Chapter I

INTRODUCTION

Historical Background
Suyo

Multi-Purpose

Cooperative

started

as

Suyo

Credit

Cooperative in the early 1973 composed of fifteen members through the

influence of the late Rev. Fr. Steve De Daffer, a Belgian Priest. Each
member contributed PhP. 20.00 for a total of PhP. 300.00 that served as
the initial capital of the cooperative. Pursuant to the Presidential Decree
175 the cooperative was registered on September 10, 1981 with the
Bureau of Agricultural Cooperative Development. Eventually, area of
operation was also expanded to the whole Municipality of Suyo and the
nearby barangays of the Municipality of Sigay, Alilem, and Cervantes,
IlocosSur.For

fifteen

years

of

operation

since

its

inception,

the

cooperative had reached its first million mark, in total assets, in the year
1988. The cooperative received Certificate of Recognition from the
Cooperative Development Authority (CDA) for becoming one of the
millionaire cooperatives in the Ilocos province. From thereon, there is a
consistent increase in capital and assets. On April 8, 1992, the credit
1

and consumer coop merged paving the conversion of the credit

cooperative

into

Multi-Purpose

Cooperative.

The

Cooperative

Development Authority (CDA) confirmed the registration on March 14,

1991 with confirmation no. 733. The socio-economic activity of the
members was improved through the services in terms of a providential
loan, productive loan, emergency loan, savings mobilization, mortuary
aid and consumer store.SMPC was chosen as one of the pilot project of
Financial

Intermediary

(FI)

of

NATCCO

under

Socio

Economic

Development Cooperative of the Philippines (SEDCOP) headed by Mr.

Michelle P. Bergeron. This project focuses on technical assistance that
aims to improve and develop the financial viability, stability and
sustainability of the cooperative. This project had made a lot of changes
and challenges in the cooperative as it adapts the daily balancing system
in accounting, capacity based lending and house cleaning of accounts.
The daily balancing system can produce financial statement every end of
transaction for the day unlike before that financial statement will only be
prepared every end of the month. The capacity based lending was also
adopted but not on capital leverage anymore but rather on the capacity
of the borrower to pay. The house cleaning is on the provision of loan
2

losses. A lot of arguments had made on this matter as it really affects the
financial status of the cooperative however through series of FI trainings,
it made a reality that the cooperative provided a 100% provision of loan
losses and a zero delinquency on DOSRI.

Another projects where Suyo MPC was again as one of the

beneficiary of the Agrarian Reform Communities (ARC) under the
Department of Agrarian Reform- Agrarian Reform Infrastructure Support
Project II (DAR-ARISP II). The project focuses on the Institutional
Development Component (IDC) through capability and capacity building
activities of the cooperative. This includes the policy manual of the
cooperative as its output.
SuyoMuti-Purpose Cooperative is also an active member-affiliate of
various institution/organization such as: Ilocos Sur Cooperative Bank
(ISCB) in Candon, Ilocos Sur, Ilocos Sur Federation of Cooperative (ISFC),
Nueva Segovia Consortium of Cooperative (NSCC), and Provincial
Cooperative Union (PCU) all in Vigan City, Northern Luzon Federation of
Cooperatives

&

Development

Center(NORLU

CEDEC)

in

Baguio

City,National Confederation of Cooperatives (NATCCO) in Manila, and

CISP CLIMBS in Cagayan de Oro City.
To date, Suyo multi-Purpose Cooperative is a consistent recipient of
recognition and awards from various government &private institutions
for being one of the multi-millionaires cooperative in the Philippines. Its
VISION, MISSION and GOAL are towards reality.

Chapter II
RESEARCH DESIGN AND METHODOLOGY

This chapter provides the research design, sources of data,

instrumentation and procedure, tools for data analysis and ethical
considerations.

Research Design

The researcher made use of the descriptive research design.

Descriptive research is used to describe characteristics of a population or
phenomenon being studied. It does not answer questions about
4

how/when/why

the

characteristics

occurred.

(https://en.wikipedia.org/wiki/Descriptive_research)

Sources of Data

The data used for this study were gathered from Suyo Multi
Purpose

Cooperative.

The

Chief

Executive

Officer

permitted

the

researcher to have a copy of the cooperatives Manual of Operations and

the researcher conducted an interview with some employees of the
cooperative.

