Improvement in critical thinking and analyses by Graduate Students

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
December 18, 2016

I am writing this a reflection on my attendance for strama defense.

Peter Senge is right that the Fifth Discipline, shared learning and the rest of the disciplines:    Mental Models, Systemic Thinking, Shared Vision are important in strategy and successful management of enterprise or change.  Let us take mental models.

1. The use of macro data for EFE even for local business that have only local competitors-  It should be used for FMCG products and products and services that have national coverage.  The presentor for a hospital in an island that have local market in scope used only macro data as if she was in MM, like a big hospital in MM.  Some would advocate the use of B2C marketing strategy even if the business were B2B.   Use of mass and social media for a B2B company.

2.  Using irrelevant or hostile data or making wrong conclusions from the data presented.   Some would judge the the same stuff as both strength and weakness.  Say for instance, on the CFS, they would judge having more products as one of the factor for success in the business And somewhere in the paper, said that the company was progressive because of diverse products.  And the graphs and table shows indeed that the company was ahead of competitors in terms of products and services.  And yet in the internal analysis says that the company has fewer variants of the products.

3.  Failing to address the SWOT analysis.   Some students would say that the company is weak financially (low liquidity, high DE ratio, etc)   And yet after noting that, while the student would profess marketing strategy fail to address this issue. Why would you let a very weak company run a sprint or a marathon.  Are the weaknesses not to be addressed.?  We should beef our finance mentoring sirs?

Buying a business is like analyzing, reviewing a strama paper.

Every generation needs a revolution - an entrepreneurial revolution

Rizal Philippines
August 21, 2016.

Everything is so sudden. While I do not have the formal mandate yet that I would be an executive director of a holding company, a thick folder was sent to me to study the viability of buying a school.  (Elem to Senior High School)   There was a communication that contains a letter of intent to sell and the suggested closing is end of the month.

I reviewed the documents and found out that most of the information are for a loan transaction:  appraisal of the real property and FS (which I think looked funny)  If ever there is a valuation report, it has to be valuation of the business based on the FS?  They do not add up. Well the FS shows a school that is losing money.

If the purpose of the exercise is to buy the business, a lot more data is needed.  It is like a strama paper.   The objectives have to be defined and the strategy of how to make the school profitable, how to achieve ROI has to be defined.  A due diligence study has to be made before cogent decision can be made.

I did not realize that I am comfortable and at home in this kind of work.

These are the excerpts of my thoughts/communication to the Chairman of the Holding company:

Allow me to say some of my humble thoughts/comments on the paper which I read: 1.  The bulk of the information is for a loan transaction ie, the collateral and financials 2.  I could see a lot of discrepancy in the financial statements:   eg. the  income statement, the expenses (vs the worksheet) Have they made 100% correct representation on the data presented po Why are they selling?   Maybe they are not making money or enough However, I understand the plan is to buy the business and more information is needed to determine the viability of the business to be purchased: Internal Analysis: 1.   The main value proposition of the school, Primary Target Market 2   The competitive advantage 3.  Does the school possess the critical factors for success of the school 4.  Quality of management.  Shall the top management remain in case of sale, who shall remain, who shall resign/be retired?  Is this well managed 5.  Quality of the teaching staff/efficiency (the current ratio of staff vs students population is 1:10.  Is this an ideal ratio External analysis: 1.  Competitive analysis         of facilities      of teaching staff      of tuition fee.  Is the fee of P51,000 a reasonable tuition for a Las Pinas School (malapit na sa exclusive school fees)      enrollment 2. Why is their enrollment only 500? 3.  Where is their growth area?  Can the enrollment be increased? Strategy: Price 1.  How much is the just purchase price?   2.  Manner of payment Purpose 1.  What is the goal for the school?      Enrollment, revenue, , expenses,  Net income 2.  What is the strategy to achieve # 1. Operating the school: 1.  Who will run the school?  Shall we install a new dean (do we have a candidate now? Or shall there be a transition period until the purchase price is  completed 2. What changes must be made to make it generate cash flow for the holding company? .  My hypothesis is that:     If the enrollment can reach 1,000 ,reduce tuition to 35,000, there would be additional P11 million, and peg expenses to only say 12 to P15 m, then we can generate additional income of         P14 million for added revenues           10 million from cost reduction      the N.I can be 24 million or 40% ROI. vs purchase price of 50 million However, may I suggest that a due diligence be made. I talked to a school Dean CPA and I conclude that to properly know what to do with the acquisition and to validate this hypothesis

Every business strategist/owner should be entrepreneurial, ie spot the opportunity

Every generation needs a revolution - entrepreneurial revolution

Ateneo Professional School
Makati City
June 18, 2016

In the strama defense, there is a portion there that uses Porter;s five forces of competition.   If the competition is high for all the 4 sectors, that means to say, there is an opportunity in the industry where the enterprise is to make money.  If the competition is high, the more money is to be made. If there is more money and there is growth, there is a possibility for the enterprise to grow its sales, cash flow, and profit.

Thus the student for strama must have a keen eye on the opportunity and must balance the risk aversion vs the benefit the money to be made.

