Abes Meat Products Case Study - International Business

ABE'S BEST MEAT PRODUCTS, CORPORATION

(ABMPC)

WISHFUL THINKING?

            On December 2010, the President, Vice-President, General Manager, and the Marketing Head of Abe's Best Meat Products, Corporation decided to pursue its dream of satisfying the yearning of about three (3) million Filipinos in the United States of America and developing the products for the Muslim markets here and abroad (where there is a significant number of Filipinos).

OPPORTUNITY SEEKING

           

Annex 1

Source: Muslim Mindanao website

            Filipino Muslims are around 5 percent of the total population of the Philippines. They are most settled in the Mindanao regions. According to the US Department of State's report[1], "some Muslim scholars argue that census takers in 2000 significantly undercounted the number of Muslims because security concerns in Muslim-majority areas of western Mindanao prevented them from making an accurate count. The 2000 census placed the number of Muslims at 3.9 million, or approximately 5% of the population, but some Muslim groups claim that Muslims comprise from 8 to 12 percent. Muslims reside principally in Mindanao and nearby islands and are the largest minority religious group".

To check if there are meat processors in the region, ABMPC sought the assistance of two of its major distributors to get the meat processing industry profile of Mindanao. Their scanning resulted to a few number of local players, namely, Sler's Porky's Best, Darling's, Papat's, Calixtra's and one in Cebu, Virginia Foods but none of them is Halal certified.

OVERSEAS FILIPINO WORKERS

According to the Commission of Overseas Filipino Workers on data gathered from Census 2000, the top 10 destination countries of Filipinos are: US (2,877,666), Saudi Arabia (1,153,003), Canada (639,686), UAE (609,704), Australia (336,140), Malaysia (243,877), Japan (210,617), UK (200,987), Hong Kong (168,550) and Singapore (163,090).

USA

            Based on a market study, there are around 12 Filipino companies manufacturing processed meat all over USA, but majority are in California. They carry different brands like, Abe's Best, Orientex, Magnolia, Pampanga, Martin Puremeats, Mister Brisk, Lola Sita's, Manila Ihawan, Tropics, Baliwag, Masagana, and a few more. But the most famous is Abe's Best, carrying the brand of ABMPC of the Philippines.

ASIA and the MIDDLE EAST

            ABMPC is currently exporting to UAE and Bahrain through an exclusive distributor in Dubai. There are 3 major local suppliers in UAE namely, Puremeats, JCM, and ABMPC; but ABMPC is the only Tocino and longaniza supplier. In Saudi Arabia, the only brand available is Brisk, being the only Halal certified. 

TARGET MARKET

            Abe's Best Meat Products Corporation identified its target market as a result of its general opportunity seeking; the Filipino Muslims in the Philippines and the OFW's in Muslim predominated countries like, the Middle East, Malaysia, and Singapore. USA is a dream…

            To further understand the case of ABMPC, data for the EXTERNAL ANALYSES shall be segmented according to the segmentation of the target markets - HALAL for the Muslims and CALIFORNIA for the western market.

HALAL MARKET ANALYSIS

I. DOMESTIC

            Since majority of the Filipino Muslims are in Mindanao, ABMPC decided to get the factors, which could affect its decision-making, are directly connected the corresponding location of the target market. These are regions IX, XI, XII, and ARMM. For the OFW's in Muslim countries, these will include Middle East, Malaysia. Singapore will be under this segment too for the purpose of regional segmentation.

ECONOMIC FORCES

            Mindanao's gross regional domestic product from 2002 to 2009 grew by 4.3%. Despite this growth and Mindanao' richness in natural resources, it must be noted that Mindanao's share in the total output of the country remains low as a result in low income, aggravated poverty, and the hampered efforts to achieve peace and unity. Five of the poorest provinces in the country are in ARMM, which incidentally have the highest number of Filipino Muslims.

Employment rate is relatively high, 90 percent upwards. The daily wage rate in ARMM is P210, Davao (R-XI) is P265 for the non-agriculture employees and P255 for the agricultural employees. Region IX is the lowest at P190 for the agricultural employees. Because of the low wage rates, the purchasing power of peso is only between 0.45 to 0.55

            The large Muslim community and its trading relationships with East Asia, offer opportunities in the HALAL industry. Progress has been achieved with the establishment of the Muslim Mindanao Halal Certification Board, Inc. and the foundation of Halal Certification guidelines used as basis for the Philippine National Standards on Halal Food declared by the Bureau of Product Standards of the Department of Trade and Industry.

Annex 2

            When ABMPC found out that the daily wage in the Mindanao region is quite lower than the other regions of the Philippines, she realized that her biggest challenge in this segment is pricing and their capacity to buy.

SOCIO-CULTURAL-POLITICAL FORCES

The political condition in Mindanao is unstable that may have rooted from the Muslim's historical background. From the formation of the Muslim community

Annex 3

(Bangsamoro) in Mindanao and Sulu until the middle of the twentieth century, the connection of the Muslims in the Philippines with the Muslim world was through the Muslims in Southeast Asia. This was because of the influence of the ruling families in these Southeastern Asia.

Annex 4 Economic Indicators of Mindanao (Source: NEDA)

This was because of the influence of the ruling families in these Southeastern countries in expanding Islam in the Philippines. In forming their state, the political institutions in neighboring principalities profoundly influenced the sultanates that ruled the Muslims in SEA. It is for this reason that Filipino Muslims believe they are an independent nation when they became part of the Philippines in 1946. It is in this same time that their ties to the Muslim world shifted to the Middle East. Subsequently, religious thoughts in Middle East slowly influenced the religious practices in Mindanao and Sulu.

            According to Muhamas al-Hasan "We [Moros and Filipinos] are two different peoples adhering to different ideologies, having different cultures, and nurtured by different historical experiences…Our culture, imbued with Islamic beliefs, tenets and principles, is diametrically in contrast with what is known today as Filipino culture which is the amalgamation of the residues of the colonizers' cultures. Our art, architecture, literature and music have retained their Asian character [which] is not true [of] theirs."[2]

            Based on Abhoud Syed M. Lingga's observation during in his paper Muslim Minority in the Philippines, he says "The Bangsamoro have never live in isolation from their brothers and sisters either in Southeast Asia or in the Middle East. They always relate themselves with the Muslim world and their ties with global Ummah will always remain, whether they differ or not in their understanding and practice of Islam. In their quest for the assertion of their rights to freedom and self-determination the Muslims in Mindanao and Sulu will always find sympathetic ears to listen to their aspirations at least from the masses in the Ummah, if not from governments and organizations."

            While they clamor for independence, to this date, they are is still a part and governed by the Philippines. 

II. OVERSEAS

MIDDLE EAST

            While ABMPC is targeting the OFW's in the Middle East, being Muslim predominantly region, trading to any of its countries must be treated the same way as a Muslim, regardless of the origin of the target market.

            A write-up in the Migrants website posted on June 10, 2010 states, "Saudi Arabia is oil based economy possessing 25% of the world's proven petroleum reserves with GDP of $592.886 billion as of 2009 estimate. 7 million labor forces are required to run its machineries and 80% of which are overseas migrant workers. Average wages in Saudi Arabia hover around 75 – 96$ and 6 – 9$ per day depending upon your nationality, skill and professional; which is also tax-free with benefits like housing and medical insurance. Even after last year's world financial crisis; World Bank declared Saudi Arabia as strongest Arab economy. All these conditions make Saudi Arabia the best choice to work. According to Philippine Overseas Employment Administration (POEA); Saudi Arabia welcomed 123, 048 Filipino migrant workers in 2009 among which 48,109 are female; it is highest number of migration."

            "These 1.5 million OFW(s) are posted in every city, every field and literally every company inside Saudi Arabia. Working as Head Nurses to helpers in every big hospital like King Faisal Specialist Hospital, King Khalid and National Guard Hospital. Taken over posts from Project Manager till technicians and even tea boys in all the major Telecommunication operators like STC, Mobily and ZAIN. You will find them working in every shopping mall working as shoppers and helpers. You will find them in very home as house; and as managers, chefs and waiters in all Fast food chains of Saudi Arabia. Thus you will find them everywhere."

            "Filipinos has proven themselves as very big, active and vital community in Saudi Arabia. The Business centre of Riyadh (Batha) has converted into Mini Manila with many shops, malls and restaurants run my Filipinos themselves. The cooperation and operators has to offer special packages to attract this 1.5 million community; as they know they are playing vital role in Saudi Arabia's economy. They are living as one big family and they work and intermingle with other nationalities very easily. They don't separate themselves as other Western, European or Chinese community does here."

MALAYSIA

BASIC ECONOMIC FACTS[3]

GDP: US$218.95.8bn (2010, estimate IMF Source)
GDP per head (Nominal): US$6,950 (2009 estimate); US$7,755 (2010 estimate.IMF)
GDP per head (Purchasing Power Parity): US$13,799 (2009 estimate). US$14,603 (2010 estimate.IMF)
Annual Growth: 2007: 6.3%; 2008: 4.6%; 2009: -1.7%; 2010: 7.2% %; 2011: 5.3% (20112010 estimate IMF)
Inflation: 2010:  1.7% (actual); 2011/2010: 2.1% (estimate. IMF source) Major Industries: Electronics, Petroleum & LNG, Chemicals, Textiles, Palm Oil, Timber, Tourism
Major Trading Partners: Singapore, China, Japan, USA, Thailand, EU

Malaysia is one of South East Asia's more successful economies and one of UK Trade and Investment's High Growth Markets. Recent GDP growth has raised per capita income to US$7755 in 2010, transforming a commodities-based economy into one with a large, export-orientated manufacturing sector. The economy continued to grow robustly with a 6-7% estimated growth for 2010. Nowadays the services sector (rising to 55% of GDP in 2008) is increasingly important; while both commodities (palm oil and rubber) and oil and gas remain substantial sectors.

