San Beda College

Mendiola, Manila

Strategic Management Paper

On

Submitted to:
Prof. Raquel Castro

Submitted by:
Gabo, Angelica Marie V.
Rivera, Junica
Velasco, Gary Ariel T.
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Table of Contents

Executive Summary 4

I. Introduction 6

II. Research Design and Methodology 8

1. Research Design

2. Scope and Limitation

III. Company’s Vision Mission 10

IV. External Analysis 13

1. General Environment

Economic Performance Forecast

Political and Government Aspects

Environmental Factors

2. Industry and Competitor Analysis

3. Summary and Conclusion

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 V. Company Analysis 52

a. Strategy Formulation

1. SWOT

2. SPACE

3. IE Matrix

4. GRAND

5. QSPM

VI. Objectives, Strategy Recommendations, Action Plan 98

1. Strategic and Financial Objectives

2. Recommended Business Strategies

3. Recommended Organizational Strategies

4. Financial Projections and Overall Evaluation of Strategies

5. Departmental Programs

VII. Strategy Evaluation, Monitoring and Control 116

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 EXECUTIVE SUMMARY

DMCI Homes is the property development arm of DMCI Holdings, a diversified corporation with

interests in construction, mining, power generation, water distribution, infrastructure and property

development. The property developer envisions being the leader of residential communities for the

middle income market.

The property industry is recovering from the economic downturn through the growth of key customer

segments such the OFWs and the emergence of new business districts. Other external factors property

developers face includes the stable interest rate of 4% in the market. Overall responsiveness of DMCI to

its external environment is modest. Its 2.85 rating is due to its lackluster response to the growth of

alternative markets (such as retirement industry) moderated by its average response to the economic

recovery and continued growth of the OFW sector.

The real estate industry players that closely compete with each other are Robinson’s Land, Vista Land,

Empire East, and DMCI Homes. DMCI has a CSF rating of 3.30, higher than the three’s average of 2.6. It

has a clear advantage among other given its strong capitalization and price competitiveness.

Internally, most of the company’s strengths are owed to its synergy with DMCI’s construction

subsidiaries. The operational synergy has allowed DMCI to pursue an overall cost leadership – best value

strategy. Despite this, DMCI is given a modest IFE rating of 2.56 due to less strategic development

location moderated by high residential unit turnovers.

Strategies that are most appropriate for the company are (1) Develop properties into office spaces

for leasing inside central business districts and urban centers; and (2) Locate developments

outside the metropolis and recreate them to make fully service communities. These will

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address the booming of business districts inside the metropolis and scarcity of residential units

around the country while taking advantage of low interest rates.

Through these strategies, DMCI will maintain its vision to be the #1 unit provider for middle

income earners. Owing to its financing strategy, DMCI will be more liquid and its financing costs

reasonable without sacrificing the dilution of its equity. Increase in revenues, better control of

inventory, and a constant cost ratio will allow DMCI’s net income to grow further from 3.34B in

2014 to 4.06B by 2018.

5|Page
 I. INTRODUCTION

DMCI Holdings Inc. was founded by a young concrete inspector by the name David M. Consunji.

With years of experience, a vision and a degree in Civil Engineering from the University of the

Philippines, he started D.M.Consunji in a small space in Pandacan, Manila and was incorporated

on December 24, 1954.

DMCI began on constructing chicken houses for the Bureau of Animal Industries and has earned

a reputation on its quality of work and on time delivery. It was because of this reputation that

launched DMCI into the limelight and started being awarded with major projects such as plant

or factory constructions. It has enjoyed patronage of big institutions in the Philippines and has

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constructed one of the largest commercial and high rise buildings in the country particularly in

Makati and Ortigas Center. It has also built malls, hotels, banks, condominiums, bridges and

roads over the years. One of which is the Rockwell Center’s Condominium Towers which is the

country’s single largest high rise project up to date.It has also served as contractor for foreign

countries and entities and has constructed bulidings, roads and bridges abroad like the Royal

Palace of the Sultanate of Brunei, roadways and bridges along the Zalim Halban in Saudi Arabia

and major motorways along King Faisal Motorway in Kuwait.

As a result, DMCI has received numerous awards like the Outstanding Contractor in Building

award, a certificate of Appreciation from the U.S. Department of the Navy and Safety Award

from Daniels Corp. at Shell Petroleum’s STAR Project. Its chairman, David Consunji has also

received numerous awards and one of it was the Ten Outstanding Filipinos of 2002, among

others.

In 1999, DMCI launched its housing Division, DMCI Homes, with the aim to build residential

house and lots and high rise condominiums. In just a decade it has built numerous resort-type

community and mix living urban communities for city dwellers and continues to put up many

more infrastructure in the Metro Manila to meet the never ending demands of its customers

for comfortable dwellings at price tags that are within the reach of average Filipino families.

DMCI Homes has immensely contributed to the over-all income of its parent company, DMCI

Holdings, Inc. Based on the latest annual report. Though not really considered as the main

income generator of DMCI Holdings Inc., it has become one of the leading mid-income

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residential developer in the Philippines that can compete with the giants of the real estate

industry such as AvidaLand, Megaworld and Robinsons Land.

In 2014 it has generated revenue of 12.5 billion which only 3% increase from 2013. But its net

income is 3.2 billion which is a 22% increase compared to net income in 2013. It has turned

over 5,115 units to buyers.

II. RESEARCH DESIGN AND METHODOLOGY

Research Design

The data used in the external analysis was gathered from Banko Sentral ng Pilipinas (BSP) , The

National Statistics Office (NSO) and other websites of various government offices. These

government offices, with the collaboration from economist and other private institutions, have

provided the public of the projections on macro-economic growth of the Philippines.

Research such as the market overview, Philippine Research and Forecast Reports for industry

data was gathered from the real estate consultants such as Colliers International. As well as

data from Housing and Land Use Regulatory Board. The news from the industry was also used

as a supplement from the websites of media outlets such as Inquirer, BusinessMirror, Manilla

Bulletin and The Philippine Star.

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Financial Reports published in the respective websites of DMCI and its competitors and other

reports submitted to the Security and Exchange Commission was used to assess the

performance of DMCI as well as its competitors.

Announcements from the website of DMCI and its competitors are used to determine current

development, marketing activities and other internal information. Data from various websites

of brokerage companies was gathered to benchmark the pricing of the company relative to its

competitors. The benchmarks are based on project similar as of nature, in close proximity to

one another and will be completed within the same year.

Scope and Limitation

This research paper was limited to DMCI Homes’ projects and how it competes in the Philippine

Market. The international real-estate developments were excluded in the analysis. The research

focuses on the high rise residential building developments of DMCI. Other projects such as

subdivisions and leisure residence was omitted in the research.

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 III. COMPANY’S VISION AND MISSION

We shall be the best provider of residential communities designed to create quality

lifestyle responsive to the changing needs and preferences of the market we serve.

In so doing, we are committed to ensuing:

 to ensure customer satisfaction,

 to achieve a sustainable growth on our shareholders’ investment,

 to maintain a mutually beneficial relationship with our partners in the business,

 to care for the environment, we work in,

 to promote the growth of our people…

 while building an organization that espouses Integrity, Excellence and

Interdependence.

According to the investor relations information found in its website, DMCI Homes’ goal

is to provide affordable residence in urban friendly, fully serviced communities near

places of work, study and leisure. Its objectives jives with the proposition of “profit with

honor”, namely: to ensure customer satisfaction, sustainable investment growth,

mutually beneficial relationship with partners, environmental concerns and the career

development of its people.

DMCI Upholds the core values of integrity, excellence, interdependence, and customer

satisfaction

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Integrity

All their actions are guided by what is ethical, fair, and right. Believing in profit with

honor, they are committed to good governance and the highest moral standards.

Excellence

They reject mediocrity and strive for excellence in even the smallest of details,

Interdependence

With unity in purpose and mutual trust and respect for each other, they work toward

shared aspirations and transcend boundaries along functional and organizational lines.

Customer Orientation

Their goal is to delight and please their customers. Thus., all activities and programs

they undertake result in innovative projects and in the enhancement of productivity and

quality

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ASSESSMENT OF VISION MISSION

Customers yes

Products or services yes

Markets N/A

Technology yes

Concern for survival, growth, and profitability yes

Philosophy yes

Self-concept N/A

Concern for public image yes

Concern for employees yes

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 IV. EXTERNAL ANALYSIS

a. GENERAL ENVIRONMENT

Economic Performance Forecast

1. Growth of the BPO sector

BPO revenues soon to overtake OFW remittances

The business process outsourcing (BPO) industry may soon overtake dollar

remittances from overseas Filipinos in terms of revenues given the continued

strong demand for office space, a real estate market consultancy firm said.

In 2014, the BPO sector registered $18.9 billion in total revenue and is forecast

to grow between 15 percent and 18 percent for 2015.

Pinnacle Real Estate Consulting Services Inc. said the industry is expected to

further grow this year with revenues projected to hit $25 billion

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Relevance

The BPO sector is a growing market for real estate developers as they will need

vast office spaces and due to scarcity of spaces in established business areas like

Makati, there is a need to open new developments to cater them

2. Interest rate

Steady interest rate of 4%

The BSP has left its benchmark at steady 4% and has kept short term deposit

accounts facility at 2.%

Relevance

With stable interest rates, the more the company can borrow and this can have

the effect of more projects and more resources to use for the improvement of

the company. On the other hand, condominium buyers can easily apply for

housing loans increasing the purchasing capacity of the people and more

revenues for the firm in the long run.

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3. Income boost from remittances

Third highest worlwide, OFW remittances seen to hit $29.7 B in 2015

The remittances of the OFWs is seen to hit $29.7B ifor the year 2015 making the

country the Third highest in the world when it comes to revenue form

remittances

Relevance

Overseas Filipino Workers have been widely acknowledged as a major

contributor to the Philippine economy. And the remittances have been invested

by their families in real estate not only as primary home but also as long term

investment. It was estimated that 11% of the remittances go to real estate

invesments.

4. Demand

High demand for Philippine residential real estate

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Colliers reported a 164.5% year-on-year increase in the number of socialized

housing licenses issued in the first six months of 2015, to 11,431, while licenses

to sell low-cost condominiums more than doubled to 2052. Meanwhile, mid-

income housing licenses were up 43.5% over the period at 2208.

Relevance

With real demand for real estate, the company can be assured of continuous

sales and more profits as its sales price for condominiums has risen for the past

years. This could also mean more upcoming projects to address the large

demand for condominiums in the city.

5. Emergence of Bonifacio Global Center as new business center

Fort Bonifacio eclipsing Makati CBD

Dubbed as the next Makati, Bonifacio Global City is set to be the future financial

district in the Philippines. The establishment of a new Philippine Stock Exchange,

which will be part of a mixed-use block to be developed by Ayala, is one of the

factors that signal a possibility of this trend of becoming the next business

capital.

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Relevance

This can pose as a new playing field wherein DMCI can invest into in order to

cope up with the competition with its rivals by putting up a premier project

within the Business district of Bonifacio Global City. This could also mean higher

revenues of DMCI’s Cypress Development which is located in C5 road.

Political and Government Aspects

1. Promotion of the Philippines as retirement haven and relaxed

constitutional limitations on land use and ownership

Since May 2009, the PRA, under the Department of Tourism, has sought to

promote the Philippines as an attractive retirement and investment destination

for foreign nationals and former Filipino citizens with the end view of

accelerating the country’s socio-economic development. To date, a total of

35,000 foreign nationals have obtained the Special Resident Retiree’s Visa

(SRRV). Of this total, there were 8,000 from Korea, placing Korean retirees at

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second place following Chinese retirees at 16,000. Popular destinations for

Korean retirees are Baguio, Cebu, Subic and Clark.

Relevance

With the coming of the foreign retirees, there is a potential growth of sales since

under the current laws foreign nationals are allowed to buy and own

condominium developments. And these retirees are considering to buy a second

home.

source: http://asianjournal.com/news/philippines-promoted-as-a-retirement-

investment-haven/

c. Environmental Factors

1. Changes in climate patterns

Flooding in low lying areas

Metro Manila is known for its flooding problems and things are not getting any

better, with the climate change that the world is experiencing, it also means

more rains and more floods to come. Especially to low lying areas

Relevance

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 With floods now becoming inevitable in Metro Manila, home buyers are now

looking for alternative places to live in which is flood free. With no other place to

go but up, this leads them to buying condominium units in order to address

flooding problems .

b. INDUSTRY AND COMPETITORS ANALYSIS

Rivalry of Competition: Medium

From January 2012 to August 2015, The Housing and Land Use Regulatory Board, an agency of

the Philippines that gives permits and licenses to real estate developers, reported a total of

943,488 issued licenses to sell for the residential segment.

