STRATEGIC MANAGEMENT PAPER FOR

BROWNIES R US

Submitted to _______________
College of Accountancy and Business Administration

In Partial Fulfillment
Of the Requirements for the Degree of
Bachelor of Science in Accounting Information System

Your name
I. INTRODUCTION
Brownie R Us (BRU) is a start-up brownie product selling business located in Zambales.
BRU expects to catch the interest of a regular loyal customer base with its vast selection of
brownies. The company plans to build a strong market position in the town due to the mild
competitive climate in the area.
A sweet chocolate dessert that has a history of different stories of origin but all pointing
to being created around the mid 1800’s. Brownies may have derived from chocolate cakes,
becoming a denser and shorter version. Typically, a brownie is approximately 1 inch in height
and since it is quite dense, it has a chewy texture that provides a very sweet flavor. There ae a
wide variety of different types of brownies made, all very similar in consistency and flavor.
The first known recipe for brownie was published in the 1897 Sears, Roebuck Catalogue.
The classic brownie consists of just a few ingredients: butter, sugar, chocolate, eggs, and flour.
II. RESEARCH DESIGN AND METHODOLOGY
Primary Data
Primary data was congregated from the website of the Securities and Exchange
Commission. This information includes external factors that affect the industry, market size,
market growth ranking positions of all baking companies in the Philippine market.
Secondary Data
Secondary data was gathered through the readings from the internet. The information
includes economic trends in baking business and its major competitor’s information; it also
includes the latest technologies in baking industry in the Philippines. It also requires information
regarding recent trends regarding the industry under study. For comparative purposes,
background of some major competitors in the industry is also needed, especially in the financial
and operations aspect.
Scope and Limitation
The Strategic Management Paper is only limited to study and analysis of Brownies R Us,
among the different sectors in the industry this study focuses on baking institutions in the
Philippines. The focus of this paper is on the company’s performance and position in the market.
III. VISION / MISSION
Vision Statement
“The Brownies R Us shall be the leading brownies product selling company in Region 3”
Diagnosis:
It answers the question “What do we want to become?”
Mission Statement
“Brownies R Us is dedicated to offer high-quality brownies at a competitive price to meet
the demand of the lower- to higher-income local market area residents and tourists. It is
committed to continuously improve all aspects of the business in order to sustain the long-term
success of customers and employees in the provinces as well as in Region 3.”
Diagnosis:
The mission statement doesn’t include the customers; markets; concern for survival,
growth, and profitability; and concern for employees as shown in table 1.
Table 1. Diagnosis for Current Mission Statement
YES NO Excerpt from Mission Statement

Customers
middle-to-higher income residents

Products/Services
high-quality brownies

Markets
local market residents and tourists

Technology
high quality brownies
Concern for
survival,growth,
profitability dedicated to offer high quality brownies

Philosophy
long term success

Self-concept
continously improve business aspects for sustainability
Concern for public
image sustainable long-term success of the province and in region 3
Concern for
employees long-term success of employees