Since the Asian financial crisis, Malaysia has made good progress in reforming its banking and financial system. Local banks have been consolidated and there is phased liberalization to allow greater competition. Malaysia has developed its Islamic Finance capability and is now a major hub in the Asia Pacific region. The Government has also progressively dismantled the exchange and other controls imposed during the Asia Crisis - including abandoning the Ringgit peg to the dollar in July 2005 in favor of a managed float.  In April 2009 Prime Minister Najib unveiled his New Economic Model, which is expected to further liberalize the economy.

The chief economic reform facing Malaysia is to move up the value chain in response to the economic challenge posed by China and other low-cost manufacturing economies. The administration has made some changes to improve financial and political accountability, and is seeking to improve Malaysian competitiveness in sectors such as biotechnology.  The New Economic Model is expected to help Malaysia continue to grow if it is implemented as planned. Business culture can be defined as written and unwritten codes of principles and values that govern decisions and actions within a company.

BUSINESS CULTURE IN MALAYSIA[4]

Malaysia is a multi-ethnic, multi cultural, multi religious and multi lingual country. But since Malaysia is a predominantly Muslim country, a businessperson should perceive to comprehend Malay's customs and restrictions. For instance, Friday is a particularly religious day of the week in Malaysia and business meeting should not be arranged on Friday's. Again business should not be conducted during Ramzan. Pork and alcohol are also restricted for Malaysians. One should always accept any item using the right hand; Malaysians regard the left hand as unclean. 

Normal business hours are 9 a.m. to 5 p.m. Mondays to Fridays, with many businesses and government agencies also open until noon on Saturdays. Malaysia is also predominantly ethnic Chinese, who are very particular about punctuality. They would do business only with someone they know or trust. However, the Malaysian or Indian hosts can be a little late and have a relaxed attitude. 

Malaysian business culture is hierarchical and people of senior rank should be treated with great respect. First names are not used and one should address people by their personal, professional or honor art title, along with their family name-noting that this comes first in written Chinese names. 

Malaysian communication styles are polite and often indirect and they are extremely particular about people not losing face by humiliating or embarrassing them. 

Negotiations and decision making often take time since proposals usually are analyzed in great detail. Business gifts are not encouraged and could be interpreted as a bribe. It is advisable to remove ones shoe before entering a Malaysian home.

FILIPINO DEMOGRAPHICS IN MALAYSIA

Filipinos in Sabah, a part of Malaysia island Borneo, work mostly in fishing, construction, and plantation companies. Some 500,000 undocumented[5] (documented 250,000) Filipinos are in Sabah mainly because of its proximity to and historic ties with the Philippines. The Philippines has a claim to Sabah.

Other OFWs in Malaysia work as domestic workers. The minimum wage for Filipino domestic workers is 1,200 ringgits or 16,200 pesos a month. This is higher than most office workers, teachers and nurses receive in the Philippines.

A standard contract lays down the minimum wage, working hours, living conditions and days leave. The contract does not apply to Indonesians who make up 95% of domestic workers in Malaysia. They receive 450 to 500 ringgits only and have no days off.

Malaysia's strong business sector requires engineers, IT specialists and managers. The oil and gas industry needs engineers because locals prefer to work in the United Kingdom (UK) and in the Middle East.

LEGAL FORCES

EXPORT POLICIES – BARRIER TO ENTRY

            Export has varied importation policies especially in processed meat. There are countries like the North American countries, Europe and Singapore, Malaysia, Hong Kong, and Middle East that require a country accreditation. Philippines, is not accredited to export its meat to several countries due to Foot and Mouth disease (FMD) that inflicted the hogs in Central Luzon several years ago.  In fact, any meat from Luzon is not allowed for a long time for shipment to its own two islands, Visayas and Mindanao because these regions are FMD free regions. These regions were even classified under "export areas" during the early onset of FMD in Central Luzon.

            ABMPC can only ship its products to these islands if the meat used is imported from an accredited country or from at sourced from at least double AA category slaughterhouse in Visayas and Mindanao. Another option is pre-cooking the products, like the hotdogs and longaniza. Tocino, considered marinated meat should likewise undergo pre-cooking before it can be shipped out of Luzon. This policy goes for all of the countries mentioned earlier, except for Muslim predominated countries like Saudi Arabia, Qatar, and the like that require both country accreditation and Halal Certificate.

            Sometime in 2009, ABMPC applied for an accreditation in Singapore and incidentally, Barbara learned from the Agrarian and Veterinary Authority (AVA) officials that there is one slaughterhouse in Mindanao that has been accredited by Singapore. This could have been the perfect opportunity for ABMPC, had not the accreditation been suspended due to suspicion of the presence of ebola virus in the hogs.

Meat Import Licenses and Halal Certification in MALAYSIA

According to the Foreign Trade Agreement[6], Malaysia requires that all meat, processed meat products, poultry, and egg and egg products originate from plants inspected and approved by the Ministry of Agriculture's Department of Veterinary Services (DVS). DVS requires these food safety inspections despite assurances from the U.S. Department of Agriculture (USDA) Food Safety and Inspection Service.

All meat, processed meat, poultry, egg, and egg product imports require import licenses issued by DVS. DVS often restricts imports of chicken parts through this importlicensing requirement, especially when local producers believe they are facing low prices. The State of Sarawak actually issued a ban on certain chicken parts imports, which was subsequently rescinded after the issue was raised in the U.S.-Malaysia Trade and Investment Framework Agreement (TIFA). However, Sarawak put other restrictions in place that effectively banned imports. (The States of Sarawak and Sabah on the island of Borneo maintain separate quarantine restrictions from those of Peninsular Malaysia.)

All meat, processed meat products, poultry, eggs, and egg products must receive halal (produced in accordance with Islamic practices) certification from Pusat Islam (the Islamic Center). Slaughterhouses, meat processors and egg processors must also be inspected and approved by the Department of Islamic Development (JAKIM) for halal beef, lamb, poultry and egg exports. DVS and JAKIM travel together on the inspection visits. U.S. halal product suppliers must be under the supervision of an approved U.S. Islamic Center. U.S. producers have expressed concern that the halal certification process is confusing and non-transparent. Each individual product, rather than the plant, must receive halal certification. Malaysia's halal requirements are considered relatively strict as compared to other countries.

This certificate is issued on the joint recommendation of Malaysia's Department of Veterinary Services (DVS) in the Ministry of Agriculture and Pusat Islam following an on-site inspection. The government of Malaysia has the right to re-inspect approved plants after one year.

DUBAI

            Dubai, an open city does not require a country accreditation provided ABMPC submits a shipping permit issued by the Bureau of Animal Industry and National Meat Inspection Service. Ironically, only pork products can be exported because it does not require Halal certification, being sold only to non-Muslim nationals. There are several non-Filipino stores in Dubai wherein a pork section is provided for most of the expatriates living and working in Dubai.

            However, since ABMPC intend to penetrate the non-pork market, it must secure a HALAL certificate first. In this manner, chicken and beef processed meats may be sold in sections of the supermarkets and groceries open to all consumers.

FOOT AND MOUTH DISEASE (FMD)

The foot-and-mouth disease virus can be transmitted in a number of ways, including close contact animal-to-animal spread, long-distance aerosol spread and fomites or inanimate objects, typically fodder and motor vehicles. The clothes and skin of animal handlers, such as farmers, standing water, and uncooked food scraps and feed supplements containing infected animal products can harbor the virus as well. Control measures include quarantine and destruction of infected livestock, and export bans for meat and other animal products to countries not infected with the disease.

FMD poses a great threat to the meat processing industry so that pork is not allowed to export. In January of 2010, the Philippine government submitted an application to the World Organization for Animal Health (OIE) to remove most parts of Luzon in the list of areas with FMD. And in June 2011, the Philippines is finally granted a certificate as foot and mouth disease free-zone from OIE. The certification will allow local meat-producers to export their products abroad.

THE IRONY

            It is odd that despite the granting of OIE to the Philippines as FMD-free zone, one of the regional officials of National Meat Inspection Service says that ABMPC should maintain status quo, when asked ABMPC's Quality Assurance Manager asked if they can already eliminate the FMD-Free logo in their packaging materials because the logo send a bad signal to the consumers. But to this date, no updates have been given to ABMPC regarding this matter.

HALAL[7] ACCREDITATION

Halal is an Arabic term, which means allowed, lawful, legal, or permissible under the Shariah (Islamic Law). This law is based on the Qur'an, Hadith (tradition of the Prophet Muhammad), Ijma (consensus), and Qiyas (deduction by analogy). Moreover, according to poultrysite.com, in food safety standards, halal is considered a quality control system by itself that puts emphasis on critical control points involving hygienic and disease-free preparation of foods from farm to plate. Halal seal marked on labels of food and non-food products will inform Muslim consumers that the product is free from pork, lard from swine and alcohol.

What is HALAL Food?

Halal food means food that is permitted under the Shariah (Islamic) Law. This law is based on the Qur'an, Hadith (tradition of the Prophet Muhammad). Ijma (consensus) and Qiyas (deduction by analogy). The qiyas approved by the relevant Islamic Authority also fulfills the following conditions:

a.     Does not contain any component or raw materials from animals that is not Halal.

b.     Does not contain any ingredient that is considered haram or najis (fithy).

c.     During its preparation, processing or manufacturing, the tolls or equipment used must not be     contaminated with product containing ingredients considered haram or najis.

 Halal certification is a certificate of compliance of the religious requirement observed by all Muslims worldwide.  It is now accepted scientifically that a Halal certificate is a guarantee of genuineness, best quality, wholesomeness, cleanliness, and best fit for human consumption.

Haram

Also Arabic term that means prohibited, unlawful, illegal or forbid under the Shariah law.

