final business summary

8/8/2019 Final Business Summary

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HYBRID AGREEMENTBusiness Project Management Report

For the fulfillment of LS127Ateneo de Manila UniversityMarch, 2009

Kin GatmaytanAndrei PostradoJeff GonzalesMarianne BellosilloSunhyung ShinGavie CecilloMark Lim


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TABLE OF CONTENTS

TITLE/TOPIC PAGEEXECUTIVE SUMMARY 3

BUSINESS PLAN

Highlights of Business Plan

Deviations/Plan Revisions

Key MileStones/ TimeTable

Key Results/Areas

6

17

19

20

BUSINESS IMPLEMENTATION

Actual vs. Projected KeyResults/Accomplishments

Variance Analysis

Major Challenges/ Problems

Encountered and Management

Response

Actual Financial Statements

20

20

22

22

23

STRATEGY EVALUATION

Fred Davids Strategy EvaluationFramework

Rumelts Criteria

Porters 5-Forces Model

Lessons Learned

26

28

29

31

Future Prospects

Growing Your Business: Improved

Business Plan

Projected Financial StatementsFunding Plan

33

33

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EXECUTIVE SUMMARY

Gist of Business Concept

The companys business, Hybrid Agreement shirts, is like the Spoofs brand, but instead

of doing hilarious renditions of logos of popular designer brands, movies, and TV shows,

we do hilarious and entertaining renditions of popular figures ( People, Things, real or

virtual). But behind the hilarious appearance of the design of the shirts, we also try to

imply the connection of the cultures of the world through our shirts and its designs. Other

than the good possibility for steady quantitative growth seen in the research, our

company would like to go into this business because we believe in the capabilities of

each member to produce good ideas, innovations, and connections for this Shirtbusiness. The company believes that the attractiveness of this business depends on the

connection between the ideas and innovations of the businesses and the tastes and

preferences of the people. The main factors for success are the design of the shirts and

its SEE-ABILITY (Able to be seen by the customers) since it will be these designs that

we will be selling. Given this bold statement, this industry is very attractive for new

entrants who are ideas-and-innovations-rich. On the other hand, there are risks that one

has to put into consideration like quantity of disposable income, consumer preferences

and expectations, prices, costs, competitors, legal restrictions, taxes, culture, piracy, etc.Hence, for a newcomer to succeed, here are some of the factors to consider: affordable

prices, wide and good relationships with distribution networks, design, high quality and

low cost inputs, advertising and promotions, suitable target market, and most

importantly, customer satisfaction. In the companys research, they saw that industry has

been experiencing growth, though the growth rates are decreasing. This is due to the

consumers' behavior of buying clothing. The consumers purchasing of these products

are mainly because of impulse purchasing, very-low brand loyalty of consumers (buying

a product depends mainly on the price, quality and trendiness aspects of it), and other

factors like preference.Even though there are forecasts of strong competition, weak

economy and weak growth, it is optimistic that the product will survive these external

factors for as long as the flexibility and capabilities of the internal aspect of the company

is in tact.


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FINANCIAL FEATURES (at Php 249.99/sh irt)

Year Profit Margin

2009 20%

2010 25%

2011 30%

2012 33% (Spread to Cebu)

2013 32% (Davao)

Financial Ratios:

Php 249.99

(without rental

fess)

Total Assets Turnover 3.205246557

Gross Profit Margin 1

Net Profit Margin 0.31198848

Return on Total Assets 1

Return on Stockholder's Equity 1

* For January 31, 2011, the company expects to have established a good relationship with its

suppliers and thus, will reduce expenses.

Financial Requ irements

For financial requirements, the company shall initially invest Php 59, 178 to be

able to purchase raw materials (shirts), printing, provide for transportation, personnel,

and royalty fees. As the company expects the business to grow, it will have to invest

more to generate more income.

Major Achievements /Key Milestones

Given the companys commitment statement (the companys mission/vision), itplans to abide by it and use it as a measure to highlight its major achievements and

milestones. So here are the companys expected milestones and achievements:

1. Establish the business as a sustainable and profitable business with a market share

that is at par with the 2 direct competitors (Team Manila and Spoofs).

2. Expand the reach of our products to the Metro Areas in the Philippines (Manila, Cebu,


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Davao) to promote connecting cultures.

3. Establish an accessible listening arm of the company to acknowledge the needs,

wants, queries of the consumers (Assessment of our product, comments, suggestions,

etc.).

4. Establish a rock-solid company composed of every single member and part of it.

5. Establish the image of the firm not only as a firm that connects cultures, but also as a

strong advocate of Corporate Social Responsibility and Social Development.


