Virgin Coconut Oil
It is reflected in the land area devoted to coconuts, labor force utilized and foreign exchange earnings. The total population that depends on the coconut industry for their livelihood is one-third of the Philippine population. The country is the 2nd largest producer of coconut oil in the world. It produces 45% – 50% of the world’s output and 70 – 75% of the total world’s export. Virgin Coconut Oil (VCO) Products have not been patented for the past years but it has been existing as a cottage product in the regions. There are several plants located in the different regions of the country such as Zambales, Laguna and Batangas.
Highest capacity production is at 20,000 liters per year for one plant and a minimum of 9,000 liters for small plants. At this day and age, VCO can be produced through modern technology aside from natural means. Processes may either be through Fermentation, Centrifuge or Enzymatic. Producers however are faced with competition with refined coconut oil producers for raw materials. For VCO to be considered of high quality, it has to come from a harvested fruit that is not more than 12 months old, from a coconut tree that is not more than 30 years of age.
Virgin Coconut Oil Essay Example
Due to the slow and tedious productive system, many entrepreneurs have hesitated to venture into such business. A. INTRODUCTION This paper describes the macro environment starting with the country’s economic situation, the coconut industry and its importance to the economy of the Philippines and the emerging market for virgin coconut oil. This section provides the basis for the selection of the product as subject of this paper in terms of importance in Philippine trade, the opportunities it ffers based on market growth, simplicity of the production operation and acceptability and popularity of the product itself. The paper then zeroes in on the operation of the subject company, Coco Haven Philippines, Inc. The paper shall describe the company’s main business, its owners, its history and its existing operations such as process design, facility lay-out, marketing and distribution strategy, product design and organizational set-up. An on-site inspection of the facility was conducted by the group in order to appreciate a small company’s operation strategies.
The paper then ends with recommendations to improve Coco Haven’s operations which include an improved process design, facility lay-out, over all operations strategy using the 7S framework and financial system. B. OBJECTIVES OF THE STUDY 1. To provide recommendations on how to improve the following areas: a. Facility Design; b. Process Design; and c. Production Operations. 2. To identify the viability of the coconut virgin oil business in the industry thru; a. Financial Projections b. Market Analysis c. Market Demand & Supply C. STATEMENT OF THE PROBLEM
What measures should Coconut Haven Philippines, Inc. (CHI) do to increase its production capacity of 10,000 liters per year of virgin coconut oil to take advantage of the current demand of 80,000 to 85,000 liters? D. LIMITATIONS OF THE STUDY CHI, as a typical small scale enterprise, does not document its operations and has no financial system in place. On the macro-environment, statistics and information focusing on VCO as dietary supplement are unavailable. This study shall concentrate only on the improvement of the production system of the Virgin Coconut Oil of Coconut Haven Philippines, Inc. ased on the information provided by the company and the result of the group’s on-site visit and shall focus mainly on the company’s major product which is the virgin coconut oil. E. LITERATURE REVIEW Virgin Coconut Oil (VCO), is oil obtained from the fresh, mature kernel (coming from a fruit that is not more than 12 months old upon harvest), of the coconut plant not more than 30 years of age, by mechanical or natural means, without the use of heat, which does not lead to any alteration of the oil. VCO is suitable for human consumption in its natural state.
The Philippine Coconut Authority recommends the Tacunan Green Dwarf variety for producing VCO. VCO is composed primarily of medium and short chained fatty acids (MCFA) or triglycerides. MCFA are quickly digested, goes straight to the liver thru the portal vein and is transformed instantly into energy, This means that VCO does not produce fat and is absolutely non-cholesterol. Saturated fats found in VCO are good and promote health. VCO contains Lauric Acid that is transformed by the body into the disease fighting Monolaurin when ingested.
Monolaurin has shown very good results as an antibiotic and antiviral agent particularly in its potency agains lipid-coated viruses and bacteria. Monolaurin inactivates and disintegrates the lipids (fats) covering pathogenic microorganisms, enabling the antibiotics to easily penetrate and kill them. As such other Monolaurin benefits include the following: o Reduction of the risk of atherosclerosis, coronary and cerebrovascular disease, cancer and other degenerative conditions such as arthritis, asthma and diabetes. o Support the immune system function Prevent platelet stickiness that casuses clotting o Promotes weight loss o Inhibit osteoporosis o Boost the health of thyroid o Heal damaged tissues of the skin and prevent premature ageing o Make the skin soft, smooth, young looking and free of blemishes. o Moisturize dry, flaky & itchy skin. It can also ease eczema & alleviate minor skin ailments o Protect skin from cancer o Promote healthy scalp & produce strong and silky hair o Ease tension and relax the entire body Lauric Acid can also be found in abundance only from Mother’s milk, nature’s most perfect food.
VCO also has (Vitamin E) natural Tocopherol content of 40mg/kg making it an ideal skin moisturizer and revitalizer. The corona virus causing SARS is also lipid-coated and is similar to the organisms causing flu and pneumonia. Therefore, VCO may be a potential cure for SARS. Oil Seeds and Sources, variety of oil-rich seeds, nuts, and cereals which, apart from butter, are the main source of oils and fats for cooking, food manufacture, and soap making, as well as for specialized lubricating oils and oils used in cosmetics.
Some of these are grown solely for their oil, while others are also important food crops. The oil is extracted by pressing the seeds, followed by extraction with steam; the high-protein residue that remains after oil extraction is a valuable feedstuff for livestock (oil-seed cake). VCO may also serve as a healthy cooking oil or salad dressing or a perfect food seasoning & ingredient. As cooking oil, it is ideal for cooking due to its ability to remain whole without losing its chemical composition despite exposure to high temperatures. It can also be used to create your own salad oil and oatmeal.
It can be added to food and drinks to enhance their taste. As hair conditioner, the natural anti-microbial and protective medium chain fatty acid in VCO eliminates dandruff-causing bacteria, viruses. It is also an ideal cream and make-up remover. Oil-seed production is an important part of the agricultural economy of many countries; some oil seeds only grow in tropical regions (for example, coconut and oil palm), others in Mediterranean regions (such as the olive), while others will grow well in temperate regions (maize, rape, sunflowers, and soya beans).
The main sources of food oils are: coconut, corn (maize), cotton seed, oil palm, olive, peanut (groundnut or arachis oil), safflower, soya bean, sunflower seed, and rape seed (rape or colza oil). Olive oil is considered a delicacy, and that of the highest quality (virgin or extra-virgin oil, used mainly for dressings rather than cooking) is expressed from ripe olives by allowing them to be crushed simply under their own weight. Less expensive grades of olive oil are extracted after the virgin oil has been expressed in this way by pressing it cold, and then by extraction with water.
One of the main differences between Virgin Coconut oil and refined coconut oils is the scent and taste. All Virgin Coconut Oils retain the fresh scent and taste of coconuts, whereas the copra-based refined coconut oils have a bland taste due to the refining process. Some grades of refined copra-based oils are also now sold that have a coconut flavor, but are usually bitter and have a burnt taste to it. They are a form of “crude coconut oil” that has not undergone all of the deodorizing process, and they have a shorter shelf-life. Some manufacturers of Virgin Coconut Oils call their coconut oil “Extra Virgin Coconut Oil. There is no official classification or difference between “virgin” and “extra virgin” as there is in the olive oil industry, since the two oils are completely different in fatty acid composition, harvesting procedures, and terminology. Coconut oil also contains medium chain fatty acids which are found in mother’s milk. To equal the amount of MCFAs in mother’s milk a nursing infant would receive in one day, an adult needs about 3. 5 tablespoons of VCNO a day according to researchers. Since coconut oil in nature is packaged inside the coconut meat, it is recommended to take this amount throughout the day with food high in fiber and protein.