Instrumentation and Data Collection

Prior to the company immersion to conduct interviews and

observation, the researcher sought the approval of the CEO and the
Chairman of the Board to have the cooperative as the subject of the
study. The primary sources were obtained from the Manual of Operations
of the Cooperative and from the audited financial statements available.

Data Analysis

The external environment and internal environment of the

cooperative industry were analyzed using the following tools or
framework, Porters Five Forces, External Factor Evaluation(EFE) Matrix,
Internal Factor Evaluation (IFE)Matrix, Competitive Profile Matrix (CPM),
Strategy Analysis and Formulation for the cooperative is also analyzed
using different tools like,

Strengths, Weaknesses, Opportunities, and

Threats (SWOT) Matrix, Strategic Position & Action Evaluation (SPACE)

matrix, Boston Consulting Group (BCG) matrix, Internal External (IE)
matrix,

Ethical Considerations

For the researcher to avoid ethical issues, the following were

considered, Recognition of sources of information was done by citing
sources and authors articles and websites, permission was given to
study the company using an approved endorsement letter and the
researcher will provide a copy of this study to the management of the
company for transparency purposes.

Major Assumption

At the end of the study, the researcher and the reader as well, shall
be able to identify strong points in maintaining the cooperatives
sustainability, stability and growth for the next decades of operation.

Chapter III
COOPERATIVES VISION, MISSION AND GOAL EVALUATION

Vision
Suyo MPC is envisioned as a highly competitive and capable of
delivering multi services to the membersin each and every community
throughout Region I and CAR.

Mission

To sustain the implementation of multi-services and various

programs that will alleviate the socio economic status of

members.
To enhance knowledge, attitudes and skills of officers, staff and

members.
To strengthen

linkages

and

ties

with

line

agencies

and

organizations with similar objectives in developing the cooperative,

the community and the nation as a whole.

Goal: SMPCs goal is to alleviate the socio-economic status of the

members.

The cooperatives Vision, Mission and Goal are geared towards the
improvement of every cooperative members socio economic status that
contributes to the community building andthe nation as a whole. The
researcher evaluated the cooperatives vision, mission and goal using the
parameters set by Davids Framework.
Table 1: Vision Statement Evaluation

PARAMETER

YES

WHY

/NO
Does it clearly answer the YES

The

question: What do we want to

statement

become?

cooperative wants to become a

cooperative
states

vision
that

the

highly competitive and capable

of delivering multi services to
its members and the community
throughout region 1 and CAR.
Is it concise yet inspirational?

YES

It is concise and inspirational

for it aims to deliver multi
services

in

each

and

every
9

community throughout Region I

and CAR.
Is it aspirational?

YES

It aspires to extend or deliver

multi-services
contribute
socio

in

economic

that

will

improving

the

life

of

every

member throughout the region.

Does it give clear indication as NO
to when it should be attained?

Table 2: Mission Statement Evaluation

PARAMETER
Customers
Products and
Services
Markets

YES
/NO
Yes
Yes
Yes

IF YES, WHICH OF THE STATEMENT.

-

Alleviate the socio economic status of

members.
To sustain

multi-services and various programs

Objectives
in
developing
the

the

implementation

of

cooperative, the community and the

Technology
Concern for Survival,

nation as a whole.
To enhance knowledge, attitudes and

Yes

skills of officers, staff and members.

objectives in developing the cooperative

Yes

To strengthen linkages and ties with

Yes

Growth and
Profitability
Philosophy

line agencies and organizations with

10

similar objectives in developing the

cooperative, the community and the
Self-Concept

Yes

nation as a whole.
In connection with the missions of the
cooperative it implies that in the near
future the cooperative believes itself to
be a leading service provider of the

Concern for
Employees
Concern for Nation

Yes
Yes

community and the nation as a whole.

To enhance knowledge, attitudes and
skills of officers, staff and members.
To strengthen linkages and ties with

Building

line agencies and organizations with

similar objectives in developing the
cooperative, the community and the
nation as a whole.