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BUSINESS PLAN (Original)

HIGHLIGHTS OF BUSINESS PLAN

Business Model

Value Proposition

- Fear to wear the same type and design of shirt as others do= Limit quantity per

design and size of the shirt (10 pieces per shirt)

- Stand out, look good and fashionable

o Business concept (mixing cultures through figures)

Market Segment

Variable Target Market Information

Region NCR

Age 13-24

Gender Male and Female

Family Size Average of 4

Income Class Top 2 classes of the Disposable Income

Bracket (Php 225, 401 ++, and Ps

200,401-225,400)

Occupation Students

Education High School, College, and Post- Graduate

Social Class Middle to Upper Class

Use Occasion Any Occasion (depends on what our

customers want to wear)

Benefits Sought Individualism, Nice Designs, High Quality,

Quality Prices

Readiness Stage Interested

Attitude Toward Product Enthusiastic


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Value Chain Structure

Position in Value Network

- Competitors : Spoofs Limited, Team Manila

- Complementors : handful for men and women (accessories, other fashion

garments)

- Suppliers : tie-ups with the blank shirt supplier

- Shirt Designers : tie-up with the design artists

- Customers : values which make the shirt valuable

Competitive Strategy

1. Overall cost leadership: The lowest production and distribution costs

2. Focus: Focus on serving a few market segments

3. Operational excellence: Leading the industry in price and convenience

4. Customer intimacy by segmenting the markets and continuous customer

communication

5. Niche Strategy by trying to find one or more market niches that are big enough to

be safe and profitable

SUPPLIER OF BLANK T-SHIRTS ART DESIGNS

DESIGN PRINTING

STORAGE COST

TRANSPORTATION

SALES, MARKETING, AND DISTRIBUTION COSTS


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Commitment Statement (Mission-Vision)

We are committed to being a leader in the fashion industry for the young generation

beginning at the National Capital Region and then later expanding to the regional and

national level for the next consecutive years. We advocate connecting cultures

worldwide and how it influences our lives as well as others.

We are committed to listening to the needs and wants of our customers and we value their

opinions to further improve ourselves to better serve them. We continuously delight them

by offering quality shirts embodying the best trendy designs in the fashion industry and

representing the best fads at best value.

We are committed to efficiently manufacture our products using technological improvements

to maintain high quality. We, as a team, promote personal and professional enrichment

through innovation, professionalism and respect.

We are committed to building a sustainable and profitable business with a secure share in

the market. We nurture a team with shared values and corporate social responsibility.

Objectives:

To be able to develop, expose, and saturate the Metro Manila target market in 3

years

To be able to acquire equipment for designing and printing shirts to cut down

costs in the value chain network

To be able to establish the listening arm of the businesss consumers through

social networks

To be able to distinguish more niches inside the area of our target market to hit

the spot of what our target customers want and need


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To be able to develop the company itself as a company that will be efficient

enough for the business.

To establish the company as an advocate of corporate social responsibility and

social development

Design and Development

Rationale

Always try to be at par with the needs and wants of customers.

The customers have to know that Hybrid Agreement is here.

Product Development Goals and Procedures

GOALS PROCEDURE(S) WHEN? WHO SHALL

GATHER

DATA?

Continuous gathering of

ideas for designs of

shirts

Preferences (FGDs,

Surveys, communication

through social networks,

comments and

suggestions, etc.)

FGDS and

Surveys-

Annually

(Starting Jan.

31, 2009)

Communication

through social

networks-

Perpetual

The company

To be able to adapt to

new developments in

fashion (especially in

shirts in terms of texture

of material, forms of

shirts like sleeveless,

tight-fitted shirts, etc.)

Survey fashion trends

(reading fashion

magazines, watching

fashion channels,

secondary sources like

Euromonitor, etc.)

Annually

(Starting Jan.

31, 2009)

The company


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new trends in culture in

the Philippines

Look at the youth scenery

in the Philippines through

the various media (TV,

Broadsheets, Magazines,

Music, Films, etc.)

Annually

(Starting Jan

31, 2009)

The company

Supplier and Distribution Network

Our company will employ Selective distribution which will involve using a limited

number of outlets in a geographical area to sell our shirt products.

Choose the most appropriate or outlets that would make noise for our product

and company and focus our effort on them.

We will try our best to establish BRAND PREFERENCE as soon as possible so

that consumers are prepared to "shop around" - in other words since they have

a preference for our brand and price, they will search out the outlets that carry

our products.

Suppliers and Retailers

For the initial stages of the companys product (October- January 31,

2009), we will outsource our shirts (raw materials and printing) from a

garments company (CY Garments).

For the launch period of the company (first week of October to January 31,

2009), Other than transacting through our family, friends, and through social

networks, we will distribute and sell our product through the following schools

and their corresponding events:

Ateneo,

La Salle,

Miriam.


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Market Testing and Development

Diagnostic Test Market (DTM): For the period starting October to January 31,

2009, this time will be used to assess the success/failure of the firm for its first

few months. By investing a relatively small capital at Php 70,000, this will serve

as the Market Testing for the company.


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Scheduling

June-

September,

2008

Formulation of Business Plan

Market and Industry

Business Concept, Future, Model,

etc.