However, for those not used to coconut oil in their diet, it is best to start out with an amount far less than this first, to see how your body reacts. The most common side effect is diarrhea. VCO does not need to be kept in the refrigerator. In the Philippines and other tropical climates, where the ambient air temperature is much higher than North America, people traditionally do not refrigerated coconut oil. Virgin Coconut oil is the least susceptible to oxidation than any plant oil. Its natural antioxidants give it the longest shelf life. The expiration dates of VCO are for two years.
In the tropics Virgin Coconut Oil is almost always a liquid, since it’s melting point is about 76 degrees F. In North America it will usually be a solid, butter-like consistency. It can be stored in either form. Chapter 1. ENVIRONMENTAL SCANNING OF THE COCONUT INDUSTRY A. MACRO-ENVIRONMENT 1. 0 The Philippine Economy In 1997, the Asian financial crisis struck the region leading to a sharp depreciation of the peso and huge capital outflows leading to a 0. 6% contraction of the economy in 1998. The industry sector performed poorly, punctuated by a 2. 1% shrinkage.
For agriculture, this sector was badly hit by the El Nino drought in 1998 contracting the sector by 6. 4%. It made a dramatic turnaround with a 6. 5% growth in 1999. The economy staged a recovery in the ensuing years with real GDP rising by 4. 4% in 2000. In 2001, growth slowed to 3% owing to the global economic slowdown, the Mindanao insurgency crisis and major political upheavals in the Philippine history known as EDSA 2 and EDSA 3 during the first semester. But in the following years, growth picked up again to almost 5%, led by a robust service sector growth of 5-6%. Table 1.
Selected Philippine Economic Indicators (1970-2003). [pic] On the whole, the country’s economic performance has been marked by “boom and bust” cycles attributable to political instability, stalled policy reforms, external shocks, and natural disasters. Such a situation has not been conducive to increases in both domestic and foreign investment. As a consequence, labor productivity has also stagnated and this has been exacerbated by the rapid growth of the labor force (Herrin and Pernia, 2003). Table 2. Economic Growth Indicators. [pic] Although the GDP growth rate increased from 4. 43% in 2002 to 4. 2% in 2003, Gross Value Added (GVA) for the Agricultural sector decreased from 3. 67% in 2002 to 3. 63% in 2003. But in terms of trade, the agriculture sector contributed in total exports an FOB value of US$2. 160 Billion for 2004. Coconut oil is the top three Philippine exports with an FOB value of US$60 Million surpassed only by electronic products and apparel/clothing accessories with US$ 1. 96 billion and US$ 137 million respectively. 1. 1 The Philippine Coconut Industry Coconut production comprises one of the four major segments of Philippine agriculture; rice, corn and sugar are among the others.
Coconut is planted in 2. 7 million hectares, which accounts for 23% of the total croplands, and 74% of commercial croplands. In comparison, sugar accounts for only 5% of croplands and 15% of commercial crops, while rice and corn account for 30% and 28%, respectively, of total croplands. In the period before World War II, exports of coconut products accounted for about 20% of total Philippine exports. It rose to 35% of exports in the 1950’s and 1960’s, and dropped to about 20% in the 1970’s. In 1979, export earnings from coconut products amounted to $878. 35 million (coconut oil, $675. 6 million; copra, $114. 61 million; desiccated coconut, $88. 18 million), accounting for 23% of Philippine export earnings. Coconut products in the 1970’s have been the country’s top raw-material export, followed by mineral and forest products. Since the 1920’s up to the early 1970’s, about 61% of these exports were in the form of unprocessed copra; coconut oil and desiccated coconut accounted for about 29% and 10%, respectively, of the value of coconut exports. In the beginning of 1974 however, coconut oil has gradually accounted for the bulk of coconut-based exports.
By 1979, coconut oil accounted for 77% of the total value; copra 13%; and desiccated coconut, 10%. Other coconut products, such as coconut shell charcoal, coir (coconut fiber), and activated carbon, have accounted for only an insignificant portion of the value of all coconut products. Of the total value of coconut exports in the latter half of the seventies, 39% went to the U. S. , 46% to Western Europe, and the rest to the countries such as Japan and Russia. The Philippines was said to be the second world’s largest producer of coconut products, only after Indonesia.
It was in 1989 Philippines produced 11. 8 million tons of coconut products. It was also in that same year, coconut products such coconut oil, copra, and desiccated coconut accounted for more or less 6. 7% of the country’s exports. The world tonnage of coconut oil and copra exported during 2001 averaged about 2. 23 Million MT in oil basis and of this about 64% is from the Philippines. On the other hand, 16% of which were used to generate manufactured oil. 3 1. 2. Demand and Supply Situation of Coconut In a study, it was found out that 25% of cultivated land was planted with coconut tree.
Likewise, approximately, 25 – 33% of the Filipinos were partly dependent on coconut industry for their livelihood. In light of this, it is obvious that the coconut industry is of crucial importance to the Filipinos. Some of the regions that were most reliant to this industry were Southern Tagalog, Bicol regions and Eastern Visayas. In the late 1980’s these areas were once the center of coconut production. There are around 300M coconut trees in the country, about 85% of which are considered productive. The coconut industry provides an annual average of 5. 97% contribution to the GVA and 1. 4% to the GNP. Table 3. COCONUT PRODUCTION BY REGION, Annual Average (in ‘000 MT Copra Terms) 1997-2001 |REGION |AREA |% SHARE |PRODUCTION |% SHARE IN | | | | | |PRODUCTION | |Cordillera |0. 24 |- |0. 17 |0. 01 | |Ilocos Region |12. 08 |0. 03 |3. 74 |0. 15 | |Cagayan Valley |9. 2 |0. 026 |7. 71 |0. 31 | |Central Luzon |1. 75 |- |1. 25 |0. 31 | |Mimaropa |149. 90 |4. 80 |268. 45 |0. 11 | |Southern Luzon |350. 46 |11. 23 |100. 32 |0. 04 | |Bicol |369. 17 |11. 83 |210. 90 |8. 53 | |Western Visayas |114. 98 |3. 8 |76. 15 |3. 08 | |Central Visayas |126. 24 |4. 00 |66. 63 |2. 69 | |Eastern Visayas |364. 43 |11. 68 |296. 76 |12. 00 | |Western Mindanao |369. 13 |11. 83 |254. 12 |10. 27 | |Northern Mindanao |216. 13 |6. 90 |137. 11 |5. 54 | |Southern Mindanao |460. 70 |14. 76 |662. 2 |26. 77 | |Central Mindanao |98. 35 |3. 15 |87. 66 |3. 54 | |CARAGA |227. 48 |7. 29 |108. 89 |4. 40 | |ARMM |223. 15 |7. 15 |178. 43 |7. 21 | |PHILIPPINES |3,119. 65 |98. 279 |2,473. 30 |100. 00 | The table below will show the annual coconut trees by region from years 1992-2001.
It can be observed that the total volume of coconut trees planted in the Philippines has a fluctuated significantly and in 2001, it reached its second to the lowest from a period of ten years. Likewise, coconut farms are widely distributed nationwide, largely in regions of Southern Luzon in the North and Mindanao in the South. Table 4. COCONUT BEARING TREES BY REGION Philippines, Annual 1992-2001 [pic] Source of Basic Data: Bureau of Agricultural Statistics, Department of Agriculture During the early 1990’s, the average farm was a medium-sized unit of less than four hectares.
The owners, practically employed those nearby workers to collect coconuts rather than to engage in tenancy relationships. These community peasants were paid on a per piece rates. Workers employed in the coconut industry usually are less educated and were paid lower than the average wage. On the other hand, pieces of land devoted to coconut plantation increased by about 6 percent per year during the 1960s and 1970s. An earlier study showed that this scenario was a response to devaluations of the peso in 1962 and 1970 and increasing world demand.