The following are considered Haram (unlawful), but not the complete list

1.     Pig, dog and their derivatives

2.     Domestic Donkey

3.     Carnivorous animals except animals that only eat fish

4.     Animals with tusks, claws, fangs, or protruding canine teeth such as monkeys, bears, cats, lions, elephants, and the like

5.     Animals that died by headlong fall, strangulation, natural causes, or attacked by other animals

6.     Animals not slaughtered in Islamic Way

7.     Blood

8.     Alcoholic drinks and all forms of intoxicating and hazardous drinks

HALAL SLAUGHTER PROCEDURE (Zabihah Procedure)

1.     Slaughter man should be a practicing Muslim that has a knowledge on halal slaughtering procedure

2.     The animal slaughtered must be alive and in good health

3.     The knife to be used for slitting must be very sharp

4.     Slaughter man should recite the name of Allah such as "Bismillah Allahu Akbar" before slitting the animal

5.     The throat must be slit quickly, the trachea, esophagus, jugular veins, and carotid arteries should be cut swiftly in one move to prevent the animal from suffering. It must be ensured that the animal will have a complete bleeding.

INTERVIEWS WITH PEOPLE HAVING HIGHLY DIFFERENT PROFILES

All terms and details are taken from the Islamic Da'Wah Council of the Philippines, the accrediting body recognized all over the world. But to further understand the Muslims, Barbara Gomez, interviewed a Filipina Muslim, named Rai Rai who has been residing in Pampanga for 8 years, Jake, a 58 year-old male Christian whose father is Muslim, two OFW's currently working in Abu Dhabi and Dubai, a Filipino consolidator to Middle East, and a recently retired General Manager for Export of Brisk.

Rai Rai

            "Maganda", was Rai Rai's response when Barbara asked her how she feels about ABMPC's application for HALAL certification. Rai Rai somehow knows the company because she has been staying in Pampanga for several years already. Jumping from one question to another, here a list of what Barbara learned from Rai Rai:

1.     All materials used should be Halal too

2.     Merchandise cannot be displayed together, suggesting a new store

3.     Muslims have basically the same eating habits except that theirs is Halal

4.     They are somehow looking for substitutes to vegetables and fish that Mindanao is rich with

5.     Their spending habit is based on their income but are definitely not thrifty

6.     They are generous, in a sense like, being ok when a family visits and takes home half of her groceries and dinnerware displayed, or even electronics.

7.     She suggested to use Abe's Best Halal Foods as its brand name

8.     She finds seventy five pesos for a pack of Tocino economical

9.     Muslims prefer to buy it from a Muslim seller

10.  Quiapo is a good selling point in GMA

11.  Mindanao State University in Marawi has a big population; the vicinity gives a high opportunity for business

12.  The MILF and Abu Sayaff are not of high threat to businesses in Mindanao

13.  She kept on repeating "dapat Halal, baka masara ang kumpanya nyo"

Jackson Avilla

      Jackson was an accidental interviewee because he incidentally is staying in Barbara's home and heard what the two were discussing. It was only then that Barbara found out that he's father was a Filipino Muslim too so that he had so much to share. His insights turned out to be interesting to Barbara.

1.     On the first note, Filipino Muslims do not know the "tocino", so that it is going to be a new taste for them

2.     Appearance of the products should not be the same as those of the Christians – tocino should be sliced or cut into strips, longaniza shaped differently, to eliminate the association with pork tocino and pork longaniza

3.     Change packaging design, preferably using bright colors of yellow, green, red, and white because these are Muslim colors

4.     Their food is normally color yellow and spicy, so sweet and spicy tocino will be good

5.     Halal word should really in bold letters in the packaging and with Arabic translation

6.     Muslim houses are huge because the male's families from different women normally live together; unless he can afford to buy each of them a house

7.     They normally cook a lot and once a day for those living in the rural areas

8.     People in Mindanao are not really poor because of their natural resources

Albin Buan

            An engineer from Pampanga, has been working in Abu Dhabi for more than 10 years now, said that salary rates in Middle East depends on the company an OFW is working for. Normally, women are hired in supermarkets and Duty Free Shops as sales ladies and secretaries. Their salary ranges from US$350 to $500 and US$600 to $1,500 respectively. Engineers receive as low as $800 and as high as $4,890; architects receive as high as $6,000. He also mentioned that some companies provide housing, food, and transport to their work.

Rudy Laxamana

            Also a Kapampangan and incidentally a former employee of ABPMC, is currently in Dubai working as "roomboy" for more than 2 years now. Rudy assisted Barbara by asking some of his Filipino friends to be able to gather more information on the salary rates.  There are 16 Filipino in the company he is working for. They stay in the desert so that board and lodging is provided. They only get one day-off a month. They spend their day-off in the city to buy some Filipino foods (chichirya). Domestic helpers do not get any day-off. Rates are on a monthly basis, are as follows:

1.     Roomboys 1,000 dirhams

2.      Laundry man 1,200 dirhams

3.     Tea boy and waiters 1,200 dirhams.

4.     Cook 2,000 or 2, 500 dirhams

5.     Head waiters 2,500 dirhams

6.     Domestic Helpers 600 dirhams

Mauricio Mallari and Mrs. Teresita Madlambayan

            According to Mauricio, a consolidator to Saudi Arabia, there are a few Filipino meat processors in Saudi Arabia. Some are even using the packaging design of Abe's Best. On the other hand, the only legit importer from the Philippines is JCM. But as of writing this paper, Barbara learned from Mrs. Madlambayan that JCM is stopping all its HALAL operations effective on September 2011. JCM will be concentrating on regaining its market share for processed meat in the Philippines - the share it had before the company closed due to labor issues and decided to shift all its facility for HALAL production when it reopened its plant after several years.

            Ms. Madlambayan (around 65 years old), who worked for 16 years with JCM, was promoted as General Manager for Export when JCM started its Halal food and beverage manufacturing, including Brisk hotdog, dairy products, pasta, and flour. But because JCM discontinued its Halal processed meat production, Mrs. Madlambayan decided to retire as an employee. Adept to the export business, she decided to put up her own export business, which prompted her to look for viable sources to fill the soon to be vacuum market in the Middle East, because of the stoppage in Brisk supply. According to her, JCM has annual revenue of $9 million and $2.8 million (P126 million) accounted for Brisk hotdog alone. Barbara immediately converted the figure to its peso value. Initially, she was not delighted by the figure, but then she realized that it is still an additional opportunity for Abe's Best Meat Products Corp.

LABOR POLICIES IN SAUDI ARABIA

Recently, Saudi Arabia released a statement that it will no longer hire Filipino and Indonesian domestic helpers due to increase in criminal cases against these foreign nationals. This highly signals threat to the Filipinos because Saudi Arabia has the second most number of Filipino migrant workers. This news sent worries to Barbara as well. While she was surfing the Internet, she saw this write-up posted by an Arab national dated June 16, 2008.

Annex 5 Distributions of Overseas Filipino Workers in Middle East as of Year 2000

Annex 5-a

Imagine a world without Filipinos[8]

Abdullah Al-Maghlooth | Al-Watan, almaghlooth@alwatan.com.sa

Muhammad Al-Maghrabi became handicapped and shut down his flower and gifts shop business in Jeddah after his Filipino workers insisted on leaving and returning home. He says: "When they left, I felt as if I had lost my arms. I was so sad that I lost my appetite."

Al-Maghrabi then flew to Manila to look for two other Filipino workers to replace the ones who had left. Previously, he had tried workers of different nationalities but they did not impress him. "There is no comparison between Filipinos and others," he says. Whenever I see Filipinos working in the Kingdom, I wonder what our life would be without them.

Saudi Arabia has the largest number of Filipino workers — 1,019,577 — outside the Philippines. In 2006 alone, the Kingdom recruited more than 223,000 workers from the Philippines and their numbers are still increasing. Filipinos not only play an important and effective role in the Kingdom, they also perform different jobs in countries across the world, including working as sailors. They are known for their professionalism and the quality of their work.

Nobody here can think of a life without Filipinos, who make up around 20 percent of the world's seafarers. There are 1.2 million Filipino sailors.

So if Filipinos decided one day to stop working or go on strike for any reason, who would transport oil, food and heavy equipment across the world? We can only imagine the disaster that would happen.

What makes Filipinos unique is their ability to speak very good English and the technical training they receive in the early stages of their education. There are several specialized training institutes in the Philippines, including those specializing in engineering and road maintenance. This training background makes them highly competent in these vital areas.

When speaking about the Philippines, we should not forget Filipino nurses. They are some 23 percent of the world's total number of nurses. The Philippines is home to over 190 accredited nursing colleges and institutes, from which some 9,000 nurses graduate each year. Many of them work abroad in countries such as the US, the UK, Saudi Arabia, the United Arab Emirates, Kuwait and Singapore.

Cathy Ann, a 35-year-old Filipino nurse who has been working in the Kingdom for the last five years and before that in Singapore, said she does not feel homesick abroad because "I am surrounded by my compatriots everywhere." Ann thinks that early training allows Filipinos to excel in nursing and other vocations. She started learning this profession at the age of four as her aunt, a nurse, used to take her to hospital and ask her to watch the work. "She used to kiss me whenever I learned a new thing. At the age of 11, I could do a lot. I began doing things like measuring my grandfather's blood pressure and giving my mother her insulin injections," she said.

This type of early education system is lacking in the Kingdom. Many of our children reach the university stage without learning anything except boredom.

The Philippines, which you can barely see on the map, is a very effective country thanks to its people. It has the ability to influence the entire world economy.

We should pay respect to Filipino workers, not only by employing them but also by learning from their valuable experiences.

We should learn and educate our children on how to operate and maintain ships and oil tankers, as well as planning and nursing and how to achieve perfection in our work. This is a must so that we do not become like Muhammad Al-Maghrabi who lost his interest and appetite when Filipino workers left his flower shop.

We have to remember that we are very much dependent on the Filipinos around us. We could die a slow death if they chose to leave us.

           

           

Annex 6 Distribution of Overseas Filipino Workers in East and South Asia as year 2000

CONCLUSION

            The Filipino Muslims in Mindanao may be quite a big number, but given the per capita income rate, ABMPC is facing challenges to achieve its objectives. Strategies should focus on the price factor of the product. Smaller packaging sizes will be of significant relevance.

            On the other hand, Filipinos, no matter where they are, or no matter what country they migrate to, their culture will always remain. So that wherever they work in foreign countries, they are highly commended due to their hard-working character and adding the fact that they are multi-tasking, without complaining.