Competitors are not becoming more equal in size and capability as evidenced by the large gap

in market capitalization below:

Bloomberg: As of Jan. 15, 2016 Market Capitalization (in billions Php)

DMCI Holdings Inc. 160.923

Vista Land & Lifescapes Inc. 52.029

Robinsons Land Corp 102.346

Empire East Land Holdings Inc 10.860

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In August 2015, real estate consultancy Colliers International reported steady growth in the

residential real estate sector during the first half of 2015. According to the firm, the market saw

a 2% year-on-year increase in the number of residential property sale licenses issued by the

Housing and Land Use Regulatory Board in the second quarter.

Growth was driven in large part by strong performance in the affordable and low-cost housing

segments. Colliers reported a 164.5% year-on-year increase in the number of socialized housing

licenses issued in the first six months of 2015, to 11,431, while licenses to sell low-cost

condominiums more than doubled to 2052. Meanwhile, mid-income housing licenses were up

43.5% over the period at 2208.

Residential occupancy levels in central Manila also showed some improvement in the first six

months of the year, as just one new project came on-line over the period. The vacancy rate in

the Makati Central Business District decreased from 8% to 7.6% between the first and second

quarters, with luxury vacancies down from 4.3% to 3.9%. Occupancy also rose in Fort Bonifacio

and Ortigas Center, with vacancy rates hovering around 7% and 9.5%, respectively.

Meanwhile, the condominium rental market remained tight in Rockwell Center, which boasts

the highest rental rates in the city, with vacancies falling to 4.35%.

Occupancy levels are projected to decline in the coming months, however, with 5,500 new

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residential units slated to hit the market. In Fort Bonifacio and Ortigas Center, condo stock is

set to rise by nearly 20% by the end of the year, which could create a more competitive rental

market, Colliers noted.

The National Economic and Development Authority (NEDA) is expecting sustained growth of

the real estate industry over the next five years, fueled by a strong demand for business

process outsourcing (BPO), heavy consumer spending and healthy inflow of remittances from

overseas Filipino workers (OFWs). According to Secretary Arsenio Balisacan, Condominiums are

becoming particularly attractive in Metro Manila, with an estimated increase in supply of

14,000 units from 2012 to 2018, mostly coming from the mid-end segment of the market. He

said that the demand for residential properties is mainly driven by our middle class, and

particularly the 11 million Filipinos overseas who about US$24.3 billion in 2014, allocating

about US$7 billion of which into property investments.

Barriers to leaving the industry are high since fixed costs are also high for real estate

developers. Residential condominium industry is capital intensive. Investments have to be

made in land acquisition and building construction. According to Colliers International, land

values in the Makati CBD accelerated in the third quarter of 2015 by 2.43% to an average

PhP463,700 per sq m. Meanwhile, the rapid escalation of values in Fort Bonifacio has

somewhat tapered in the period, slowing by 1.52% to an average PhP400,100 per sq m.

Surprisingly, land value growth in Ortigas Center outpaced the established districts, growing by

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4.71% in the quarter to PhP172,700 per sq m, owing to new developments within and along the

periphery of the district.

Potential for New Entrants: WEAK

Factors that increase barriers to entry and discourage new competitors

1. Need to gain economies of scale quickly NO

2. Large capital requirements YES

3. Government regulatory policies YES

4. Low land availability YES

5. Strong brand preferences NO

6. Current competitors have strong marketing resources YES

Economies of scale are the cost advantages that enterprises obtain due to size, output,

or scale of operation, with cost per unit of output generally decreasing with increasing scale as

fixed costs are spread out over more units of output. However, for real estate developers, they

cannot increase output without accordingly increasing production costs.

Capital requirements are undoubtedly huge for the real estate industry. Potential entrants need

a large sum of money in acquiring land, equipment, among others.

The industry's business is dependent, in large part, on the availability of large tracts of land

suitable for development by these companies. As each of them attempts to locate sites for

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development, it may become more difficult to locate parcels of suitable size in locations and at

prices acceptable to these companies.

Looking ahead, issues related to land reform are expected to present medium-to-long-term

challenges to further property development, as government efforts to address bureaucratic

hurdles appear to have stalled.

One of the most significant constraints to sector growth has been a mixture of unreliable and

overlapping bureaucracy in land sales and acquisition. The current process for purchasing land

includes payment of a documentary stamp tax, a transfer tax and a creditable withholding tax,

with the buyer also required to file a certificate authorizing registration with the Bureau of

Internal Revenue, followed by a title transfer request. In addition, the buyer is obliged to pay a

fee for registration, as well as for the transfer of tax declaration at the relevant municipal

authority.

Although the process is meant to take just a few weeks, buyers often wait more than a year due

to technical issues and lost titles, according to local media.

While the country’s proposed National Land Use Act intends to establish a legal structure for

land-use planning and delineates four major categories of land use -- protection, settlements,

infrastructure and production, with socialized housing among its priorities -- the law has been

pending in Congress since it was first introduced in 1992.

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Although consumers generally have loyalty to certain brands, buyers in the industry look more

into the affordability and design of the units,taking into account their specific needs.

Top players in the industry have one of the most extensive marketing networks of all

Philippines housing development companies, hindering potential entrants into entering the

industry. Vista Land, for example, has a local marketing and distribution network of

independent contractors and agents consisting of approximately 3,008 teams, with a combined

total of approximately 20,351 active agents. Of the 3,008 marketing teams, 2,791 are

accredited realtors, 169 are exclusively contracted marketing teams, and 48 teams are direct

marketing groups.

The company’s sales and marketing efforts include but are not limited to:

• tri-media advertising campaigns, including maintenance of billboards in strategic

locations;

• maintenance of sales booths and product exhibits in pre-selected locations;

• project site activities such as Property Preview and Grand Open House activities;

• direct mailing campaigns;

• saturation drives; and

• regular monthly meetings.

In addition, the company engages in non-traditional marketing efforts such as:

• telemarketing;

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 • sponsorship of concerts, conventions and other events;

• corporate presentations;

• strategic alliances with other marketing channels; and

• cyberspace marketing and e-based transactions.

The company also has below-the-line marketing efforts, including producing and providing the

sales force with brochures, leaflets, handouts and other sales materials.

BARGAINING POWER OF SUPPLIERS - MEDIUM

Number of suppliers MANY

Number of good substitute materials FEW

Cost of switching raw materials LOW

Backward integration is used NO

Construction and development of malls, high-rise office and condominium units as well as land

and housing construction are awarded to various reputable construction firms subject to a

bidding process and each company’s evaluation of the price and qualifications of and its

relationship with the relevant contractor. Most of the materials used for construction are

provided by the contractors themselves in accordance with the underlying agreements,

although sometimes companies in the industry will undertake to procure the construction

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materials when they believe that they have an advantage in doing so. A company typically will

require the contractor to bid for a project on an itemized basis, including separating the costs

for project materials that it intends to charge the company. If the company believes that it is

able to acquire any of these materials (such as cement or steel) at a more competitive cost than

is being quoted to it, it may remove these materials from the project bid and enter into a

separate purchase order for the materials itself, to reduce project costs.

BARGAINING POWER OF BUYERS - WEAK

Customers are concentrated or large NO

Customers buy in volume NO

Products are undifferentiated NO

Target consumers in the real estate industry are the middle and upper classmen who can afford

the prices offered. The bargaining power of buyers is considered weak because unit prices are

usually fixed and they cannot negotiate selling price, warranty coverage, and accessory

packages to a greater extent, although companies offer different modes of payment through

cash purchases, bank financing, in-house (company-provided) financing, and government-

assisted financing. Under these four major modes of payments, companies design flexible and

creative financing packages for their customers to make their acquisitions possible.

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POTENTIAL FOR SUBSTITUTES – MEDIUM

Buyers of residential condominium units may opt to rent apartments, buy house and lots in

subdivisions, or own parcels of land on which to build their own houses. Still, factors like

spending capacity, location strategy, security, accessibility, monthly fees, and designs should be

considered accordingly.

MARKET SHARE

TOP 10 PROPERTY FIRMS IN THE PHILIPPINES (by gross revenue in millions Php)

50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000 2015
- 2014

Source: Top 1000 Corporations in the Philippines 2015 (BusinessWorld Research)

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MARKETING AGGRESSIVENESS

Aside from the strong local sales and marketing mentioned above, efforts are also poured into

international marketing networks. Major companies believe that the overseas Filipino

population constitutes a significant portion of the demand for their housing and land

development projects. The demand comes from both the direct purchase by the OF or purchase

by relatives of the OF financed by OFW remittance. As such, companies seek to adequately

service and reach the OF and international markets. For that purpose, they have established an

extensive international marketing network.

As for Vista Land, its international marketing network consisted of 164 partners and 5,091

independent agents as of December 31, 2014. Through this network, the company is well-

represented in key cities abroad with the highest concentration of OF communities. The

company’s presence is significant in countries and continents such as North America, Europe,

Middle East and Asia including Japan. These international brokers are established in their

respective areas and serve as the company's marketing and promotion agents in their

territories, to promote the company and its products. In addition, some of these agents actually

bought houses from the company in the past. The company believes that its long standing

relationships with these agents over the years distinguish it from its competitors.

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Vista Land, together with these international brokers and agents, regularly sponsors road shows

and participates in international fairs and exhibits, Filipino social and professional gatherings,

and other OF related events.

Awareness efforts are primarily conducted through sustained TV advertising on The Filipino

Channel and print advertising on national and geo-based publications. As added support, the

company through this special division called Prime Properties International has set-up support

marketing groups focused on and dedicated to servicing the international market.

Due to its growing number of projects and the continuous expansion of existing developments,

the company seeks to recruit and maintain quality sales people. This is achieved by continuous

training of the sales force conducted by the in-house training group as well as by professional

consultants. Recruitment is an on-going activity, encouraged by the company to continuously

search for individuals and sales groups with potential and/or proven track record in sales.

CAPACITY EXPANSION PLANS

By continuing to evaluate projects for synergies, sustaining a diversified development portfolio,

and capitalizing on growing opportunities in tourism development, Empire East plans to expand

capacity. It intends to continue to evaluate potential projects, particularly with respect to

opportunities among the company itself and its various subsidiaries and affiliates, in order to

maximize cost efficiencies, resources and other opportunities to derive synergies across the

Megaworld group and the larger AGI group of companies.

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An important part of the company’s long-term business strategy is to continue to maintain a

diversified earnings base. Because the company’s community townships include a mix of BPO

offices, retail, middle-income residential, educational/training facilities, leisure and

entertainment properties within close proximity to each other, the company is able to capitalize

on the complementary nature of such properties. In addition, the community township

developments enable the company to generate profits from selling residential projects as well

as invest in office and retail assets retained by the company to generate recurring income and

long-term capital gains. The company intends to continue to pursue revenue and property

diversification as it develops community townships with the live-work-play-learn concept in

various stages throughout Metro Manila. It also intends to continue pursuing innovative

product lines that may complement its existing developments, while maintaining a well-

diversified earnings base.

Empire East has further developed and diversified its real estate business to include integrated

tourism development projects through its acquisition of a minority ownership interest in

Travellers. Due to growth in the number of tourist visits to the Philippines and the company’s

real estate development expertise, it believes it is well-positioned to capitalize on opportunities

in this growing sector. For example, the company is exploring the possibility of developing

hotels in The Mactan Newtown and Iloilo Business Park in the Visayas. The company is also

actively exploring and evaluating possible joint venture opportunities with an affiliate which

focuses on tourism-related property developments.

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Competitive Profile Matrix

25,000,000,000

20,000,000,000

15,000,000,000

10,000,000,000

5,000,000,000

0
Vista Land Robinsons DMCI Homes Filinvest Land Empire East
Land

2014 2013 2012

The competitor of DMCI was limited to three company---Vista Land Lifescapes Incorporated,

Empire East and Robinsons Land Corporation as these three company is similar to DMCI in

developing high-rise residential projects and middle-income segment as their target market.

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Key Competitor of DMCI

Competitor #1 Vista Land

Vista Land Lifescapes Inc., was incorporated in Metro Manila, Philippines, on February 28, 2007

as an investment holding company. Vista Land through its subsidiaries harnesses more than 35

years of professional expertise in residential real estate development, and believes it has

established a nationwide presence, superior brand recognition and proven track record. Its

projects include master-planned developments and stand-alone residential subdivisions which

offer lots and/or housing units to customers in the low-cost, affordable, middle-income and

high-end market segments.

Vista Land operates through its five different subsidiaries (Brittany, Crown Asia, Camella

Homes, Communities Philippines and Vista Residence. Each segments caters different target

market: Brittany caters to the high-end market, Crown Asia caters middle-income segment

housing segment, Camella Homes offers low-cost housing segment, Communities Philippines

offers residential properties outside Metro Manila and Vista Residence offers vertical residence

projects in the Metro Manila area.