Due to previous large demand of coconut products of the world market, the Philippine government encouraged processing of copra domestically. This move of the government resulted to a number of investment incentives extended to those local producers, primarily to boosts the coconut industry. However, government’s aim to pop up the industry did not last long as the number of coconut mills rose from twenty-eight in 1968 to sixty-two in 1979, thus, creating substantial excess capacity. The situation was aggravated by declining yields because of the aging of coconut trees in some regions.
On the other hand, it was the Spanish colonizers who laid the groundwork for the coconut industry. The Spanish expanded coconut production beyond the colonized people’s natural needs through an edict in 1642, which required each indio (filipino natives) under severe penalties, to plant 200 coconut trees. When Spain turned over the Philippines to the United States at the turn of the 20th century, the US dominated right away the production of several types of major oils and fats. And until to these days, the Philippine economy is heavily dependent on the coconut industry.
This can be seen from the annual value of Philippine exports. The graph below will show the annual average utilization of coconut products from 1987 – 2001. It can be clearly seen that almost 68% of the coconut products were accounted to produce coconut oil. The main industrial use of the coconut is still copra from which coconut oil is derived. Figure 1. PHILIPPINE COCONUT UTILIZATION Annual Average, 1987-2001 [pic] Table 5. Comparative Annual Value of Philippine Exports BY COMMODITY, 1992-2001 (in FOB Million U. S. Dollars) [pic] Table 6. Milling Capacity for Coconut Oil |MILLING CAPACITY | |REGION | | | |(MTD) |(MTY) | | NATIONAL CAPITAL REGION (NCR) |670 |201,000 | | REGION IV-A (Southern Luzon) |3,178 |953,400 | | REGION V (Bicol) |2,580 |774,000 | | REGION VI (Western Visayas) |150 |45,000 | | REGION VII (Central Visayas) |1,500 |450,000 | | REGION VIII (Eastern Visayas) |705 |211,500 | | REGION IX (Western Mindanao) |1,835 |550,500 | | REGION X (Northern Mindanao) |2,060 |618,000 | | REGION XI (Southern Mindanao) |2,010 |603,000 | | REGION XII (Central Mindanao) |2,300 |690,000 | | REGION XIII (CARAGA) |120 |36,000 | | REGION XIV (ARMM) |175 |52,500 | |PHILIPPINES |17,283 |5,184,900 | 1. 3 Government Regulations Affecting the Coconut Industry A number of laws have been enacted as early as 1947 to institute a number of regulations on the coconut industry.
Distinguished among them are the various policies that imposed on the industry to raise funds for the benefit of the coconut farmers. Among of which are the coconut investment fund, the coconut consumer stabilization fund, the coconut industry development fund, and coconut industry stabilization fund. It will be illustrated below the sequence to events that took place in the development of the coconut industry. 1947: Coconut farmers (planters) and politicians in the Southern Tagalog founded the Philippine Coconut Federation, Inc. Jan. 1971: R. A. 6260 instituted coconut investment fund levy, 3,000-member COCOFED recognized as representative of “coconut farmers”; PHILCOA provides organizational support, and COCOFUND provided financing for COCOFED. June 1973: P. D. 30 established incentives for greater coconut industrial processing (coconut oil processing & desiccated coconut manufacturing); higher export tariffs on copra than processed coconut products. P. D. 232 Government functions regarding the coconut industry were centralized; the Philippine Coconut Authority (PCA) was established. Aug. 1973: P. D. 276 Coconut Consumers’ Stabilization Fund (CCSF) levy established. It imposes an additional levy on the first domestic sale of copra. (i. e. , collected from copra farms as in the case of COCOFUND Levy. Feb. 1974: E. A. 425 created premium duties higher on copra than processed coconut products. April 1974: P. D. 14 CCSF collections authorized for “investment in processing plants, research and development, and extension services to the coconut industry”. Nov. 1974: P. D. 582 Coconut Industry Development Fund established from CCSF collections for replanting program using high-yielding coconut hybrid. Dec. 1974: P. D. 623 Composition of PCA governing board changed to include three COCOFED representatives and a representative of the hybrid farm owner. July 1975: P. D. 755 United Coconut Planters Bank established from CCSF funds. July 1976: P. D. 961 Decrees dealing with coconut industry codified’ UCPB authorized to invest in coconut or palm oil based enterprises. June 1978: P. D. 1468 Coconut Industry Code Revised; all levy collections to be deposited with acquired oil mills or refineries.
October 1978: Exporters to pay premium duties on coconut exports in full Feb. 1979: UCPB purchases Leg Oil from Ayala-Mitsubishi group; new subsidy scheme put to effect. March 1979: Lower premium duties on coconut exports Sept. 1979: L. O. I. No 926 United Coconut Oil Mills established Nov. 1979: UCPB purchases GranexPort firms 1980: Pres. Marcos issued P. D. 1699 suspending the levy issued to millers & desiccators and other copra end-users but continued the collections from exporters. 1982: Collection of Levies ended 1984: majority shares of stocks of San Miguel Corporation were acquired using levy money 1989: Congressman Oscar Santos from Quezon province, through H. B. 25928 attempted to declare that coco levy funds public and putting it into the service and benefit of the farmers. The bill was not prioritized by the landlord dominated Congress. Feb. 16, 1993: The Supreme Court affirmed the public character of the fund, refusing to recognized its ownership by the small number of its present shareholders. The character of the levy funds as public remains to be affirmed by government’s executive, legislative and judicial branches. Sept. 1995: the President Ramos issued Executive Order 277, Directing the Mode of Treatment, Utilization, Administration and Management of the Coconut Levy Funds. 1. 4 Market Trends and Forecast Exports.
Global exports of coconut products indicated that coconut cream, coconut powder, coco chemical, activated charcoal and coir products have good export market. Annually, about US$ 1 million are earned through export. Largest exporter is Philippines, followed by Indonesia and Sri Lanka. In fiber products, Sri Lanka and India are the largest exporters, followed by Thailand. Per Capita Consumption. Per capita consumption of fats and oils of developing countries like China, India, Indonesia average below 15 kg. per year. World average is 16. 5 kg. The Philippines is much lower at 7 kg. Thus, increasing per capita by just 1 kg. will translate to millions of tons of oils and fats needed in these countries.
Past observations indicate that fat consumption tend to increase with increasing income and stabilize at higher income level e. g. US 30 kg. , EU 53 kg. , Japan 35 kg. Thus, there is much potential in developing countries than for developed countries. 1. 5 The Emerging Market for Virgin Coconut Oil Although virgin coconut oil has been around for years in the country, it remains at most a cottage industry. It is only in 2000 when virgin coconut oil was noticed in the international market due to the increasing preference of consumers towards natural and organic products. In the EU market, part of the 42% sales of the top 25 selling drugs worldwide are either biologicals, natural products or entities derived from natural products.