Rules may change depending on their host of country, but given the chance to a Filipino food, they will always grab it. It is this for this reason that wherever Filipinos are, there surely are Filipino stores and Filipino food.

And let it be known "Imagine a World without Filipinos"!

MEAT PROCESSING INDUSTRY OF THE PHILIPPINES

            The meat processing industry has a significant contribution to the country's gross domestic product annually. As of 2007, it posted revenue of Php 70 billion[9]. It supports its allied businesses like packaging, canning, advertising, printing, media, retail trade, among others. According to EntrePinoysAtbp. "There's a bright prospects for the Philippines to become a production hub for high-quality processed meat products, as the Paris-based Office International des Epizooties recognizes the foot and mouth disease-free status of most parts of the country." The industry grew by 8 percent from 2009 to 2010.

            Export of processed meat to the Muslim countries is now possible because of the HALAL certification made possible through the promulgation of the Department of Trade and Industry.

MARKET SHARE of KEY PLAYERS

Annex 7-a                                          

The market shares shown are gathered from the Financial Statements of each player taken from the Securities and Exchange Commission. These five players' revenues have shown significant relevance to the industry's total value. Foodcircle (24%) and ABMPC (8%) have shown a 2 percent growth in 2010, while Puremeats (62%), the industry leader posted a 4 percent decrease, apparently taken by Foodcircle and ABMPC. Kayabe and Brisk maintained their market share at 5% and 1%, respectively.

COMPETITIVE ANALYSIS

Critical Success Factors

Annex 8

 

            Based on the interview Barbara conducted, fourteen critical success factors were mentioned. It must be noted that HALAL certification was given the highest weight due to its necessity to penetrate the Muslim markets. Brisk, being the only HALAL certified frozen meat product has the highest rating of 4.  But apparently, Brisk will no longer be available in all HALAL market this September.

COMPETITORS PRODUCT PROFILE

            Puremeats and Foodcircle have the most varied meat-based products, namely hotdogs, bacon, ham, sausage, luncheon meat, tocino, and longaniza; all in different variants. ABMPC and Kayabe have basically the same products in the frozen division of the top 2 market leaders, but both without canned meat products. JMC has limited products and was focused in HALAL distribution only.

THE PROJECT – HALAL FACILITY 

            Based on all the factors and data shown, Abe's Best Meat Products Corporation can only serve the Filipino Muslims and OFW's in Muslim-predominantly countries by putting up its HALAL facility that is no way connected to a non-Halal facility. Even employees cannot go around a non-Halal facility to achieve total isolation of the facility and secure its accreditation. This move will not alter its regular production process except that it will be adding a new procedure, which is the ceremony or praying over of the facility, equipment, and raw materials before every operations start in an isolated facility. Therefore, this merely innovates ABMPC's production process.

Annex 9 Competitors Product Profile

           

            After the HALAL facility is accomplished, accreditation shall follow. This includes the plant's accreditation, equipment, process flow, vehicles used for transporting raw materials (for exclusive use in Halal operations), and individual product, as the Malaysian import policies require. Based on all the given factors, ABMPC came up with a product development strategy for the HALAL market. These are all chicken and beef base.

Table 1  Revenue and Product Distribution Projection

	Chicken Tocino	Beef Tocino	Chicken Hotdog	Beef Hotdog	Chicken Longaniza	Beef Longaniza
Target Selling Price	80.00	112.50	70.00	75.00	70.00	75.00
Target COGS	64.00	90.00	56.00	60.00	56.00	60.00
Target Revenue	100M	50 M	50M	50M	25 M	25M
Target Units	1,250,000	444,000	714,300	667,000	357,200	333,333
Target Gross Margin	20 M	10M	10M	10M	5M	5M

ACTION STEPS

1.     ABMPC will initially sell in Middle East countries like Saudi Arabia, Bahrain, UAE, Qatar, Kuwait, and Oman, with a population of approximately 2.2 million.

2.     The target revenue of Php 300 million for the first year shall be distributed as follows: 1,250,000 units of Chicken Tocino, 444,000 units of Beef Tocino, 714,300 units of Chicken Hotdog, 667,000 units of Beef Hotdog, 357,200 units of Chicken Longaniza, and 333,333 units of Beef Longaniza, with a total of 3,765,833 units. Hotdogs for both meat types contribute a big share due to the fact that Brisk is leaving an empty-filled market this September, which poses a very good opportunity for ABMPC.

3.     Distribution shall be through 2 exclusive distributors to maximize their profitability as well and to minimize same brand and product competition in the target markets.

4.     Market penetration in Singapore, Malaysia, and Mindanao on the second year.

Process Flow EXHIBIT 1a

HALAL CEREMONY by IMMAM

HALAL CEREMONY by IMMAM

5.     Product to be developed for the Mindanao market shall be in smaller packaging sizes to achieve a lower pricing that will be affordable to the Filipino Muslims.

BUSINESS OFFERING and ITS JUSTIFICATION

   1.    INVESTMENT REQUIREMENT

INPUTS	USES	SOURCES – EQUITY (Php)
PPE a.     Structure/Building b.     Equipment c.     Blast Freezers d.     Walk-in Freezers	Production of Halal products Intended to freeze finished products in 3 hours For final warehousing purposes of finished goods ready for selling	6,900,000.00 15,000,000.00 25,000,000.00
Working Capital	To produce 376,700 units of assorted products	20,402,000
Utilities		1,000,000
Salaries and Wages		600,000
TOTAL		68,702,000

Initial investment of Php 46.9 million is required to put-up and operate a HALAL meat processing plant. This includes the building or structure, the equipment, and freezers/storage. This does not include the land cost because the new building will be constructed in the same property close to where the current plant is. However, this does not include the working capital needed to produce the initial volume of 376,700 units, which is Php22 million. It must be noted that working capital does not have a very high cash requirement because ABMPC does not sell on credit. In fact, all its distributors domestic and abroad are required to pay in advance the whole amount of a distributor's purchase orders. And this has been going on for about 5 years, to date.

2.     PASSING TESTS OF FEASIBILITY

a.     Marketing Feasibility

Using marginal contribution method, break-even is estimated at 335,418.246 units. Target sale is Php 300 million in the first year for the Middle East market. Target sale means that the 2,200,000 Filipinos in Middle East alone will have to consume only 1.7 units per OFW per annum.

b.     Financial Feasibility

Sales estimated to be at Php 300,000,000 in the first year. This will result in Php 227,584,171Cash Flow and Php 23,418,500 net income.

3.     SUMMARY OF PROJECTED RETURNS/FINANCIAL RESULTS

      With the above-mentioned investments of Php 46,900,000, the projected results shall be:              Annex 10-a

            First year revenue in the 3-year forecast is at 300 million pesos. A 20% growth is forecasted in the 2^nd year from year one because of the inclusion of the Malaysia, Singapore, and Mindanao markets; aside from the fact that the first year forecast is based on 1.5 unit-consumption per OFW per year. 10% growth shall come from Middle East, 5% from Malaysia, 4% from Singapore and the remaining 1% shall come from the Mindanao market. On year three, ABMPC is forecasted to have a 10% growth. Return on investment is on the second year, sending a signal that the strategy is very promising. Consolidated net income shall represent 55% of the current revenue of Php1,562,537,453.00.

Annex 10-b

CALIFORNIA

The Start of A Dream

 Sometime in the late 90's, the Gomez Family, who owns Abe's Best Meat Products Corporation and manufacturer of the famous tocino, thought about putting up a manufacturing plant in USA to satisfy the Filipinos' craving for the famous Abe's Best Tocino. In the year 2000, Juanito, one of the Gomez' children, went to California to register the company name as one of its preliminary steps. But while in California, he found out that the trademark; Abe's Best was already being used in commerce by a registered a Filipino company under the name Quesada Food Corporation. Incidentally, this is registered in California. That alone gave him reasons to stop whatever Abe's Best's dream was.

After almost twenty years, it is the younger children of the Gomez couple who are already managing the business in the Philippines. Mico Gomez, the General Manager, is very bold, together with a very ambitious Marketing Head, Barbara, is a perfect combination to relive the sleeping dream of Abe's Best Meat Products Corporation (ABMPC) in USA. When Mico and Barbara presented the proposal to the board, it was rejected because the president and vice-president felt that ABMPC has not fully saturated the market in the Philippines yet. Moreover, nobody among the Gomez children wanted to stay in US, which resulting to more pressure to the Gomez parents. Having a unique organizational structure, ABMPC's major decisions are decided by only a few members of the board – the President and the Vice-President (owning more than 99% of the company). However, after about six months, many people from abroad all over the world were asking if the Abe's Best in US is the same as the one in the Philippines. Apparently, it is not. The pressure suddenly shifted to the idea of letting people in USA that what they buy in the supermarkets is not the original Abe's Best Tocino from the Philippines. In fact, this very moment the paper is being written, not a lot of people are aware of this matter.

US MACRO-MARKET ANALYSIS

ECONOMICAL FORCES

U.S. Annual Inflation Rate at 3.6% in July 2011

            According to US Bureau of Labor and Statistics, "the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.6 percent before seasonal adjustment".

            Food - "The food index rose 0.4 percent in July after rising 0.2 percent in June. The cereals and bakery products index fell 0.1 percent in July; the other five major grocery store food groups all increased. The dairy and related products index, which rose 0.5 percent in June, increased 1.2 percent in July. The fruits and vegetables index also rose 1.2 percent as the index for fresh fruits rose 3.7 percent. The index for nonalcoholic beverages increased 0.9 percent in July as the coffee index continued to rise sharply, while the index for meats, poultry, fish, and eggs increased 0.5 percent and the index for other food at home advanced 0.3 percent. The index for food away from home rose 0.2 percent in July after rising 0.3 percent in June. Over the past 12 months, the food index has risen 4.2 percent with the food at home index up 5.4 percent. All major grocery store food group indexes have risen over the past year; the increases ranged from 3.5 percent (other food at home) to 7.9 percent (dairy and related products)".