It has a total asset and equity of P106.8 billion and P53.1 billion, respectively and having a

market share 4.1 billion in 2014

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Vista Land is a strong competitor in the condominium market and middle income segment. By

banking on the company’s brand name and its existing marketing network, the company is able

to effectively compete with other big company such as DMCI.

Competitor #2 Empire East

Empire East, established by Andrew L. Tan and incorporated under Philippine law on July 15,

1994. Prior to its incorporation, the Company was a division of Megaworld Corporation and was

then known as its Community Housing Division. In 1994, Megaworld Corporation decided to

spin off its Community Housing Division into what is now the Company for the purpose of

separating its high-end residential

and office business from its lower and middle-income housing business.

Empire East a real estate developer that is engaged in building and selling mid-to-high-rise

condominiums in key locations in Metro Manila as well as horizontal subdivisions in progressive

suburban areas and considered as a competitor of DMCI in its middle income segment.

Currently, the company concentrates on its transit-oriented condominiums in Metro Manila.

It has a total asset of P35.2 billion and total equity P24.8 billion as of 2014. The market shares

for its high rise projects amounted to P3.19 billion in 2014.

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Competitor #3 Robinsons Land

Robinsons Land Corporation, the real estate arm of JG Summit Holdings, Inc., is involved in

various developments in the real estate industry such as office buildings, hotels, residential

condominiums as well as socialize housing projects located within and outside Metro Manila.

It has a total asset of P102.4 Billion and equity of P50.3 billion as of the fiscal year ended

September 30, 2014. The market share in 2014 of its residential division amounted to P5.87

billion.

The Robinsons Land, particularly it RLC Robinsons Communities is competing with DMCI under

the middle income segment.

Robinsons Land can compete with this market segment on the basis of its brand name,

technical expertise, financial standing and track record of successfully completed quality

projects.

Critical Success Factor

CSF # 1 - Capital Adequacy

Real Estate industry is a capital intensive industry so firms must rely on enough capital to fund

current and future developments. This measures the company’s ability to acquire land and

indicated by the amount of assets available for future acquisitions. Adequate capital is also

essential for future borrowings because it’s a measure of financial strength and capability to

34 | P a g e
pay. This can be measured by the percentage of total liabilities over equity in order to

determine how much liabilities the company is using to finance its developments.

Importance Weight: 35%

Real Estate Developer requires an ample amount of capital to purchase land and construct

projects. Thus, receiving a 35% weight.

CSF # 2 - Location Accessibility

The business centers and educational institutions are within the vicinity of the residential

property. Accessibility is a major concern of consumers. Buyer considers purchasing residential

unit that are nearby schools, workplace and/or commercial area for convenience.

Importance Weight: 15%

15% weight was given because living close to important areas is significant to people who value

time and convenience.

CSF # 3 – Price Competitive

This means the quality of the units that the developer sells and the amenities available in the

property must be worth the price. Quality as defined by the unit’s design, amenities and

maintenance of the property.

Importance Weight: 25%

35 | P a g e
The quality of the residential unit is essential to home buyers in decision making whether to

spend a huge amount of money for a residential unit.

Property with swimming pools, gymnasium and study area adds value to the property and may

be considered by the buyers in purchasing. Thus, having a weight of 25%.

CSF # 4 - Real Estate Developer’s Track Record

Importance Weight: 10%

The company experience is critical success factor in this industry. The buyers take in

consideration the track record of the developer before purchasing. They tend to choose real

estate developer with good reputation and name in the industry. A 10% weight was given

because the buyer considers the company’s integrity in delivering a good quality product even

though no actual development has been made in the case of pre-selling basis. This will only be

possible if the company has a good track record.

CSF # 5 - Marketing Competency

Advertising and Promotion is a way of making people aware of the company’s products.

Advertising is a means that leads to company’s success; the more people that know the product

the greater the possibility to generate revenue. This can be measured by the company’s effort

to advertise its product and how much of the revenue is allocated to marketing expenses.

36 | P a g e
Importance Weight: 10%

A weight of 10% was given because the buyer’s purchasing decision may depend on the

products they are familiar with.

DMCI Critical Success Factor Rating

DMCI’s CSF #1 – Capital Adequacy (4)

The total assets of P38.9 billion and total liabilities of P26.4 billion as of 2014 thus result to a

debt-asset ratio of .69, the highest among 3 competitors. Based on its annual report, DMCI will

acquire additional funding through investing in Bond Market for its current and future

developments.

DMCI’s CSF # 2 -- Location Accessibility (4)

DMCI’s condominium is strategically positioned outside the central business area. In such a way

it may reduce the cost of residential unit and makes it convenient to travel to three cities. For

instance, La Verti is ideally situated at the converging point of Manila, Pasay, and Makati. Flair

Towers is also centrally located and within minutes from the Ortigas, Mandaluyong and Makati

Central Business District. Also, there are ongoing developments in Taguig such as Royal Palm

Residences that is 7.0km outside Bonifacio Global City and Tivoli Garden Residences in

Mandaluyong City.

37 | P a g e
DMCI’s CSF # 3 – Price Competitive (4)

The La Verti residence has an average price P77,192 per square meter, the lowest between the

companies. The amenities available are swimming pools, lounge Area, basketball court,

playground and function Hall. Among the company targeting same market, DMCI has the

lowest price.

DMCI’s CSF # 4 - Real Estate Developer’s Track Record (3)

In a span of almost 2 decades in the industry, DMCI homes has completed more than 20

projects. Although DMCI is relatively new as compared to other real estate developer, its

affiliation to DMCI that already built over 500 projects and landmarks such as Makati Shangri-

La, Manila Hotel, Ayala Tower One and The New Istana Palace is the basis to the higher rating

given.

DMCI is known in providing high-quality living affordable to average Filipino individuals and

family in Metro Manila. It has developed the most comfortable communities within the price

range of an average Filipino family.

DMCI’s CSF # 5 - Marketing Competency (1)

38 | P a g e
As the marketing arm of DMCI Holdings Inc, the company allocated an amount of P397,549 in

2014. Product advertisement includes television and billboards advertising. As compared to

other competitors, it has the lowest budget for advertising.

Vista Land Critical Success Factor Rating

Vista Land’s CSF # 1 - Capital Adequacy (4)

As of 2014 the total assets of Vista Land amounted to P16.76 billion and the total liabilities to

P11.56 bringing the debt-assets ratio of .68%. Tied with DMCI’s for having debt – asset ratio of

¾ of total assets.

In its financial report states that Vista Land finances its working capital requirements through a

combination of internally-generated cash, pre-selling, joint ventures, borrowings and proceeds

from sale of installment receivables

Vista Land’s CSF # 2 - Location Accessibility (3)

Developments was strategically located near schools to cater growing population of students

and young professional in Metro Manila. Some of the completed projects are Crown Tower

University Belt, 878 España, Vista 309 Katipunan & Vista Taft.

39 | P a g e
Vista Land’s CSF # 3 – Price Competitive (1)

Based from online brokers, Vista Taft 1344 has an average price per square meter P125,000

and the amenities include: Library, gym, roof deck, residential and office lobby

Vista Land’s CSF # 4 - Real Estate Developer’s Track Record (2)

Vista Land subsidiary Vista Residence entered the competitive sector in 2009 for vertical home

segments and introduced to the market its developed project such as Avant in Bonifacio Global

City, Pinecrest in New manila, Crown Tower in Sampaloc, Manila and Madison Tower in Quezon

City.

Vista Land’s CSF # 5 – Marketing Competency (4)

In its annual statement, Awareness efforts are primarily conducted through sustained TV

advertising on The Filipino Channel

and print advertising on national and geo-based publications. As added support, the Company

through this special division called Prime Properties International has set-up support marketing

groups focused on and dedicated to servicing the international market.

The company does not separate advertising expense for its horizontal and vertical segment thus

having the largest amount of advertising expense of P1,441,984,541 among the four

competitors.

40 | P a g e
Empire East Critical Success Factor Rating

Empire East’s CSF # 1 - Capital Adequacy (1)

Empire East’s total assets and liabilities amounted to P35.3 billion and P10.45b respectively,

thus resulted to a debt-asset ratio of .30.

Empire East’s public stock listing allows it to have an additional capital for its upcoming

projects.

Empire East’s CSF # 2 - Location Accessibility (4)

Empire East projects are situated closed to mass transit system such as MRT-3 and LRT-2 in

order to provide convenience to its residence thus having a higher rating.

Empire East’s Little Baguio Terrace is strategically located for convenient access to public

transport and major roads. It is located along N. Domingo Avenue and Aurora Boulevard, a

walking distance to Greenhills District in San Juan and a minutes away from University Built for

students.

Empire East’s CSF # 3 – Price Competitive (2)

41 | P a g e
Based from scanning prices of online brokers, San Lorenzo Place has has an average of

P155,300/sqm. The highest selling price among the four competitors.

Empire East’s CSF # 4 - Real Estate Developer’s Track Record (3)

Empire East was once part of a giant company in real estate--- Megaworld Corporation.

However in 1994, It branched out as an independent company and registered in Philippine

Stock market Exchange. Empire East completed ten residential projects in a span of almost 2

decades.

Currently, Empire East focused on transit-oriented condominiums in Metro Manila.

Empire East’s CSF # 5 – Marketing Competency (3)

In its annual statement, The Company is aggressively involved with below-the-line strategies

such as event sponsorships, billboards set-ups, print advertisements, cable TV airtime, online

advertising among others. Lamp post banner ads and directional signage are also part of the

Company's citywide promotion efforts. Thus incurring an advertising expense of P98,878,593 in

2014.

42 | P a g e
Robinsons Land Critical Success Factor Rating

Robinson’s CSF # 1 - Capital Adequacy (3)

The company has a total assets of P27.3 billion and a total liabilities of P5.3 billion and a debt-

asset ratio of 0.19

Robinsons Land is also a publicly listed corporation which makes it accessible to additional

capital.

Robinson’s CSF # 2 - Location Accessibility (4)

The developed projects was strategically located inside the business district. For instance, Signa

Residence is located at the corner of Valero and and Rufino Streets in Salcedo Village and nerby

Makati Medical Center, RCBC Plaza and Makati Sports Club. Other developments is ideally

positioned near Robinsons Malls.

Robinson’s CSF # 3 – Price Competitive (2)

Based from online brokers the average price of Robinsons Place Residence along Taft Avenue is

at P105,000 per square meters.

The amenities accessible are gym and swimming pool.

43 | P a g e
Robinson’s CSF # 4 - Real Estate Developer’s Track Record (3)

RLC,the investment arm of JG Summit Holdings Inc., as of 2014, had completed 71 residential/

condominium/ housing projects.

Robinson’s CSF # 5 – Marketing Competency (3)

The advertising and promotion fee for 2014 amounted to P403,144,880.

44 | P a g e
Competitive Profile Matrix (CPM) Ratings

From the identified critical success factors in the industry, DMCI and its key competitors were

assigned the following ratings (from 1-4, with 4 as the highest).

Critical Weight DMCI Homes Vista Land Empire East Robinsons

Success Land
Factors Rating Scor Ratin Scor Ratin Scor Ratin Scor
e g e g e g e

0.35 4 1.4 3 1.05 2 0.7 3 1.05

1. Capital
Adequacy

0.15 3 0.45 3 0.45 4 0.6 4 0.60

2. Location
Accessibility

0.25 4 1 1 0.25 2 0.5 2 0.5

3. Price
Competitive

0.1 3 0.3 2 0.2 1 0.1 3 0.3

4. Real Estate
Track Record

0.15 1 0.15 4 0.6 3 0.45 3 0.45

5. Marketing
Competency

1 3.30 2.55 2.35 2.9

TOTAL

45 | P a g e
Based from the competitive profile matrix, DMCI has the competitive advantage over its other

competitors. DMCI’s strength over the other competitors is its price competitiveness and

adequate capital. DMCI also has modest rating in terms real estate track record and location

accessibility.

46 | P a g e
 C. SUMMARY AND CONCLUSION

EXTERNAL FACTOR EVALUATION

Opportunities

1. New business centers are emerging like Bonifacio Global City

Rating 3 – DMCI’s landbank, Cypress Towers along C5 highway is close but not within the

Bonifacio Global City. In contrast, its competitors have developments within BGC. AyalaLand

has developed Serendra, a known BGC landmark while Robinsons have Trion Tower and

Megaworld’s Mckinley Hill, all at the center of BGC Business district.

15% is given because establishing presence within the business center improves not only the

company’s image but also solidifies its standing as a key competitor in the real estate industry

2. Income boost from remittances of OFWs seen at 29.7B

Rating 3 – DMCI is still lagging behind its competitors when it comes to overseas market as it

still lacks international sales and promotions offices compared to key competitors like

Ayala/Avida. Though DMCI has already launched a website for this, more efforts are still

needed to keep up with the competition.