Although, no figures of the demand for natural cosmetic ingredients have been recoreded in the EU market, production of EU’s cosmetic end-product can be used as indication which posted an average annual growth in the natural segment of cosmetic products of 8-10%. With virgin coconut oil promising a natural and healthy alternative to other vegetable oils, orders and inquiries have increased phenomenally in just three years. Mt. Banahaw Tropical Traditions penetrated the US market with an initial export of 800kg, in 2000, 19MT in 2002. From an export volume of 800 kgs. in 2000, export volume have increased to 19MT in 2002 to the US alone. Export Figure Sales from the Bureau of Customs as stated in the available Export Declaration posted the following sales value of VCO: 2001 = US$ 19,810 2002 = US$ 94,758 2003 = US$ 407,580
Today, there are a growing number of companies advertising & selling VCO or its variations (coconut butter/cream, scented coconut oil for massage, hydrating body lotions). There are 62 producers/traders as of August 2004, with approximated production capability of around 200 tons per month. Posted average monthly VCO production for 2003 is 831. MT dispersed around the country according to the following data: Luzon = 193. 20 or 23. 23% Visayas = 0. 26 or 00. 03% Mindanao = 638. 38 or 76. 74% One major threat recognized by local producers is that other ASEAN countries producing coconut may take advantage of the market access initiated by the Philippines. In an interview with the owner of CHI, Paolo Mamangun, Jr. said that other countries like Thailand, Singapore and even the United Kingdom may attain a nearly similar quality with advanced technology, but they cannot equal Philippine-made VCO simply because our coconut varieties are the best. Virgin coconut oil producers see exports increasing three to five times in 2005 from 200,000 liters this year due to higher world demand. The Virgin Coconut Oil Producers and Traders Association (Vcopta) noted that more countries are turning to virgin coconut oil as an alternative food supplement. Export shipments this year have risen 100 percent to 200,000 liters from 100,000 liters in 2002, according to Vcopta’s estimates.
Because of rising demand, the industry will have to increase its production capacity. Chapter 2. Coconut Haven Philippines, Inc. A. Nature of the Business [pic] Coconut Haven Philippines, Inc. (CHI) is a company that produces pure virgin coconut oil of premium quality. The company strongly believes that coconut is one of nature’s best gift to man. As such, CHI, Phil. seeks to provide the purest VCNO of premium quality so that its clients may be able to avail of the oil’s remarkable health benefits. CHI, Phil. is a charter member of the Virgin Coconut Oil Producers and Traders Association Philippines (VCNO Phils. ) Inc. B. Company Scan 2. 0 Vision
Coconut Haven envisions to reaching out as many people who wish to attain a desirable degree of healthiness in their lifetime while aiming to catalyze a rational scheme through which the coconut farmers can get a fair share directly from the multi-faceted benefits of their product. 2. 1 Mission To produce and promote the best quality of Virgin Coconut Oil worldwide. To continuously maintain an aggressive research and development stance to allow its clients, benefactors, beneficiaries and supporters to get the most from the “Tree of Life”. Philosophy Coconut Haven salutes these dedicated farmers and coconut workers for, without them, we never would be able to benefit from the healing miracles that the coconut offers. The people behind Coconut Haven are committed to contribute and share, in their own little, knowledge, time, and available resources to the development and growth of the Virgin Coconut Oil industry”.
Coconut Haven is committed to be instrumental in the progress and development of not only the coconut industry but the nation in general by giving added share to the farmers and increase employment opportunities. 2. Competitive Advantage Coco Haven Phils. takes pride in the fact that their product is a genuine virgin coconut oil produced without heat and with less processing as possible. CHI Phils. uses the traditional “cold process” that extracts oil through the fermentation method at low temperatures (34C). As such, the resulting oil still contains its health and therapeutic properties. 2. 3 Company Owners and Size The company is wholly owned by the family of Mr. Paolo Mamangun, President and GM.
His wife is his marketing partner who markets the products of CHI Phil. under the label of Viviendo, which is also managed and run by his children. The company’s Board of Directors is composed of his children, five of which are in the business. The company’s workforce totals to twenty (20) personnel excluding Mr. Mamangun and his wife. Viviendo Philippines, Inc. Viviendo Phils. is a subsidiary of CHI Phil. which is a company managed by the wife of CHI’s President, Ms. Theresa Mamangun. The company is the primary marketing arm of Coco Haven Phils’ virgin coconut oil. In addition, Viviendo also conducts R&D, manufacturing and marketing of beauty products using virgin coconut oil as base.
Their products range from flavored dietary supplement, massage oils and lotions, massage balms, oil and creams for hair, bath and beauty soaps, lip balms and nappy cream for children. It is their goal to offer to the people the many benefits that VCO has to offer. 2. 4 Organizational Structure Since Coco Haven and Viviendo is both owned and run by the Mamangun family, the organizational structure of both companies is one and the same. Below is an overview of the current structure of the family business: Current Organizational Structure Chairman of the Board Members of the Board PRESIDENT GENERAL MANAGER Secretary – Receptionist Administration & FinanceProductionMarketing & Promotion General ServicesManufacturingCustomer Service Janitorial Freight ServicesBottlingTraining Mailing Services
CommunicationsLabelingMedia & Inter-Agency Transportation FinanceSales AccountingDomestic Credit & CollectionInternational Cashier Purchasing Human Resource C. The Success Story of Coconut Haven Mr. Paolo Mamagun, one of the pioneers in the virgin coconut oil had been experimenting with the production of VCO since 1983 on an on-and-off basis. His research started as early as 1983 done with some of his colleagues from the University of the Philippines at Los Banos. His experiments were further developed by his three daughters who, as part of their scientific projects in elementary and high school, undertook further studies and provided more input.
These experiments were noticed for their positive results and earned for them a DOST Award as the Most Promising Scientific Project in 1991. But, the family went into serious production with his wife, son and daughters only in 2003 after their entire merchandise of VCO dietary supplement and beauty products peddled at one of the trade fairs of the Philippine Coconut Authority (PCA) showcasing coconut-based products were sold out. “That was a turning point for us. It was a hit not only locally, but we began getting inquiries and orders from local users such as spa owners, beauty salons and health shops, as well as from buyers in the US,” recalled Mr. Mamangun.
Today, the company is now one of the lead producers of virgin coconut oil in the country producing VCO dietary supplement branded as Viviendo, which was endorsed by no less than Health Secretary Manuel Dayrit and is typical to be found in pharmacies of some of the biggest hospitals such as St. Luke’s, Philippine Heart Center, National Kidney Institute, Lung Center and National Children’s Hospital. The family’s output volume now reached up to 4,000 Liters per month of VCO. Total sales for 2004 are P4. 6 Million for Coco Haven and P3 Million for Viviendo. The family sustained their sales for VCO only thru phone and web inquiries since they started from the trade mission sponsored by the PCA.
The family also takes part in various exhibits and trade fairs locally which increased their visibility in the market. Further, Mr. Mamangun became the first President of the Virgin Coconut Oil Producers and Traders Association (VCOPTA) solidifying their presence and authority among local producers of virgin coconut oil. Since the demand for VCO is increasing and the family can only produce 20,000 L per month at their present capacity, the family even shares the orders to other members of the association. Mr. Mamangun also became known in the industry when he rallied the association to seek help from the government to produce standards for virgin coconut oil.
Mamangun clearly expressed in one of the seminars sponsored by the PCA that “ if we are to really grow as an industry and aim for the export market, there should be harmonized standards that buyers could expect. We cannot afford to be having individual standards because just one damaging shipment could ruin all our efforts”. As a result, a Philippine National Standard for Virgin Coconut Oil was established primarily thru Mr. Mamangun and the Association’s help in 2004. Today, the company is espousing or promoting the “cold process” for producing virgin coconut oil since some producers use heat in one form or another in their manufacturing process.
To achieve this end, Coco Haven also trains interested entrepreneurs in the regions in producing VCO using his method. The company also sells production modules which consist of 2 graters and 1 presser for P137,000 as start up for their trainees. Strengths and Weaknesses Since the company is wholly owned by the Mamangun family, they also have its share of problems typical for family run businesses. The company has the children of Mr. Mamangun as Board Members and sometimes family relationships would interfere or influence business decisions. Since the whole family shares the passion with almost 22 years of promoting, using and researching on virgin coconut oil, the family business continues to grow strong.