Strategies

Competitive Analysis

Design and Devt Plan

October, 2008Start of

DTM/Trial/IMPLEMENTATION

Selling Through Family and

Friends

Generating initial revenues

Assessment

November,

2008Continuation

Selling Through Social Networks,

Family, Friends, and Ateneo

Christmas Bazaar on November

27-29

Generating revenues

Assessment

Personnel Hiring

December,

2008

Start of retailing through the

three schools/six events

Selling through social networks,

family, friends, Miriam, La Salle,

Assessment


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January, 2009 Evaluation


family, friends, Miriam Fair,

Kabihasnan (La Salle), Ateneo

HS Fair

Assessment

Evaluation

Changes for the business and

implementation for the

subsequent years

Cost Structure

2008

300 units

Raw Material 90

Art Designs 10% royalty

Transportation 40

Design and Printing 33.33

Storage Costs 0

Sales, Marketing, and Distribution 90

Personnel Php 16.00

Total Cost per unit Php296.26 (with rental, Php 197.26 without rental)

Risk Assessment

Technical Risks

Design Piracy

CONTINGENCY PLAN: We will try to put our trademark logo into

every shirt we produce.

Designs are not accepted well

CONTINGENCY PLAN: Penetrate another market to increase the


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chances of that design to be purchased.

Possibility of Copyright issues

CONTINGENCY PLAN: First, check the image/text if it does

violate copyrights, or not. If it does, abolish the design, even if itmeans cutting profits or gaining loses (NOTE: Use cost-benefit

analysis to know which is better: court or not to court). If it does

not, fight with the accuser.

Economic Risks

Priority of Buyers and Propensity to Spend

CONTINGENCY PLAN: PLAN A-Lower prices, look for cheaper

processes to produce, distribute, etc. PLAN B- Niche on a meaty

market (Class A, etc.)

Low growth rate in the Clothing and Footwear industry (and consequently

the Specialized Shirts Sector) Forecast period to see weak constant

value CAGR (Compound Annual Growth rate) of less than 5% in the

industry

CONTINGENCY PLAN: Make our products and company known.

Establish brand image and loyalty, even though it can be hard in

this industry (Euromonitor).

Financial Risks

Competing against well established competitors (Team Manila and

Spoofs) and numerous unestablished competitors (Tiangge, bazaar,

small stall shops, boutiques, etc.)

CONTINGENCY PLAN: Build image through effective but low-or-

no cost advertisements and promotions like social networks. The

company should let Manila know: Hybrid Agreement is here. Show

that you agree.


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Marketing Strategies and Com peti t ive Analysis

Marketing Objectives

To increase sales by:

Promote consumer awareness of the business and its product

Establish company and product image

Acquaint customers with our new product

Advertising

Upon entry, the company will initially rely on low-cost advertising through social

networks such as Friendster and Multiply, which the members of our target

market are most likely to be familiar with

Personal Promotion and Selling

The company members will be assigned to personally promote the product to

retailers and to consumers


To achieve competitive advantage by:

Offering our products at competitive prices

Add value to our product by coming up with creative designs and using high

quality materials

Selling lower quantity of design and size


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Manpower Requirement

Designers (our connections which can make our requirement of 10 designs) and

Personnel for the 6 events (at least 4 people)

Overhead Budget

Initial: Rent for the 6 events

Given that the company wants to penetrate the bazaars and stalls in malls, it

would require authentication from BIR/ DTI, and rental fees from the malls and

other places stated above.

Capital Budget

The initial stages will not require us to procure equipment because we

outsourced our designing and printing (CY Garments)

In the stage after January 31, 2008, the company would begin to plan to

purchase printing equipment to cut costs significantly.

After evaluation and assessment of the companys performance during

the initial stages, it will decide whether to buy or not to buy.

DEVIATIONS

- December 1-18, 2008

- Given the insufficient funds that the company has (Php 14,000), it has

decided to cancel the rentals and focus first on word-of-mouth and free

social networks (Multiply).

- The business actually started December with a production of 28 shirts as

a test market assessment and evaluation.

- Because of this, the total cost of the shirt will increase to Php340

- New price= Php389.99 to be at par with the profit margins the

company has set.

- Given that we produce more in quality than in quantity

(Value proposition), the company believes that a higher

price should be imposed to make up for the opportunity

cost of not making lots of stocks of each design.


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- CY garments currently has insufficient requirements for the business to

pull through.

- Insufficient available raw materials (black and white shirts)

- Designs have been hard for them to print

- RESULT= 30 shirts (3 designs, 2XL, 3L, 3M, 2S)

- Beginning December 29, 2008, the company has changed its supplier from CY

garments to Signs and Designs which is owned by the Wenceslao family.

