Final Paper: Magdalena Pawnshop

A Final Paper
Presented to
Mr. Artemio Guevara Gesmundo Jr.
Management and Organization Department
College of Business
De La Salle University

In Partial Fulfilment
Of the Requirements for the Course
Strategic Management (coded as STRATMA)

Alvarez, Charlene G.
Castelar, John Anthony A.
Gahol, Ma. Psalm Victoria V.
Luna, Jose Gabriel C.
Yupangco, Lara Gabrielle V.

April 9, 2015

Table of Contents
Company Analysis.............................................................................................................3
I. Introduction...............................................................................................................3
A. Company Profile................................................................................................3
II. Competitive Profile Matrix (CPM).............................................................................4
III. External Factor Evaluation (EFE)............................................................................6
IV. Internal Factor Evaluation (IFE)...............................................................................8
Strategy Analysis...............................................................................................................9
I. Strengths, Weaknesses, Opportunities, and Threats Matrix (SWOT).....................9
A. Strengths.........................................................................................................10
B. Weaknesses....................................................................................................11
C. Opportunities...................................................................................................12
D. Threats............................................................................................................13
II. Strategic Position and Action Evaluation Matrix (SPACE).....................................15
III. Boston Consulting Group Matrix (BCG).................................................................17
IV. Internal-External Matrix (IE)...................................................................................18
V. Grand Strategy Matrix (GSM)................................................................................19
VI. Quantitative Strategic Planning Matrix (QSPM).....................................................21
Recommendation.............................................................................................................23
Implementation................................................................................................................24
Evaluation........................................................................................................................25
Conclusion.......................................................................................................................25

Company Analysis
I.

Introduction
A. Company Profile
Background
Magdalena Pawnshop Corporation is a company established in
1986 with its first branch in Libertad St. Pasay City. Magdalena Pawnshop
Corporation has twenty-two branches. This study focuses on the branch
located in 344-346 Libertad St. Cor. Decena St. Pasay City as it is the
main branch of the company and the top managers are based there as
well. A total of fourteen employees are in the main branch with the top
managers and the Castelar family stockholders of the company. Among
the fourteen employees, there are two to three contractual employees,
while the remaining of which are permanent.
Vision
Through our dedication to quality, innovation and customer care,
we at Magdalena Pawnshop aspire to be the leader in providing
unparalleled financial solutions catered to the short-term credit needs of
every Filipino.
Mission
At Magdalena Pawnshop, our mission is to deliver superior,
innovative and technologically-driven pawnbroking solutions that cater to
the short-term and urgent credit needs of Filipinos across Metro Manila.
We are:
1. The top of the mind choice for customers seeking for a discreet
pawnshop with the highest appraisals, low interest rates, no hidden
charges and most friendly staffs.
2. A business that recognizes the importance of using cutting-edge
technologies to improve our total business, to offer better services
to our clients, and to reach a larger market;
3. A company true to a philosophy that treasures integrity,
professionalism and excellence;
4. A workplace committed to developing the skills and capabilities of
our most valuable asset, our employees; and,
5. A socially responsible organization devoted to helping more
communities progress as we grow our business across the Metro
Manila and Cavite City.

II.

Competitive Profile Matrix (CPM)

Magdalena
Pawnshop
Critical Success Weight Rating Weighte
Factors
d Score
Advertising
.01
1
.01
National
.07
2
.14
Expansion
Customer
.06
2
.12
Loyalty
Customer
.06
2
.12
Service
Appraisal
.08
3
.24
Rating
Competitivenes
s
Available Liquid .10
4
.4
Capital/Financia
l Liquidity
Product
.03
2
.06
Diversity
Financial
.10
4
.4
Security
Safety
.1
4
.4
Branch
.06
3
.18
Location
Collateral
.10
4
.4
Disposal/High
Turnover Rate
(Collateral
to
Cash)
System
.08
4
.32
Efficiency
Partnership with .03
2
.06
other financial
institution/s
and/or
retail
shop/s
Various
.09
4
.36
Collateral Types
Buying
in .03
2
.06

