CHAPTER I SITUATION ANALYSIS A. SWOT/TOWS ANALYSIS a. SWOT ANALYSIS STRENGTHS: Competitive distribution process Market visibility New technological innovations that leads to higher operational efficiency. Part of the leading dairy company in Netherlands. Promotional strategies Well-known milk brand in the Industry Wide range of product lines Strategic Alliances OPPORTUNITIES: Continuous growth of Philippines' population Rapid market growth Entry to the foreign market. WEAKNESSES: Advertisements are not eye catching Brand switchers Decisions made are affected by current events High dependency on imported raw materials increases vulnerability against availability and price fluctuations. THREATS: Increasing cost of raw materials Increasing cost of utilities - crude, electricity, water etc.. New market entrants Competitive R&D of other brands b. TOWS ANALYSIS External Opportunities External Threats Internal Strengths Adapting new technological innovations can be used to cope up with the rapid market growth. Also, with the continuous growth of Philippines' population, Alaska can use their competitive distribution process to reach more of their markets and engage more of their consumers to their promotional strategies. Lastly, the entry to the foreign market can be made possible by the fact that Alaska is a well-known milk brand in the industry, in addition to its strategic alliances. The increasing cost of raw materials and cost of utilities could be address by the usage of new technological innovations that leads to a higher operational efficiency. Market visibility and competitive distribution process are the main solution for the competitive R&D of other brands. Internal Weaknesses Alaska can improve their advertisements from getting ideas and insights from their foreign markets. Also, for Alaska to avoid being affected by brand switchers, the corporation should continue promoting the milk brand with their programs to add more consumers on their rapid market growth. By minimizing weaknesses, Alaska should be consistent on building good relationships to its market with their different program that aims to develop personal characteristics of their market. Lastly, on its 40 years in the industry, Alaska already launched many promotional tactics that make them as the leading milk company in the Philippines and the company has already the biggest potential to compete towards its existing competitors in the market. B. P.E.S.T. ANALYSIS POLITICAL RA No. 7581, or the Price Act, mandates the Government to impose an automatic increase of prices of "basic necessities  (including processed milk) in areas where an emergency or "state of calamity  is declared. This power is also exercisable by the President of the Philippines, upon recommendation of the DTI or the Price Coordinating Council. Under normal circumstances, however, prices of milk products are generally not subject to government regulation. The Company is somewhat unaware of any other existing or probable governmental regulation that may materially impact the normal course of operations of the Company. ECONOMIC The domestic milk market is a mature industry that has recently experienced declining trends in consumption, notwithstanding a population of 90 million growing at an average rate of 2.0% annually. The foregoing is largely due to shrinking household incomes largely due to tight economic conditions. Per capita milk consumption in the Philippines remains among the lowest compared to neighboring ASEAN countries. In this environment, price competition is intense with competitors aggressively offering steep discounts in an effort to stimulate incremental demand. SOCIAL Any seasonal aspects that had a material effect on the financial condition or results of operations. Sales of milk products exhibit some seasonality during the year of 2012, particularly for liquid canned milk products. Historically, sales in the second quarter are strong for this category due to the summer season when use of the liquid canned milk increases during fiesta season and for "halo-halo . Demand during the third quarter of the year usually slackens, compared to the summer and peaks again during the Christmas season. A similar pattern also applies to the all-purpose cream product. From the brand preference of the potential market of Alaska, consumers were being affected by the season in terms of purchasing any products under Alaska. It is based on their needs and what they feel during those days. Consumers satisfied and contributed to the amount of sales gained by the company every season that caused to gain a high profit. Filipinos are not considered as milk drinkers. They tend to drink a lot more of milk's substitute products such as coffee, tea, or water. Although Filipinos are not considered as milk drinkers, Alaska's market is still showing a positive attitude towards the brand because Alaska gets into the heart and mind of t