The interest in the business is prevalent among the children coupled with the knowledge of the product and its various uses. D. Product Lines Viviendo Virgin Coconut Oil |[pic] | | | |Available Sizes | | | | | | | | |250 mL | | | | | | | | |[pic] | | | | | | | |500 mL | | | | | | | | |[pic] | | | | | | | | |1000 mL | | | | | | | | |[pic] | | | | | | | | |5 gals | | | | | | | | |[pic] | | | | Viviendo VCNO Dietary Supplement provides significant health benefits. It may be used in the following various ways: o Be taken like a liquid vitamin. The recommended daily dosage is three to four tablespoons. Taken on a full stomach.
As a short chain fatty acid, it goes straight to your liver and is transformed into instant energy. o It may also serve as a healthy cooking oil or salad dressing, or a perfect food seasoning and ingredient. Pour VCO on your rice, soup, noodles, fish, pork or beef dishes or use for pasta and bakery products. o It can also be taken topically as skin and hair moisturizer or as an instant first aid remedy for insect bites and wounds, skin allergies and skin infections, diaper rash, etc. , be it viral, fungal or bacterial. o Viviendo VCNO also comes as flavored with natural herb and fruit extracts, for easy ingestion. Viviendo Body Massage Oils & Lotions |[pic] |Added Benefits | | | | | | | |• | | |decongestant | | | | | |• | | |mosquito repellant | | | | | |• | | |stress relaxant | | | | | |• | | |underarm and foot deodorizer | | | | | |[pic] | | |Available Sizes | | | | | | | | |120mL p. e. t. ottles with gel pump | | | | | | | | |[pic] | | | | | | | | |1000mL in p. e. t. bottles | | | | | | | | |[pic] | | | | Viviendo Oil & Hair Cream [pic] |Added Benefits | | | | | | | | |• | | |retard breakage and thinning of damaged or | | |chemically treated hair | | | | | |• | | |promote hair growth and darkening | | | | | |• | | |improve hair elasticity | | | | | |• | | |leaves hair fresh and clean | | | | | |[pic] | | |Available Sizes | | | | | | | | |100 mL p. e. t. ottles | | | | | | | | |[pic] | | | | | | | | |1000mL p. e. t. bottles | | | | | | | | |[pic] | | | | Viviendo Beauty Products
Viviendo Coco Rose Petal Beauty Line This beauty product is composed of Coco Rose Petal hand and body lotion, Coco Rose Petal Soap, Coco Rose Petal perfume oil and Coco Rose Petal Perfume spray. This line of beauty product is recommended for the use of active and matured women. These products are based with virgin coconut oil infused with the pure essential oil of rose, considered one of the most valuable and finest oil in the world that will leave your skin soft, glowing and fragrant. This “queen of oils” known for its feminine character, has many exceptional qualities such as its aphrodisiac, soothing and rejuvenating properties. Viviendo Coco Cream Body Scrub
The Viviendo Coco Cream Body Scrub is made from a specially prepared exfoliant of coconut cream with virgin coconut oil and kernel of apricot, infused with the essential oils of peppermint and orange. This is best rubbed on your entire body before taking a bath. Gives you cooling pleasures as it soothes and smoothen skin. Helps rejuvenate and remove dead skin. Viviendo Facial Derma Cream Line The Facial Derma Cream Line is composed of the Day Cream, Night Cream and Moisturizing Cream. These products are made from a cream base with virgin coconut oil of premium grade, infused with extracts of olive and almond oil and other botanicals. Day Cream is best used as a make-up base. Its natural sunscreen factor will protect you from the harsh elements. Night Cream is best applied on clean face and neck area left to stay overnight.
Helps smoothen, soften, rejuvenate and whiten skin, as well as Moisturizing Cream maybe used anytime of the day to protect and renew the skin. Viviendo Children’s Line The Children’s Line is composed of the Nappy Rash Cream and Mild Soap. These products are based with virgin coconut oil, premium grade infused with the mild scent of green tea, honeydew and melon essential oils. The anti-fungal, anti-bacterial and anti-viral properties of virgin coconut oil helps protect and heal skin irritations and infections. Virgin Coconut Oil Soaps These soaps are made from virgin coconut oil, premium grade with the right essential oils. It helps clean and moisturize the face and body, and aids in fighting bacteria that cause skin irritations and infections.
The Virgin Coconut Oil Soap Line products are: a. VCO Deo Soap for Men b. VCO Mild Soap for Children c. VCO Feminine Hygienic Soap Chapter 3. VCO Production System A. Product Design and Description Major Product – Virgin Coconut Oil Dietary Supplement Actual laboratory test results of Coconut Haven Phils. For Viviendo Virgin Coconut Oil – Premium grade VCNO |Fatty Acid |Content | |Caproic |0. 30% | |Caprylic |7. 73% | |Capric |6. 50% | |Lauric |50. 90% | Myristic |19. 28% | |Palmitic |7. 75% | |Stearic |2. 05% | |Oleic |4. 39% | |Linoleic |1. 10% | Viviendo Virgin Coconut Oil is manufactured using the first press, cold process only from freshly grated coconut kernel of carefully selected matured nuts from coconuts of choiced varieties, without absolutely passing through any heat. Therefore, Viviendo Virgin Coconut Oil retains all its natural components and nutrients especially its tocopheral content.
Because of its natural tocopherol content, Viviendo Virgin Coconut Oil does not turn rancid easily and remains useful for a longer period. This serves as its natural preservative. |VCNO’s definition | |Virgin Coconut Oil obtained from the fresh, mature kernel of the coconut by mechanical | |or natural means, without the use of heat, which does not lead to the alteration of the | |oil. Virgin Cocounut oil is suitable for human consumption in its natural state. | Because it is not heated, Viviendo Premium Grade Virgin Coconut Oil retains the natural exotic aroma of the coconut milk and its sweet taste.
It is water clear, thick and very smooth when ingested. Viviendo Premium Grade Virgin Coconut Oil’s Lauric Acid content reaches to a high of 51% because its coconuts are carefully selected. Because it does not undergo any heat, it becomes easily compatible with other essential olis when blended. Viviendo’s usually higher lauric acid content and its natural tocopherol content makes it now more potent as an aid in fighting diseases caused by lipid coated bacteria, virus and fungus. Viviendo products are painstakingly produced, in small quantities daily, under strict supervision to ensure the quality of the product. B. Process Design /Capacity 1.
Process Steps of the Manufacturing process of Existing Virgin Coconut Oil Producers |STEP |Operati|Transpo|Inspect|Delay |Storage|Description of Process |Time | | |on |rt | | | | | | |1 | | |( | |( |Selection of nuts |0. 5 hr | |2 | | |( | |( |Split the nut and collect coco water in separate container |0. 02 hr | |3 | | |( | |( |Grate the coconut |0. 5 hr | |4 | | |( | |( |Collect the grated coconut in a bag |0. 08 hr | |5 | | |( | |( |Press the grated coconut in a bag (produces the first pure |0. 25 hr | | | | | | | |coco milk) | | |6 | | |( | |( |Mix coco water with grated coco meat |0. 17 hr | |7 | | |( | |( |Press the mixture to get 2nd coco milk |0. 25 hr | |8 | | |( | |( |Mix the first and second pressed coco milk |0. 2 hr | |9 | | |( | | |Set aside for 16 hours to wait to separate into 4 layers |16 hrs | |10 | | |( | |( |Harvesting/Decanting |1 hr | |11 | | |( | |( |Filter the harvested oil to remove water |1 hr | |12 | | |( | | |Cure the oil to separate the moisture |3 weeks | |13 | | |( | |( |Filtering |1 hr | |14 | | |( | |( |Bottling |0. 15 hr | |15 | | |( | |( |Labelling/Packing |0. 1 hr | |16 | | |( | | |Store bottled oil |0. 1 hr | 2. Process Description: a. Raw Material Selection Good quality of 13 month old dehusked coconuts are selected for processing.