            Energy - "The energy index, which declined in May and June, increased 2.8 percent in July. The gasoline index, down 6.8 percent in June, rose 4.7 percent in July. (Before seasonal adjustment, gasoline prices fell 1.5 percent in July.) Over the past 12 months, the gasoline index has increased 33.6 percent. The household energy index also turned up in July, rising 0.2 percent after a 1.2 percent decline in June. The electricity index, which declined in June, rose 0.8 percent and more than offset a 1.7 percent decline in the index for fuel oil and a 1.2 percent decrease in the natural gas index. The household energy index has risen 2.7 percent over the last 12 months, with the fuel oil index up 37.2 percent and the electricity index up 2.0 percent but the index for natural gas down 2.8 percent".

U.S. Gross Domestic Product

            US GDP increased from $14,043.9 billion to $14,482.4 billion in December 2010, which accounts to 23.52% of the world economy, according to the World Bank. The growth rate is 1.6% in the second quarter of 2011. According to US Department of Commerce, this figure show that the economy is not gaining momentum, dampening prospects for a significant reduction in unemployment in the near future. The reduced growth figure to US economy was partly due to a strong increase in imports and a slow in the country's exports. Imports reduced the economy's growth rate by 0.7%.

Employment

            The unemployment rate in most of the private sectors of US improved by 0.1% in May 2011 while government employment continued to decline.

Figures 1 and 2 U.S Gross Domestic Product Pattern June 2005 to December 2010 and GDP Growth Rate

            California's 2-Year Median Household Income declined by 3.1%, from $58,253 to $56,466 for the periods of 2006-2007 and 2008-2009.

US Debt Limit

            After a long debate over the debt limit, US House of Representatives finally approved legislation to raise the U.S. debt limit by at least $2.1 trillion and cut federal spending by $2.4 trillion or more, one day before a threatened default.[10] According to Jorge Saguinsin, a Professor in Ateneo Graduate School of Business and an icon in the real estate industry in the Philippines, "in five days from August 5, 2011, the world capital markets lost $8.1 trillion in market capitals".

            Five days is very short yet it created a humongous catastrophe to the world market. In this scenario, it seemed like the US economy is the heart of the world economy. How can this symbol  (crisis) zhuan3 ji1 find its way toward opportunity? Professor Saguinsin mentioned in his blog that some of these opportunities arising from the crisis in US are making export from US cheaper, Philippine peso is stronger, and it is cheaper to manufacture elsewhere.

SOCIAL, CULTURAL, DEMOGRAPHIC FORCES

Consumption Pattern and Buying Pattern

            The global crisis has tremendously shifted the buying and food consumption pattern of people all over the world. According to the 2009 U.S. Grocery Shopper Trends of Food Marketing Institute Research (FMI), the impact of the economic crisis on consumer behavior is as follows:

·       Eating out versus home-cooking – people are cutting back on eating out; 54% of the consumers are spending less on eating out

·       Channel choice for groceries – consumers shifting to supercenters and limited assortment stores like convenience and discount stores

·       Trip frequency – fewer trips save gas

·       Money-saving measures – data gathered by FMI Research

a.     Fewer impulse purchases: 50%

b.     Eat more leftovers: 45%

c.     Purchase fewer luxury foods: 45%

d.     More private brand products: 44%

e.     Make shopping lists: 43%

f.      Use more coupons: 42%

g.     Buy on deal: 42%

h.     Make items from scratch: 29%

i.      Buy in bulk: 27%

·       Pantry leveraging – consumers buy fewer products and stock less in their pantry

·       Brand preference – consumers now prefer private brand over national brands

·       Reaction to marketing/sales promotions – usage of coupons is higher and on sale products

·       Interest in organic and local – healthy eating is perceived as costly

                  Figure 3

                  Based on the data from Livestock Marketing Information Center on February 2, 2011, U.S. per capita consumption of meat, poultry, and fish declined by an estimated one pound per person in 2010. Per capita beef consumption in 2010 was the lowest level, 59.7 pounds, in their data set, which is broke the old lowest 59.8 pounds set in 1958, and was lower by 1.4 pounds than level of 2009 per capita consumption of beef. Per capita pork fell to 48 pounds, 2.2 lower than 2009, which is also lower than the lowest in their history. This decline in meat consumption is affected by the increase in export and increase of the US population; hence, producers did not meet the local demand.                       

Figure 4 U.S. Population Change

                                    Figure 5                                    

Population

            U.S. Census 2010 reported to have a population of 308.7 million people including the foreign -born, which represents a 9.7% increase from the Census 2000. However, this rate is still lower compared to the Census of 1990, which was 13.2%. 2009 American Community Survey (ACS) shows the relative population share of foreign-born residents. During the last four decades, the foreign-born population of the United States has continued to increase in size and as a percent of the total population: from 9.6 million or 4.7 percent in 1970, to 14.1 million
or 6.2 percent in 1980, 19.8 million or 7.9 percent in 1990, and 31.1 million
or 11.1 percent in 2000.1 According to the 2009 ACS, there were 38.5 million foreign-born residents, representing
12.5 percent of the total population. Among the 12.5%, American-Filipinos represent 4.5% to the total foreign-born population.

            The Filipino American population is the second largest among the Asian American population in US. As of 2007, the U.S. Census Bureau stated that the American Community Survey identified around 3.1 million Filipinos alone or in any combination. In addition, the census found about 80% of the Filipino-American population is US citizens. The U.S. Census, however, estimated the population at 4 million, which is about 1.5% of the total U.S. population.                              

                       Figure 6

Mixed Races

Intermarriage among Filipinos is not uncommon; apparently they have the largest number of interracial marriages among Asian immigrant groups, as documented in California. It is also noted that 21.8% of Filipino Americans are multiracial, second among Asian Americans.

Only in Da Pilipins

Filipinos have tightly-knitted family set-up wherein you will normally see the grandparents in their homes, which in a way help the parents in taking care of their children. Having this set-up, it is also common among them to have home-cooked food – Filipino dishes, in their dining tables.

Settlement

            Stated in the U.S. Census 2000, "as of 2008, one out of every four Filipino Americans makes their home in Southern California, numbering over 1 million. Greater Los Angeles is the metropolitan area home to the most Filipino Americans, with the population numbering around 370,000. Los Angeles County alone accounts for over 262,000 Filipinos, the most of any single county in the U.S. The City of Los Angeles designated a section of Westlake as Historic Filipino town. San Diego County has the second largest Filipino American population of any county in the nation, with over 145 Thousand Filipinos, alone or in combination, in 2000, with later claims of that number being higher. In addition, San Diego is the only metropolitan area in the U.S. where Filipinos constitute the largest Asian American nationality. Orange County also has a sizable and growing Filipino population".

            "The greater San Francisco Bay Area is home to approximately 320,000 residents of Filipino decent, while metropolitan areas such as Chicago, Atlanta, Houston, Las Vegas, Phoenix, Washington, D.C. and Seattle are also seeing dramatic growth in their Filipino populations. In Census 2000, the state of Hawaii had a Filipino population of over 275,000".

Table 3

            "New York City is home to 215,000 Filipinos. It annually hosts the Philippine Independence Day Parade, which is traditionally held on the first Sunday of June at Madison Avenue. The celebration occupies nearly twenty-seven city blocks which includes a 3.5-hour parade and an all-day long street fair and cultural performances. Devout attendees include Mayor Michael Bloomberg and Senator Charles Schumer".

            Another area that has a significant Filipino American population is the Southern United States, which contains about 11% of the country's Filipinos.

Location of Filipino Stores

            It is strategic to say that wherever there are Filipinos, Filipinos are there too. There are Filipino stores all over US, namely Seafood City, Lucky Supermarket, Island Pacific Supermarket, Manila Oriental Market, Kaunlaran Oriental and Fish Market, to name a few.

INDUSTRY ANALYSIS

            The meat processing industry in US is classified under Animal Slaughtering and Processing but under subsector called Meat Processed from Carcass (NAICS 311612). The poultry processing declined with less than a million dollars. According to Dun & Bradstreet's 2009 Industry Reports[11], sales of sausages and other prepared meat products valued at $20.4 billion. The low-carbohydrate, high-protein diet market of the 2000s helped enhance consumer popularity of luncheon meats, sausages, bacon, and other prepared meats. Consumers are even willing to pay high for high-quality products.

            The report also states that the meat processing industry is integrated, and in 2010, around 1,291 establishments in US engaged in the sausage and prepared meats industry. The industry employed more than 63,336 workers.

Distribution channels

            Prepared meats are marketed to supermarkets and wholesale clubs. Food services, and in-store delicatessens make up the rest of the market share.

            "Meat processors often work closely with vendors from other industries to develop innovative packaging ideas, mindful of the importance of packaging from a marketing and practical point of view. Because meat is highly perishable, packaging must ensure that the food inside will not spoil and that it will retain its flavor for long periods. The packaging must also be convenient and attractive to the consumer. The concept of meeting consumer demands through marketing is reflected in packaging, which presents each product's traits (for example, low-fat or low-sodium)."

            "In addition to the large national brands, many regional brands of ham, sausage, hot dogs, lunch meat, and other prepared meats are available for family-run companies. A proliferation of processed meat products put shelf and cooler space at a premium, forcing producers to create niches in major markets and design more convenient and tastier products. The prepared meat industry's practice of creating products and the resulting demand that had not previously existed among consumers is part of a larger food industry trend called differentiation. With differentiation, similar foods are altered enough to appear different either in preparation, flavor, or packaging and are then marketed as new products."

            "As a result to of the consumer demands for healthier prepared meats, meat- processing companies introduced many light or low-fat or low-sodium versions of popular products. The increased emphasis on healthy nutrition revolutionized the prepared meat product industry. Philip Morris's Oscar Mayer Foods Corp. cut nearly 300 slow-selling products, dropped prices on bacon, hot dogs, and bologna, and added light bologna and turkey bacon as part of an ambitious low-fat lunchmeat line. ConAgra's Armour Swift-Eckrich Inc. subsidiary enhanced its line of Healthy Choice brand lunch meats and hot dogs to compete against Oscar Mayer's Healthy Favorites and a Weight Watchers lunch meat line, produced by Hillshire Farms, which is owned by Sara Lee Corporation."

