suppliers that small individual chains are unable. In

return, Philippine based suppliers are also threatened by the

growing ability of large retailers to source their products from

abroad at cheaper deals. The relationship with sellers can have

similar effects in constraining the strategic freedom of the company

and in influencing its margins. The forces of competitive rivalry

have reduced the profit margins for supermarket chains and

suppliers

4.2.2 Risk of Entry by potential competitors

PGOLD.PS is now known by the consumers for their affordable

products and good service. And also, PGOLD.PS is known for their

domination in the Retailing Industry. Lately, there are news that

PGOLD.PS has been allied with Eunilaine Grocer E, S&R

Membership and Parco.

Puregold buys operator of Eunilaine, Grocer E marts

By Doris C. Dumlao

Philippine Daily Inquirer

4:34 pm | Monday, January 14th, 2013

“MANILA, Philippines—Businessman Lucio Co-led Puregold Price

Club has gobbled up another retailing peer that operates the

Eunilaine foodmarts and Grocer E supermarkets, adding 15 new

stores to its fast-growing network.

Puregold, the country’s second-biggest retailer and the most

serious challenger to taipan Henry Sy’s, announced on Monday the

acquisition of all the outstanding shares of stocks of Company E

Corp. This paves the way for its takeover of the four operating

Eunilaine foodmarts and 11 operating Grocer E supermarts.

The additional stores are distributed as follows: seven in Metro

Manila, six in Rizal and two stores in Cavite.

Puregold ended 2012 with 156 stores in operations, consisting of

131 Puregold hypermarkets, supermarkets and extras; 19 Parco

supermarkets; and six S & R warehouse membership shopping

clubs. Last year Puregold accelerated its expansion with the

acquisition of the Parco and S&R chains.

The company’s footprint now covers the following areas: 77 in

Metro Manila, 45 in South Luzon, 33 in North Luzon and one in the

Visayas.

Puregold is indicatively targeting to open 25 new Puregold stores

and one new S & R warehouse membership shopping club this

2013, which will mark its entry in Mindanao with the opening of the

S & R store in Davao City and the Puregold hypermarket in

Cagayan de Oro City.  All the Parco supermarkets will be

rebranded into Puregold in 2013.

Meanwhile, in the January 2013 issue of AsiaMoney on the matter

of the best businesses in Asia, Puregold was awarded as the

“Medium-Cap Corporate of the Year” for 2012 for the Philippines.

“The mid-cap award for the Philippines was a close call. ICTSI was

a contender, as were Manila Water and Security Bank, all of which

were deemed by analysts to have displayed impressive strategies

this year in the mid-cap space. But while these companies have all

performed well, their strategies on the whole have been a

continuation of good management in previous years. Puregold

Price Club’s strategy, on the other hand, has allowed it to gain

market share over larger rivals for the past 12 months,” the

magazine said.”

“Puregold eyes merger with S&R Membership

Lucio Co eyes consolidation of retail operations

By Doris C. Dumlao

Philippine Daily Inquirer

11:09 pm | Monday, February 20th, 2012

MANILA, Philippines—Chinese-Filipino businessman Lucio Co

plans to merge S&R Membership Shopping with Puregold Price

Club Inc., thus consolidating his retailing businesses into a publicly

listed vehicle catering to all market segments.

In a disclosure to the Philippine Stock Exchange Monday, Puregold

said its board had authorized its management to commence study

and discussions for the possible acquisition of S&R “at terms and

conditions satisfactory to both parties.”

The planned infusion of S&R into Puregold will diversify the latter’s

market base and potentially harness the power of increasing

consumer affluence in the Philippines. S&R caters to the upscale

segment while Puregold caters to the lower-income but more

populous market segment.

“What’s good about the infusion is, remember that Puregold Price

Club serves the CDE market and S&R serves the AB market. So

with this, we will be able to cover the whole spectrum of the market

segments,” Puregold president Leonardo Dayao said in a phone

interview.

“We (in Puregold) haven’t focused much on the AB market so we

now have a vehicle and a store format for that,” he added.

Puregold currently has three retail formats: hypermarket (Puregold

Price Club), which caters to resellers and retail customers;

supermarkets (Puregold Junior) and discount stores (Puregold

Extra). The bulk of the business comes from hypermarket with an

86.7 percent share of total revenues.

As of end-September, Puregold had 48 hypermarkets, 20

supermarkets and nine discounter stores. In 2011 alone, a total of

15 stores were opened while 12 stores were opened in the last

quarter of 2010. These new stores accounted for nearly a quarter of

total net sales for the nine-month period in 2011.

S&R, meanwhile, operates six membership stores serving the AB

market, located at Fort Bonifacio, Alabang, Diosdado Macapagal

Highway, Quezon City, San Fernando (Pampanga) and Cebu.

In terms of geographic base, the potential merger will give Puregold

a foothold outside Luzon, given S&R’s branch in Cebu. Puregold

itself, however, has plans to put up stores in the Visayas and

Mindanao within the next two to three years.

When asked about the timeframe to finish the study leading to the

prospective infusion, Dayao said: “We expect to do it within the

year, although you know, the timetable can change depending on

many factors.”

No details were disclosed about S&R’s financial profile.

Puregold debuted on the Philippine Stock Exchange on October 5

last year at P12.50 per share. As of Monday, its share price rose by

72 percent to P21.50, giving it a market capitalization of P43.6

billion.

Its shares were down by 1.4 percent Monday after the disclosure of

the prospective merger with S&R.

As of September last year, Puregold posted a net profit of P1

billion, up by 185 percent from a year before on the back of a 36.3-

percent increase in net sales to P26.9 billion, in turn as a result of

opening of new stores in 2011 and in the 4th quarter of 2010.”

4.2.3 Threat of Substitutes products

General substitution is able to reduce demand for a particular

product, as there is a threat of consumers switching to the

alternatives. In the grocery industry this can be seen in the form of

product-for-product or the substitute of need and is further

weakened by new trends, such as the way small chains of

convenience stores are emerging in the industry. In this case

PGOLD.PS is trying to acquire existing small-scale operations and

opening Hypermarts and Puregold Jr. stores in local towns and city

4.2.3 Rivalry among Establish firm5. The company and its Internal

Environment

5.1 MS Model Analysis

5.1.1 Men- Human assets, their skills, and competencies

5.1.2 Management quality, expertise and experience

5.1.3 Money-financial health of the business

5.1.4 Make up-organizational structure and culture

5.1.5 Machinery-physical asset of the business

5.1.6 Methods- processes adopted by the business

5.1.7 Markets the firm’s product/ Market Mix(7P’s)

5.2 SWOT Analysis

6. The company Strategies

6.1 Tactics (specify each action steps that company is implementing)

6.2 Key Performance Indications (how does the company measuring the

performance)

7. Recommendation

8. Conclusion

9. Cite your individual key learning’s

10. Bibliography