Dehusked nuts of good quality are usually dark brown in color and with depressed eyes. Dehusked nuts with cracks are rejected as it may contain meat that is spoiled and rancid. b. Splitting/Cracking De-husked nut is split open in two manually using a heavy type knife or mild steel flat bar. Splitting is done along the equator of the nut producing two half kernels. The coconut water is collected into containers for further processing during the milk extraction. c. Grating The coconut meat inside the half kernel is grated with the use of a motorized grater. The half kernel is pushed towards the rotating blade of the grater to produce grated meat. Grated coconut meat is collected in a container. d.
Collection of Grated Coconut in a bag The grated coconut meat is collected in a fine meshed bag before pressing to extract the milk e. Milk Extraction Milk extraction is done using a screw-type milk extractor. Grated coconut meat in a fine meshed bag is fed into the extractor and the operator will manually rotate the lever to press the meat. The pressed meat is press two (2) times and mixed with coconut water to increase the yield of milk extraction. Normally, the yield is 55-60% of milk based on the weight of the grated meat. The pressed meat or ‘sapal’, the residue after the extraction of milk from the grated meat can be used as animal feed and food snack. f.
Settling of Extracted Milk Extracted milk is set aside for 16 hrs in enclosed room with controlled minimum temperature 30C and maximum of 34C using a light bulb until it has separated into 4 layers. First layer consists of coagulated protein while the second layer is the virgin coconut oil. Third and last layer consists of oil emulsion and water respectively. g. Harvesting/Decanting After the separation of 4 layers, first layer is manually scooped using a strainer to collect the solids. Next using a ladle, oil is carefully collected and place in a separate container. The third layer that is emulsion is also collected and used to make the beauty products such as soap.
The water on the other hand is considered as waste. h. Filtration Collected oil will be filtered using a filter paper to remove water and further solids. i. Curing Collected and filtered oil is cured in a ambient temperature for 3 weeks to remove the moisture. Allowed moisture content is 0. 1% j. Bottling Operators manually bottle collected and cured oil. k. Labeling Labeling of bottles are also done manually 3. Plant Capacity a. Equipment Inventory | | | | | | |Equipment |Cost Per Equipment |Capacity |No. f Operators Per |Inventory | | | | |Equipment | | |Flesh Grating Machine |5,000 Php |170 Nuts/hr |1 |2 | |Grated Coconut Meat Presser |20,000 Php |100 kg/hr |1 |2 | b. Manpower Requirement for other Process Steps |Process |No. of Operators | |Harvesting Decanting |2 | |Splitting of Nuts/Selection of Nuts |2 | |Bottling/Labeling |2 | 4. Theoretical Oil Recovery 5. Factory Throughput & Cycle Time | | | | | | | | |PROCESS INPUT |THEORETICAL OUTPUT |ACTUAL OUTPUT |ACTUAL OUTPU/DAY |LOSS |SOURCE OF LOSS | |Grating |25 Nuts |10 kg | |800 nuts | |spilled grated | | | | | | | |meat | |Pressing |10 Kg meat |6. 25 kg milk | |320 kg/meat | |residual oil in | | | | | | | |the meat | |Oil Separation |6. 25 milk + 8 |2. 75 L oil | | | |emulsion layer | | |kg water | | | | |which still | | | | | | | |contains oil, | | | | | | | |manual separation | | | | | | | |of oil from the | | | | | | | |emulsion and water| | | | | | | |layer, manual | | | | | | | |transfer of oil | | | | | | | |from one container| | | | | | | |to another | |Final Product |2. 175 L oil |2. 175 L oil |1. 25 L oil |40 L |42% |due to manual | | | | | | | |bottling of oil | |Cycle Time |3. 12 Weeks or | | | | | | | |524. 84 hrs | | | | | | C. PROPOSED PROCESS IMPROVEMENT 1.
Proposed Manufacturing Process of Extraction of Virgin Oil |STEP |Operati|Transpo|Inspect|Delay |Storage| |Time | | |on |rt | | | |Description of Process | | |1 | | |( | |( |Get one batch of coconuts from inventory |0. 5 hr | |2 | | |( | |( |Split the nut and collect coco water in separate container |0. 02 hr | |3 | | |( | |( |Grate the coconut |0. 5 hr | |4 | | |( | |( |Collect the grated coconut in a bag |0. 08 hr | |5 | | |( | |( |Press the grated coconut in a bag (produces the first pure |0. 25 hr | | | | | | | |coco milk) | | |6 | | |( | |( |Mix coco water with grated coco meat |0. 17 hr | |7 | | |( | |( |Press the mixture to get 2nd coco milk |0. 25 hr | |8 | | |( | |( |Mix the first and second pressed coco milk |0. 2 hr | |9 | | |( | | |Set aside milk collected to separate in four layers |12 hrs | |9 | | |( | | |Centrifuge to separate the residues and water |1 hr | |15 | | |( | |( |Labelling/Packing |0. 02 hr | |16 | | |( | | |Store bottled oil | | 2. Process Description a. Raw Material Selection Good quality of 13 month old dehusked coconuts are selected for processing. Dehusked nuts of good quality are usually dark brown in color and with depressed eyes.
Dehusked nuts with cracks are rejected as it may contain meat that is spoiled and rancid. b. Splitting/Cracking De-husked nut is split open in two manually using a heavy type knife or mild steel flat bar. Splitting is done along the equator of the nut producing two half kernels. The coconut water is collected into containers for further processing during the milk extraction. c. Grating The coconut meat inside the half kernel is grated with the use of a motorized grater. The half kernel is pushed towards the rotating blade of the grater to produce grated meat. Grated coconut meat is collected in a container. d. Collection of Grated Coconut in a bag
The grated coconut meat is collected in a fine meshed bag before pressing to extract the milk e. Milk Extraction Milk extraction is done using a screw-type milk extractor. Grated coconut meat in a fine meshed bag is fed into the extractor and the operator will manually rotate the lever to press the meat. The pressed meat is press two (2) times and mixed with coconut water to increase the yield of milk extraction. Normally, the yield is 55-60% of milk based on the weight of the grated meat. The pressed meat or ‘sapal’, the residue after the extraction of milk from the grated meat can be used as animal feed and food snack. f. Settle Milk Extracted g. Cream Separation by Centrifuge
Whole coconut milk is passed to a centrifuge to separate skim milk (the watery portion) and coconut cream (the oil portion). An equal amount of water is added to the cream and then fed again to the centrifuge to wash the cream from other water-soluble components. Washing can be done h. Vacuum Drying The oil recovered from centrifuge is further dried under vacuum without heating to remove moisture in oil that cannot be evaporated in the heating process. The allowable moisture content is 0. 1% i. Moisture Inspection After vacuum drying, the output will be tested using a moisture meter to measure moisture content. If moisture content is greater than 0. 1%, oil must be returned in the vacuum machine for further drying. j. Bottling
The cured oil is transferred from plastic containers to the filling machine. The filling machine has a 120 L capacity with faucets at the bottom for the plastic and glass bottles. As such, bottling is made easier since it can be done efficiently in a line. k. Labeling Labeling of bottles are also done manually 3. Equipment and Manpower Requirement | | | | | | |Type |Cost |Capacity |No. of Operators Required |Equipment Inventory | |Flesh Grating Machine |5,000 Php |170 kg/hr |2 |2 |Grated Coconut Meat |20,000 Php |100kg/hr |2 |2 | |Presser | | | | | |Centrifuge |400,000 Php |300 L/hr |1 |1 | |Vacuum Dryer |80,000 Php |8 L/hr |1 |2 | |Filling Machine |50,000 Php |120 L/batch |1 |1 | |Labelling | | |1 | | 4. Expected Throughput and Cycle Time | | | | | | | |Process |Input |Theoretical Output |Actual Output |Actual Output / |Loss |Source of Loss | | | | | |Day | | | |Grating |25 Nuts |10 kg | |1000 nuts | |spilled grated meat | |Pressing |10 Kg meat |6. 25 kg milk | |400 kg/meat | |residual oil in the meat | |Oil Separation |6. 25 milk + 8 |2. 75 L oil | | | | | | |kg water | | | | | | | | | | | | |From manual pouring of oil| |Final Product |2. 175 L oil |2. 175 L oil |1. 75 L oil |87 L |20% |into big plastic | | | | | | | |containers | |Cycle Time |15. 25 hrs | | | | | | Comparative Advantage | | |advantages |disadvantages | |advantages |disadvantages | |16 hrs waiting time |ensures separation |turn around time is too long |centrifuge |processing time for 300 l |investment cost is high| | |of oil from worker | | |takes only 1 hr | | | |thru national means | | | | | | | |separation still not | |total turn around time | | | | |efficient since the emulsion | |time is decreased by 4 hrs| | | | |layer is not broken down | | | | | | | | |efficient separation since| | | | | | |the oil from the emulsion | | | | | | |layer is extracted | | | | | | |less cost for storage time| | | | | | | | | |curing stage |taking out moisture |losses due to manual |vacuum dryer |takes out moisture w/o |additional investment | | |without additional |separation of oil from the | |additional heat |cost | | |heat |water layer | | | | | | |turn around time is too long | |turn around time is | | | | (3 weeks) | |shortened since drying | | | | | | |will only take 30 min per | | | | | | |liter | | | | |takes up space in production | |losses due to transfer of | | | | |area | |oil from one container to | | | | | | |another is minimized | | | | |labor requirement: 2 workers | |losses due to separation | | | | | | |of oil from water is | | | | | | |totally eliminated | | | | | | |labor requirement: 1 | | | | | | |worker | | C. Facility Design and Plant Layout Current Layout [pic] Address: Unit 364B El Grande Ave. , BF Homes, Phase 3, Paranaque City Supplier located in Laguna, Batangas , Aurora and Quezon Customer located in Metro Manila and US based. Proposed Layout Chapter 4. ANALYSIS AND RECOMMENDATIONS A. Recommended Accounting System After starting initial operations in the second half of 2003, the company still does not have any existing accounting system to measure and control its financial resources. All that the company has are receipts for cash disbursements.