- Changes in the cost structure are shown below (Figure 2-1)

- Due to the lower costs in raw material and design and printing, the

company decided to lower the quantity per design to 6 (4 designs: 1XL,

2L, 2M, 1S)

2008

30 units

2009

24 units

Raw Material 90 80

Art Designs 10% royalty 10% royalty

Transportation 0 0

Design and Printing 250 200

Storage Costs 0 0

Sales, Marketing, and Distribution 0 0

Personnel 0 0

Total Cost per unit Php 340 Php 280

- Transportation expense continues to be zero because:

The shirts are delivered to the company first hand.

Given our testing stage, the company sold its shirts to the members

family and friends during the Christmas season.


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KEY MILESTONES/TIMETABLE

- The key milestones stated in the executive summary are still used by the

company.

- Because the bazaar plans were cancelled and actual selling started December

2008, we formulated a new timetable:

New Scheduling

December,

2008

Start of

DTM/Trial/IMPLEMENTATION


Friends

Generating initial revenues

Assessment

January, 2009 Continuation of DTM


family, friends (word of mouth)

Assessment

February, 2009 End of DTM, EVALUATION

Continuation of selling through

social networks, family, friends

(word of mouth)

Assessment

Evaluation



subsequent years


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KEY RESULTS/AREAS

- For the key results and areas, the company based it on two criteria: the financial

numbers (revenues and profits), and the targets set by the company (milestones,

goals, and long term objectives)

BUSINESS IMPLEMENTATION (November 1, 2008- January 31, 2009)

ACTUAL VS. PROJECTED KEY RESULTS

-Shirt Breakdown:

Period 1 from Dec. 1-18,2008: 30 shirts (3 designs= 2XL, 3L, 3M, 2S)

Period 2 from Dec. 19, 2008- Jan. 14, 2009: 24 shirts (4 designs= 1XL, 2L, 2M, 1S)

Period 3 from Jan. 14-31, 2009: 18 shirts (3 designs= 1XL, 2L, 2M, 1S)

Hybrid Agreement FIGURE 2-2 Php 389.99 Php 349.99 Php349.99 Php349.99

income statement

ProjectedFrom Dec 1-18,

2008

From

December

19, 2008 to

January 14,

2009

From

January

15. 2009

to January

31, 2009

Total fo

the three

periods

Revenues

Gross Sales 74997 11699.7 8399.76 6299.82 26399.28

Sales Returns and

Allowances 0 0 0 0 0

Net Sales 74997 11699.7 8399.76 6299.82 26399.28

Cost of goods

Raw materials shirts -27000 -2700 -1920 -1440 -6060

Printing -9999 -7500 -4800 -3600 -15900

Cost of goods sold -36999 -10200 -6720 -5040 -21960

TOTAL 37998 1499.7 1679.76 1259.82 4439.28

Expenses


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Transportation -12000 0 0 0 0

Rental -27000 0 0 0 0

Personnel -4800 0 0 0 0

TOTAL -43800 0 0 0 0

Earnings Before Royalty 24198 1499.7 1679.76 1259.82 4439.28

Less: Royalty (10%) -2419.8 -149.97 -167.98 -125.98 443.93

NET INCOME 21778.2 1349.73 1511.78 1133.84 3995.35

STATUS OBJECTIVES (Should be done within 3 years)

In the

process

To be able to develop, expose, and saturate the Metro Manila target market in 3

years.

Not yet

done

To be able to acquire equipment for designing and printing shirts to cut down costs in

the value chain network.

Done To be able to establish the listening arm of the businesss consumers through social

networks (Multiply, friendster, facebook, etc.)

In the

process

To be able to distinguish more niches inside the area of our target market to hit the

spot of what our target customers want and need. This can be done through constant

communication of the company to its consumers.

Not yet

done

To establish the company as an advocate of corporate social responsibility and social

devt through some of the designs of the shirts and through promotions and

marketing.

In the

process

To be able to develop the company itself as a team that will be efficient enough for the

business. This objective will be done by continuous assessment and evaluation of the

company weekly and monthly.

STATUS LONG TERM GOALS

In the

process

To establish the business as a sustainable and profitable business with a market

share that is just below the 2 direct competitors (Team Manila and Spoofs).

In the

process

Expand the reach of our products to the Metro Areas in the Philippines (Manila, Cebu,

Davao)

Done, but Establish an accessible listening arm of the company to acknowledge the needs,


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should be

developed

and

expanded

wants, queries of the consumers (Assessment of our product, comments,

suggestions, etc.).

In the

process

Maintain the internal firmness of the firm through various organization building

sessions.

Not yet

done

Vigorously train the organization to integrate corporate social responsibility inside and

outside the company.

VARIANCE ANALYSIS

The deviations were made because:

There were currently insufficient funds to meet the expected revenues, profits,

and the planned activities (bazaars).

CY garments had to process the shirts for one month so the business/Diagnostic

Test Market started December 2008.

Since Signs and designs provided lower costs (raw materials and printing) and

their processing time is shorter (one week), the company switched

suppliers/outsourcers

MAJOR PROBLEMS/ PROBLEMS ENCOUNTERED

One major problem seen by the company is the uncertainty of when the designs would

be complete. The company does not pressure the artists to get their creative juices

coming. But of course, the negative side of this is the delay of finishing designs for

deadlines. For this problem, the company suggests to provide:

- Ideas

- Research materials

- Exposure to the Philippine Culture which is a diversity of cultures in itself.