Summary and Recommendations

Based from Davids Framework on Vision Mission Evaluation Suyo
Multi-Purpose Cooperatives VisionStatement clearly states what it wants
to become in the future. It aims to become a competitive and capable of
delivering multi-services to its members. Mission Statement also clearly
state about its purpose of existence that is to continuously extend the

11

cooperative services to alleviate the socio economic status of its members

throughout Region 1 and CAR.
Cooperatives vision mission statement is a guide in achieving their
goals. Cooperative by laws, operational guidelines and policies are
formulated in relation to the cooperatives vision, mission statement,
which is geared to alleviate the socio economic status of its members.
Members satisfaction is the primary concern of the cooperative. Thus,
board of directors and managers should see to it that all policies are in
accordance with the cooperative principles and implementing the same
as a guide for their employees. Every employee should be well oriented
about the importance of the vision mission statement in relation to their
work.

Chapter IV
EXTERNAL ANALYSIS

12

In this chapter contains the identification and discussion of

external factors or forces that have significant impact in the operations of
the cooperative industry.
A. GENERAL ENVIRONMENT
Cooperatives are established to address members needs not for the
benefit of one or two persons interest. It aims to give the members a
window to grab new opportunities in life. Some of the members
opportunities or benefits in a cooperative are as follows; access to
educational financing, business financing, cheaper cost on farm and
fishing supplies and others as may be needed by the members and are
available at their respective cooperative.
In order to facilitate and address these needs cooperatives are
currently expanding their area of operations from community to town,
town to province, province to region and region to nation.
Though expansion gives positive effect in the cooperative in terms
of increasing its size as to asset and revenue there are external factors
that needs to be considered.

13

Economic Developments Economic Developments give a big impact in

business operations. The government is focused in the educational
improvements, health facilities and services, and livelihood programs and
others that contribute in the economic growth of the country. Under
Economic Development the researcher considered the following factors
that have great impact in the cooperatives business operations.
-

Education education system in the Philippines has been extended to

two years through the K-12 program. If there is an increase in the
number of years in the education system the cost of education also
increases. Hence, parents will be looking for a financial leverage to
sustain their childrens educational needs. It will be an opportunity
for the cooperative to assist the financial needs of every parent who is

concerned with their childrens future.

Housing Every family needs a shelter to live in their whole life
through. Every family dreams to have their own houses but because
of the high capital requirement in starting the house construction is
too high. Every member of the cooperative is entitled to avail of its
financing services for a maximum of PhP. 1,000,000.00 depending on
their pledged collaterals or securities. Again housing is also counted

14

as one of the opportunities that the cooperative to consider in the

industry.
Business ventures is also considered as an opportunity for the
cooperative because some business establishments needs additional
capital to finance its increasing day to day operations, if not all. The
cooperative is extending micro financing to small enterprises like
restaurant owners, parlor owners, sari-sari store owners, and others.
Increasing numbers of such businesses would mean an increase in
the future members of the cooperative and a borrower as well.

Lifestyle Trends lifestyle nowadays is changing it includes health

awareness and looking into the needs and priorities in life. Under this
category the researcher considered the trending automobile industry. The
researcher viewed that means of transportation nowadays has been seen
as a need especially to those who are employed. Every worker needs a
mean of transportation to go to work at his/ her convenience without the
hustle of getting late due to the time allotted in waiting for a hitch. Car
financing industries are charging almost double the market price in
instalment basis. This is an opportunity of the cooperative to encourage
such individuals to avail of its loan services instead of having the car in

15

financing

industries.

The

cooperative

offers

lower

interest

and

amortization than that of the financing firm.

Technological Developments Technological advancements has a fast

turnover nowadays, especially when it comes to gadgets. Computers,
cellular phones, and other devices are being innovated from time to time.
To own the newly introduced gadget in the market has already become a
trend in the society, like for instance apple gadgets. This is also
considered as an opportunity for the cooperative because some people
tend to buy luxurious items even if it will result to a loan.
Government Regulations and Policies amendment of existing laws
governing cooperatives and other business is normally abrupt and is
considered as a threat because there might not be enough time to comply
and adapt for the changes imposed by the government.
Politics In every market area there is a political aspect to consider. The
cooperative should always do courtesy calls to the Local Chief Executive
Officer. The LCO should always be aware and invited to the programs the

16

cooperative is extending for the public. Like Medical Missions, General

Assembly and any activities that involves publicity.
Product differentiation - Some competitors might have a more unique
product or service that is of the same quality with that of the
cooperative. It is considered as a threat because it might able to surpass
the existing services of the cooperative.
Calamities/ unprecedented events this factor affects the flow of the
cooperatives financial services especially in the agriculture sector. Some
member borrowers invest in agricultural crops. If there is a typhoon the
crops will be destroyed and their source of payment will be directly
affected. Credit risk arises, hence, it is considered as a threat.