Weight of 15% was given since OFW remittances contributes big part of the industry’s revenues

47 | P a g e
3. High demand for condominium units

Rating 2 – With high demand for residential units, this is an opportunity to DMCI and other

market players to gain additional market share and encourage more investments. However

DMCI does not have enough capital to launch an aggressive approach to attract more and to

attack the leading players in head to head competition. For this, a rating of 10% has been given

4. High GDP rate forecast for the Philippines at 6.4%

Rating 2 – with the increase of GDP forecast, so also is the increase in demand. DMCI can take

this advantage by increasing its sales and putting more developments in the long run. However,

capitalization is a problem that DMCI has to face since it is lagging behind its competitors in this

area. 15%

5 steady interest rates at 4%

Rating 4 – DMCI can take advantage of the stable interest rates to invest more in development

activities. This is also an advantage for the firm due to its reliance to short term debt leading to

lower financing cost for the company. For this reason it is given a 10% importance and 4 rating

6 Promotion of the Philippines as retirement haven and relaxed constitutional limitations on

land use and ownership

Rating 1- DMCI is not primarily targeting retirees but it targets young mid income families. This

is the reason that sales has been more focused to local market compared to international sales.

10% is given due to the relaxation of land use and property ownership to foreigners coupled

with the economic effect of the upcoming elections

48 | P a g e
7. Growth of the BPO sector

Rating 1 – this is not the current focus of DMCI because it does not have a commercial real

estate development arm. Megaworld, Ayala and Robinson is currently banking on the so called

mixed living developments where commercial, BPO and residential areas are brought into one

development. This helps them capture the BPO market to their advantage.

Threats

1. Flooding problems in the metropolis wherein key metropolitan areas are deemed

below the sea level

Rating 4- DMCI has chosen to put up its developments away from flood prone areas and

has invested in innovative solutions of construction to make its buildings more resilient to

calamities. This is the reason that of the recent flooding, none of DMCI’s developments

were affected.

49 | P a g e
2. Increasing number of competitors and high exit barriers

Rating 4 - Barriers to leaving the industry are high since fixed costs are also high for real

estate developers. Residential condominium industry is capital intensive. Investments have

to be made in land acquisition and building construction. Also, Buyers of residential

condominium units may opt to rent apartments, buy house and lots in subdivisions, or own

parcels of land on which to build their own houses

3. Regulatory Policies

Rating 3 - Issues related to land reform are expected to present medium-to-long-term

challenges to further property development, as government efforts to address bureaucratic

hurdles appear to have stalled.

50 | P a g e
EXTERNAL FACTOR EVALUATION MATIX

EXTERNAL FACTOR SOURCE IMPORTANCE FIRM’S WEIGHTED

WEIGHT RATING SCORE
OPPORTUNITY
New business centers are Environmental 15% 3 .45
emerging like Bonifacio Global Analysis -
City Economic
Income boost from Environmental 10% 3 .3
remittances of OFWs seen at Analysis -
29.7B Economic
High demand for Environmental 10% 2 .2
condominium units Analysis -
Economic
High GDP rate forecast for the Environmental 10% 2 .2
Philippines at 6.4% Analysis -
Economic
steady interest rates at 4% Environmental 20% 4 .8
Analysis -
Economic
Promotion of the Philippines Environmental 5% 1 .05
as retirement haven and Analysis -
relaxed constitutional Political
limitations on land use and
ownership
Growth of the BPO sector Environmental 10% 1 .1
Analysis –
Economic

THREAT
Flooding problems in the Environmental 10% 4 .4
metropolis wherein key Analysis -
metropolitan areas are Environmental
deemed below the sea level
Increasing number of 5 forces 5% 4 .2
competitors and high exit
barriers
Regulatory Policies 5% 3 .15
TOTAL 2.85

51 | P a g e
 V. COMPANY ANALYSIS

Initially a housing division under D.M. Consunji, Inc., DMCI Homes was spun off in 1999 to take

advantage of the surge in demand for urban homes.

Since then, the company has made high-quality living affordable to average Filipino families

through its innovative designs, proprietary technologies and cost-efficient methodologies.

Its core products are larger-than-usual condominium units with resort-inspired amenities in

mid-rise and high-rise developments within five kilometers of known city centers in Metro

Manila and Baguio.

The company’s projects also include commercial spaces, subdivisions and leisure developments

in Aklan, Cavite, Laguna and Taguig.

PERFORMANCE AND HIGHLIGHTS

DMCI Homes continued to deliver growth in 2014, registering significant improvements in

revenue and net income.

52 | P a g e
Residential turnovers and sales and reservations also increased during the year.

To boost its inventory, the company accelerated its capital expenditures for land acquisition

and development. This capex trend is seen to continue in the years to come.

DMCI Homes has 15 projects under construction in Metro Manila and Baguio City. Five more

projects are scheduled for launch in 2015.

BUSINESS REVIEW

Low inflation, attractive interest rates, high liquidity and strong inflow of remittances from

overseas Filipino workers (OFWs) converged to sustain demand for mid-market housing in

2014. However, fierce competition for market share and escalating land values tempered the

growth of DMCI Homes during the year. To strengthen its market position and expand its

product offerings, the company is investing more heavily on its land banking activities. It is also

entering new market segments to drive its future growth.

Operational Results

53 | P a g e
Net income rose by 22% to a record P3.2 billion in 2014, mainly due to gain realized on the sale

of a lot and margin improvements upon cost actualization of a completed project.

Revenues for 2014 reached P12.5 billion, which was a slight increase (3%) from the previous

year. The uptick was due to the additional high-rise condominium projects in the company’s

inventory, the accounting revenue for which will be recognized only upon full completion of the

projects.

Contrary to local industry practice, DMCI Homes adopts a more conservative approach to

recognizing its real estate revenues by realizing sales only when the unit is fully completed and

at least 15% of the contract price had been collected.

Residential unit turnovers surged 68% to 5,155, which were mostly from Flair Towers, La Verti

Residences and Arista Place.

A better representative of current demand would be sales and reservations for the year, which

grew 3% to P19 billion. Sustained demand for residential condominium units in new and

existing projects such as Brio Towers, Lumiere Residences and Arista Place also helped push

sales.

54 | P a g e
Capital expenditures surged 47% to P12.2 billion from P8.3 billion in 2013. Of the P12.2 billion

spent, majority (56%) went to development cost while the rest (46%) went to land acquisition.

Financial Position

As of 2014, total assets improved 2% to P38.9 billion compared to the previous year. Cash and

cash equivalents contracted 59% to P2.7 billion as a result of the company’s land banking

activities, while property and equipment grew 29% to P1 billion due to the purchase of new

construction machinery and equipment.

Receivables declined 26% to P8 billion owing to the acceleration of payments from installment

buyers, as a result of full payment of unit contract price.

Meanwhile, total liabilities fell 3% to P26.4 billion compared to 2013. Customers’ advances and

deposits increased by 17% to P5.4 billion while loans payable dropped by 14% to P16.2 billion

due to the conversion of in-house accounts sold through contract-to-sell financing, to end user

financing. Liabilities for purchased land grew 59% to P2.18 billion.

Inventory

In 2014, DMCI Homes launched 6,925 residential and parking units, which is 18% lower

compared to the previous year.

55 | P a g e
The total approximate value of the units amounted to P13.9 billion, a 15% drop from the P16.5

billion in 2013.

During the year, the company accelerated the completion of six projects to expand its product

offerings. The projects include Stellar Place and The Amaryllis in Quezon City, Flair Towers in

Mandaluyong City, Rhapsody Residences in Muntinlupa City, and Royal Palm Residences and

the Town Center at Acacia Estates in Taguig City.

To further build-up its inventory, DMCI Homes is constructing 15 projects in Metro Manila and

Baguio City. In all, these projects have 16,503 residential units and 11,777 parking units. Total

value of these units is expected to reach P52.7 billion.

56 | P a g e
 Gross Revenues
25,000,000,000

20,000,000,000

15,000,000,000

10,000,000,000

5,000,000,000

0
DMCI Homes Empire East Vista Land Robinsons Land
2014 13,504,588,972 4,575,697,311 23,605,954,083 17,051,175,228
2013 12,567,753,586 2,951,116,312 21,319,126,764 15,904,493,019
2012 10,099,124,420 2,522,753,617 17,397,109,454 13,515,059,546

Net Income
6,000,000,000

5,000,000,000

4,000,000,000

3,000,000,000

2,000,000,000

1,000,000,000

-
DMCI Homes Empire East Vista Land Robinsons Land
2014 3,339,982,254 484,520,380 5,709,559,725 4,739,911,246
2013 2,560,278,904 300,471,781 5,062,508,683 4,442,464,578
2012 2,281,336,626 236,021,986 4,385,701,100 4,203,061,017

LIQUIDITY RATIOS

57 | P a g e
Liquidity ratios are used to determine a company's ability to pay off its short-terms debts

obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the

company possesses to cover short-term debts.

Current Ratio
4.5
4
3.5
3
Axis Title

2.5
2
1.5
1
0.5
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 3.59 3.65 3.93 3.11 3.56
2013 3.65 3.08 3.88 2.2 3.05
2012 3.08 1.41 0.95 2.55 1.64

The current ratio is a liquidity ratio that measures a company's ability to pay short-

term and long-term obligations. To gauge this ability, the current ratio considers the

total assets of a company (both liquid and illiquid) relative to that company’s total liabilities.

The formula for calculating a company’s current ratio, then, is:

Current Ratio = Current Assets / Current Liabilities

The current ratio is mainly used to give an idea of the company's ability to pay back its liabilities

58 | P a g e
(debt and accounts payable) with its assets (cash, marketable securities, inventory, accounts

receivable). As such, current ratio can be used to take a rough measurement of a

company’s financial health. The higher the current ratio, the more capable the company is of

paying its obligations, as it has a larger proportion of asset value relative to the value of its

liabilities.

For the three years ending 2014, DMCI Homes has surpassed the competitor average and can

be considered doing well.

Quick Ratios
2.5

2
Axis Title

1.5

0.5

0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 0.89 0.66 1.84 0.3 0.93
2013 1.49 0.62 2.28 0.2 1.03
2012 1.02 0.8 1.14 1.05 1.00

The quick ratio, also known as the acid-test ratio or quick assets ratio, is an indicator of a

company’s short-term liquidity. The quick ratio measures a company’s ability to meet its short-

59 | P a g e
term obligations with its most liquid assets. For this reason, the ratio excludes inventories from

current assets, and is calculated as follows:

Quick ratio = (current assets – inventories) / current liabilities, or

= (cash and equivalents + marketable securities + accounts receivable) / current liabilities

The quick ratio measures the peso amount of liquid assets available for each peso of current

liabilities. The higher the quick ratio, the better the company's liquidity position.

DMCI Homes has decreased quick ratio because the real estate inventory increased by 35% due

to accelerated land acquisition.

Solvency Ratios
4.5
4
3.5
3
Axis Title

2.5
2
1.5
1
0.5
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 1.43 3.38 1.99 2.6 2.66
2013 1.34 4.04 2.35 2.93 3.11
2012 1.41 3.3 2.56 2.93 2.93

60 | P a g e
A key metric used to measure an enterprise’s ability to meet its debt and other obligations.

The solvency ratio indicates whether a company’s cash flow is sufficient to meet its short-term

and long-term liabilities. The lower a company's solvency ratio, the greater the probability that

it will default on its debt obligations.

The measure is usually calculated as follows:

Solvency Ratio = Asset/Debt

Although DMCI Homes has the least solvency ratio, it can still meet its obligations because it

has1.43 pesos to pay a peso of debt.

LEVERAGE RATIOS

Companies rely on a mixture of owners' equity and debt to finance their operations. A leverage

ratio is any one of several financial measurements that look at how much capital comes in the

form of debt (loans), or assesses the ability of a company to meet financial obligations.

61 | P a g e
 Debt Ratios
0.8
0.7
0.6
0.5
Axis Title

0.4
0.3
0.2
0.1
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 0.7 0.3 0.5 0.38 0.39
2013 0.64 0.25 0.43 0.34 0.34
2012 0.71 0.3 0.39 0.34 0.34

A financial ratio that measures the extent of a company’s or consumer’s leverage. The debt

ratio is defined as the ratio of total – long-term and short-term – debt to total assets, expressed

as a decimal or percentage. It can be interpreted as the proportion of a company’s assets that

are financed by debt.

The higher this ratio, the more leveraged the company is, implying greater financial risk. At the

same time, leverage is an important tool that companies use to grow, and many businesses find

sustainable uses for debt.