            However, the industry's cost for advertisements in the animal slaughtering and processing and poultry processing sectors, increased significantly at $8,426 million and $9,236 million respectively in 2009. These figures show the change in the spending and eating habit of people. On the other hand, advertising and promotional services get the benefits. This just gets to show that companies spend more on marketing when the demand decline in their efforts to pull the demand upward.

MICRO MARKET

PLAYERS

Quesada Foods Company (QFC) is the market leader in Asian Meat Processing in USA. Its brands are Abe' Best, Orientex, Magnolia, to name a few. It has a wide variety of products, like tocino, longaniza, hotdogs, spring rolls, ice cream, and a lot more.

Market Survey Methods

            ABMPC's Chinese supplier happens to know the family of QFC so that she was able to get the some details of QFC. According to her, QFC's annual revenue for the frozen processed meat like tocino and longaniza is $8 million, $15 million for spring rolls alone.

            It was hard for ABMPC to get significant data of the key players it intends to compete with because unlike in the Philippines, financial statements are available at a very reasonable cost in the Securities and Exchange Commission. One can only obtain a financial statement of a company that is publicly listed.

            Barbara Gomez herself knew that the only way she can gather relevant data is through sending someone in the targeted market and do interviews with at least 300 Filipinos of different origins. This was not done either.

Legal Forces

Business Policies

1. Business Name Registration

            There are different types of business structures in US, namely: C or S corporation, Limited Liability Company, Limited Partnership, General Partnership, Limited Liability Partnership, and Sole Proprietorship.

            As said earlier, Abe's Best, Inc. was registered in year 2000. However, since it did not pursue the business, it was suspended for failure to submit the Statement of Information that is supposed to be filed within 90 days from the time the business name was registered. Also, according to the Franchise Tax Board, when a corporation is incorporated in or is qualified to do business in California, it must file a return and pay the minimum tax ($800) annually, whether it is doing business or not. Therefore, excluding the penalties, Abe's Best must pay at least  $8,000 to revive the business name.

            In February 2011, through an American lawyer, Abe's Best Meat Products Limited Liability Company was registered, instead of the suspended Abe's Best, Incorporated to minimize start-up cost. After about 3 weeks, the processing plant was purchased.

2. Patent and Trademark Office for the trademark registration

            Patent and Trademark policies on registration in US are generally the same because of the fact that they were drawn the Paris Convention Treaty of 1883. However, there are two things that make them different:

a. Philippines is not a member of the Madrid Protocol[12]. This is the protocol relating to the Madrid Agreement Concerning the International Registration of Marks (Madrid Protocol) is an international treaty that allows a trademark owner to seek registration in any of the countries that have joined the Madrid Protocol by filing a single application, called an "international application." The International Bureau of the World Intellectual Property Organization, in Geneva, Switzerland administers the international registration system.

The resulting "international registration" serves as a means for seeking protection in member countries, each of which apply their own rules and laws to determine whether or not the mark may be protected in their jurisdiction. Neither the Madrid Protocol nor the Madrid Agreement provide for registration of an "internationally effective" trademark.

b.     Trademark registration of a new business entity must register its trademark within the state it is already using in commerce. Should the company intend to transact business in other states and use its trademark, the company must file for a registration in the federal office or US Patent and trademark office. This, of course is required only when a company wishes to protect its trademark.

In the case of ABMPC, it cannot register its trademark because it is already registered under Quesada Foods Corporation. Being so, ABMPC intends to use Gomez Best but will include in all its labels the words "manufactured by the original Abe's Best of the Philippines" to create an awareness to the consumers that what is currently in the US market is not the original Abe's Best tocino.

3. Taxation[13] based on the Business Entity's structure:

            Other than the taxes similar to Philippine Tax Laws, the United States of America has the following taxes imposed on the business and/or employer:

a.     Sales and Use Tax - The combined statewide sales and use tax rate is 7.25%, including local tax. However, many of California's counties and cities have special taxing districts, which also impose district taxes. The tax rates for these districts range from 0.10% to 1.00% per district and this amount is added to the combined statewide rate. In addition, more than one district tax may be in effect in a given location

b.     Estimated Tax - method used to pay tax on income that is not subject to withholding. This includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes and awards.

c.     Federal Unemployment Tax[14] - the Federal Unemployment Tax Act (FUTA), with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a federal and a state unemployment tax. Before July 1, 2011, the FUTA tax rate is 6.2%. After June 30, 2011, the FUTA tax rate is scheduled to decrease to 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year. The $7,000 is the federal wage base. State wage base may be different.

d.     Social Security and Medicare Taxes - The 2011 employee tax rate for social security is 4.2% (amount withheld). The 2011 employer tax rate for social security is 6.2% (10.4% total). The 2011 wage base limit is $106,800, unchanged from 2010. The 2011 employee tax rate for Medicare is 1.45% (amount withheld). The 2011 employer tax rate for Medicare tax is also 1.45% (2.9% total). There is no wage base limit for Medicare tax; all covered wages are subject to Medicare tax.

Taxation based on Business Entity Structure

1.     C Corporation - a C Corporation is taxed on its net income at a rate of 8.84 percent from the State of California. Entities formed as corporations under civil law and LLCs that elect to be taxable as a C corporation are subject to a minimum tax of $800. In addition, a C corporation is taxed between 15 to 35 percent by the Federal Government.

2.     S Corporation - An entity that has elected to be taxable as an S corporation for federal tax purposes is also treated as an S corporation for California tax purposes. An S corporation generally offers liability protection to its owners (shareholders) and is a conduit where the profits or losses of the S corporation flow through to the shareholder(s)/partners/member(s). Liability of the owners for debts and obligations of the business depends on what type of entity the S corporation is under state civil law, e.g. corporation, partnership, or LLC. Under California law, the S corporation is subject to a 1.5 percent tax on its net income and is a conduit similar to a partnership. It does not pay federal income tax. S corporations that are corporations or LLCs under civil law corporations must pay the annual $800 minimum franchise tax.

3.     Limited Liability Company - An LLC is a newer form of business entity. It has advantages over corporations and partnerships. The LLC's main advantage over a partnership is that, like the owners (shareholders) of a civil law corporation, the liability of the owners (members) of an LLC for debts and obligations of the LLC is limited to their financial investment. California treats the LLC and its owners for income tax purposes in the same manner the LLC is treated for federal tax purposes. The LLC will be taxed at the corporate tax rate of 8.84 percent and will be subject to a minimum tax of $800.

4.     Sole Proprietorship - This is the simplest and most common form of starting a new business. It has no existence apart from its owner. A sole proprietorship consists of only "one" individual; ownership by more than one person creates a partnership. The tax rate depends on the proprietor's total taxable income.

FOOD SAFETY POLICIES (All taken from the published Industry Assistance for Safer Food Process of the California Dept. of Public Health, Food and Drug Branch)

Federal, state, and local agencies share responsibility for ensuring that food processors follow food safety laws. The goal of all of these laws is to protect the public by ensuring that food processors produce safe food. Laws and regulations are legal requirements that must be followed. "Prerequisite Programs" is the term used to describe a range of programs that enhance operational conditions and provide a foundation for food safety programs. Examples of such prerequisite programs are Good Manufacturing Practices (GMP), Standard Operating Procedures (SOP), and Sanitation Standard Operating Procedures (SSOP). Why are prerequisite programs important? Prerequisite programs, when properly followed, help keep small problems from becoming serious problems that could eventually have an impact on food safety. Voluntary programs are completely voluntary and in many cases are developed by the food industry associations to provide guidance for their members.

Local, state and federal public health agencies may inspect food-processing facilities. Federal agencies such as the FDA have jurisdiction over products in interstate commerce that is; products that move or have moved across state lines. State agencies have jurisdiction over food produced, distributed and consumed in the state. State regulators may adopt federal requirements as their own state laws. Some states may adopt requirements that must be met in addition to federal requirements. Food processing operations must comply with all existing state and federal laws and regulations that apply to food establishments.

Sanitary Standard Operating Procedures/ Master Sanitation (SSOP)

Important components of prerequisite programs are the SSOP and Master Sanitation Schedules. They are instructions or procedures for sanitary practices developed for each specific cleaning and sanitation operation. They identify what to clean, how to clean and sanitize, when to clean, and who should clean.

Industry Assistance Lot and Date Coding

Date coding is a system that enables you to do trace back from the buyer to the processing facility, or vice versa. The following are examples of two date coding systems:

Julian Date Code: (162 02B)

Gregorian Date Code:

•       162 represents the day of the year. It is 162nd day from Jan 1st.

•       02 represents the year 2002

•       B represents hour period or production batch. Established 
by the company.

•       July 15, 2002B or 7/15/02B

•       Date is self-explanatory.

B represents hour period or product batch

All finished product packages, or cases should have the date code.

Finished products should be labeled or coded in such a way as to allow for the identification of a specific product lot or batch, based on raw ingredient supply or production date. Although good labeling and/or lot identification will not prevent the possibility of a foodborne illness outbreak, it may limit the liability if specific batches or lots can be traced to buyers and the product can be recalled.

Industry Assistance Product Labeling

All food packaged by your business must be properly labeled. The U.S. Food and Drug Administration (FDA) instituted laws and regulations pertaining to labeling.

The Department of Public Health, Food & Drug Branch (FDB) adopted all labeling regulations. It also has its own laws concerning additional labeling requirements. The law requires specific information such as Food Name, Responsible Firm, Net Quantity, Ingredient Listing, Product Dates, Nutritional Labeling, Nutrient Content Claims, and Health Claims. The information is to be listed and positioned in the proper display panel.

Industry Assistance Product Recall Plan

            It is important to plan ahead. Your food processing company may need to recall a product at some point. The recall may result from consumer complaints or your company has identified a problem. To recall a product, your company needs to be able to identify the product involved and determine the distribution of that product.