B. INDUSTRY AND COMPETITOR ANALYSIS

B.1 Industry analysis

At present cooperative industry is fast growing. Each and every
cooperative is into aggressive expansions in order to fulfil and extend
their purpose of existence, that is, to serve the community and the
17

nation as a whole. Due to this current trend in cooperatives, competition

is at large in the industry. Commercial banks, Individual private lenders,
and other private financing institutions are also affected in the
competition because major cooperatives that are expanding are involved
in the financing services. Each financing organization is a key player in
the industry. Cooperative members tend to avail of the services that
offera lower cost of financing, high interest rate on deposits, and high
dividends on common shares.
In order to have a wider view about the competition within the
cooperatives industry the researcher considered the underlying concepts
on Porters Five Forces framework,

Porters Five Forces Framework this framework attempts to analyse

the level of competition in an industry. Under this framework it considers
some forces affecting the attractiveness or competitiveness of a firm
within a specific industry. Such forces are, Threat of new entrants,
Threat of substitute product or service, Bargaining power of customers,
Bargaining power of suppliers and Intensity of competitive rivalry.

18

Threat of new entrants (weak)

-

New entrants in the wide market are considered threat, for the
cooperative is not aware of what may these new entrants offer other
than what the cooperative is currently offering. New entrants dont
necessarily mean a newly organized cooperative or financing firm but
it may also be an existing cooperative that has long been sleeping. In
connection to this the new entrant may offer new rediscounted rates
on Financing services and Deposit Services. And the competitors
marketing strategies might be better than the cooperative is doing.

Barriers to entry
-

Government Policy all cooperatives are being governed by the

Cooperative Development Authority. Every cooperative has to meet
requirements in order to make a move especially when it comes to

expansion.
Capital Requirements Every cooperative must meet the minimum
capital requirement in order for it to establish or expand a branch
office in its target market. Minimum starting capital requirement of a
cooperative branch for its operation is ranging from 2-3 million.
19

Human Resource Skilled employees are the key players in operating

a branch or extension office. Without these criteria an expansion

program will not materialize.

Loyal cooperative members the cooperative have loyal members

and are always patronizing the cooperative products and services.

Market Coverage the area of coverage for a cooperative needs
approval from the Cooperative Development Authority, thus, making it
hard for some cooperatives to expand.

Threat of substitute products or services (weak)

-

Substitute products or services may evolve but when it comes in

acquiring financing services to institutions as such customers always
tend to finds the financing institution who offers the cheapest interest
rates on loans. And Suyo Multi Purpose Cooperative is just on the
right track with regards to these characteristics of a financing
institution.

Bargaining power of customers (weak)

-

Cooperative members do bargain with regards to loan services offered

but in the current status of Suyo Multi-Purpose Cooperative, it is still
offering lower interest than that of the other cooperative or financing

20

institution they are trying to compare. The bargaining power of

customers is still not an issue for the cooperatives operations.
Bargaining power of suppliers (weak)
-

The Cooperative considers Secondary and Tertiary Cooperatives as its

suppliers. Financial leverage for the cooperative is accessible through
these types of cooperatives. They extend loan at lower interest rates
for their member cooperatives. Bargaining power cannot be enforced
because officers of these higher levels of cooperatives come from the
Board of Directors of each member primary cooperatives. Hence,
decision making is controlled.

21

Intensity of competitive rivalry (high)

For most industries the intensity of competitive rivalry is the major
determinant of their competitiveness within the industry. As competition
increases the risk of losing some of the market share follows.
Potential factors:

Sustainable competitive

advantage through innovation

cooperatives are moving with their variety of services offered.

Farmers cooperative extend agro and fishery products in an
amortization basis. Thus, earning their share in the financing
industry market.

Level of advertising expense Marketing is somehow a factor that

the cooperative should be looking at. As of this moment the
cooperative is lacking marketing activities and that is giving way for
some competitors to indirectly or directly get a share in the market.

Conclusion
Using Porters Five Forces Frameworkresult that most of the forces are
rated weak in affecting the attractiveness of the cooperative it only shows
that Suyo Multi-Purpose Cooperative is still attractive and competitive in
the cooperative and financing industry. Though there is an existing

22

threat that is the competition the cooperative will somehow manage to

step on the ladder at some point in time.