This ratio is higher in capital-intensive industries. DMCI is aggressive in using leverage because

it seizes the opportunity of lower interest rates, unlike Empire East which opts to be

conservative by using equity to finance its operations.

62 | P a g e
A high debt ratio can indeed be of higher financial risk, but the company maintains the extent

of their debt through ratio indicators that it had set. With this, the strategy of DMCI pertaining

to using more leverage is deemed effective in obtaining higher ratios in almost all financial

soundness indicators.

Debt-to-Equity Ratios
3.5
3
2.5
Axis Title

2
1.5
1
0.5
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 2.31 0.42 1.01 0.34 0.59
2013 2.94 0.33 0.74 0.26 0.44
2012 2.44 0.44 0.63 0.26 0.44

Debt/Equity Ratio is a debt ratio used to measure a company's financial leverage, calculated by

dividing a company’s total liabilities by its stockholders' equity. The D/E ratio indicates how

much debt a company is using to finance its assets relative to the amount of value represented

in shareholders’ equity.

The formula for calculating D/E ratios can be represented in the following way:

63 | P a g e
Debt - Equity Ratio = Total Liabilities / Shareholders' Equity

Given that the debt/equity ratio measures a company’s debt relative to the total value of

its stock, it is most often used to gauge the extent to which a company is taking on debts as a

means of leveraging (attempting to increase its value by using borrowed money to fund various

projects). A high debt/equity ratio generally means that a company has been aggressive in

financing its growth with debt.

DMCI, as mentioned, is aggressive but it did not exceed the company-set maximum ratio of 3:2.

Asset-to-Equity Ratios
4.5
4
3.5
3
Axis Title

2.5
2
1.5
1
0.5
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 3.31 1.42 2.01 1.62 1.68
2013 3.94 1.42 1.74 1.52 1.56
2012 3.44 1.44 1.63 1.52 1.53

64 | P a g e
The asset-to-equity ratio or equity multiplier is a measurement of a company’s

financial leverage. Companies finance the purchase of assets either through equity or debt, so a

high equity multiplier indicates that a larger portion of asset financing is being done through

debt. The multiplier is a variation of the debt ratio.

PROFITABILITY RATIOS

A class of financial metrics that are used to assess a business's ability to generate earnings as

compared to its expenses and other relevant costs incurred during a specific period of time. For

most of these ratios, having a higher value relative to a competitor's ratio or the same ratio

from a previous period is indicative that the company is doing well.

65 | P a g e
 Gross Profit Margin
0.6

0.5

0.4
Axis Title

0.3

0.2

0.1

0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 0.48 0.34 0.51 0.48 0.44
2013 0.45 0.32 0.51 0.49 0.44
2012 0.52 0.34 0.51 0.47 0.44

A financial metric used to assess a firm's financial health by revealing the proportion of money

left over from revenues after accounting for the cost of goods sold. Gross profit margin serves

as the source for paying additional expenses and future savings.

Calculated as:

Where: COGS = Cost of Goods Sold

66 | P a g e
The gross margin is not an exact estimate of the company's pricing strategy but it does give a

good indication of financial health. Without an adequate gross margin, a company will be

unable to pay its operating and other expenses and build for the future. In general, a

company's gross profit margin should be stable. It should not fluctuate much from one period

to another, unless the industry it is in has been undergoing drastic changes which will affect the

costs of goods sold or pricing policies.

DMCI Homes has a gross profit margin of almost half of its sales, which can help in increasing its

net income provided that interest expenses have decreased.

Net Profit Margin

0.35
0.3
0.25
Axis Title

0.2
0.15
0.1
0.05
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 0.27 0.14 0.26 0.28 0.23
2013 0.22 0.18 0.25 0.28 0.24
2012 0.25 0.17 0.27 0.31 0.25

Profit margin is part of a category of profitability ratios calculated as net income divided

by revenue, or net profits divided by sales. Net income or net profit may be determined by

67 | P a g e
subtracting all of a company’s expenses, including operating costs, material costs (including raw

materials) and tax costs, from its total revenue. Profit margins are expressed as a percentage

and, in effect, measure how much out of every dollar of sales a company actually keeps

in earnings.

DMCI Homes has managed to increase its profit margin in 2014 after a downfall in 2013.

Although Robinsons Land has the highest margin among them, it is undeniable that DMCI

Homes remains competitive by exceeding the competitor average.

Return on Assets
0.1
0.09
0.08
0.07
Axis Title

0.06
0.05
0.04
0.03
0.02
0.01
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 0.09 0.01 0.05 0.06 0.04
2013 0.07 0.01 0.06 0.06 0.04
2012 0.08 0.01 0.061 0.06 0.04

An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to

how efficient management is at using its assets to generate earnings. Calculated by dividing a

68 | P a g e
company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this

is referred to as "return on investment".

The formula for return on assets is:

DMCI Homes is by far the most effective in converting the money it has to invest into net

income. This means that the company is earning more money on less investment.

Return on Equity
0.35
0.3
0.25
Axis Title

0.2
0.15
0.1
0.05
0
Competitor
DMCI Homes Empire East Vista Land Robinsons Land
Average
2014 0.29 0.02 0.108 0.09 0.07
2013 0.27 0.01 0.104 0.09 0.07
2012 0.28 0.01 0.101 0.09 0.07

The amount of net income returned as a percentage of shareholders equity. Return

on equity measures a corporation's profitability by revealing how much profit a company

generates with the money shareholders have invested.

69 | P a g e
ROE is expressed as a percentage and calculated as:

Return on Equity = Net Income/Shareholder's Equity

Since DMCI Homes is leveraged, its shareholders generate more profit in proportion to their

investments.

2014 DMCI HOMES EMPIRE EAST VISTA LAND ROBINSONS

Gross Revenue 13,504,588,972 4,575,697,311 23,605,954,083 17,051,175,228
Net Income 3,339,982,254 484,520,380 5,709,559,725 4,739,911,246

Liquidity
Analysis Ratios:
Current Ratio or 3.59 3.65 3.08 1.41
Working Capital
Ratio
Quick Ratio .89 0.66 1.84 .30
Solvency Ratio 1.43 3.38 1.99 2.60

Financial
Leverage Ratios
Debt Ratio .7 0.3 .50 .38
Debt-to-Equity 2.31 0.42 1.01 0.34
Ratio
Interest 36.50 6.73 5.36 6.96
Coverage
Asset to Equity 3.31 1.42 2.01 1.62
Ratio

Profitability
Ratios
Gross Profit .48 0.34 .51 .48
Margin
Net Profit .27 0.14 .26 .28
Margin
Return on Assets .09 0.01 .05 .06
Return on Equity .29 0.02 .108 .09

70 | P a g e
2013 DMCI HOMES EMPIRE EAST VISTA LAND ROBINSONS
Gross Revenue 12,567,753,586 2,951,116,312 21,319,126,764 15,904,493,019
Net Income 2,560,278,904 300,471,781 5,062,508,683 4,442,464,578

Liquidity
Analysis Ratios:
Current Ratio or 3.65 3.93 3.88 0.95
Working Capital
Ratio
Quick Ratio 1.49 0.62 2.28 .20
Solvency Ratio 1.34 4.04 2.35 2.93

Financial
Leverage Ratios
Debt Ratio .64 0.25 .43 .34
Debt-to-Equity 2.94 0.33 0.74 0.26
Ratio
Interest 7.71 4.12 4.78 6.15
Coverage
Asset to Equity 3.94 1.42 1.74 1.52
Ratio

Profitability
Ratios
Gross Profit .45 0.32 .51 .49
Margin
Net Profit .22 0.18 .25 .28
Margin
Return on Assets .07 0.01 .06 .06
Return on Equity .27 0.01 .104 .09

71 | P a g e
2012 DMCI HOMES EMPIRE EAST VISTA LAND ROBINSONS
Gross Revenue 12,493,636,000 2,522,753,617 17,397,109,454 13,515,059,546
Net Income 3,339,982,254 236,021,986 4,385,701,100 4,203,061,017

Liquidity
Analysis Ratios:
Current Ratio or 3.08 3.11 2.20 2.55
Working Capital
Ratio
Quick Ratio 1.02 0.8 1.14 1.05
Solvency Ratio 1.41 3.3 2.56 2.93

Financial
Leverage Ratios
Debt Ratio .71 0.3 .39 .34
Debt-to-Equity 2.44 0.44 .63 0.26
Ratio
Interest 5.82 3.09 4.30 4.44
Coverage
Asset to Equity 3.44 1.44 1.63 1.52
Ratio

Profitability
Ratios
Gross Profit .52 0.34 .51 .47
Margin
Net Profit .25 0.17 .27 .31
Margin
Return on Assets .08 0.01 .061 .06
Return on Equity .28 0.01 .101 .09

72 | P a g e
Management Audit Checklist

Does the firm use strategic-management concepts? YES

Are company objectives and goals measurable and well communicated? YES

Do managers at all hierarchical levels plan effectively? YES

Do managers delegate authority well? YES

Is the organization’s structure appropriate? YES

Are job descriptions and job specifications clear? YES

Is employee morale high? YES

Are employee turnover and absenteeism low? YES

Are organizational reward and control mechanisms effective? YES

The company has specified the roles and responsibilities of each stakeholders of the company,

especially that of management. Management is generally tasked to develop, improve, maintain,

and evaluate strategies that are aligned with the objectives and goals of the company.

The company is continuing to strive because of an appropriate organizational structure.

Authorities and jobs are well-delegated.

73 | P a g e
Protecting the welfare and rights of its employees is among DMCI’s foremost concerns. It

strives to provide its people with the safeguards, opportunities and platforms they need to

deliver superior performance and achieve work-life balance.

DMCI’s compensation structure is set at levels that are appropriately competitive in attracting,

motivating and retaining competent individuals.

It also provides variable cash incentives based on the performance of the employee and the

company, to support a high-performance culture that actively strives to grow the business and

increase shareholder value.

FUNCTIONAL AUDIT CHECKLIST

Marketing Audit Checklist

Are markets segmented effectively? YES

Is the organization positioned well among competitors? YES

Has the firm’s market share been increasing? YES

Are present channels of distribution reliable and cost effective? YES

74 | P a g e
Does the firm have an effective sales organization? YES

Does the firm conduct market research? YES

Are product quality and customer service good? NO

Are the firm’s products and services priced appropriately? YES

Does the firm have an effective promotion, advertising, and publicity strategy? YES

Are marketing, planning, and budgeting effective? YES

Do the firm’s marketing managers have adequate experience and training? YES

Is the firm’s Internet presence excellent as compared to rivals? YES

DMCI Homes is the leading mid-income residential developer in the Philippines. It has

maintained to be among the top 10 property developers in the country, which proves that its

share in the market is increasing.

The sales and marketing team are effective and efficient, provided that sales increased despite

a decrease in marketing fees of 9.3 million.

Its internet presence is excellent as compared to rivals. The social media accounts of DMCI have

significantly more followers than the others, primarily because the company continually

updates them and are more strategic in garnering the attention of the public.

75 | P a g e
Product quality is competitive, but a number of customers are not satisfied with the service and

maintenance.

Finance/Accounting Audit Checklist

Where is the firm financially strong and weak as indicated by financial ratio Strong –

analyses? Leverage

Weak -

Solvency

Can the firm raise needed short-term capital? YES

Can the firm raise needed long-term capital through debt and/or equity? YES

Does the firm have sufficient working capital? YES

Are capital budgeting procedures effective? Are dividend payout policies YES

reasonable?

Does the firm have good relations with its investors and stockholders? YES

Are the firm’s financial managers experienced and well-trained? YES

Is the firm’s debt situation excellent? YES

As discussed in the ratio analysis, the company can raise short-term and long-term capital and

is aggressive in leveraging.

76 | P a g e
DMCI is committed to providing its shareholders and prospective investors with an open,

welcoming and enabling environment to assist them in making wise investment decisions.

To ensure that the rights and interests of its retail and institutional investors are protected, it

maintains policies and practices that accord equal voting rights, reasonable economic returns,

unrestricted access to material information and appropriate safeguards against discriminatory

and abusive conduct.

It is also the company’s policy to keep its openly traded shares above the 10% minimum public

float requirement of the Philippine Stock Exchange.

Shareholders have the primary financial right to participate in the company’s profits, and DMCI

is fully committed to upholding this right by providing them reasonable economic returns on

their stock investments.

its policy aims for a dividend payout ratio of at least 25% of the preceding year’s Consolidated

Core Net Income. Dividends are paid in the subsequent year.

Consolidated Core Net Income is currently defined as reported net income excluding all foreign

exchange, mark-to-market gains and losses and non-recurring items.

77 | P a g e
In the last five years, its total dividend payout has amounted to P27.8 billion, which makes

DMCI one of the best dividend-paying companies in the Philippines.

From time to time, our Company may declare special dividends as a return of excess funds to

shareholders, as determined by the Board of Directors.