- (With sufficient income) incentives for people who give designs early.

Another problem encountered was not being able to give more than the quantity

provided per design. Some of our customers wanted to get more of a particular design

(eg. Bomberman), but since our unique selling proposition is selling less quantities per

design, we just tell our customers: Sorry but we will now make shirts of that design


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anymore, but please do wait for our other designs. In the meantime, what popular and/or

virtual figure would you suggest we do? With this statement, the company would be

able to:

Provide the we wantmore from you effect from customers.

We establish the listening arm of the company to provide ideas, comments, and

suggestions regarding our product.

The last problem that we had was trying to establish the company as a brand which

mixes cultures. The team noticed that the designs were more memorable than the name

of the business itself. What we intend to do is continuously try to expose our product

through word of mouth (HA shirts!), putting logos on the t-shirt (the back of the shirt),

and through the social networks.

ACTUAL FINANCIAL STATEMENTS

Actual breakdown: 72 shirts

Hybrid Agreement Php349.99

Income statement

From November 1, 2008-

January 31, 2008

Total for the three periods

Revenues

Gross Sales 26399.28

Sales Returns and

Allowances 0

Net Sales 26399.28

Cost of goods

Raw materials shirts -6060

Printing -15900

Cost of goods sold -21960

TOTAL 4439.28

Expenses


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Transportation 0

Rental 0

Personnel 0

TOTAL 0

Earnings Before Royalty 4439.28

Less: Royalty (10%) 443.93

NET INCOME 3995.35

Hybrid Agreement

Balance Sheet

As of January 31, 2009

Assets

Cash 1895.41

Inventory 2099.94

Liabi l i t ies 0

NONE

Owner's Equity

Hybrid Agreement, Capital 3995.35


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Hybrid Agreement

Initial

From Dec. 1-

18, 2008

From Dec.

19, 2008-

Jan. 14,

2009

From

Jan. 14-

31, 2009

Statement of Cash Flows (Direct

Method)

Php389.99 Php349.99 Php349.99

Cash Flows from operating

activities

Cash receipts from customers0 11699.7 7349.79 5249.85

Cash paid to suppliers -2700 -1920 -1440 0

Cash paid for printing -7500 -4800 -3600 0

Cash paid for transportation 0 0 0 0

Cash paid for rental 0 0 0 0

Cash paid for personnel 0 0 0 0

Cash paid for royalty 0 -149.97 -167.98 -125.98

Net Cash Flows From Operating

Activities

-10200

4829.73 2141.81 5123.87

Net Increase (Decrease) in Cash

and Cash Equivalents

-10200

4829.73 2141.81 5123.87

Cash and cash receipts, beginning 0 -10200 -5370.27 -3228.46

Cash and Receipts -10200 -5370.27 -3228.46 1895.41


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STRATEGY EVALUATION

Fred Davids Strategy Evaluation Framework

1. Review Underlying Bases of Strategy- Since the business does not have a

point of comparison in terms of EFE and IFE, the team would just formulate

the two matrix for future evaluation references.

EFE Matrix

Key External Factors Weight Rating Ratedscore

Opportunities

1. Industry growth 0.2 3 0.6

2. New trends in culture in thePhilippines

0.15 3 0.45

3. Wide relationship with distributionnetworks

0.05 2 0.1

Threats

4. Strong competition 0.15 3 0.45

5. Weak growth rate 0.1 1 0.1

6. Legal restrictions 0.05 3 0.15

7. Decrease in disposable income 0.1 2 0.2

8. Worsening economic conditions 0.2 1 0.2

Total 1 2.25

Total weighted score of 2.25 indicates that the company has mediocreexternal position. The company needs to take advantage of strongrelationships with suppliers, adjust to the upcoming financial crisis, and theanticipated slower growth rates found through Euromonitor studies.

IFE Matrix

Key Internal Factors Weight Rating Rated scoreStrengths

1. Limited quantity per design and sizeof the shirt

0.1 3 0.3

2. Affordable price 0.15 3 0.45

3. Creative designs 0.2 4 0.8


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4. Advertising and promotion 0.1 2 0.2

Weaknesses

5. Financial incapability 0.2 2 0.4

6. The length of time printing the shirts 0.1 2 0.2

7. The uncertainty of when the designswould be complete

0.15 2 0.3

Total 1 2.65

Total weighted score of 2.65 indicates that the company has averageinternal position. The company has to stay firm with its USP, increasemarketing efforts, and double efforts of standardizing processes for amore efficient and faster processing time.

2. Measure Organizational Performance

Given the Actual vs. Projected key results stated above especially the projected

revenues and profits, it can evidently be seen that there is a significant difference

(only 12% of the projected income was met).