B.2 Competitor Analysis

In

the

Financing

Industry

cooperatives,

banks,

financial

institutions and private individual lenders are present and are competing
against each other in terms of interest rates of the services they offer. At
present these are the major competitors that the researcher considered
that the cooperative should be dealing with because they are the
cooperatives that are ranked on top in Region 1 and North Luzon as a
whole.
Ilocos Sur Cooperative Bank A Secondary Cooperative based in Candon
City, Ilocos Sur, with a +/- 600M total assets. Loan Interest rate is
around 13% per annum.
Tubao Credit Cooperative based in Poblacion, Tubao, La Union with +/500 million in total Assets and is recently expanding its operation to

23

nearby town Rosario, La Union. Interest rate on loans is around 12-15%

per annum
SACDECO is also a primary cooperative based in Sta. Cruz Ilocos Sur. It
is one of the active and aggressive cooperative in terms of expansion.
Interest rate on loan is around 12% per annum. It is a billionaire
cooperative. It has 16 branch offices.

Competitive Profile Matrix (CPM)

This matrix is used in assessing the different competitive
advantage of each cooperative in the financing industry. Such competitive
advantages are presented in table 3. Under this matrix it will show if
Suyo Multi Purpose Cooperative will be attractive and gain a
competitive advantage in the market.
In order to get a better picture about the attractiveness and
position in the industry compared to itscompetitors.The researcher
identified

seven(7)

Critical

Success

Factorsto

determine

the

attractivenessof the cooperative within the industry.

24

1. Loan Interest rates is considered as one of the key success

factor of competitiveness in the industry because it is the primary
service price offered in the industry and it is what the customers
are comparing most of the time. Customers always look for the
lowest interest rate offer.
2. Interest rate on Deposits high interest rate on deposits attracts
investors. Most of the time interest rate is the cause of competition.
3. Cooperative Size investors consider the size of a cooperative, in
terms of assets and revenue, prior to their investment because size
reflects the stability of the cooperative.
4. Market expansion is also a key indicator of competitiveness.
Saturation of market increases the cooperative size in terms of
assets and equity.
5. Reputation People always base on the reputation of an
institution they are investing in. Reputation includes size in terms
of assets and revenue, years of existence, awards received, financial
ratios, and members/customers feedback and others that tells
good about the company.
6. Management staffs and officers attitudes and technical
competencies attract customers. Good employees interaction with
customers is something a company has to offer.

25

7. Marketing

Strategy

is

also

factor

that

affects

the

competitiveness of a company. A well planned and strategized

marketing of products and services will lead a firms upward
growth.
8. Organizational

Guidelines,

Policies

and

Procedures

are

internal strengths used to controls the cooperatives operations. It

is a mitigating factor to avoid fraud inside and outside the
cooperative.

Table 3: Competitive Profile Matrix

SMPC

.80

.60

.40

.40

.20

.80

.60

.60

.60

Reputation

.15

.60

.60

.60

.60

Cooperative Size

.15

.45

.60

.60

.60

Interest on
Deposits

Score

Rating

Score

.20

Score

Rating

Loan Interest rates

Rating

Factors

Score

ISCB

Rating

TUBAO

Weight

Critical Success

SACDECO

26

Market Expansion

.10

.45

.60

.30

.60

Marketing Strategy

.10

.30

.40

.20

.40

.05

.30

.40

.30

.40

.05

.30

.30

.30

.30

Management Staff
and Officers
Organizational
Guidelines, Policies
and Procedures
TOTAL

1.00

4.00

4.10

3.30

3.90

As illustrated in table 3 Suyo Multi Purpose cooperative is still

competitive in the market because it earned a total score of 4.00 which
indicates that it is above the average of 2.5. Though SACDECO takes the
lead there will still be a chance for Suyo Multi-Purpose Cooperative to
improve on its weak areas and its strengths as well. The researcher
assigned weightsbetween0-1, 0 - being the least attractive factor in the
industry and 1 - as the most attractive factor in the industry. The rating
is between1-4, 1- Poor, 2-average, 3-above average, 4-superior.
SUMMARY AND CONCLUSION
27

External Factors Evaluation (E.F.E.) Matrix the total weighted score

of 3.30 indicates that the cooperative is strong in the industry. It is
maintaining its operations way higher than the average of 2.5.
Table 4: EFE Matrix
WEIGHTED