The mission statements comply with the essential requirements of a good mission statement,
Fred David’s (2011) were used and it includes the following:
• Customer - Who are the firm’s customers?
• Products - What are the firm’s major products or services?
• Markets- Geographically, where does the firm compete?
• Technology- Is the firm technologically current?
• Concern for survival, growth and Profitability- Is the firm committed to growth and financial
soundness?
• Philosophy - What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
• Self-concept- What are the firm’s distinctive competences or major competitive advantage?
• Concern for public image- Is the firm responsive to social, community and environmental
concerns?
• Concern for employees- Are the employees’ valuable asset of the firm?
IV. ENVIRONMENTAL ANALYSIS
Market
Brownie R Us market will be the lower-to-higher income local area residents and tourist
of the province of Zambales and Region 3.
Zambales is a province in the Philippines located in the Central Luzon region in the
island of Luzon. Its capital is Iba. Zambales borders Pangasinan to the north, Tarlac and
Pampanga to the east, Bataan to the south and the South China Sea to the west. With a land area
of 3,830.83 square kilometres (1,479.09 sq mi), Zambales is the second largest among the seven
provinces of Central Luzon. The province is noted for its mangoes, which are abundant from
January to April. It has 13 towns, Iba is the capital town.
Based on the 2010 Census of Population and Housing (CPH), the province of Zambales,
excluding Olongapo City, posted a total population of 534,443 persons as of May 1, 2010. This
is larger by 100,901 persons compared to its total population of 433,542 persons counted in the
2000 CPH. The increase in the population count from 2000 to 2010 translated to an average
annual population growth rate (PGR) of 2.11 percent. This is higher than the 1.61 percent annual
PGR of the province between the census years 1990 and 2000. If the average annual PGR
recorded at 2.11 percent during the period 2000 to 2010 continues, the population of Zambales
would double in 33 years. Fifty years ago, the population of Zambales was only 168,112 persons.
This population size is less than one third of the population of the province in the 2010 CPH.
Competition
The identified competitors of Brownies R Us are the Goldilocks-Zambales branch and
Red Ribbon-Zambales branch.
Socio-Cultural
Sociocultural is a combination of social and cultural factors. These factors are customs,
lifestyles and values that characterize a society or group. Cultural aspects include concepts of
beauty, education, language, law and politics, religion, social organizations, technology and
material culture, values and attitudes. Social factors include reference groups, family, role and
status in society, time and available resources. An understanding of sociocultural factors is
crucial in developing marketing strategies for businesses or organizations seeking action from
particular groups. Income is an important factor in deciding whether potential individuals are
likely to enroll in higher education.
Filipino has a unique sense of taste buds. Filipino culture indeed loves to eat sweets
finger foods for dessert and snacks; it’s a big factor to consider that Filipinos loves giving
giveaways and souvenir especially in occasions.
Technology
There are a lot of baking technologies now adays, it will be very helpful for the
production and innovation for new flavor of brownies.
Economy
Exchange Rate
The Philippine Peso will likely to continue to appreciate against the US dollar to
P40.65:U$1 (source: BSP, Dec. 2016).
Environmental
Climate change has had an impact on International farmers, ranchers, rural land owners,
and foresters and will continue to do so, through its influence on production, distribution, and
yields. Continuous climate change in the Philippines may affect the Baking Industry especially
the Flour Industry and soon will affect the prices of the products that uses flour, sugar etc.
In Philippines pure water is very difficult to obtain. This is due to excretion of biological
and other waster into the water of rivers, lakes, and ponds. As baking business water is very
important to production, the business may have the tendency of consuming too much water. It
may affect the products prices because water is one of the main ingredients of brownies and
other pastries.
Political
Tax rate policy will give awareness to the enterprise on whatever changes has been made
regarding taxes, so as to avoid evasion or other related matters. It is beneficial both on the
company and for the Government in terms of financial matters.
V. INDUSTRY AND COMPETITOR ANALYSIS
Industry Analysis
Porter’s Five Forces Model adopted for Brownies R Us