3. TAKE CORRECTIVE ACTIONS

Given the three major problems stated above and the 12% meeting of the

projected income, these are the corrective actions which are suggested:

Increase productivity of the artists, the company would provide them:

o Ideas through communication and external environment analysis

o Research materials

o Exposure to the Philippine Culture which is a diversity of cultures

in itself.

o (With sufficient income) incentives for people who give designs

early.

Appease the profit maximization problem (shortage of stock per design to

maximize revenue), the company will:

o Employ the we want more from you effect from customers.

o We establish the listening arm of the company to provide ideas,

comments, and suggestions regarding our product.


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Establish the company as a brand which mixes cultures, what the team

intends to do is continuously try to expose our product through word of

mouth (HA shirts!), putting logos on the t-shirt (the back of the shirt), and

through the social networks.

Establish a strong bond with our supplier, Signs and Designs.

Rumelts Criteria

Consistency

Hybrid Agreements strategies are consistent with the objectives and core

values of the company. The strategies are patterned to meet the companys

expected milestones and achievements.Although it wasnt able to meet the

expected revenues and profits, the firm was able to establish the listening arm of

the businesss consumers through social networks such as Friendster, Multiply,

Facebook etc., was able to lessen the costs (from the switch of supplier from CY

Garments to Signs and Designs), and members of the firm are continuously

striving for improvement towards efficiency and success.

Consonance

Strategies that the company takes are also in accordance to the set of

popular culture trends in the market. The designs are patterned according to the

leading trend or popular icons in the industry in order to capture the attention of

potential customers. Organization-building sessions are also conducted in order

to maintain the internal firmness of Hybrid Agreement.


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Feasibility

The company also considers the availability of money and capital in

pursuing their strategies. Also, time span and skills of the companys personnel

are also taken into consideration in managing the business. Designers /Artists

hired by the company are given ample time to complete their designs and Hybrid

Agreement follows their plans according to the schedule created in the

implementation of their strategies.

Advantage

Hybrid Agreement gains competitive advantage due to their unique and

trendy designs. The companys monetary resources are invested in their shirt

business and the skills of the company members are improved and put into good

use by coming up with interesting designs that captures the attention of their

target consumers. The companys positioning is targeted to people with the same

age bracket that members of Hybrid Agreement belong which enhances their

ability to interact and relate to their consumers.

Porters 5 Forces

Rivalry Among Existing Competitors

There is high rivalry between Hybrid Agreement and its competitors due

to the industrys low entry barriers. There are also large number of firms in the

industry that compete with the same customers and resources. The competitors


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in the industry are also highly diversified which also increases rivalry simple

because predicting the rivals moves becomes more difficult. Thus, the pressure

of competition increases. Among the companys competitors are Team Manila

and Spoofs.

Threat of Substitute Products or Services

There is medium threat of substitute products for Hybrid Agreement.

Although there are many competitors in the industry that produces original-

designed shirts, the designs that the company produced are unique and one of a

kind. The designers or the artists of the t-shirt designs are liable to Hybrid

Agreement so that all the designs that they make solely belongs to Hybrid

Agreement alone.

Bargaining Power of Buyers

Bargaining power of buyers is weak because of the unique products that

Hybrid Agreement sells. They cannot easily find another product that has the

same unique design that the company offers to them. Aside from that, the

company also limits the number of shirts printed with the same design.

Bargaining Power of Suppliers

The bargaining power of suppliers is low due to large number of suppliers

available in the industry. The costs for switching to other suppliers are low and

suppliers provide commodity products or unspecialized services which does not


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give them an edge or power over the companies that need them. To prove this

point, Hybrid Agreement was able to switch from CY Garments to Signs and

Designs relatively easy.

Threat of New Entrants

Hybrid Agreement also encounters high threat of new entrants because of

low entry barriers in the industry. There is low capital needed in order to compete

in the industry. There are also inadequate measures from the authorities in the

Philippines to stop piracy. Aside from that, there is also easy access to

distribution channels and there are common technology available to start a

business and compete in the industry.

Lessons Learned:

Throughout the teams experience, these were the most important lessons that we have

learned:

1. Our business intuitions and instincts should always be backed up by market research

and analysis before the actual implementation of our project. This has been important to

us because knowing which segment of the market to target and their needs is the actual

driving force behind the shirt designs that we have created.

2. There can be unexpected events that may occur and lead to changes in our business

plans such as the change of the supplier, insufficient capital, financial crisis, etc. With

these unexpected events, the company must learn how to adapt and react to trends and

movements in the world.

3. Another lesson that we have learned from our experience is that results of our project


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may deviate from the results that we have been expecting. Expectations are really

incentives for the company to achieve, but it is also a measure of how the company

should adjust its present situation to reach its expectations and even surpass it.

4. Another important lesson that we have learned is the value of customer loyalty and

satisfaction. We have noticed that the people who liked our designs not only purchased

more from us, they also spread the word to their family and friends, further increasing

our customers.