OPPORTUNITIES

WEIGHT

RATE

Education
Housing
Business Ventures
Lifestyle Trends
Technological Advancements
THREATS
Government Regulations and

25%
20%
15%
8%
7%

4
4
3
3
3

1
.80
.45
.24
.21

5%
Policies
Politics
5%
Product Differentiation
10%
Calamities
5%
Total Weighted Score
Chapter V

.10

3
3
1

.15
.30
.05
3.30%

SCORE

COMPANY ANALYSIS
Suyo

Multi-Purpose

Cooperatives

primary

goal

is

for

the

upliftment of its members socio-economic status. It is purely committed

to serve its members, community and the nation as a whole. Every
cooperatives growth basically depends on its members trust. It is not
owned by high profile businessmen but it is owned by the members.
28

Income from operations is distributed fairly to its members in the form of

dividends. The officers and management staff of the cooperative are
managing its operations to achieve a common goal. For the fruitful 43
years of operations the cooperative is able to maintain its stability
through the promising services it offers in the community.
Products and Services
Suyo Multi Purpose cooperative is primarily engaged in financial
intermediary services and is catering the financial needs of its members
in terms of education, housing, business financing, agricultural and
other social needs that arises from each member borrower. And also is
offering a window for a financial leverage in terms of interest earned in
the members deposits and loan or financing services at a very low
interest rate considering a 1% per month outstanding balance based
otherwise known as diminishing interest rate. (see table 2).
Deposit Services
Suyo Multi Purpose Cooperative Savings Deposit rate is 2 percent
per annum average daily balance. The cooperative also designed a
deposit system for kids, ranging from 0-14 of age, which could only be

29

withdrawn until the child is 15 years of age bearing an interest rate of

7.5 % per annum.
Table 5: Time Deposits Rate
AMOUNT
5,000.00

50,001.00

150,001.00

350,001.00

500,001.00

50,000.00
150,000.0
0
350,000.0
0
500,000.0
0
ABOVE

30

60

90

180

365

DAYS

DAYS
4.00

DAYS
4.50

DAYS
5.00

DAYS
5.50

%
4.50

%
5.00

%
5.50

%
6.00

%
5.00

%
5.50

%
6.00

%
6.50

%
5.50

%
6.00

%
6.50

%
7.00

%
6.00

%
6.50

%
7.00

%
7.50

3.50%
4.00%
4.50%
5.00%
5.50%

SMPC also offer promos on time deposits with an interest rate of

8.5 % per annum that starts from 100,000 above. If the member
depositor decides to withdraw his/ her time deposit before the maturity
period, the rate on savings deposit of 2% applies. Share Deposit or Paidup Common shares of members can earn as high as 12% of the Net
Income After allocations per annum.Saranay Fund Deposits are non
interest bearing deposits. It is the members mortuary contribution fund
wherein the cooperative deduct 10 pesos per member if a member dies.

30

And the premiums collected will be delivered to the members bereaved

family.

Financing Services

Table 6: Service Charges

Terms

Service Fee

Insurance

Collection Fee

5%
6%
7%

1.25%
2.50%
2.50%

1%
1%
1%

One Year
Two Years
Three Years

Table 7: Sample Computation

Principal Amount
Less Financial Charges
Service Fee (5%)
Insurance (1.25%)
Collection Fee (1%)
Capital Build up (Savings
and Share)
Net Proceeds on Loan

1 year
PhP. 100,000

2 years
PhP. 100,000

3 years
PhP. 100,000

5,000
1,250
1,000

6,000
2,500
1,000

7,000
2,500
1,000

1,750

1,500

1,500

PhP. 91,000

PhP. 89,000

PhP. 88,000

31

32

Financial Ratios
Financial Ratios are essential in assessing the cooperatives current
status. Financial ratios show how well the cooperative is managing its
finances in terms of Liquidity, Financial Leverage and Activity Ratios.