Figure 1. Brownies R Us Adaptation of Porter’s Five Force Model

Porter’s five forces (figure 1) model helps Brownies R Us as they define the parameters
within which new rules, participants and markets continue to emerge.
Porter’s Five Force Model – Adapted for Brownies R Us:
1.The Potential for Entry into the Industry
The product will be loved by the customers because it is affordable and has a good
quality.
The basic ingredients of brownie are sugar, milk, flour and egg, and the prices of those
ingredients rapidly had hit the global high and will continue to high in the next few weeks or
months. It may be a big factor for Brownie R Us to get cheaper suppliers of those ingredients,
and it would be a reason for them to double their products’ prices.
2.The Level of Rivalry of Competition
 Increasing number of competitors since French Baker, Goldilocks and Red ribbon, these
bakeshops really marked their name in industry and Brownies R Us will be having the hard time
competing with this company because it is new in the market. The said competitors already built
such public image regards to brownie selling industry and other pastry products.
3.The Power of Buyers
There are many sellers and at the same time there are dominant buyers. Filipinos love to
eat sweet finger foods every day especially during occasions and some of the customers buy in
volume for souvenir. The quality of brownies and services of the business is just the same to its
competitors, it’s just that Goldilocks and Red Ribbon are larger companies compared to
Brownies R us.
4.The Threat to Substitutes
A substitute performs the same or a similar function by a different means (Porter, 2008).
The threat of substitute is high if the substitute provides a cost-effective trade-off compared to
the original product.
In light of today’s economic status, people are searching for less expensive products.
Brownies R Us offers affordable brownies product with a high quality same to their competitors.
5.The Power of Funders, Faculty, and Staff
In industry analysis, suppliers are defined as those organizations or individuals that
provide the materials, information or knowledge to allow an organization produce its goods
and/or services (Martinez and Wolverton, 2009a). Considering if the brand of the supplier is
strong and the role of quality and service of baking products. There are a lot of baking suppliers
in the market, and it may be a very hard one for Brownie R Us to find suppliers that offers cheap
cost and gives a good deal since the business is still new in the industry. Because of the high
price in sugar and flour the baking industry is trying to buy in large volume to lessen the cost.
There is a high tendency that the business will charge the cost to the consumer resulting into
having a costly brownies product, if the company can’t find a supplier which offers a good deal
and price
Key Success Factors for the Business
• High Quality Product – Brownies R Us produce quality product that tailored the customers’
desire.
• Competitive Pricing – Brownies R Us produce quality delicious brownies at affordable price
that low-to-higher income residents can buy.
• New Ideas and Flavor – the business continues to innovate and develop new ideas and flavors
to address the trends in baking.
• Channel of Distribution – the business adopts the most appropriate channels of distribution for
product accessibility.
• Customer Service – the business management practice high hospitality to customers in
addressing complains and suggestions.
C. Competitor Analysis
Goldilocks traces its roots to the collaboration and complementary talents of the women,
whose collective love for good food fueled what has been transformed into the global enterprise
today. From ten employees and two display stands, Goldilocks has become a global brand,
expanding to over a total of 250 stores in the Philippines and overseas; and hiring thousands of
local employees. The opening day total sales of P574 back in 1966 has multiplied thousands of
times over, reaching a system-wide sale of P5.9 billion by the end of 2007.
Goldilocks is one of the most Filipino owned bakeshop in the Philippines. They
established already established a good image in the Philippine Baking Industry. Goldilocks is the
best performing bakeshop in the Filipino hearts and mind. With 100% total brand awareness and
top-of-mind score of 71% per 2005 UAI study.
From its store in Timog, Quezon City what started out as hobby-induced business in1979,
turned out to be a proudly Filipino-owned and professionally-run business network. Red Ribbon
has grown to over 200 outlets all over the country and over 38 stores in the US with locations in
California, Las Vegas, Arizona, New Jersey and New York. With its acquisition in October 2005
by Jollibee Foods Corporation, Red Ribbon entered a new phase in its company history. The
company will soon become the biggest and fastest-growing bakeshop in the Philippines. Its
mission is to bring the joy of eating to everyone through its great-tasting food and superior
quality. Red Ribbon uses premium ingredients, such as real butter, high quality cake flour, and
its unique Red Ribbon cream. Red Ribbon cakes have become a tradition, an integral part of
every celebration - birthdays, christenings, anniversaries, and weddings. Owing to its heritage of
bringing families and friends together through its delicious, elegantly-designed cakes and other
specially prepared products, Red Ribbon captures this core benefit in a campaign that best
summarizes what the company has stood for over the years, "Whatever the celebration, it's more
beautiful with a Red Ribbon."
Red Ribbon is one of the successful Baking Company in the Philippines. Red Ribbon has
the financial capability of competing in the Baking Industry. For Red Ribbon Bakeshop, the
ingredients to success are no secret. Quality, Service, Value, Customer, and Red Ribbon has
even taken itself to a higher level of customer service. Improvements are geared towards a more
delightful dine-in experience with strict FSC (Food, Service, Cleanliness & Condition)
compliance, better take-out experience to ensure faster servicing time, and enhanced delivery
service with a broader coverage.
Competitor Analysis Synthesis
The identified competitor as a source of high quality at affordable price brownies and to
sustain the long term success of customers and employees.
Brownies R Us is on a strong competitive position having a score of 2.70 on the CPM
Matrix even though the business has the lowest total compare to their competitor. It is because
the business is in start-up stage and their competitors were already operating for decades, but still
the business has the possibility to realize the position they want to be in the future.
Opportunities and Threats Identified
After the discussions about the external environment (primarily on high quality at
affordable price brownies) which the business operates, the following threats and opportunities
have been identified:
VI. COMPANY ANALYSIS
Strategy
Brownies R Us is dedicated to offer high-quality brownies at a competitive price to meet
the demand of the lower- to higher-income local market area residents and tourists to sustain the
long-term success of customers and employees.
Market Position
Brownies R us will target the low-to-higher income local area residents and tourist within
the province and will expand in the region, who are interested in trying new products and
experiences and are dissatisfied with the limited selection and lack of personal service found in
grocery store and bakeries.
Structure
Organization Structure