5. We have learned the value of teamwork. Our success as a team would not have been

possible without the inputs and contributions of each member. Each of us have unique

skills that have been combined to produce the best results.

6. Money is King. Without money, a business cannot move.

7. Our business seems to not maximize our profit because of the limited quantity per

design and price-setting at a cheaper price than our competitors. Because we wanted to

to be a different company, it entails a lot of sacrifices like giving up the maximum profit

possible and potential customers. As time passes by, the company hopes to establish

itself as a T-Shirt Giant because of our innovative but risky project. The lesson here is to

take risks.

8. Time for thinking and coming up with designs really vary. The artists think of ideas

suddenly at times and too long at times. It takes patience to let out the creative juices.

But of course, patience should be backed up with motivation.


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Overall cost leadership: Trying to achieve lower production and distribution costs

than our competitors for further exposure of our products and brand. AFTER we

have established our brand and product in 3 years, a further evaluation will take

place to assess the next move of the company

Focus: Focus on serving a few market segments (See Market Segment)

Operational excellence: Leading the industry in price and convenience

Customer intimacy by segmenting the markets and continuous customer

communication

Niche Strategy by trying to find one or more market niches that are big enough to

be safe and profitable

Commitment Statement (Mission-Vision)- Same

Objectives: Same

Design and Development

Rationale

Always try to be at par with the needs and wants of customers.

The customers have to know that Hybrid Agreement is here. After establishing

presence, the company will establish its dominance.

Product Development Goals and Procedures

GOALS PROCEDURE(S) WHEN? WHO SHALL

GATHER

DATA?

Continuous gathering of

ideas for designs of

shirts

Preferences (FGDs,

Surveys, communication

through social networks,

comments and

FGDS and

Surveys-

Quarterly

(Starting Apr.

The company


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suggestions, etc.) 1, 2009)

Communication

through social

networks-

Perpetual


new developments in

fashion (especially in

shirts in terms of texture

of material, forms of

shirts like sleeveless,

tight-fitted shirts, etc.)

Survey fashion trends

(reading fashion

magazines, watching

fashion channels,

secondary sources like

Euromonitor, etc.)

Quarterly

(Starting Apr.

1, 2009)

The company


new trends in culture in

the Philippines

Look at the youth scenery

in the Philippines through

the various media (TV,

Broadsheets, Magazines,

Music, Films, etc.)

Quarterly

(Starting Apr 1,

2009)

The company

Supplier and Distribution Network

Suppliers and Retailers

For the initial stages of the companys product (December 1, 2008-

December 1, 2011), we will outsource our shirts (raw materials andprinting) from a garments company (Signs and Designs).

If time and money will permit, the company will examine other options on

or before December 1, 2011).

For the first year of the company (December 1, 2008 to December 1, 2009),

Other than transacting through our family, friends, and through social network.,


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On the second year, will distribute and sell our product through the following

NCR schools and their corresponding events:

SCHOOLS EVENTS COSTS

La Salle Greenhills

Christmas Fair, DLSU

Christmas Fair

Php 4500 each event

ADMU Blue Christmas

2008, AHS Fair

Php 4500 each event

MC Christmas Fair, MC

High School Fair

Php 4500 each event

On the third year, we will target the bazaars in the malls which are frequently

visited by our target market.

Proper research will be done to verify our intuitions (Eastwood,

Greenhills, Greenbelt, etc.)

At this time, we will be able to develop, saturate, and expose the NCR

target market of the company

Market Testing and Development

The Diagnostic Test Market might be done, but that doesnt mean we will not


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monitor the market anymore. We will continuously follow the product

development goals and procedures to be at par with the market trends.


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New Scheduling

Feb 1, 2009 Continuation of Business


Friends (word of mouth), Social

networks

Generating revenues

Assessment

April 1, 2009

Continuation of Business,

Research and Development

(also on July 1, October 1, and

January 1)


family, friends (word of mouth)

Assessment

December 1,

2009

Continuation of Business, Start

of School saturation (Ateneo, LaSalle, Miriam etc.)



(word of mouth)

Assessment

Evaluation

December 1,

2010

Continuation of Business, Start

of School Saturation



(word of mouth)

Assessment

Evaluation



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subsequent years

Cost Structure

2009

432 shirts

2010

600 shirts

2011

1200 shirts

Raw Material 80 75 70

Art Designs 10%

royalty

10%

royalty

10% royalty

Transportation 0 40 20

Design and Printing 200 150 100

Storage Costs 0 0 2

Sales, Marketing, and Distribution 0 (rent for 6

events)45

100 (rent+

authentication

from DTI,

etc.)