A. Liquidity Ratio/ Current Ratio

Liquidity indicates the cooperatives ability of paying off its debt in
the soonest possible time. Liquidity ratio or current ratio must be equal
or ideally more than 1. If it is equal to 1 it means that current assets are
equal to its current liabilities which means that it can pay off its current
assets for its current liabilities at the soonest possible time. If the ratio is
more than 1, lets say 1.25, 2 or more, it means it is very liquid, which
means that after paying all its current liabilities the cooperative will still
have cash available to finance its short term activities.
Current Ratio = Current Assets / Current Liabilities
2012
Current Assets
Current Liabilities
Current Ratio

102,351,711.7
1
90,017,239.55
1.14

2013

2014

128,247,066.04

156,701,572.23

110,260,246.05

131,317,036.12

1.16

1.19
33

The current ratio as shown in the table is increasing which means the
cooperative is managing its operations efficiently and effectively.
B. Solvency is the ability of company to pay its long term liabilities.
Solvency is like liquidity but it focuses on the long term investments or
activities of the company. Solvency ratios include;
Debt to Asset Ratio
The debt to asset ratioof the cooperative as shown below indicates that
the cooperative can pay its obligations because the cooperative will only
sell a 76% of its assets to pay off its debts.
Debt to Asset Ratio = Total Liabilities / Total Assets

Total Assets
Total Liabilities
Ratio

2012
125,508,776.5
3
93,981,853.39
.75

2013

2014

146,308,891.42

176,958,577.96

112,132,274.19
.77

135,155,418.45
.76

Profitability Ratios
Profit Margin measures how much net income is derived from the
number of revenues earned. It is hereby calculated by dividing net

34

income by the Revenue. The profit margin of the cooperative as reflected

in the table below is 22.36% which means that the cooperative earned a
net income of 22.36% from its generated revenue.
Profit Margin Ratio = Net Income / Revenues
Net Income
Revenue
Profit Margin

2012
3,310,594.13
16,321,986.82
20.28%

2013
4,567,206.13
20,010,809.48
22.82%

2014
5,605,409.15
25,058,686.54
22.36%

Return on Asset- The return on assets ratio measures how effectively

the cooperative can earn a return from its asset investments. Return on
asset shows how efficiently the cooperative can convert the money used
to profits. As we can see in the table below the Return on asset has been
constant at .03 or 3% for the period of three years. The cooperative
should improve more on its return on asset ratio so that it will go higher
in the next years of its operation.

Return on asset ratio = Net Income / Average Total Assets.

35

Net Income
Average Total Assets

2012
3,310,594.13
117,527,711.8

2013
4,567,206.13
135,908,833.9

2014
5,605,409.15
161,633,734.6

0
.03

8
.03

9
.03

Return on Asset
Ratio

Internal Factor Evaluation (IFE) Matrix

The cooperatives internal strengths and weaknesses are assessed by
giving corresponding weights ranging from 0-100%and rates ranging
from 1-4 as shown in table 5.
STRENGTHS
Low interest rates on loan services it is one of the strengths of the
cooperative compared to other cooperatives and commercial banks. And
this is the primary factor of every financing business operations. Hence,
36

it is given a weight of 15% and is rated at 4 because in so far as the

cooperative industry is concerned Suyo Multi- Purpose Cooperative is
giving the cheapest or lowest interest rate, 1% diminishing or at an
average of 6.5% per annum, on loans.
High interest rates on deposits this is another critical success factor
that encourages members to invest their money in the cooperative.
Interest rate on deposit is also one of the major factors in the industry.
The cooperative deposit rates can go as high as 8.5 percent per annum.
Wide area of coverage the Cooperative Development Authority
approved that Suyo Multi-Purpose Cooperative can operate in the whole
Region 1 and CAR. The wider the area of coverage the higher the
expected market shares. It is an advantage for the cooperative and is
weighted at 8% and is rated at 3.
Increasing members/ market share as a result of successful
expansion membership increased. An increase in membership depicts an
increase in equity and assets as well. Weighted at 7% and rated at 3.
Loyal

and

competent

employees

despite the low salary its

management staff is driven to work and live the cooperative way.

37

Weighted at 11% and is rated at 4 because it is the employees who gets

the job done in everyday operations.
Loyal members members are always supportive and continuing to
patronize the services of the cooperative. Weighted at 10% and rated at 3
because in every year there are members who close their accounts, so far
2 members per year.
Reputation The cooperative earned its unquestioned reputation as
reflected in its fruitful years of operations, awards and its upward
growth. Weighted at 9% and rated at 4 because reputation is a factor
that every business maintains.