These policies are secondary to the prerequisites of US Food and Drug Administration on ingredients and formulation of products. There are some restrictions in US but are acceptable in the Philippines. This is why ABMPC have to send all its prototypes to USFDA for testing before it can really start producing.

New California Law requires increase use of renewable energy^[15]

            In April 2011, California has approved a legislation that will require California utilities to obtain more energy from renewable sources because of its plans to significantly increase its use of cleaner energy. California Governor Jerry Brown signed energy legislation that will boost the state's use of electricity from wind, solar and other sources. The law will require California utilities to obtain up to a third of their electricity from green sources. Brown said "This bill will bring many important benefits to California, including stimulating investment in green technologies in the state, creating tens of thousands of new jobs, improving local air quality, promoting energy independence and reducing greenhouse gas emissions".

            To date, utilities such as the Sacramento Municipal District, PG&E Corp. and Southern California Edison must get 20% of their electricity from green sources. This raises the renewable requirement to 33% by the year 2020.

            Manufacturers and other opponents of the legislation say the new order will rather increase electricity rates and drive up the cost of doing business in California.

INVESTORS' VISA

            The US Government requires an investor's visa before ABMPC can send its core group to USA for employment.

Treaty investor applicants must meet specific requirements to qualify for a treaty investor (E-2) visa under immigration law. The consular officer will determine whether a treaty investor applicant qualifies for a visa.

• The investor, either a real or corporate person, must be a national of a treaty country.
• The investment must be substantial. It must be sufficient to ensure the successful operation of the enterprise. The percentage of investment for a low-cost business enterprise must be higher than the percentage of investment in a high-cost enterprise.
• The investment must be a real operating enterprise. Speculative or idle investment does not qualify. Uncommitted funds in a bank account or similar security are not considered an investment.
• The investment may not be marginal. It must generate significantly more income than just to provide a living to the investor and family, or it must have a significant economic impact in the U.S.
• The investor must have control of the funds, and the investment must be at risk in the commercial sense. Loans secured with the assets of the investment enterprise are not allowed.
• The investor must be coming to the U.S. to develop and direct the enterprise. If the applicant is not the principal investor, he or she must be employed in a supervisory, executive, or highly specialized skill capacity. Ordinary skilled and unskilled workers do not qualify.

Technological Forces

The Internet is the most used technology for efficient marketing all over the world. In the Philippines, meat-processing companies highly use advance technology in their productions, including packaging systems. While the big American players use very appealing packaging technologies in their products, it is very noticeable among the Filipino companies that they are still using stickers to label their products, Styrofoam as their longaniza's packaging, and designs are not even photographic.

LOCATION

            ABMPC chose to find a location somewhere in South California because the area has a high Filipino population. Also, incidentally, they have a residential home in the area so that the core group from the Philippines to head the operations will have a place to live at.

COMPANY BACKGROUND

            Is Abe's Best Meat Products Corporation capable of putting up its own plant and manufacture processed meat in US? Is it allowed to serve the Muslim market? ABMPC has been in the meat processing business in the Philippines for more than 30 years. ABMPC boasts of its advanced technology, HACCP (Hazard Analysis Critical Control Point), and Good Manufacturing Practices in achieving the highest standard of quality for processed meat.

            After identifying its target market, ABMPC opted to validate its capacity by doing an internal analysis. ABMPC's income statement shows the company is in a sound financial position, no long-term debts, and it is earning quite a good profit margin. ABMPC doesnot believe in leverage usage. It will use its own money in putting up both facilities.

            ABMPC is using the most advanced technology for meat processing. It is advocates Good Manufacturing Practices, HACCP certified and AAA accredited by the National Meat Inspection Service, under the Department of Agriculture. Its practices are USDA standards so that it has been often presented as a model meat processing plant to any of the government's guests.  Different American Embassy consuls and delegates have visited the plant a couple of times as well and was once assessed by a USDA representative a few years ago.

VISION (Proposed by the Barbara Gomez as she was conceptualizing the business concepts)

To be the third biggest meat processing company in the Philippines, in terms of revenue.

Mission (Proposed)

            A 100% Filipino-owned manufacturing company that gives to every Filipino household in East Asia, Middle East, North America, and Europe, the pride in eating its famous and varied Tocino, Longaniza, and Tapa and other frozen deli. By using the best and advanced technology and processes it shall exceed the standards of the Good Manufacturing Practices in assuring the quality of the products.

 It shall provide a safe working environment to its employees; right wages, salaries, and benefits; a clean and safe air and environment to the community by adhering to the policies on environment safety and ecology protection.

Objectives

1.     To give the customers the pride in eating the famous Abe's Best innovative and consistent in quality products, thereby delighting and satisfying them.

2.     To generate more sales and increase geographic coverage – here and abroad

3.     To increase net income and obtain good financial returns for its investors

4.     To help the community by creating more jobs

STRATEGIES

1.     Product development intended for HALAL markets

2.     Market penetration in Mindanao, Middle East, Singapore, Malaysia, and USA in 2012

	HALAL		CALIFORNIA
Objectives	KRA	PI	KRA	PI
1. To give the customers the pride in eating the famous Abe's Best innovative and consistent in quality products, thereby delighting and satisfying them.	a.     Customer satisfaction level	a.     Positive feedbacks on survey or zero customer complaints	a.     Customer satisfaction level	a.     Positive feedbacks on survey or zero customer complaints
	b. % of customers who migrated to Abe's Best brand	b.      20% of the competitors customers have migrated to Abe's Best Meat products	b.     Percent of customers who migrated to Abe's Best brand	b. 10% of the competitors' Revenue
	c.     Customer awareness of products	c.     Number of repeat customers	c.     Customer awareness of products	c. 5% of the household population buying repeatedly
2.  To generate more sales and increase geographic coverage – here and abroad	a.     Sales generated, which is the measure of the company's success	a.     Revenue of 300 million pesos on the first year in Middle East, 19% increase from the current year, and 10% increase on the second year generating from Malaysia, also, 10% increase on the third year.	a.     Sales generated, which is the measure of the company's success	a. Php 1.4 million on the 1st year in CA, a 20% increase from the previous year generating from other US states, and 10% increase on the 3rd year
	b.     Number of units sold per region	b.     3.766 million units sold on the first year in Middle East	b.     Number of units sold per region	b. 590,000 units sold on the first year in CA
	c. Market share	c. 5% increase in market share	c. Market share	c. 2% market share
3. To increase net income and obtain good financial returns for its investors	a.     Net profits	a.     Annual net profit of 8 percent for three years that will be equivalent to 55 percent of its current revenue	a.     Net profits	a. An average 8% annual net profit for 3 years
	b.     Return on investment	b.     Return on investment on the second year	b.     Return on investment	b. ROI on the 10th year
	c.     Gross profits	c.     Gross profit margin of 15% to 20%	c.     Gross profits	c. Gross profit margin of 28% to 35%
4. To help the community by creating more jobs	a.     New jobs generated	a.     Seventy new jobs created on the first year	a.     New jobs generated	a. 20 new jobs created on the first year

KEY RESULT AREAS

Customers

a.     Customer satisfaction level

b.     Percent of customers who migrated to Abe's Best brand

c.     Customer awareness of products

Market Impact

a.     Sales generated, which is the measure of the company's success

b.     Number of units sold per region

c.     Market share

Financial

a.     Net profits

b.     Return on investment

c.     Gross profits

Job Generation

a.     New jobs generated

PERFORMANCE INDICATORS for HALAL

Customers

a.     Positive feedbacks on survey or zero customer complaints

b.     Twenty percent of the competitors customers have migrated to Abe's Best Meat products

c.     Number of repeat customers – at least half of the first year's new customers

Market Impact

a.     Revenue of 300 million pesos on the first year in Middle East, 19% increase from the current year, and 10% increase on the second year generating from Malaysia, also, 10% increase on the third year.

b.     3.766 million units sold on the first year in Middle East

c.     5% increase in market share

Financial

a.     Annual net profit of 8 percent for three years that will be equivalent to 55 percent of its current revenue

b.     Return on investment on the second year

c.     Gross profit margin of 15 to 20 percent

Job generation

a.     ABMPC shall have created seventy new jobs created on the first year

PERFORMANCE INDICATORS for CALIFORNIA

Customers

a.     Positive feedbacks on surveys or zero complaints on product quality

b.     10 percent of the competitors' revenue has been shifted to ABMPC

c.     Number of repeat customers is 5% of the household population

Market impact

a.     $1.4 million on the first year in California, a 20 percent increase from the first year to generated from other states like New Jersey, New York, Hawaii, Guam, Florida, and 10 percent increase on the third year

b.     Sold units on the first year in California is five hundred ninety thousand

c.     ABMPC gaining 2 percent market share

Financial

a.     ABMPC shall earn an average of 8 percent annual profit for the first three years

b.     Return on investment of ABMPC is on the 10^th year

c.     Gross profit margin is set at 28 to 35 percent per unit

Job Generation

a.     ABMPC shall create twenty new jobs in California on the first year

Table 2

INCOME STATEMENT OF ABMPC       

	2010	2009
REVENUE	1,562,537,453	1,070,008,139
Cost of Sales	1,257,713,733	834,347,523
GROSS PROFIT	304,823,720	235,660,616
Other Income	1,949,908	1,842,530
TOTAL INCOME	306,773,628	237,503,147
Distribution Expense	58,992,073	70,698,998
Administrative Expense	164,094,155	119,620,123
Other Expense	52,463	36,063
INCOME FROM OPERATION	83,634,938	47,147,963
Finance Costs	000	192,292
INCOME BEFORE TAX	83,634,938	46,955,671
Provision for Income	26,446,367	13,719,510
INCOME AFTER TAX	57,188,571	33,236,161

BUSINESS PROPONENTS (ORGANIZATIONS)

                    After identifying its target market, ABMPC opted to validate its capacity by doing an internal analysis. ABMPC's income statement shows the company is in a sound financial position, no long-term debts, and it is earning quite a good profit margin. ABMPC doesnot believe in leverage usage. It will use its own money in putting up both facilities.