Cebuana Lhuillier
Pawnshop
Rating Weighte
d Score
4
.04
3
.21

Tambunting
Pawnshop
Rating Weighte
d Score
1
.01
4
0.28

.18

.18

.24

.18

.32

.32

.4

.4

.12

.09

.4

.4

4
4

.4
.24

4
4

.4
.24

.4

.4

.32

.32

.12

.06

.36

.36

.06

.06

bulk/large
volume
Total

43

3.27

56

3.81

50

3.7

The companies that are included in the competitive profile matrix are
Villarica Pawnshop, Cebuana Lhuillier Pawnshop, and Tambunting
Pawnshop. The CPM presents that Cebuana Lhuillier is the strongest player
in the industry with relative strengths in Customer Service, Product Diversity,
and Partnership with other financial. Even if Cebuana Lhuillier is the strongest
company, its total score is very close with Tambunting Pawnshop, 3.81 and
3.7. Some of their strengths are equal like Customer Loyalty, Appraisal Rating
Competitiveness, Branch Location, System Efficiency, and Various Collateral
Types. On the other hand, Villarica Pawnshop is the weakest among them. It
doesnt have any relative strengths against its rivals. Overall, Cebuana
Lhuillier has created its strategies properly while Tambunting is also doing
good. Tambunting must be consistent and improve more on their strategies.
Lastly, Villarica Pawnshop must really improve their ratings in the most
important industry areas.

III.

External Factor Evaluation (EFE)

Key External Factors

Weigh
t

Ratin
g

Weighted
Score

1. Philippines is prone to calamities

.03

.06

2. High Unemployment

.02

.02

3. Hand-to-mouth lifestyle of most Filipinos

.04

.08

4. Technological advancements

.07

.28

5. High credit needs

.07

.28

6. Financial Leverage

.06

.24

7. Fragmented Market

.09

.27

8. Most Filipinos belong to the middle and working .08

class.

.32

9. Demographic setting

.07

.21

10. Many competitors

.10

.30

11. Competitors are closely located

.10

.30

12. Fluctuation rates of items

.07

.28

13. Government Regulations

.07

.21

14. Demographic Changes

.07

.14

15. Unstable Economy

.06

.06

TOTAL

1.00

Opportunities

Threats

3.05

The following key external factors are being weighted according to

opportunities and threats. Each key factor should be given a weight ranging
from 0.0 (low importance) to 1.0 (high importance). The number specifies how
important the factor for Magdalena pawnshop to succeed in the industry. If no
weights are given, all the factors would be equally significant. All the weights
must equal to 1.0. On the other hand, rating shows how effectively
Magdalenas current strategy reacts to the opportunities and threats. The

number range from 4 to 1: 4- superior response, 3- above average response,

2- average response and 1- poor response.
According to EFE matrix of Magdalena Pawnshop, the most important
factors in the company, which weighted .10, are the huge number of
competitors and their location. Both are key factors from threats. In the
Philippines, there are a large number of pawnshop companies. As observed,
in every part of Metro Manila there is a pawnshop. The competition among
them is very high because most of their offered services are similar with each
other. Also, most of the time, many different pawnshops are located in just an
area. The competition is really at stake for the company. On the other hand,
the second most important factor is fragmented market which weighed .09
while the key factor that has been weighed .02, lowest, is high
unemployment.
When it comes to ratings, the key external factors that have the highest
rating are technological advancement, high credit needs, middle and working
class Filipinos, and fluctuation rates of items. These strategies greatly affect
the company effectively and positively. On the other hand, the factors that
have poor response are high unemployment and unstable economy.

IV.

Internal Factor Evaluation (IFE)

Key Internal Factors

Weight

Rating

Weighted
Score

.10

.30

.09

.36

.08

.32

.07

.21

.09

.36

.09

.36

.09

.09

.08

.08

.10

.10

.08

.08

Strengths
1. Automatic database

2. High Liquidity

3. Tight External Security

4. Customer Loyalty

5. Straight Interest rate

6. Appraisal
Weaknesses
1. Old System and equipment

2. High Turnover

3. Human Errors

4. Micromanagement/Centralized Management

.07

.14

6. No presence in social media particularly online .06

.12

5. Limited Products

Total

1.00

2.52

The Internal Factor Evaluation Matrix is done similarly to the External

Factor Evaluation Matrix, only this focuses more on the strengths and
weaknesses of the company and the rating is done differently; only ratings 3
and 4 are allowed for Strengths 3 being minor strength and 4 being major
strength, while ratings 1 and 2 are for Weaknesses 2 being the minor
weakness and 1 being the major weakness. The total should be within the
range of 1.00-4.00, 1 being the lowest implying a weak internal position and
4 being the highest implying a strong internal position.
Although the Total Weighted Score did not reach 4.00, attaining 2.52 is
still notable as it is above the Average Total Weighting Score of 2.50; it could
be interpreted that Magdalena Pawnshop is working towards a strong internal
position. Moreover, it indicates that the company is not on the weak side in
terms of its competitiveness against present opponents in the industry.