Thus:

1.  In the yarn factory that shifts to cotton toll manufacturing.  It makes a cotton bud each for 4 cents, which the the brand owner sells for 20 cents.  The l6 cents is the opportunity window. The brand owner makes a lot more money that the producer.  It is worth looking into the business of making and selling cotton buds.

Some notes on a strama defense

Rizal Philippines | June 9 2014

I witnessed a strama defense late last week on beauty industry

I saw some difficulties in the strategy paper:

1.  The business in engaged in 3 sub businesses:  skin, spa, beauty products.  Hence there is no strategy b
because strategy means focus on an objective.

SMART in strategy

APS, Makati, Philippines

I was at Strama defense early this week.  It was a reoral.   The earlier paper needed a lot of rework because of the lack of understanding by the student of how the business, an insurance broker operated, as we went through the external and internal analysis.    She could not tell, or clarify as to where the Insurance Brokerage gets its customer:   from open market or from the bank.

This time she could not convince the panel, as to whether the 50% growth in sales  (her planned strategic objective) which tops at 21 billion pesos next year could be achieved.   The inputs, the thhroughputs, the outputs, the 4ms, the enterprise delivery system were not clear or some were not available/written donw

Or what is magical about the product/service that would:

1.  draw in a lot of agents;

2.  Have people buy the products/service.

It was not very SMART (specific, measureable, achievable, realistic, and time bound)

Some insights into strama papers presented in the defense yesterday - pharma onco and bank assurance

Rizal Philippines   |   February 11, 2014

Today is the Feast of Lourdes in France.  The anniversary of apparition of Virgin Mary to the young girls.  Let us celebrate and remember the missives of Virgin Mary to us.

I was a panelist in two papers yesterday:   a bankassurance and a European pharma selling oncology (anti cancer drugs in the Philippines)

1.  Pharma selling anti cancer drugs.

Our main concern with standard strategic tools and analysis is that the output is me too business/products

I had some discussions with some Spentrep students who are currently taking up Strama.  For them, being the final paper, the Strama is the subject.  Spentrep is an elective.  I have pointed out and even Prof Fagan of HBS (who worked for BPI as a consultant) that we need applied or practical strategy.

After listening to  to Jaime Mandejar's BOS, we can say:

1.  If we look historically at products and company history, then we will continue to be in the red ocean, have price war, and red ocean competition.;

2.  Then if it is driving forward using a rearview mirror;  then, what you come out with strategy will be maybe moving backward or sideways?

3.  BOS says that most businesses now did not exist 5 years ago.  Therefore, new businesses that are compelling and differentiated would be your best bet.  Blue Ocean business that exist in new market space will flourish.  That could not happen with traditional strama tools and analysis.  BOS means sometimes abandoning the current business models  (Schumpeters destructive creation)

4.  Also if we use the same tools, same analysis leading to the same conclusion, why are we wondering that we come out with stale or me too strategies?

I will have my entrep students with their creative synthesis, new products with compelling MVP beating the best strama paper..  I would like to see them, think creatively rather than err hmmm strategically.  In the confusion of the terms and tools, they sometimes get confused or do not get the straight clear  meaning of the word itself.

They might have missed  Lidell Hart, Sun Tzu, Hannibal, Clauzewitz and lately that of Gen Vo Nguyen  Giap at Dien Bien Phu

Please view my presentation on the subject matter:

Old school strategy is dead

Applied Strategy

Strategic thinking by entrepreneurs

Noted in the checking of business plans

Angono, Rizal PHL   |  May 28, 2013

As I am checking the business plan submitted by Standard students and MBAH, I noted the following:

l.  For the effectual bp,  the story in the life of the entrepreneur consumed 60% of the bp;  the main parts of the bp was missed;

2.  There were no page number in quite a number of bp (this will not do in strama)

3. The bps were graded on the basis of completeness of the various parts and many parts:  eds, objectives, business model canvass, products,  were incomplete;

4.  With regards to the sales estimate, the macro and micro market were related to the number of customers/prospects  that can be had by the enterprise.

5.  Despite consultations, the cases, and the creative exercises conducted, these were not incorporated in the business plan

I will check the Business Plans today and tomorrow Christmastime

I got all the 13 business plans of the Sentrep class.  They were due December 20;  however the last day of the class was December 19.  Those who submitted last December l9 at AGSB will be graded after Jan 8, the first day of class in 2013 (RJ, who did, re - submitted via LBC -  I got her LBC send today.

5 papers were in partnership:  9 were solo. Those who are in partnership will get a maximum grade of 3 only.  Congrats to those who dared and went solo.  They learned invaluable lessons about business, business planning, research, creativity and above all entrepreneurship.

I noticed that some did not meet the basic requirement of at least 40 pages.  One paper will free me from checking because it did not meet the requirement of being written in a prescribed format. (They did not listen or read the syllabus.)

The business plan writing is a dry run for strama course. Those who listened well who understood what strategy is all about, and went through the rigor of business plan writing did well in their strama.  Well those who did not....