Figure 2. Brownies R Us Organizational Structure

This structure defines how activities such as task allocation, coordination and supervision
are directed toward the achievement of organizational aims. It can also be considered as the
viewing glass or perspective through which individuals see their organization and its
environment.
Strengths and Weaknesses Identified
After the discussions about the external environment (primarily on high quality at
affordable price brownies) which the business operates, the following strengths and weaknesses
have been identified:
VII. STRATEGIC (OR LONG-TERM) OBJECTIVE
• To be able to become a leading brownies product selling business in the province and in
region 3.

VIII. STRATEGY FORMULATION

Recommended Business Strategies
Brownies R Us being new in the industry should penetrate the market through product
customization and tapping possible distributors as a way of advertisement.
Recommended Organizational Strategies
After analyzing the key internal factors of Julie’s Bakeshop the following strategies are
highly recommended:
• Brownies R Us should offer quality brownies at affordable price
• Penetrate the market thru product customization
• Availability of the product based on customer’ demand
Financial Evaluation of Strategies
Brownies R Us established a forecast of the Income Statement and Cash Flows Statement
for the period 2017-2021. The financial projections below were based on the strategic objectives
and proposed strategies on the different aspects of the business.
Projected Income & Expense for 5 Years

INCOME: 2017 2018 2019 2020 2021

Total Sales 250,426 257,939 265,677 273,647 281,857

Cost of Goods Sold 150,256 154,763 159,406 164,188 169,114

Gross Profit 100,170 103,176 106,271 109,459 112,743

EXPENSES
Advertising 35,508 35,508 35,508 25,508 25,508
 Projected Income & Expense for 5 Years
Accounting 25,840 25,840 25,840 25,840 25,840
Utilities 27,410 27,410 27,410 27,410 27,410

Total Expenses 88,758 88,758 88,758 78,758 78,758

Net Income 14,418 17,513 30,701 33,985 14,418

Sales projection for FY 2017-2021 has an increase of 3%, Cost of Goods Sold was
projected to be 60% of sales. Net income has an increase of 1% per year for the first 3 years and
jump to 4% increase on the 4th year due to decrease in advertising expense.

IX. ACTION PLANS AND DEPARTMENTAL PROGRAMS

Objectives Key Result Program Activities Key Performance Performance Target Key
Area Indices Personnel
Objective 1: Penetrate the >tap distributors >increase in market share >3% increase in sales per >marketing
To be able to market year department
become the
leading
brownies
product
selling
business
Objective 2: local > to be known locally >increase in sales and >1% increase in profit per >marketing
To be able to advertisement profit year department
Develop
Business
Status with
public
relations

X. STRATEGY EVALUATION/MONITORING AND CONTROL

Balance Scorecard as strategy evaluation tool, it will allow the organization to evaluate
from the following perspectives: Financial Performance, Customer Knowledge, Internal
Business processes and Learning and Growth.

Time
Strategy Department Measure of Target
Expectation
1. Market 1. Marketing, Finance, Establishment of distributors
development Production
2-3 years

2. Market 2. Marketing, Management, Increase in market share

penetration Production
2-3 years

4. Product 4. Marketing, Production Use of modern technology for

development customization 2-3 years
 The new structure is in line with the objectives formulated in the previous sections. With
the new structure and strategies as a basis, Balanced Score Card is formulated to evaluate and
monitor strategies to be implemented.
For further monitoring of where and how the company is going with all the strategies
being implemented, a strategy map is developed. The strategy map is derived from the set of
strategies identified guided by the mission and vision of the institution.

Brownies R Us Map Strategy

References
Fred R. David. Strategic Management: Concepts and Cases, 11th
Edition.Fred, David. Strategic Management. 7th edition. 2009.Kotler, Philip & Keller, Kevin.
Marketing Management. 4th Edition.
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