Production/Operations Audit Checklist

Are supplies of raw materials, parts, and subassemblies reliable and YES

reasonable?

Are facilities, equipment, machinery, and offices in good condition? NO

Are inventory-control policies and procedures effective? YES

Are quality-control policies and procedures effective? NO

Are facilities, resources, and markets strategically located? YES

Does the firm have technological competencies? YES

The company has a policy on supplier/contractor selection. Acquisitions are done thru

competitive bidding, or negotiated contracts, as the case may be.

The total costs of fully depreciated property and equipment that are still in use amounted to

P116.35M and P78.64M as of December 31, 2014 and 2013, respectively

78 | P a g e
The software net book value increased from P18, 173,559 in 2013 to P71, 269,928 in 2014.

DMCI continually seeks to improve its technological competencies by investing in applications

that help the operations of the company.

Markets are strategically located, but competitors like Robinsons, are more strategic.

Research and Development Audit

Does the firm have R&D facilities? YES

Are they adequate? YES

If outside R&D firms are used, are they cost-effective? YES

Are the organization’s R&D personnel well qualified? YES

Are R&D resources allocated effectively? YES

Are management information and computer systems adequate? YES

Is communication between R&D and other organizational units effective? YES

Are present products technologically competitive? YES

Capital expenditures surged 47% to P12.2 billion from P8.3 billion in 2013. Of the P12.2 billion

spent, majority (56%) went to development cost while the rest (46%) went to land acquisition.

79 | P a g e
Management Information Systems Audit

Do all managers in the firm use the information system to make decisions? YES

Is there a chief information officer or director of information systems position YES

in the firm?

Are data in the information system updated regularly? YES

Do managers from all functional areas of the firm contribute input to the YES

information system?

Are there effective passwords for entry into the firm’s information system? YES

Are strategists of the firm familiar with the information systems of rival firms? NO

Is the information system user-friendly? YES

Do all users of the information system understand the competitive advantages YES

that information can provide firms?

Are computer training workshops provided for users of the information YES

system?

Is the firm’s information system continually being improved in content and YES

user-friendliness?

80 | P a g e
According to the organizational structure of the firm, there is a management information

systems manager, but there is neither chief information officer nor director of information

systems position.

Information systems are upgraded, as evidenced by additional software costs, for

improvement.

81 | P a g e
IFE MATRIX

Key Internal Factors Weight Rating Weighted

Score
Strengths
Increased revenue by 7.5% .03 4 .12
5,155 residential unit turnovers, 3982 residential units .04 3 .12
launched
Lower costs and expenses .03 3 .09
Leading mid-income residential developer in the Philippines .08 3 .24
+47% capital expenditures .07 3 .21
Effective leveraging w/ attractive interest rates .10 4 .40
Employee morale is excellent .05 3 .15
Strong internet presence .08 4 .32
Strong inflow of remittances from OFWs .08 4 .32

Weaknesses
Inflation & interest rates may affect leveraging .10 1 .10
A number of unsatisfied customers .13 1 .13
Locations of some competitors more strategic .09 2 .18
Escalating land values hinder strategic acquisitions .03 2 .06
Still uses equipment that are fully depreciated .06 1 .06
Be more familiar with IS of rivals .03 2 .06
1.0 2.56

The total weighted score of DMCI Homes is 2.56, which indicates an average internal position.

82 | P a g e
 VI. STRATEGY FORMULATION

SWOT

STRENGTHS WEAKNESS

S1 there is greater W1 Small geographic

quality output due to coverage and lack of global

sustained synergy with its distribution capability

sister companies, DM

Consunji Inc.

(construction arm) in

particular

S2 distinctive W2 It is limited to

competence in design residential developments

concepts, quality alone; no relative

SWOT matrix amenities and other add background in retail or

ups for leisure commercial infrastructure

or mixed living structures

S3 there is a healthy W3 It lags behind its

domestic market and rivals when it comes to

83 | P a g e
 steady demand for its R&D and e-commerce

units

S4 faster lead time in

construction projects

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

O1 New business S4 & 02 – develop BGC

centers are emerging like property through

Bonifacio Global City strategic infrastructure

projects and land banking

initiatives

O2 Income boost from W3 & 02 – improve e-

remittances commerce capability and

use it as an alternative

distribution channel

O3 Renewed interest in O3 O4 – Establish Sales

property investment as and Operations Planning to

long term investment keep demand and supply in

balance

84 | P a g e
O4 High demand for

condominium units

O5 Large base of more

financially empowered

young professionals

O6 High GDP rate

forecast for the

Philippines at 5%++

O7 Promotion of the S2 & O5, O6 - Recreate

Philippines as retirement developments to make

haven and relaxed them fully service

constitutional limitations communities for second

on land use and home investors like

ownership retirees as well as first

time homeowners such as

young professionals.

O8 Growth of the BPO W2, W1, & O1, O8 –

sector Combine residential units

with BPO office and

commercial establishments

85 | P a g e
 with residential

developments near BGC

THREATS ST STRATEGIES WT STRATEGIES

T1 Flooding S1 T1 T3 – locate future

problems in the developments to lessen

metropolis wherein key flooding risk and market

metropolitan areas are this as one of the features

deemed below the sea of the project

level

T2 High intensity S1 T1 T2 T3– use W3 & T1 T2 T3 – improve

competition which may construction experience R&D and pioneer more

squeeze profit margins to put green buildings innovative projects

T3 Vulnerability

from uncontrolled

economic forces such as

calamities

86 | P a g e
Strategic Position and Action Evaluation (SPACE) Matrix

The SPACE Matrix is a four- quadrant framework that aid the researchers in developing the

organization’s overall strategic position. The firm’s strategy may either be classified as

aggressive, conservative, defensive or competitive. Factors used in EFE and IFE Matrices such as

financial strengths and competitive advantage is used as inputs in developing a SPACE Matrix.

(David, 2011)

a. Financial Strength (FS) Ratings: For FS, use +1 (worst) and +6 (best)

DMCI Homes gross revenue contribution of more than 20% in 2014 to its parent company

shows a strong financial condition. DMCI has 15 upcoming developments in Metro Manila as

well as in Baguio City to boost its inventory and such projects to increased capital expenditure

trend by 47% due to land acquisitions and development cost. This has been a rating of +5 for

having above average financial condition.

b. Industry Strength (IS) Ratings: For IS, use +1 (worst) and +6 (best)

Colliers International reported a stable growth of 2% in residential sector, primarily in high rise

condominiums segment. A rating of +5 is given due to present and future developments of

DMCI under this segment. The intense competition among members of residential real estate

segment as discussed in 5 forces section has been given a +2 rating because the market share of

DMCI homes may be trim down as buyers may opt to choose the substitutes.

87 | P a g e
Susceptibility to uncontrollable economic was given a rating of +2 since it will only cause

incidental damage to the industry as compared to the previous factors.

c. Environmental Stability (ES) Ratings: For ES, use -1 (best) and -6 (worst)

The high forecast rate of the GDP coupled with the high remittances of the OFWs are key

environmental factors since this will bring the demands for housing up. High local demand

for condominium is also an important factor for the company and the industry as a whole.

With these they are given -1

The growth of the BPO sector, the promotion of the country as a retirement haven and the

large base of more financially empowered professionals are given less weight for the reason

that the company is not targeting them yet. They are given a rating of -3, -3 and -2

respectively.

The emergence of new business centers in an opportunity for the firm and the industry to

come up with new developments in these areas such as the BGC. DMCi has an opportunity

in this category since one of its developments is adjacent to the said area. This is given -2

rating.

Climate changes and the vulnerability of the economy and the industry can be a big

problem to buyers and the industry in the present and future projects. DMCI is well placed

to face this threat of climate change. A rating of -3 is given for climate change.

88 | P a g e
 d. Competitive Advantage (CA) Ratings: For CA, use -1 (best) and -6 (worst)

DMCI as the real estate arm of DMCI Holding Company allowed it to have competitive

advantage over other competitors due to the strong synergy of Consunji-owned business to

each other for instance, DMCI is able to obtain resources at an optimal transfer price that may

still enable both business to earn profit from such transfer. Thus, given a rating of -1. As a

result of synergy with DMCI’s contruction business, the developed residential units was able to

be sold lower than the competitors thus having a rating of -1. Although such relationship limits

DMCI homes to a particular real estate segment which is residential segment and has no

experience with other type of real estate projects. Its limited experience may become a

hindrance in providing its customer with full real estate solution to its clients. As to amenities,

DMCI number of amenities in comparison to competitors because one of the goal of DMCI is to

provide its customer with resort living design. As a result, it was assigned with a -2 rating.

Strategic position of company’s development is also a key success factor to the industry. As

compared to its competitors, DMCI was assigned a rating of -5 because most of the

developments was not located inside central business districts.

A -1 rating was given to the ample amount of capitalization of DMCI. The budget allocated

allows the company to use the resources available for capital expenditures such as land

acquisitions as this is also a key success factor in the industry.

89 | P a g e
 SPACE Matrix

Financial Strength (FS)

Strong financial condition 5

Enough financial resources to support present and future development 5

Total 10

Average 5

Industry Strength (IS)

Intense rivalry between competitor which resulted to a decrease in profit margin. 2

Susceptibility to uncontrollable economic occurrence in the industry 2

High rise residential segment stable growth rate of 2% annually 5

Total 9

Average 3

Environmental Stability (ES)

High forecast rate of the GDP coupled with the high remittances of the OFWs -1

The growth of the BPO sector -3

Promotion of the country as a retirement haven -3

large base of more financially empowered professionals -2

emergence of new business centers in an opportunity for the firm -2

Climate changes and the vulnerability of the economy -2

-6

Total 19

Average -2.7

90 | P a g e
 Competitive Advantage (CA)

Synergy with DMCI’s Construction Business -1

Residential Units Priced lower compared to competitors -1

Developments are not strategically located in central business district -5

Experience is limited to residential real estate projects -5

Amenities and Resort-Living Design Concept of Real Estate Projects -2

Adequate Capitalization to for investment and land acquisitions. -1

Total -15

Average -2.5

X-Axis (CA Average + IS Average) = (.5)

Y-Axis (ES Average + FS Average) =2.3

SPACE Matrix

91 | P a g e
Based from the strategic management tool, the company belongs in the aggressive quadrant

which means that the financial strength is a dominating factor in the industry. It should pursue

backward, forward, horizontal integration, market penetration, market development, product

development, diversification (related or unrelated).

IE Matrix

Total IFE Rating = 2.56

Strong 3.0 to Average Weak

Total
4.0 2.0 to 2.99 1.0 to 1.99

High I II III

EFE 3.0 to 4.0

Medium IV V VI

Rating 2.0 to 2.99

= 2.85 Low VII VIII IX

1.0 to 1.99

92 | P a g e
 The internal-external matrix assigns positions to the firm in a nine cell display based on its IFE

and EFE scores. If the firm falls in cell 1,2 and 4, grow and build strategies are recommended.

Hold and Maintain strategies are advised for firms falling in cells 3, 5 and 7. Firms should

consider harvest or divest strategies if they fall in cells 6, 8 and 9

Based on the IE matrix, DMCI Homes falls in cell V. Hold and Maintain strategies are

recommendedunder this group. Intensive strategies such as market penetration and product

development are two commonly employed strategies.

Grand Strategy Matrix

The Grand Strategy Matrix consists of two dimensions—competitive and market growth, and

four quadrants which contains various strategies that the company and all its division must fall

into. The matrix is a tool in creating a different and alternative strategies for an organization.

(David, 2011)

a. Competitive Position

DMCI Homes has a weak competitive position although it has adequate capitalization and

competitive pricing, the market share that is based on gross revenue is still lagging as compared

to its competitors. It has clearly shown a slight increase of 2% from 2013 operation. Moreover,

DMCI Homes was behind the competitors in terms of delivering related product line within the

93 | P a g e
same industry and location of developments within the business districts in Metro Manila. As a

result, DMCI has failed to accommodate the demands of young professional who opted to

reside within these areas.

b. Market Growth Rate

The GDP of Philippines is expected to be 6.3% in 2016. As BPO sectors in the country increases,

it also increases the demand in residential properties. The continuous flow of OFW Remittance,

potential industry sales of BPO sector, the retirement market and will further accelerate

growth.

However, DMCI has failed to utilize this opportunity. There are other emerging cities aside from

Metro Manila that has impeccable growth rate of in the real estate industry and is considered

by foreign retirees. For instance, Cebu has received its fair share of tourist because of its

known white sand beaches, luxury hotel and resort.

In addition, most OFW resides in the province. DMCI homes should cater consumers outside

Metro Manila especially does market areas that have not been infiltrated by its competitors.