Strategy Analysis
I.

Strengths, Weaknesses, Opportunities, and Threats Matrix (SWOT)

STRENGTHS
1.
2.
3.
4.
5.
6.

OPPORTUNITIES
1. Philippines is prone to
calamities
2. High unemployment
3. Hand-to-mouth lifestyle
of most Filipinos
4. Technological
advancements
5. High credit needs
6. Financial Leverage
7. Fragmented market
8. Most Filipinos belong to
the middle and working
class
9. Demographic setting

THREATS
1. Numerous competitors
2. Closely-located
competitors

Automatic database
High liquidity
Tight external security
Customer loyalty
Straight interest rate
High appraisal

S-O Strategies

WEAKNESSES
1. Old
system
and
equipment
2. High turnover
3. Human errors
4. Micromanagement/
Centralized management
5. Limited products
6. No presence in social
media

particularly
online
W-O Strategies

Faster and more efficient

transactions can be done
(1S-4O)
There
will
be
more
customers
who
will
patronize and choose the
pawnshop (4S-3O)
There will be a secured
environment (3S-9O)
Given that most Filipinos
only have enough to
satisfy everyday needs
and that some distressing
financial matters may
occur anytime, they can
easily
acquire
an
emergency fund through
the services offered by
Magdalena
Pawnshop
(5S-1O) (5S-3O) (6S-3O)
(6S-5O)
S-T Strategies

Lesser human errors due

to
technological
advancements (3W-4O)
Some old equipment will
be replaced soon due to
technological
advancements (1W-4O)
There will be a room for
employment (2W-2O)

W-T Strategies

Loyal customers will still

patronize and choose
Magdalena
pawnshop

Magdalena
Pawnshop
may offer more services
and gain more share of

3. Fluctuation of rates of
over other competitors
items
(4S-1T) (4S-2T)
4. Government regulations The pawnshop is fully
5. Demographic changes
equipped in terms of
6. Unstable economy
loans and services to
7. Consumer preference
cater the demands of the
8. Bad acquisition
customers even though
competitors are located
near them (2S-2T)

the market through social

media presence (5W-1T)
(6W-1T); this will also
provide more options to
several customers (5W7T).

A. Strengths
1. Automatic database
After initially inputting the necessary data and requirements
from the customer e.g. government licensed ID, photo ID, pawn
form, item. The customer information will be automatically stored in
the company database, which can be referred back to in the future
with all previous transactions showing.
2. High Liquidity
The company has more than enough liquid assets cash
to handle customer demands in terms of loans and other services.
3. Tight External Security
Due to the nature of the business, Magdalena Pawnshop
Corporation has made numerous security protocols such as
monitoring nearby establishments and renters, roving guards
outside of branches at night to opening, Motion detectors inside the
branches, and CCTV cameras that are monitored nightly.
4. Customer Loyalty
Due to the Magdalena Pawnshops brand of reliable, fast,
and simple service, customers tend to go back to Magdalena
Pawnshop whenever they need fast credit.
5. Straight Interest rate
Magdalena Pawnshop offers straight interest for the loan.
Other Pawnshops offer additional charges such as, financial
penalty, service charge, etc.
6. High Appraisal
The items being pawned at Magdalena Pawnshop are given
more value; customers receive better valuation of their precious
items.

