Strat Essay

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Food and Beverage Manufacturing Industry

Executive Summary
The food and beverage manufacturing industry is grounded on stable demand because of high population growth rate and consistently higher family income allocation for food and beverage. In addition, there are emerging foreign markets, including China, which helped decrease in trade deficit, from US$ 886 million in 2002 to US$596 million in 2003. The vast resources of the Philippines make it a viable producer of food products. With suitable climate, fertile soil, and abundant labor, the country has a competitive advantage as a raw materials producer. The industry’s Gross Value Added (GVA) has increased by 7% in 2003 or P110.75 billion pesos in constant 1985 prices. Financial ratios of industry players, such as liquidity, leverage, profitability, and activity are worth looking at. The ratios were relatively good and will definitely help the players maintain stability in the medium-run. The bankruptcy predictor formula (Altman Z score) showed that less than 20 out of the 214 samples have chances of facing downfall. There are a number of issues that are crucial to the industry. The increasing prices of petroleum in the Dubai and Brent markets have greatly affected the mode of production. Prices of final products have increased, as well. The WTO ‘s move towards complete trade liberalization is something to watch out. Some are worried that abolition of tariffs and other trade duties will allow uncontrollable entry of foreign goods into the country and eventually eating up the local industries’ market share, or depressing prices of local goods. On the other hand, exporters see it as their ticket to easily enter new markets. International opportunities are forgone because of poor quality control, as a result of lack of technology. Only a few of the hundreds of Filipino companies have the competence of passing through international standards of quality, most notable of which is the Hazard Analysis Critical...

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