94 | P a g e
 Figure 13: Grand Strategy Matrix

DMCI Homes weak competitive situation and rapid market growth fall under Quadrant II. This

means DMCI need to evaluate their present approach to the marketplace seriously and because

DMCI are in a rapid-market-growth industry, and intensive strategy (as opposed to integrative

or diversification) is usually the first option to be considered.

95 | P a g e
QSPM FOR DMCI HOMES

Strategic Alternatives
1 2
Key Factors Weig AS TAS AS TS
ht
Opportunities
New business centers are emerging in the metropolis .15 4 .60 1 .15
Income boost from remittances of OFWs seen at 29.7B .10 1 .10 4 .40
High demand for condominium units .10 3 .30 4 .40
High GDP rate forecast for the Philippines at 6.4% .10 2 .20 3 .30
Steady interest rates at 4% .20 4 .80 3 .60
Promotion of the Philippines as retirement haven and .05 1 .05 4 .20
relaxed constitutional limitations on land use and
ownership
Growth of the BPO sector .10 - -
Threats
Flooding problems in the metropolis wherein key .10 3 .30 4 .40
metropolitan areas are deemed below the sea level
Increasing number of competitors and high exit barriers .05 2 .10 3 .15
Regulatory Policies .05 2 .10 3 .15
Total 1.0

Strengths
Increased revenue by 7.5% .03 2 .06 3 .09
5,155 residential unit turnovers, 3982 residential units .04 - -
launched
Lower costs and expenses .03 1 .03 3 .03
Leading mid-income residential developer in the Philippines .08 3 .24 4 .32
+47% capital expenditures .07 4 .28 3 .21
Effective leveraging w/ attractive interest rates .10 4 .40 3 .30
Employee morale is excellent .05 - -
Strong internet presence .08 2 .16 3 .24
Strong inflow of remittances from OFWs .08 2 .16 3 .24
Weaknesses
Inflation & interest rates may affect leveraging .10 2 .20 1 .10
A number of unsatisfied customers .13 - -
Locations of some competitors more strategic .09 1 .09 4 .36
Escalating land values hinder strategic acquisitions .03 2 .06 4 .12
Still uses equipment that are fully depreciated .06 1 .06 1 .06
Be more familiar with IS of rivals .03 - -
TOTAL 1.0 4.29 4.82

96 | P a g e
Legend:

AS: Attractiveness Score

TAS: Total Attractiveness Score

1. Develop properties into office spaces for leasing inside central business districts and urban

centers

2. Locate developments outside the metropolis and recreate them to make fully service

communities

There are two alternative strategies – (1) Develop properties into office spaces for leasing

inside central business districts and urban centers and (2) locate developments outside the

metropolis and recreate them to make fully service communities. Strategy 2 is more attractive

than strategy 1. Low interest rates make developments around the capital region appealing, but

OFWs (low- to mid-end segment of the market) make up the needed 80% demand for

residential units. Strong inflows of remittances, land availability, and the growing Filipino

families are the major reasons why locating developments outside the metropolis and

recreating them to make fully service communities are a better alternative strategy.

97 | P a g e
 VII. OBJECTIVES, STRATEGY RECOMMENDATION, AND ACTION PLANS

A. Strategic and Financial Objectives

The strategic objective of DMCI Homes Inc. is to keep up and share the second place in the

middle market residential industry.

From the market analysis, there’s a wide lead of the big real estate companies (Vista Land,

Megaworld’s Empire East, and Robinson’s Land) versus the lower tier companies. The other big

companies have competencies in have competencies in other segments of the market. Vista

Land now leads the low cost segment through subsidiary Camella Homes though it also has

interest in the high end and middle income segment (Crown Asia and Brittany). Megaworld has

been the market leader in the middle segnment. Robinsons Land, the real etate arm of JG

Summit Holdings, Inc., has been competing with DMCI in the mid income segments through its

Magnolia Residences and many more.

Vista Land dominates the middle income segment with 53.1B market share in 2014 alone.

Robinsons Land and DMCI Homes comes in at second and third. There’s a large disparity

between the market leader and the followers and it makes it hard or unlikely for the followers

to aim for the top spot in the market within the next 5 years. However, given that DMCI and

Robinsons DMCI can best succeed if it can equal or exceed Robinsons within the next 5 yrs.

Aiming for number 2 can be both challenging and rewarding as this bring profits up and a better

market share thus improving the brand name.

Having better standing and higher market share in the Middle income segment will make DMCI

a strong contender against the leading Vista Land. The company will endeavor improving its IFE

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at 2.56 and CPM to be more competitive against Avida and Robinsons Land and improve market

share. The strategies will make the company more responsive to its external environment.

B. Recommended Business Strategies

According to real estate industry estimates, nearly four million housing units are needed to

meet the growing requirements of Filipino families. A big majority of these units (80%) are

needed by the low- to mid-end segment of the market.

The ASEAN integration, resettlement of OFWs in the country and swelling demand for office

spaces are also expected to drive real estate growth in the next few years.

To capitalize on these opportunities, we recommend DMCI Homes to look at new platforms to

grow its business. Mass housing and office leasing are likely expansion segments given the

company’s value engineering capability and property management experience.

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1. Develop properties into office spaces

for leasing inside central business

districts and urban centers

Due to a high demand for office spaces,

it is best for the company to

concentrate developments inside cities

where its presence is low. Looking at

the project map, developments are

lacking at Muntinlupa City, Pasay City,

Pasig City, and Quezon City. It should

also strengthen its presence around

Bonifacio Global Center.

For the construction, designs are less

intricate because basic amenities are only provided.

2. Locate developments outside the metropolis and recreate them to make fully service

communities

DMCI Homes should also prepare to expand its presence outside Metro Manila, Cavite, Laguna

and Baguio City to help address the housing shortage in the country.

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The company should strengthen their international presence more by increasing distribution

forces and offices around the globe where there are many OFWs.

Construction of units should cater to the needs of retirees, mid-income earners among

provinces, and those OFWs wishing to return from abroad. Architectural designs should meet

the geological requirements of the provinces where they would develop.

Financing

To access additional funding for its current and future developments, tapping the bond market

is recommended given the steady interest rates at 4%

C. RECOMMENDED ORGANIZATIONAL STRATEGIES

The current functional organization of DMCI Homes contributes itself to the market

development and market penetration strategy. The additional department within the functional

divisions can be added to further the progress of the market development strategy. It is also

necessary to supplement the existing department with additional roles.

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The market penetration strategies will further be put into effect by the sales, marketing and

customer care divisions while the market development strategies will be enacted by the

business development, marketing, and sales divisions.

A total of 50 additional employees will be included to the organization to respond to the

different strategy.

Most of the employees will go to additional sales personnel to strengthen the distribution

network of DMCI Homes.

1) Additional employees to support international sales divisions.

This is in line with market penetration strategy to further strengthen its presence to the OFW

and to take advantage of the promotion of the Philippines as a retirement haven.

W1 & O7 - Increase international presence by adding in-house sales and partnering with

external

brokers abroad.

Additional employees will be used to manage and support the operations of the different

international offices. Employees will be used to develop partnerships with brokers abroad and

to help DMCI Homes meet the terms with foreign regulations in establishing sales offices.

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 2) Additional employees to institutional sales.

A corporate sales unit will be added to form partnerships with BPO companies in line with the

market development strategy to target BPO workers:

O5 & O8 – Large base of more financially empowered young professional and growth of BPO

sector.

The new unit will forge partnerships with corporate institutions to provide housing solutions to

their employees.

3) Additional positions for after-sales representatives.

S1 & T2 - Launch incentive program for satisfied homeowners to refer family and friends to

DMCI Homes because of high-intensity competition may squeeze profit margin.

For the incentive program strategy to be implemented, existing clients should be satisfied. The

customer service representative will act as a relationship manager to be used to market the

incentive program to the DMCI Homeowners. Relationship managers would determine

potential home owners that would have possible referrals.

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 4) Concentrate DMCI’s real estate business to DMCI Homes.

DMCI Holdings should concentrate all of its property businesses to DMCI Homes in order to

reduce operating cost and increase the business focus of DMCI Holdings. Presently, there is a

small fraction of its housing development business that belongs to its construction arm. These

projects should be assigned to DMCI Homes to fully utilize the property development

experience of DMCI Homes.

W2 – Solve limited experience problem in commercial infrastructure or mixed living structures

by transferring some projects handled by the parent company, DMCI Holdings.

D. Financial Projections and Overall Evaluation of the Strategies

Financial Projections

The following table shows the comparison of values in the income statement of DMCI Homes

taken from the notes section of the consolidated income statement of DMCI Holdings from

2012 to 2014. The items in the first column are the basis of the items that need calculations for

the financial projections of DMCI Homes. Below the comparison table are the assumptions and

the bases of the projected values for DMCI Homes for a period of five (5) years, from 2014 to

2018.

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 Financial Projections (2014-2018)

INCOME STATEMENT

FINANCIAL PROJECTIONS
2014 2015 2016 2017 2018
Revenue 13,504,588,972 14,179,818,421 14,888,809,342 15,633,249,809 16,414,912,299
Costs and Expenses
Cost of Real Estate Sales 6,411,214,342 6,731,775,059 7,068,363,812 7,421,782,003 7,792,871,103
Operating Expenses 2,436,487,041 2,558,311,393 2,686,226,963 2,820,538,311 2,961,565,226
Finance Costs 127,604,628 133,984,859 140,684,102 147,718,307 155,104,223
8,975,306,011 9,424,071,312 9,895,274,877 10,390,038,621 10,909,540,552
EBITDA 4,529,282,961 4,755,747,109 4,993,534,465 5,243,211,188 5,505,371,747
Provision for income tax 1,264,672,682.00 1,327,906,316 1,394,301,632 1,464,016,714 1,537,217,549
Net Income 3,264,610,279.00 3,427,840,793 3,599,232,833 3,779,194,474 3,968,154,198
Other Comprehensive Income
Remeasurement gains on defined benefit plans 107,674,250 113,057,963 118,710,861 124,646,404 130,878,724
Income tax effect -32,302,275 -33,917,389 -35,613,258 -37,393,921 -39,263,617
75,271,975 79,035,574 82,987,352 87,136,720 91,493,556
Total Comprehensive Income 3,339,982,254.00 3,506,981,367 3,682,330,435 3,866,446,957 4,059,769,305

a. Specific Financial Statement Assumptions

*Values are in million, unless volume is indicated.

 The table above shows the increasing trend of sales and reservation and the percentage

of revenues recognized from it. The researchers have come up with the average growth

of the first two items through the computation of the historical average growth rate of

the values provided above.

 Since the researchers were able to obtain only the income statement from the notes

section of the 2012 to 2014 financial reports of DMCI Holdings, the parent company of

the subject under study, the researchers will project values only for that particular

financial statement.

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 b. General Revenue and Expense Assumptions

The following assumptions formulated for this research will be affecting the revenue item in

the income statement of DMCI Homes:

 The Cost of Sales will follow the average historical growth rate from 2014 to 2018

because there are no specific strategies geared towards lowering production costs any

further. Current production setup where there exists an operational synergy between

DMCI Homes and its construction sister company will be retained.

 Provision for Income Tax will follow the average historical growth rate from 2014 to

2018 assuming that taxation policies regarding property developments do not change.

 Finance Income (cost) will increase from 2014 to 2018 because of specific strategies

geared towards incurring more funds to be used in future developments.

 Depreciation and Amortization will follow the average historical growth rate from 2014

to 2018 assuming that there is no bubble in the industry that would affect how DMCI

Homes values its property developments which are dependent on interest rates.

 Other income (expense) will follow the historical growth rate from 2014 to 2018

because there are no specific strategies that are deemed by the researchers that would

affect that particular item.