B. Weaknesses
1. Old System and equipment
The company uses desktop computers that are, in some
branches, 15 years old. Also, the Operating System used
throughout the business is Windows XP. This operating system is
already nearly 15 years old. Furthermore, due to the age of the
system and equipment, it is prone to slow processing and
occasional hanging.
2. High Turnover
The company is constantly hiring because of the turnover it
experiences. This is exacerbated by the expansion that the
company is currently implementing. The high turnover rate is mainly
caused by frequent resignations, promotions due to expansion,
demotions, and employee dismissal usually due to disciplinary
issues.
3. Human Errors
Since the business processes are semi automated, most of
the errors that happen are because of mistake by employees. Since
Magdalena Pawnshop separates itself from the competition with its
brand of service and the cost of mistakes, the company suffers
greatly from these errors
4. Micromanagement/Centralized Management
All the top management positions are occupied by members
of the Castelar family. This restriction may hinder the progress of
the company because it limits the strategic decisions of the
company to members of the family which can lack innovative, fresh
ideas.
5. Limited Products
Compared to other pawnshops around Metro Manila,
Magdalena has less products - services - offered; unlike its other
competitors, Magdalenas services are only limited to remittance,
pawning, sales, and money changing.
6. No Presence in Social Media
Aside from the yellow pages and online company list and
location services, Magdalena Pawnshop has no website or
substantive company profile that could be found or researched on
any social media platform.

C. Opportunities
1. Philippines being prone to calamities
With the Philippines being prone to calamities, unexpected,
yet necessary expenses sprout side by side. Not everyone has
emergency funds to use in order to make up for the damages the
calamities have caused. The need to repair shelters requires an
immediate response and with not having extra cash available on
hand, people head to pawnshops with their collaterals in exchange
for loaned money that can answer to their need.
2. High unemployment
With the high unemployment rate in the Philippines (Highest
in the ASEAN region), a lot of people with very high potentials will
be coming to Magdalena Pawnshop in order to seek for work.
Through this, they can hire the much needed labor and new ideas
to provide the solutions to their problems in the company.
3. Hand-to-mouth lifestyle of most Filipinos
To live hand-to-mouth is to just have enough for daily
survival and nothing extra. Should there be an urgent financial
need, people turn to pawnshops to loan. Being a short term
financial service, pawnshops greatly help people who need a fast
source of money.
4. Technological Advancements
Advancements in technology can bring improvements to our
lives. It can help minimize the duties and responsibilities of
humans. For Magdalena Pawnshop, this can make their daily
processes be free of human errors and the like. Also, it can help
reduce time, effort, and costs for the company.
5. High credit needs
High credit needs means business for pawnshops. Not only
does it arise from short-term financial needs, but also for long-term
business investments and expansions that have been growing
recently because of the development of Philippine economy.
6. Financial leverage
The longstanding need for quick finances with regards to a
large portion of the pawnshops clientele allows it a certain leverage
with regards to the clienteles choosing of which establishment to
pawn goods in. Magdalenas looseness with the allowable pawned
goods allows it a steady stream of acquisitions premised on
financial leverage against clientele.
7. Fragmented Market

Besides the current market leader, Lhuillier, there is no

ascertainable trend with regards to the market shares of other
pawnshops. The market is fragmented inasmuch as consumer
preference with regards to pawnshops is wide and diverse; this
allows Magdalena the opportunity to cater to a wider variety of
untapped markets.
8. Most Filipinos belong to the middle and working class
Most of any pawnshops clients belong to the middle and
working class and given that they account for a significant part of
the countrys population, this may be a key factor to the growth of
Magdalena Pawnshop.
9. Demographic setting
The Philippines liberal attitude towards quasi-financial
institutions like pawnshops allows it a certain mobility and
competitiveness; this environment allows Magdalena Pawnshop, or
any other pawnshop, to thrive more easily.
D. Threats
1. Numerous Competitors
There are several competitors present in the industry and
among those are companies pawnshops and other similar
financial institutions that are already at the top of their game,
while Magdalena Pawnshop is still paving its way to its peak.
2. Closely located competitors
Magdalena Pawnshop branches are strategically located in
high pedestrian traffic areas where competitors are situated as well.
It is inevitable that the company shares the same market with its
competitors present in the same vicinity.
3. Fluctuation of rates of items
The rate of items fluctuates through time; gadgets and
appliances depreciate and jewelleries, especially gold, are volatile
as well. However, the appraiser should foresee these
circumstances in order to ensure the company's profitability.
4. Government regulations
Though the environment for quasi-financial institutions may
be conducive for growth, it disallows the same from expanding
beyond that particular function. Microfinance and similar orthodox
banking functions are still under the dominion of the proper banking
industry.
5. Demographic changes