After less than two years of operation the company has achieved a whopping P7. 6M sales per month in 2004 just for the main virgin coconut oil product. As such before making the most out of the available information we were able to get from the owner of the company, Mr. Mamangun, we would like to recommend the following framework that can be used to establish their accounting system and financial projections. The objectives of the suggested framework is to aid the company in identifying the reports they need to analyze and project their financial performance better and assist them in evaluating business investments and choosing financing alternatives to maximize the benefits given to all their stakeholders.
Exhibit 1 and 2 indicate to which report the quantitative information/plan/analysis is interconnected. It shows that the interconnected information has an effect on related reports and therefore should be carefully managed. B. Recommended Production System The company’s existing production system generates major losses of oil due to manual handling in the harvesting, filtration and pouring of oil into the bottle. The manual method of harvesting oil using a ladle incurs spillage during the process and do not efficiently remove all the oil produced in the mixture. Furthermore, the turn around time of three (3) weeks before releasing the finished product may result in opportunity loss.
Therefore, we recommend automating the harvesting process to reduce losses by installing a centrifuge machine. This machine will automatically and efficiently separate the oil from the water and other residues. This will also break up the emulsion layer releasing the oil, thus, increasing the recovery of oil. We also recommend replacing the curing process using a vacuum drying machine. This will reduce the cycle time from 3 weeks of curing to 1 hour. The new filling machine in addition will help diminish the potential spillage from transferring the oil into the bottle. Currently, the oil filling is prepared manually in each 250ML bottles using a funnel.
This proposed production system would increase the plant’s throughput from 40L a day to 87 liters and reduce the lead time from three (3) weeks to fifteen (15) hours. Coconut Haven is capable of making an additional investment in equipment to gain a greater market share in the market. Not only will output rate be high, output quality will also be more consistent leading to increased customer satisfaction and patronage. Opportunity loss is set to reach a high of 80,000 in 2005 due to the forecasted increase in market demand in 2005. Through this exhibit (maximization of market gains through investment in additional equipment), the following events are predicted to happen… Chapter 5. Theoretical Framework: The Principal Strategy-Implementing Tasks of Coconut Haven, Inc. Main Source: Thompson, A. A. and Strickland, A. J. III. Crafting and Executing Strategy: Texts and Readings. New York: Mc Graw-Hill (2001). Strategy and Marketing Program 1. Building an organization with the competencies, capabilities, and resource strengths to carry out the strategy successfully. a. Competencies • Reliable Process. Production of Virgin Coconut Oil will only be derived from first press of fresh and mature coconut meat, without the use of heat that makes it pure, unrefined, unbleached, and non-deodorized. • Innovation. The Management continuously innovating Virgin Coconut Oil to gain market share locally and more internationally. • Values.
Website and product labels only convey true information to the consumers on the high-quality standards that Viviendo has. • Technological Know-How and Expertise. Because of the President’s deep passion on Virgin Coconut Oil, he continuously conducts thorough research to maximize its production (oil extraction). • Product Pricing. The company implements product pricing commensurate to the high quality that Viviendo has local and the affordability of local and foreign consumers. • Close Relationship with External Parties. Strong relationship with coconut suppliers, Cooperative of Coconut Farmers/Producers, and customers that leads to customer driven R&D. b. Capabilities Improving product quality – a process that often involves the collaboration of personnel in R&D, production, and marketing; • Improving the capability to conduct business via the internet – a process that involves personnel in information technology, cupply chain management, production, sales, and marketing. • Obtaining feedback from customers and making product modifications to meet their needs – a process that involves personnel in customer service, R&D, sales and marketing. 2. Establishing strategy-supportive policies. 2. 1. Duties and Responsibilities of Functional Areas a. Finance and Accounting Department The Finance and Accounting department recognizes the importance of reducing costs and risks and maximizing profits, but Coconut Haven’s commitment to financial integrity in the interactions with their customers, partners, suppliers, shareholders, and employees is the overriding standard by which they we operate.
It is responsible for coordinating and directing Coconut Haven budgeting process for the current year as well as future years. The Accounting tasks include working with customers, suppliers, partners, employees and shareholders, and delivering accurate, timely financial information that enables senior management and the board of directors to conduct business with the full assurance that the information reflects the current state of the business. Functions: o Invoicing customers and collecting customer payments o Maintaining records for capital purchases o Preparing financial statements for both internal and external purposes o Processing payroll payments Processing payments to suppliers of products and services o Activity based costing o Budgeting and forecasting o Cash management o Control of capital expenditures o Strategic planning and analysis Composition: Finance and Accounting Manager: o Supports the development of strategic plans, annual budgets and quarterly forecasting. Directs analysis of key performance areas of all departments. Models and acts in accordance with Starbucks guiding principles. o Manages all accounting activities and also a member of the company’s leadership team. Department managers assume responsibility for the performance in all functional areas of the department, staff development and management of departmental budgets.
Generally supervises staff of one or more functional areas in the accounting department. Accounting Clerk: Performs clerical processing of Accounts Payable, Accounts Receivable, Payroll and other accounting processes. Purchasing: People responsible for purchasing use their expertise to secure the best product at the best possible price. They also work with sales and production staff in various departments to ensure availability of desired products through proper forecasting, sourcing and inventory management. b. Marketing and Sales Department The Marketing team is responsible for developing and executing the plans to deliver consistent market share growth across the Company’s brands.