C. 2014 Economic Indicators Assumptions that would affect the industry

The following are the assumptions applied in the research that will be affecting the items

projected in the income statement of DMCI Homes:

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  GDP is estimated to grow to 6.4%

 Unemployment Rate is estimated to remain to 7.2%

 Value of Oil Imports is estimated to grow to 572.09 billion pesos

 Average Consumer Prices is estimated to be at 174.214

 Gross National Savings as a percentage of GDP is estimated at 18.66%

 Investments of as part of the GDP estimated at 27.4B

c. 2015 Economic Indicators Assumptions that would affect the industry

The following are the assumptions made by the researchers that will be affecting the items

in the income statement of DMCI Homes:

 GDP is estimated to grow to 17,852.45 billion pesos

 Unemployment Rate is estimated to remain to 7,2%

 Value of Oil Imports is estimated to grow to 606.69 billion pesos

 Average Consumer Prices is estimated to be at 181.629

 Gross National Savings as a percentage of GDP is estimated at 18.59%

 Investments of as part of the GDP estimated at 27.4B

d. 2016 Economic Indicators Assumptions that would affect the industry

The following are the assumptions made by the researchers that will be affecting the items in

the income statement of DMCI Homes:

 GDP is estimated to grow to 18,985,73 billion pesos

 Unemployment Rate is estimated to be at 7%

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  Value of Oil Imports is estimated to grow to 630.72 billion pesos

 Average Consumer Prices is estimated to be at 188.894

 Gross National Savings as a percentage of GDP is estimated at 18.36%

 Investments of as part of the GDP estimated at 27.4B

e. 2017 Economic Indicators Assumptions that would affect the industry

The following are the assumptions made by the researchers that will be affecting the items in

the income statement of DMCI Homes:

 GDP is estimated to grow to 20,229.26 billion pesos

 Unemployment Rate is estimated to be at 7%

 Value of Oil Imports is estimated to grow to 662.26 billion pesos

 Average Consumer Prices is estimated to be at 196.45

 Gross National Savings as a percentage of GDP is estimated at 18.15%

 Investments of as part of the GDP estimated at 27.4B

f. 2018 Economic Indicators Assumptions that would affect the industry

The following are the assumptions made by the researchers that will be affecting the items in

the income statement of DMCI Homes:

 GDP is estimated to grow to 21,599.78 billion pesos

 Unemployment Rate is estimated to be at 7%

 Value of Oil Imports is estimated to grow to 695.37 billion pesos

 Average Consumer Prices is estimated to be at 204.48

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  Gross National Savings as a percentage of GDP is estimated at 17.85%

 Investments of as part of the GDP estimated at 27.4B

STATEMENT OF FINANCIAL POSITION

2014 2015 2016 2017 2018

ASSETS
Current Assets
Cash and cash equivalents 2,631,845,505 2,763,437,780 2,901,609,669 3,046,690,153 3,199,024,660
Receivables 5,913,659,840 6,209,342,832 6,519,809,974 6,845,800,472 7,188,090,496
Real estate inventories 24,164,416,480 25,372,637,304 26,641,269,169 27,973,332,628 29,371,999,259
Financial asset at FVPL 70,630,000 71,336,300 72,049,663 72,770,160 73,497,861
Other current assets 1,560,117,594 1,575,718,770 1,591,475,958 1,607,390,717 1,623,464,624
Total Current Assets 34,340,669,419 35,992,472,986 37,726,214,433 39,545,984,130 41,456,076,901

Noncurrent Assets
Noncurrent receivables 2,826,041,144 2,967,343,201 3,115,710,361 3,271,495,879 3,435,070,673
Net pension assets 71,572,346 71,930,208 72,289,859 72,651,308 73,014,565
Investments in subsidiaries and associates 227,283,878 228,420,297 229,562,399 230,710,211 231,863,762
Investment properties 158,523,614 159,316,232 160,112,813 160,913,377 161,717,944
Property and equipment 1,040,398,741 1,045,600,735 1,050,828,738 1,056,082,882 1,061,363,296
Software cost 71,269,928 73,408,026 75,610,267 77,878,575 80,214,932
Total noncurrent asset 4,395,089,651 4,546,018,699 4,704,114,437 4,869,732,232 5,043,245,172
38,735,759,070 40,538,491,685 42,430,328,870 44,415,716,362 46,499,322,073

LIABILITIES AND EQUITY

Current Liabilities
Accounts and other payables 1,147,076,569 1,204,430,397 1,264,651,917 1,327,884,513 1,394,278,739
Customers' advances and deposits 5,401,887,366 5,671,981,734 5,955,580,821 6,253,359,862 6,566,027,855
Payables to related parties 683,291,077 686,707,532 690,141,070 693,591,775 697,059,734
Current portion of loans payable 461,490,757 484,565,295 508,793,560 534,233,238 560,944,899
Current portion of liabilities for purchased land 1,865,351,506 1,958,619,081 2,056,550,035 2,159,377,537 2,267,346,414
Total Current Liabilities 9,559,097,275 10,006,304,040 10,475,717,403 10,968,446,925 11,485,657,642

Noncurrent Liabilities
Loans payable - net of current portion 15,736,245,438 16,523,057,710 17,349,210,595 18,216,671,125 19,127,504,681
Liabilities for purchased land - net of current 312,929,207 322,317,083 331,986,596 341,946,194 352,204,579
Deferred tax liabilities - net 1,434,112,756 1,505,818,394 1,581,109,313 1,660,164,779 1,743,173,018
Total Noncurrent Liabilities 17,483,287,401 18,351,193,187 19,262,306,505 20,218,782,098 21,222,882,279
Total Liabilities 27,042,384,676 28,357,497,227 29,738,023,908 31,187,229,023 32,708,539,921

Equity
Capital stock 3,487,727,328 3,487,727,328 3,487,727,328 3,487,727,328 3,487,727,328
Additional paid-in capital 15,260,667 15,336,970 15,413,655 15,490,723 15,568,177
Appropriated retained earnings 5,000,000,000 5,000,000,000 5,000,000,000 5,000,000,000 5,000,000,000
Unappropriated retained earnings 3,009,300,858 3,677,930,160 4,189,163,979 4,725,269,287 5,287,486,648
Remeasurement gains on defined benefit plans 181,085,541 190,139,818 199,646,809 209,629,149 220,110,607
Total Equity 11,693,374,394 12,180,994,458 12,692,304,962 13,228,487,338 13,790,782,153
38,735,759,070 40,538,491,685 42,430,328,870 44,415,716,362 46,499,322,073

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Balance Sheet Assumptions

 Accounts Receivable will grow in proportion to sales.

 Available for sale investment and Investment in Subsidiaries accounts would have an

estimated change of .5%

 Investment in Properties, Property and Equipment and Other Assets will also have .5%

change every year.

 Accounts and Other Payables will grow in proportion to cost of sales. This will also grow

as a result of issuance of bonds.

 Customer Deposit Liabilities will grow in proportion to sales.

 Deferred Tax Liability, Pension Liability and Payable to related party accounts will grow

in proportion to net income

 Cash is the balancing figure to match assets with liabilities plus equity.

 Liabilities pertaining to land will grow as a result of acquisitions for to new

developments

 It is expected that there will be no changes on the capital stock account since the

company will opt to finance their needs through issuance of bonds.

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E. DEPARTMENTAL PROGRAM

The implementation of the market penetration and development strategies will heavily rely on

the division and their different programs and step by step action plans.

Construction

The Construction division will lead in the Sales and Operations Planning strategy (O3 & O4

Establish Sales and Operations Planning to keep demand and supply in balance). The operations

department will chair monthly meetings with the sales department to determine forecasted

demand for units. The sales department will provide indication as to the type of units (studio, 1

bedroom or 2 bedroom) that are on demand. The construction team will design its

developments based on the information provided by sales team.

Human Resources

An additional 50 employees are needed to aid in the execution of the different strategies of

DMCI such as improvement of the distribution channel locally and abroad. The strategy to send

employees abroad will also serve as a motivational tool for employees to perform better to be

chosen as a representative of DMCI internationally.

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Human Resource division will also launch training programs to prepare new hires for the real

estate licensure exam required by the government.

Human resource with the approval of the accounting department, will increase the commission

rate of brokers from 6% to 10% to attract external brokers.

Sales

 Online Sales Strategy

The sales division will lead in the execution of the e-commerce strategy (W3- Enhance website

to include online buying of units).

The Sales team with the help of programmers (in-house or third party website developer) will

develop an e-commerce capable website. The inventory management system of DMCI will be

connected to the website to the buyers and online brokers will be aware of the availability of

units. Moreover, an employee will also be assigned to ensure that the reservation will be

converted to actual sales.

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The sales division will coordinate with marketing for other components of the website. Since

the current website of DMCI includes ad contents, the marketing will aid the sales team by

providing a 3D Open House feature of the website.

 Development of the BPO Market

As indicated in the SWOT matrix, BPO workers will be a possible target market. (O8 &

O1 – Make an agreement with BPO companies in the Philippines in order for DMCI to provide

housing to BPO workers) With the coordination of marketing, finance and construction, the

housing package will be specifically designed to attract BPO workers.

 Development of the OFW Market

The sales department will lead this program by forging partnerships with various external

brokers in countries DMCI has no presence in. (W1, W3 –Improve international brand

awareness by partnering with external brokers especially in untapped countries). An external

broker will be employed to market DMCI in Saudi Arabia and other European Countries. DMCI

will also strengthen its hold over Canada and Japan which also has an increasing number of

OFW deployments.

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Customer Care

The Customer care division will lead in the market penetration strategy. (S3 & T2 - Launch

incentive program for satisfied home owners to refer family and friends to DMCI Homes since

there is a healthy domestic market and demand for condominium units and to cope up with the

high intensity competition that may squeeze profit margin).

The existing home owner should continue to remain satisfied for the referral program to work.

The person in charge for customer care department will be the relationship manager. Its

primary duty of the group is to update the Customer Relationship Management (CRM) for

existing homeowner and prospective buyers. While satisfying the current needs of the

homeowners, they will also gather data about prospective buyer. The manager will then exert

efforts in the individuals identified for possible referral and introduce the existing products of

DMCI, the existing homeowners will then be informed with the possible financial incentives for

referring someone to DMCI.

Marketing

 Marketing Communications Integration

To raise the brand awareness among OFW, the marketing division will lead in the planning and

execution of the integrated marketing communications plan of the company. The middle

income OFWs who are looking to resettle in the Philippines or provide home to their family will

be the marketing’s target audience.

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The marketing department will contract an advertising company to propose and execute the ad

campaign based on how DMCI Homes delivers their dream for their families to have a quality

house they can call home. The budget for local and international campaign will be 500M

annually.

DMCI Homes will use several communications method to deliver a clear and effective message

and promote brand awareness. DMCI will partake in real estate fairs and organize buyer

conventions. Detailed product information will also be available in the company’s website.

Articles will also be published in magazines and blogs about specific projects for publicity.

Lastly, TV advertisements will focus on the DMCI brand, rather than to a specific project, as a

property developer that offers finest quality products and value for money.

 Referral Program

The referral program will be supported by the marketing division. It will focus on customer care

as marketing division provide resources to effectively deliver the message of the referral

program.

The resources used must not only highlight the monetary rewards of referring people to DMCI

but the opportunity to be accessible to your family and friends.

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 VIII. STRATEGY EVALUATION, MONITORING AND CONTROL

Balanced scorecard is an important strategy evaluation tool that allows firms to evaluate

strategy from a financial, customer knowledge, internal business processes and learning and

growth.

Financial Perspective

GOALS
Primary
Objectives Measure Meets Below
Alert Responsible
Expectation Expectation

D – Driver

A – Accountable

C – Consulted

I – Informed

Growth in Net Year-on- ≥21% 10- <10% D – Marketing,

Income Year 21% Sales and

increase in Operation Teams

Profit A – General

Management

C – Finance

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 I– Business

Development

Growth in Real Year-on- ≥25% 10- <10% D – Marketing

Estate Revenues Year 25% and Sales

increase in A – General

Gross Management

Revenue C – Finance &

from Construction

Condomini I – Business

um Units. Development

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Customer Perspective

GOALS

Objectives Measure Meets Below Responsibilities

Alert
Expectation Expectation

Tap existing home % of referral D – Customer

owners for / no. of Care and Sales

referrals homeowners A – General

≥ 1% - <1%
Management

C – Marketing

I – Construction

Penetrate BPO Market ≥4% 2-4% <2% D – Marketing

Market Share of and Sales

Middle A – General

Income BPO Management

Market C – Business

Development

I – Finance &

Construction

Increase Market Market ≥8% 4-8% <4% D – Marketing

Share for Share of and Sales

Middle Income OFW Middle A – General

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market Income OFW Management

Market C – Business

Development

I – Finance &

Construction

Strong Market Percentage ≥ 1.6% 1.0-1.6% <1% D – Marketing

follower in the of DMCI and Sales

middle income real Market A – General

estate Share over Management

industry industry C – Business

Development

I – Finance &

Construction

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Operation Perspective

GOALS
Responsibilities
Objectives Meets Below
Alert
Expectation Expectation

Enable e- On or before July to After September D – Sales

commerce June 2016 September 2016 A – General

capability of 2016 Management

website C –Marketing

I – Customer Care

Strategic Additional Area D – Business

Land gained by 2019: Development

Banking A – General

initiatives ≥20,000 sqm 15,000- <15,000 Management

20,000 C –Sales, Construction

and

Finance

I – Marketing

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Learning and Growth Perspective

GOALS
Responsibilities
Objectives Measure Meets Alert Below

Expectation Expectation

Acquire and Year-on- D – Human resources

retain Year 320- A – General Management

>350 <320
Talent number of 350 C –Sales

Employees I – Finance

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APENDIX I – FINANCIAL STATEMENTS OF DMCI

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