As with time, consumers grow more intelligent specifically

with regards to their finances; with increased financial knowledge
and responsibility, therein lies a threat to the continued growth of
the pawnshop industry.
6. Unstable economy
Any negative changes in the economy will badly affect any
business, especially when monetary policies are concerned.
Moreover, it is widely known that the Philippines is highly
dependent on the remittances from overseas workers so if time
comes that this factor falls short, the industry will be at stake.
7. Consumer preference
Consumer preference changes more often than not so it is
possible that, although Magdalena gains market share and
customer loyalty, their clients may opt for other financial services
offered by competitors inside and outside the industry.
8. Bad acquisition
It is possible that Magdalena may have a bad acquisition on
any working day if the item is not thoroughly checked or if the item
is overvalued.

II.

Strategic Position and Action Evaluation Matrix (SPACE)

X-axis

Total X-axis
score:
3.67

Y-axis

Total Y-axis
score:
4.33

Internal Strategic
Position

External Strategic Position

Competitive
Advantage
(-6 worst, -1 best)

Industry Strength
(+1 worst, +6 best)

-1 External Security
-2 Automatic
Database
-1 Straight interest
rate

+6 Financial Leverage
+4 Filipinos belonging to the middle and
working class
+5 Hand-to-mouth lifestyle of most
Filipinos

Average: -1.33

Average: 5

Financial Strength
(+1 worst, +6 best)

Environmental Stability
(-6 worst, -1 best)

+6 Liquidity
+6 Cash flow
+6 Revenue

-2 Demographic setting
-6 Closely located competitors
-3 Government regulations

Average: 6

Average: -1.67

Based on the graph, the company is on the upper right quadrant which
represents the aggressive profile. Thus, the company should utilize its internal
strengths to take advantage of its external opportunities, to conquer internal
weaknesses and avoid external threats. Market penetration, market
development, horizontal and vertical integration are few suggested strategies.
Furthermore, in the case of Magdalena Pawnshop, the company is operating
within the Metro Manila. They can expand their market by collaborating or
buying provincial pawnshops. They can easily get customers because of their
high liquidity that can cater more demands. In addition, having a straight
interest rate as their competitive advantage can gain customer loyalty due to
the fact that no additional payments for loans benefit the customer. In this
case, the company can increase their market share and be a bigger
competitor to other pawnshops.

III.

Boston Consulting Group Matrix (BCG)

Due to the differences in size of the nationwide market leader and

Magdalena Pawnshop, these figures are taken from pawnshops of similar
size to Magdalena Pawnshop. Pawn loans and the sale of jewelry and
electronics rank as the Cash Cows of Magdalena Pawnshop. These two are
the products that make money for the company now. Meanwhile, remittance
is a growing industry and Magdalena Pawnshop has been growing its market
share relatively fast since it began remittance operations with Western Union
three years ago, thus it would rank a star. Lastly, due to the relatively new
money exchange service and its slow growth, it is ranked as a dog. Although,
it is ranked as such, management plans to give it more time to acquire market
share and to let the industry grow further.

IV.

Internal-External Matrix (IE)

The result of this matrix shows that the internal factors scored 2.52,
implying that it has an average internal position; while the external factors
scored 3.05, which represents a high external position. Plotting these ratings
in the diagram shows that the intersection of the said points is in the cell 2.
Accordingly, strategies that fall under the second cell are described as grow
and built. It is suggested that firms operating under this cell should use
intensive strategies (namely market penetration, market development and
product development) or integrative strategies (such as backward, forward
and horizontal integration).

V.

Grand Strategy Matrix (GSM)

In Quadrant I, a very strong and excellent strategic position is

presented. Market Development, Market Penetration, and Product
Development are included because establishment of competitive advantage
is the focus. The companys technological advancement has been improved.
Also, since Magdalena Pawnshop offers limited products and services,
Related Diversification should be included wherein the company can go for

related diversification strategy to minimize the risk related to limited product

line.

Quadrant II shows the rapid growing industry but, unfortunately, cannot

fight competently. In this area, the company must evaluate its existing
approach in the market place. It needs to know why they are ineffective in the
market. Thats why Market Penetration, Market Development, and Product
Development are still included. Since there are many competitors in the
industry, competitive advantage is very difficult to attain, Horizontal Integration
will be more advantageous option.