Personnel 0 (2

persons

per

event)

15.28

15.28

Total Cost per unit Php280 Php

325.28

Php307.28

Risk Assessment- Same

Marketing Strategies and Com peti t ive Analysis

Marketing Objectives

To increase sales by:

Promote consumer awareness of the business and its product

Establish company and product image

Acquaint customers with our new product


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Advertising

Upon entry, the company will initially rely on low-cost advertising through social

networks such as Friendster and Multiply, which the members of our target

market are most likely to be familiar with (December 1, 2008- December 1, 2009)

In the subsequent year, the company would rely on advertising within school

affairs (December 1,2009- December 1, 2010)

In the final projected year, the company would rely on advertisements within the

bazaars (December 1, 2010- December 1, 2011)

Personal Promotion and Selling

This activity will always be part of the company with every employee and

member. The company members will be assigned to personally promote the

product to retailers and to consumers.


To achieve competitive advantage by:

Offering our products at competitive prices

Add value to our product by coming up with creative designs and using high

quality materials

Selling lower quantity of design and size

Management and Financial Plan

Organizational Structure- Same

Manpower Requirement

Designers

Personnel for the school events (12 people) on the second year and the bazaarson the third year

Overhead Budget

First year: None

Second Year: School Events


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Third Year: Malls/ Bazaars (Given that the company wants to penetrate the

bazaars and stalls in malls, it would require authentication from BIR/ DTI, and

rental fees from the malls and other places stated above.)

Capital Budget

The initial stages will not require us to procure equipment because we

outsourced our designing and printing (Signs and Designs)

In the stage on or before December 1, 2011, the company would begin to plan to

purchase printing equipment to cut costs significantly.

After evaluation and assessment of the companys performance during

the initial stages, it will decide whether to buy or not to buy equipment and

materials on its own.


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Project ed Financial Statemen ts

2009: 432 shirts (72 designs= 2XL, 3L, 3M, 2S)



Year Profit Margin

2009 20%

2010 25%

2011 30%

2012 33% (Spread to Cebu)

2013 32% (Davao)

NOTE: To get the number of shirts for 2009, the team estimated the shirts sold per month

for two months (72x6=432)

Hybrid Agreement Php 349.99 Php 349.99 Php 409.99 Php385.99

income statement 432 shirts600 shirts 1200

shirts

From December

1, 2008- January

31, 2009

As of December

1, 2009

As of

December

1, 2010

As of

December

1, 2011

Revenues

Gross Sales 26399.28 151195.68 245994 463188

Sales Returns and

Allowances 0 0 0 0

Net Sales 26399.28 151195.68 245994 463188

Cost of goods

Raw materials shirts -6060 -34560 -45000 -84000

Printing -15900 -86400 -90000 -12000

Cost of goods sold -21960 -120960 -135000 -96000

TOTAL 4439.28 30235.68 110994 367188


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Expenses

Transportation 0 0 0 0

Rental 0 0 27000 120000

Personnel 0 0 9168 18336

Storage 0 0 0 2400

TOTAL 0 0 36168 140736

Earnings Before Royalty 4439.28 30235.68 74826 226452

Less: Royalty (10%) 443.93 -3023.57 -7482.6 22645.2

NET INCOME 3995.35 27212.11 67343.4 203806.8

Hybrid Agreement

From Jan.

14- 31,

2009

As of Dec.

1, 2009As of Dec.

1, 2010

As of Dec. 1,

2011

Statement of Cash Flows (Direct

Method)

Php349.99 Php349.99Php409.99

Php 385.99

Cash Flows from operating

activities

Cash receipts from customers5249.85 151195.68

245994463188

Cash paid to suppliers -34560 -45000 -84000 0

Cash paid for printing -86400 -90000 -12000 0

Cash paid for transportation 0 0 -2400 0

Cash paid for rental 0 -27000 120000 0Cash paid for personnel 0 9168 18336 0

Cash paid for royalty -125.98 -3023.57 -7482.6 -11845.2

Net Cash Flows From Operating

Activities-

115836.13 -22995.89 451342.8


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Net Increase (Decrease) in Cash

and Cash Equivalents-

115836.13 -22995.891775.4

451342.8

Cash and cash receipts, beginning-3228.46 -

119064.59

-

142060.48 -140285.08

Cash and Receipts-

119064.59

-

142060.48

-

140285.08 311057.72

Hybrid Agreement

Balance Sheet

As of Jan. 31,

2009

As of Dec.

1, 2009

As od Dec

1, 2010

As of Dec.

1, 2011

Assets

Cash 1895.41 27212.11 67343.4 203806.8

Inventory 2099.94

Liabi l i t ies 0 0 0 0

NONE

Owner's Equity

Hybrid Agreement, Capital 3995.35 27212.11 67343.4 203806.8

Funding Plan

For the first year, the team will use its own investments to continue on with the business. For

the second year, to get financial leverage, we will assess the best way to further

enhance the company (loan or not to loan). And for the final year of the initial stage, it

would really depend on whether the company is able to meet its own objectives and

expectations.


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Sources:

David, Fred. An Introduction to Strategic Management: Eleventh Edition.

Previous pass (Hybrid Agreement Business Plan Formulation of the first semester)

Discussions and consultations in class

final business summary

Documents