                    ABMPC is using the most advanced technology for meat processing. It is advocates Good Manufacturing Practices, HACCP certified and AAA accredited by the National Meat Inspection Service, under the Department of Agriculture. Its practices are USDA standards so that it has been often presented as a model meat processing plant to any of the govenrment's guests.  Different American Embassy consuls and delates have visited the plant a couple of times as well and was once assesed by a USDA representative.

   

Technology/Process holders

1.     ABPMC has a facility equipped with highly advance technology. It has anin-house laboratory strategically located at the center of the process area. 2.     Invention of own sugar substitute(not available in the market) that will be used in the product 3.     ABMPC Research and Development Team is composed of 8 young innovative Food Technologists and Chemical Engineers with passion for reinvention. 4.     Prince Dizonon – Production Manager He has been with ABMPC since 1993 but got his first experience in food business from McDonald's as Store Manager. He took up Business Management in Holy Angel University and is currently taking Masters in Business Management in AGSB. If you are looking for dedication in work, he is the right person. 5.     Warren Cunanan – QA Manager He is one of ABMPC's few relatives with great experience in Quality Assurance. He graduated in UST with a degree in BS Microbiology so that no micro-organism can get through this man. 1.     R&D a.     Mike Guarin – a graduate of Food Technology in UST and was first employed by Coca Cola Bottlers Phils. as quality assurance specialist. He has been in the company for 2 years now and continuously shows passion for innovation b.     Juancho Gomez-Mico Gomez' eldest son who finished Food Technology in UST. Being the first employee from the 3rd generation of the Gomez clan, he is trained directly by his father so that he unconsciously emulates his father. c. Shiela Pastor – another Food Technologist from   UST. She has been in the company for 5 years now and she heads the R&D department.

Top Management Team/ Senior Management/Board

1.     Barbara Gomez – Marketing Head Her undergraduate course is in no manner connected with all the positions she had from the day she started working in Pampanga's Best; she took up BS Biology in UST. While she had her first official work in one of the malls in Manila as sales clerk, where she experienced demeaning from her immediate superiors that made her want to prove people that she is a somebody, she started working ate the age of 9. At an early age, she did not enjoy summers like other children her age because she had to help in the family business. At age 15, she was tasked to take-over her eldest sister's (when she went to US) jobs – meat purchasing in the wet market at 3 o'clock in the morning, heading the tocino production and cooking meals for the 50 employees. It was at age 16 when she started tending the first ever retail store outside their home up to the opening of the first branches in Manila and Cabanatuan. She has gone through being the accounting and finance head, operations manager in the Quezon City depot, and logistics manager. Her studies in Ateneo Graduate School of Business is the biggest contributing factor to her passion for competitiveness and being ahead. 2.     Mico Gomez – General Manager He got all the founder's passion and tongue for best taste, quality, and perseverance. He took up Food Technology in UST and headed the production at age 20. He pioneered the automation of the production, and the product and process innovation. He totally fits the line "lahat ako" because there is nothing he does not know to do when you talk about the entire plant. To top it all, he listens to the customers' comments and suggestions.

Warren Cunanan, Mike Guarin, Juancho Gomez will be the core group that intends to start the operations in California. Mico Gomez will also join them during the start-up process.

DISTRIBUTION

                    When friends of ABMPC heard about its in the process of searching for a plant in US, people have started inquring how to become ABMPC's dealer or distributor. ABMPC intends to do direct selling to Filipino supermarkets, restaurants and small stores initially in California. Filipino chains of supermarkets are normally scattered in different states so that once ABMPC is accepted to one, it is most likely be supplying to its branches. There are also Filipino businesses engage in importing Filipino goods then distribute the goods to different counties. ABMPC intends to partner with such entities as well.

            ABMPC will capitalize on the brand equity it established in the Philippines that is why it is important that it advertise, otherwise, people will not know that Gomez' Best Tocino is the Abe's Best Tocino of the Philippines. Filipino channels will be good avenues for advertisement because most of the Filipinos subscribe to these networks.

PAYMENT

                    You don't normally see dollar bills going around the Americas as mode of payment. It is the credit card or check that ABMPC that needs to deal with, which is a high risk. And this entails a larger working capital.

CONSULTATION WITH PROFESSOR JORGE SAGUINSIN

                    Barbara sought the assistance of her Professor in MBA for the US Embassy's requirements in securing an investor's visa. Jorge Saguinsin asked why ABMPC needs to put-up a plant when toll-packing is available. Also, he was not that convinced of the idea of ABMPC investing around $2 million dollars when the market was not really studied. In fact, up to this day, he keeps on mentioning it to Barbara.

                    Apparently, ABMPC did not listen to his thoughts because in February 2011, ABMPC bought a plant in Riverside County, California. Presently, the HALAL facility is done, audit will be on the first week of September 2011.

BUSINESS OFFERING and ITS JUSTIFICATION

   1.    INVESTMENT REQUIREMENT

INPUTS	USES	SOURCES – EQUITY ($ US)
PPE Ready to use Plant	Production, Packaging, In- House Refrigeration(Walk in Freezer),Crew Room, Warehouse, Waste Water Treatment, Loading/Un Loading dock, Two 40 footer Reefer Van, Vacuum mixer, Stainless Tables	650,000
Processing Equipment	Production, Packaging Equipment	302,325
Blast Freezer	Intended to freeze finished products in 3 hours	7,500
Ice Maker	Used for sourcing ice that is used maintain the temperature of the raw materials during the working process	20,000
Working Capital		350,000
TOTAL		1,329,825

            The proposed business will need an initial investment of $1,329,825 to be able to start the business in California. This includes the plant that is ready for use for meat processing, equipment, freezer, ice-maker, and other office equipment. This is already inclusive of the working capital, which is $350,000 for 3 months due to the credit payment scheme.

ACTION PLANS

1)    ABMPC will sell to 5% Filipino household population in California on the first year.

2)    Market penetration in other US states like New Jersey, New York, Florida on the second year.

3)    Market penetration in other North American countries and Europe on the third year.

2.  Revenue and Product Distribution Projection

	Pork Tocino Reg 12 oz	Lean Pork Tocino 12 oz	Sugar Free Chicken Toc 12 oz	Chicken Toc Reg 12 oz	Skinless Sweet Pork Longaniza 14 oz	Chicken Longaniza 12 oz
Target Selling Price	2.35	2.61	2.50	2.25	2.18	2.25
Target COGS	1.53	1.70	1.46	1.46	1.42	1.53
Target Revenue	235,000	208,800	375,000	180,000	196,200	202,500
Target Units	100,000	80,000	150,000	80,000	90,000	90,000
Target Gross Margin	82,250	73,080	131,250	63,000	68,670	70,875

                    ABMPC is targetting a revenue of $1.375 million for the first year by selling six SKU's – 3 variants of tocino (regular pork, lean pork, sugar free chicken, and regular chicken) and 2 variants of longaniza made of pork and chicken.

3. Passing Tests of Feasibility

                    a. Marketing Feasibility

Break-even is estimated to be at 259,372 units. Sales is estimated to be at $1.4 million in the first year for the California market. It is selling to 50(%) of total outlets in California, and 5 (%) of the total Filipino community in California.

                    b. Financial Feasibility

Sales is estimated to be $1.4million in the first year.

This will result in $-367,251.00 Cash Flow and $11,198 Net Income.

Exhibit 2

All payroll expenses are based on California's taxation rates. ABMPC shall employ eleven workers

4. SUMMARY OF PROJECTED RETURNS/FINANCIAL RESULTS

      With the above-mentioned investments of $ 980,000 the projected results shall be:

Reveneu on the first year is projected at $1,397,500 with a net income of $11,198.00. The second year was projected with a 10% growth resulting to $1,537,250 and with a net income of $32,979. Year three is projected to have a 20% growth from the second year giving ABMPC a net income of $98,455.

      Return on investment will be approximately on the 20^th year using the accumulated net income of $142,631.00 

CONCLUSION

                    ABE'S BEST MEAT PRODUCTS, CORPORATION SHOULD HAVE DONE A THOROUGH SCANNING AND DEEPER STUDY OF ITS TARGET MARKET IN THE NORTH AMERICAS AND EUROPE.

                    ALSO, SALES PROJECTIONS MAY BE TOO LOW SO THAT THE NET INCOME IS VERY LOW IN THE FIRST YEAR. RETURN OF INVESTMENT IS NOT APPEALING TO PUSH THROUGH WITH THE CALIFORNIA PLANT.

Exhibit 3 Average monthly bill of industries in US on their energy usage.

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[1]http://www.state.gov/g/drl/rls/irf/2005/51527.htm, International Religious Freedom Report 2005

BUREAU OF DEMOCRACY, HUMAN RIGHTS, AND LABOR

[2]Muslim Minority in the Philippines By Abhoud Syed M. Lingga, SEACSN Conference 2004: "Issues and Challenges for Peace and Conflict Resolution in Southeast Asia", at Shangri-La Hotel, Penang, Malaysia on12-15 January 2004

[3] http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country

[4] http://www.tradechakra.com/economy/malaysia/business-culture-in-malaysia-143.php

[5] Overseas-Filipino.com

[6] http://www.ftamalaysia.org/file_dir/18190573044cd7d79723c8.pdf

[7] http://www.halalislamicdawah-ph.com/halal.html

[8] http://archive.arabnews.com/?page=13&section=0&article=110923&d=16&m=6&y=2008

[9] http://www.mixph.com/2007/05/meat-processing-business-2.html

[10] Bloomberg.com/news

[11] © COPYRIGHT 2011 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.

[12] http://www.uspto.gov/trademarks/law/madrid/madridfaqs.jsp

[13] http://www.ftb.ca.gov/businesses/index.shtml#Starting

[14] http://www.irs.gov/publications/p15/ar02.html#en_US_2011_publink1000202541

[15] http://econpost.com/californiaeconomy/california-law-requires-more-energy-renewable-sources