Quadrant III talks about slow growth market and relative weak position.
To avoid decrease, retrenchment (extensive cost and asset reduction) should
be practiced first. Also, related diversification must be included. The company
must be able to create and look for another alternative product/ services
related to its current product. If it comes to worst, divestiture is highly
recommendable. The owner can sell, either partially or fully, the company to
other companies if he feels that everything fails.
Lastly, Quadrant IV talks about the strong competitive situation and
slow market growth. Like other quadrants, related diversification must be
included. The company should focus on strengthening and creating another
related product and services for the customers. Also, joint venture may take
into consideration.

VI.

Quantitative Strategic Planning Matrix (QSPM)

In applying the QSPM method, strategic alternatives must first be
prospected by Magdalena Pawnshop, insofar as to ascertain which particular
strategic alternative that is made available to the company will be the one that
is most attractive to upper-level management.
Premised upon the analysis of the different Strengths, Weaknesses,
Opportunities, and Threats of the company, the researchers will be able to
quantifiably determine which particular strategy will yield the most beneficial
result for the company.
For the strategic plans that the company may elect to proceed with, the
researchers posit that the two most feasible ones are a (1) direct expansion-funding the creation of a new pawnshop in a different location-- or the (2)
complete renovation of the existing store. The former strategy will focus on
the capacity and opportunity of the business to attract new customers more
so than to strengthen and solidify the existing relationships it has created with
old customers; the latter strategy will elect to do the opposite, by improving
the appearance and overall functionality of the existing pawnshop this move
will attempt to further strengthen existing relationships with the current
clientele and improving it to a point wherein Magdalena Pawnshop becomes
a brand-remembered name with regards to their quick loan needs.
(1)

Key Factors

Weigh
t

A
S

(2)
TAS A
S

TAS

Opportunities
1. Philippines is prone to calamities

.03

.09

.06

2. High Unemployment

.02

.06

.04

3. Hand-to-mouth lifestyle of most Filipinos

.04

4. Technological advancements

.07

.28

5. High credit needs

.07

.28

.14

6. Financial Leverage

.06

.06

.06

7. Fragmented Market

.09

.18

8. Most Filipinos belong to the middle and working

class

.08

9. Demographic setting

.07

.21

10. Numerous competitors

.10

.3

.1

11. Competitors are closely located

.10

.2

.2

12. Fluctuation rates of items

.07

13. Government Regulations

.07

14. Demographic Changes

07

15. Unstable Economy

.06

.18

Threats

Total

1.3
5

1.0
9

As seen from the QSPM study conducted, the strategic option for
expansion is significantly more attractive than consolidating and improving the
existing location. Given this information, the researchers will then elect to
suggest to the company to increase their locations, rather than focus on
isolated store locations.

Recommendation
The researchers posit that a location expansion will be strategic option that will
yield the most favorable results. As arrived into by the Quantitative Strategic Planning
Matrix (QSPM) -- whose variables of course were referenced from collated company
data -- the expansionary strategy will yield a more attractive return; in addition, the
researchers found that the company invests far too little in marketing. The company has
no social media presence, or any commercial advertisement presence on any of the
major channels of consumer communication; this inability to market the company may
be what causes the companys dismal market shares in relation to the current market
leader: Lhullier.
It is indicative in the study that the Pawnshop market is a very fragmented, also
volatile, industry-- that is, it is subject to a great many movement of different variables
that influence volume of consumers that actually seek the companys services: in the
different matrices formulated in the study, a great many of these variables include the
nations reliance on the remittances of overseas workers as highlighted in the Unstable
Economy entries found in the matrices; the researchers are of the opinion that the
company is not utilising the fragmentation of the pawnshop market and using it to its
advantage.
Were the company to expand beyond its few stores as of the moment, market
shares will be conducive to growth; the company has also yet to market itself properly-were an expansionary strategy to take place alongside a marketing push for the
company brand, the researchers find that this will lead into healthy growth for the
company.
Due to the aggressive profile of the company, another strategy is to expand
through vertical integration. This means that the company should diversify and expand
by looking at its supply chain and acquiring or opening a business that is part of its
supply chain. Examples of these companies are Jewelry Making, Precious Metal
Smelting. This could drive down costs for that company and make it more profitable
overall. Although this strategy is viable, it is not without downsides. Vertical Integration
usually results in higher organization costs, because of its size, and decreased
motivation to improve or produce good quality since sales are now guaranteed. Strong
management is needed to overcome these organizational problems, which actually is
one of the concerns of the company.
Given what was previously mentioned, it is recommended as well that the
company undergoes annual management and personnel training to achieve efficiency
and to decrease human errors. Moreover, the company may also consider
decentralizing and upgrading its technology since this is one of the factors which makes
the system ineffective.
The company can also adopt a horizontal expansion strategy. This would be
acquiring or opening new pawnshops. Since the company is primarily based in Metro

