Aquarius Food Industries (AFI) is a small and focused food company specializing in the production of processed shrimp paste or “bagoong alamang”. Shrimp paste is versatile in terms of acceptability in the market because it is considered as a condiment for different food recipes. The main ingredients of the shrimp paste which is the shrimp fry was directly purchased to the fishermen or from the wet market, thus, it has an advantage of having a low price and abundance of raw materials. The major regions such as Luzon, Visayas and Mindanao are considered as the breakdown of the market for the shrimp paste in the Philippines. In Mindanao, Neptune, the brand name of the product of AFI, is one of the major players in producing shrimp paste, with a market share of 30 percent, together with Lasap, a competing brand of Neptune, and 20 percent for Frisco accounts and the remainder is spread out among few other players. Consecutively, in Luzon, Shrimp paste is normally bought from supermarkets shelves with various competitors that have well-known brands. And in Visayas, the product is hardly sold because of the conventional wisdom that the region is mainly consists of coastal towns which has fresh seafood that are available.
The opportunities of the Aquarius Food Industries are the following: (1) Toll manufacturing which means that the AFI will extend their output to the Golden Hands that will increase their sales, (2) SM Bonus is also planning to toll manufacture their products to fill up the demands of their customers that will again give an opportunity for the AFI to increase their sales, (3) AFI has to have a more varied product line to keep up with competition and allocate fixed costs over more output that will mean a higher profit for their company, (4) Possibility of exporting the new products, and (5) Processed coconut items that can utilize the equipment and materials in making shrimp paste that will serve as an advantage for them. However, there are also some threats that the AFI must consider like their competitors such as Lasap (in Mindanao), Barrio Fiesta, Kamayan (Golden Hands), Chowking, SM Bonus, Lee Kum Kee and Tanjung Malacca including the intentions of Lasap to modernize plant facilities and squeeze out costs further that make some of the wholesalers to shift allegiance. The strategic and operational issues that Aquarius Food Industries is facing are the following: (1) Toll manufacturing arrangement for Golden Hands that compromised the total sales volume of their brand, (2) Having this arrangement tends to be more volatile that depends essentially on the availability of shrimp fry, (3) Toll manufactured products are being sold in Luzon for thrice of its the price. (4) Stretching of payments terms, (6) SM Bonus also offers AFI to toll manufacture their product, (5) In the long run, AFI has to have a more varied product line to keep up with competition and allocate fixed costs over more output. (6) Processed coconut items that can utilize the equipment and materials in making shrimp paste.
The alternatives that are available to the company are: to continue or not the toll manufacturing the product of the Golden Hands and other toll arrangements as it compromised the total sales of the Neptune and dependability of some toll arrangements to the supply of shrimp fry as it lessen the demand if the shrimp fry is abundant. Consequently, they may choose sell their product directly in Luzon to have the advantage of getting the higher price and gaining more revenues or not and to establish or not a new variety of products that can probably increase their sales. And join in processing coconut items that utilize the equipment and materials in making shrimp paste or not because of the abundance of the players in this particular food segment.
Based on the alternatives that are available, I would recommend to continue having the toll marketing for Golden Hands because although it compromised its total sales, it can be resolved by a good forecasting technique that can be able to anticipate the right amount of product to manufacture during a certain period. The AFI may also extend their production up to Luzon and sell their product for thrice the price which can be probably done by hiring a logistics for the distribution of the product. In terms of the development of the product, it is good to have more varieties of the shrimp paste because the customers will have the chance to choose other viand of the product and this maybe a venue for possible exportation of the product. In addition, the AFI must not pursue the deal to manufacture coconut items because of abundant players in this food segment. However, if the one who offers the deal will make first a further study about the food segment and will have a favorable output, maybe AFI can have coconut items because they have already the equipment and packaging materials. Finally, the AFI must considered different ways to realize revenues for the betterment of the company.