The department’s key activities include brand positioning, advertising, media planning, promotions and events. Critical to the Marketing department’s success is its ability to work seamlessly with Market Research, to better understand our consumers and to ensure that our programs are effective; and with the Sales department, to bring these programs to market. This team also shares growth by ensuring brand visibility and availability along with promoting brand adoption. Functions: o Brand Management o Events and Sponsorships o Marketing Research o Major Account Management and Sales Development o Sales Planning o Sales Representation o Merchandising o Telesales o Transportation, Distribution and Delivery Composition Marketing and Sales Manager: Create and implement the marketing plan for the company’s products and services; arrange for necessary activities, events and organizational/business tie ups to meet marketing objectives; and Benchmarking and evaluation of practices in the virgin coconut oil industry. o Works in co-operation with the Sales Executives Teams, to develop/set sales goals, strategies and tactics for selling products and services. Leads development of accurate and reliable target account process, and sales forecasting. Continuously strives to increase Coconut Haven’s market share in the international and local market. Recruits, develops, and manages the performance of all sales teams.
Identifies and participates in delivery of sales training. Provides direction to of the Sales Executive Teams. Works directly with Sales Executive Teams with significant accounts to develop positive relationships with key customers and target accounts. Determines process for pricing and maintaining pricing levels. Establishes and manages department budget. Manages finished good inventory. Provides accurate market justification for capital expenditures. o Marketing Assistant: Sets goals for marketing environment; develops plans in relation to advertising, sales promotion, public relations and sales management. o Sales Executives: Selling the products and services that drive all other activity.
Expected to safely and successfully perform the function of selling retail related packaging and display products and services in the marketplace to achieve planned sales objectives and satisfy customer needs. They must analyze and meet all customer requirements including scheduling, quality, design and resolve customer problems while maintaining account profitability and production efficiency. c. Administrative and Human Resources and Department o Responsible for the day-to-day administration and supervision of general services such as utility and janitorial, messengerial, telephone/PABX, storage management, and shuttle service. o Tasked to conduct routine inspection of all company premises and facilities, and schedule repairs and maintenance as needed. The HR department is entrusted with one of the Coconut Haven’s most valuable assets – its people. We are committed to creating a creative and diverse work environment that is characterized by respect for others and encourages employees to realize their full potential. Functions: o Developing and administering all employee on site training and development programs o Developing and administering recruiting and retention programs o Developing and implementing HR policies and procedures o Ensuring company compliance with Labor Code of the Philippines o Managing compensation and benefits programs o Promoting equal employment opportunities Composition: Administrative and Human Resources Manager: Development of HR policies and procedures, recruitment, salary and benefits administration, training and development, employee relations, as well as labor relations. o Manages all administrative activities and also a member of the company’s leadership team. Department managers assume responsibility for the performance in all functional areas of the department, staff development and management of departmental budgets. Administrative Assistant: Performs a wide variety of administrative functions and is responsible for general office procedures. Positions exist within most external operating divisions, as well as the internal support department.
Human Resources Assistant: Process new hire and termination paperwork, job posting, preparing new hire packets and conducting new hire orientations, maintaining and updating employees’ data in and master employees’ list spreadsheet, employment verifications, and record keeping of employees’ files in compliance with applicable laws and audit guidelines. Enroll employee benefits with vendors, assisting employees with benefits and/or policy questions, and monthly reconciliation of benefits invoice. Information Technology Development and hosting of organization’s website and website management. Use of web-based Information Technology as a strategic business tool to improve the business process and efficiency of the Organization. Functions: o Internet & E-Mail Services to all the executives and employees. o Planning & Implementation of Intranet. o LAN / WAN planning connecting all offices, if necessary. Standardization of IT systems, procurement, implementation & integration. o Integration of all IT systems. o Planning, development & commissioning of Centralized Software and other applications using Centralized Database Servers & Web Enabled Application Software. o Assessment and planning of IT related Training and in-house application development. o Planning and implementation of suitable information security and protection system with FIREWALL to ensure safety and security of Database and prevention of unauthorized access to server. Composition: d. Information Technology Manager: Leads the design, implementation and maintenance of the company’s Network, Operating Systems, Market Connectivity, and Security.
Product evaluation and purchasing; recommendation of solutions; LAN network design, implementation and support; domestic and international exchange connectivity; optimization of real-time market data feeds; storage and data management policies and their implementation; mail, FTP and web server maintenance; database system maintenance; performance and capacity planning; and virus protection systems and procedures. Manage the IT Team. Information Technology Staff: Set and maintain up computers and other technology equipment. Troubleshoot both software and hardware problems. Assist in the maintenance of the servers and other hardware. Train users on all software and equipment usage. Document new or changed computer processes. Maintain hardware inventory. e. Production Department
Production Manager: Responsible for the specifications, control, and procedures required for every product processed by the department; properties and characteristics of the materials used and products processed by the department; uses and operation of the equipment used by the department; plan and coordinate the activities of the department; direct, supervise, and train the employees of the department; comprehend and enforce the different specifications, and controls. Production Staff: Preparation, production and packaging of products. Maintenance of facilities and equipment and production area cleanliness. Ensure proper cleaning of manufacturing equipment and warehouse as well as routine maintenance on all equipment. f. Research and Development Department Research and Development tests the prototypes that arise from new ideas and innovations that occur during the overall development process.
It is important for the company to fully understand our products by seeing and feeling the product in a three-dimensional atmosphere. One of the main goals of the department is to ultimately leave the customer very satisfied with organization’s innovations and products. Collaboration with other functional areas allows organization’s to fully understand the wants and needs of the individual customer and thus can help us to prepare our thoughts towards further research. Functions: o Share ideas with top level management about the latest information on the research. o Provide top-level management with any innovative and exciting ideas towards the research. In the competitive adult incontinence market the management should have the latest and most up-to-date innovations to keep organization’s competitive edge over the other leading incontinence product producers. Composition: R&D Manager and Staff: Create product enhancements and bring them through the development process (search, evaluate, determine feasibility, test, develop and liaison with Sales/Marketing). Bring new product platforms through the development process. 2. Office Policy (Source: http://www. bhsu. edu/businessoffice/policymanual. html) a. Absence without Leave Employees who are absent from duty will report the reason to their Department Manager as soon as possible. Unauthorized and unreported absences will be absence without leave, and deduction of pay will be made for the period of absence.
It also may be cause for disciplinary action. b. Annual Leave Accumulated annual leave will be granted upon written application of the employee, to be taken at such time or times as will least interfere with the efficient operation of the university, and will be approved by the HR Office. Employees absent without official leave may be subject to deductions from annual leave or salary, or disciplinary action. Saturday, Sunday, and holidays set by the President of the Philippines or designated by the City Mayor occurring within a period of annual leave will not be charge to annual leave. Employees will accumulate vacation leave credits according to the following schedule: YEARS OF SERVICE |RATE OF ACCUMULATION | | | |0-15 |10 hours a month (240 hours maximum accrual) | |15 and over |13. 334 hours a month (320 hours maximum accrual) | The years of service do not have to be continuous for leave purposes. An employee is eligible to use the vacation leave credits accumulated after successfully completing the probationary period (1040 working hours). Compensatory Time Payment 1 Employees eligible for overtime pay. Employees eligible for overtime compensation shall be paid in cash at the rate of time and one-half based on a 40-hour work week. Compensatory time in lieu of cash payment shall not be allowed.
Employees are determined to be eligible for overtime based on the duties of the individual position and the pay policy of the Labor Code of the Philippines. 2 Overtime Requests. Requests to work overtime shall be filed prior to the time being worked. Forms are available in the HR Office. c. Completion of Probationary Period An employee’s salary will be adjusted to at least 5% above the minimum of the salary range upon completion of the probationary or trial period. Employees within 5% of the minimum will receive an increase to bring the salary to at least 5% above the minimum of the range. No other salary increases will be allowed for the completion of the probationary or trial period.