Manila, it has not tapped the market of even the nearby provinces. This could prove to
be a huge boon to the organization if executed properly as this strategy improves the
companys economies of scale, thus driving downs costs. Examples of these industries
are Security, Banking, Credit Institutions. This strategy will also help the company grab
more relative market share as the competitors will also have to compete with the newly
opened or acquired locations. The increased relative market share will stabilize the
profit of the company as it will hold more leverage over smaller competitors and
markets.
According to the BCG matrix, among its products, Remittance services should be
concentrated upon as it is a star. More money should be invested in it as the industry is
experiencing high growth and the companys offering is growing in line with the industry.
This can help the company produce another Cash Cow after the end of the growth in
the industry. Because of the status of pawn loans and sales as Cash Cows, these
services should also be taken care of to protect the market share it holds because of the
low growth of the industry. A loss in market share in these services will be more painful
for the company and more difficult to re-acquire. Money Exchange should then be
closed due to the low industry growth and low market share of the company. While the
company can also try to grab market share from competitors, this may prove to be
difficult and costly.
As for the annual cost, the group cannot give an estimate since it will vary as to
the extent of the expansion and improvements that the company will undertake per
year.

Implementation
It will be better if the company starts with management and personnel training
first to solve internal organizational concerns human errors, understaffed, and
centralized management. This should be started by January 2016 utilizing the
remaining months to formulate the program; and be done annually for performance
consistency and development.
In an estimate of two to three years, the company may start pushing through with
their expansion projects which were hindered due to their internal problems. This must
be done alongside their system improvement technology upgrade; and marketing plan
radio commercials and online presence. Most importantly, it should be noted that this
be accomplished gradually through the years since it will be extremely costly for the
company if done aggressively.
Once they gain further share of the market, they may begin to examine which
products remain to be profitable and which products should they drop and replace or
maintain and improve.

Evaluation
The company can evaluate their strategies by looking at their policies and goals.
Strategies must be internally consistent which means that corporate policies should be
aligned with its goals. Aside from this, strategies can be evaluated through the
appropriateness of the resources, such as money, competence and physical facilities,
used in their respective strategies. Resources can be a critical factor for a companys
success because it may limit the company in achieving its goals and it is maximized in
order to implement their strategies. Moreover, the company must be able to assess the
degree of risk of their strategies before implementing it.
On the other hand, the company can evaluate the results of their strategies by
conducting surveys and interviews to their employees and customers. By doing this, the
management will know how their strategies worked looking at a different perspective.
Furthermore, the company should assess its annual performance whether they have
achieved their goals and profited. Accordingly, an increased in sales, revenue and
number of customers and low turnover rate can be indicators of good organizational
performance.

Conclusion
In summary, Magdalena Pawnshop has a very competitive and aggressive
profile, however is does not utilise this aggression in the form of expansionary strategies
and aggressive marketing techniques. The researchers conclude through the quantified
measures and techniques used in the study that an expansionary strategy, is in fact, the
most attractive, and most beneficial to the company. This is premised upon the different
factors that make it conducive for the company to elect such a strategy; the interest
rates that govern the exchange of goods in the pawnshop industry are volatile enough
that the different competitors in the industry are hard pressed to establish one that they
feel will be most attractive to consumers. Additionally, the fragmentation of the market,
except for the established trend in favor of the current market leader: Lhuillier, makes it
so that Magdalena Pawnshop still has a lot of potential room to grow their own market
share.
Though the researchers posit that an expansionary strategy that is premised
upon the addition of branches within different locations is the most beneficial to the
company, the other similar forms of expansionary strategies are, likewise, applicable.