WEAKNESSES
Unmanned Marketing The cooperative marketing activities are very
minimal due to the absence of marketing department. Weighted at 10%
and rated at 2 because market saturation is dependent in the marketing
department.
38

Lack of Marketing Programs the cooperative is lacking of marketing

activities that promotes the services and basic competencies as to
services it has. Weighted at 10% and rated at 3 because if you have a
wide area of market there should be marketing programs to implement in
order to catch up with competitors who are already at their best.
Limited Amortization Plan The cooperative only extend loans up to
three years of amortization plan which differentiate it from other
financing institutions or other cooperatives. Some cooperatives extend
loan amortization plan up to 5 years which in case is being patronize by
members who are availing high level loans for a lower amortization
payments. Weighted 5% and rated at 2 because some members look for
a lower amortization and the only is to expand or extend their
amortization plan from three years to five years or more especially for
high level loans.

Table 8: IFE Matrix

39

As the table show, Suyo Multi-Purpose Cooperative earns a total

weighted score of 3.35 which indicates that it is very attractive in the
market. Higher than the average score for the matrix of 2.5.

STRENGTHS
Low Interest rate on loans
High Interest rate on Deposits
Loyal and Competent Employees
Loyal Members
Wide Area of Coverage
Increasing Members/ market share
Good Reputation
WEAKNESSES
Unmanned Marketing
Lack of Marketing Programs
Limited Amortization Plan
1 (poor)

2(below ave)

WEIGH
T

RATE

WEIGHTED

15%
15%
11%
10%
8%
7%
9%

4
4
4
3
3
3
4

SCORE
.60
.60
.44
.30
.24
.21
.36

10%
10%
5%

2
3
2

.20
.30
.10

3(above
ave)

4(superior)

3.35

Total Weighted Score

40

Chapter VI
STRATEGY FORMULATION
Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix
SWOT Matrix for Suyo Multi-Purpose Cooperative focuses on relating
Strengths and Opportunities (SO), Weaknesses and Opportunities (WO),
Strengths and Threats (ST), Weaknesses and Threats (WT) and
recommending strategies as well. These factors are taken from the earlier
matrices in External and Internal Analysis.
STRENGTHS
Low Interest Rate on

Limited Amortization

Loans

Plan

High Interest Rate on

Lack of Marketing
Programs

Deposits
Wide Area of Coverage

WEAKNESSES

Unmanned Marketing
Department

Increasing Members/
Market Share
Loyal and Competent
Employees

Low Salary

Loyal Members
Reputation
OPPORTUNITIES
Education

SO Strategies

Expand and penetrate

areas of operation.

WO Strategies

Open New Window for

high level Loans.
41

Housing

Enter into a new

business venture like
hallow blocks making.

Members Business

Offer another service

to complement their
business. Like
compliance services on
their permits and
licensing.
Inform and negotiate
with members about
the advantages
between auto financing
and availing a loan in
the cooperative.
Tap the current
appliance distributors

Venture Activities

Life Style Trends

Technological
Advancements

THREATS
Government Regulations
and Policies

Politics

Product Differentiation

Calamities

Do a courtesy call to
the Local Chief
Executive and
Introduce the services
of the cooperative and
its advantages in the
community.
Invite the Local Chief
Executive every
General Assemble
Meeting.
Maintain current
competitive interest
rates.
Enhance current
services.

Hire skilled members

and offer a lower price
for members in
availing the product.
Continuous marketing
activities in relaying
the current and
improvements of the
cooperative services.
Create more marketing
programs in promoting
the services.

Advertise products and

at the same time
cooperative financing
services.
Partner with the Local
Chief Executive in
implementing its
Social Programs in
connection with the
social programs of the
cooperative.
Give him/her a part in
the program of
activities.
Monitor competitors
stand or response with
the existing services.
Create restrictions for
the expected seasons.
42

Strategic Position And Action Evaluation (SPACE) Matrix

This tool is used to assess which strategy the cooperative should
undertake from these four type or nature of strategy.
1.
2.
3.
4.

Aggressive
Conservative
Defensive
Competitive

Before drawing recommendation as to what strategy the cooperative is

going to use, the researcher identified and rate factors that are within
and outside its environment basing from the earlier analysis on internal

X Axis

and external environment as follows,

Internal Strategy Position
Competitive Advantage

External Strategy Position

Industry Strength

-1 Low Interest Rate on Loans

-1 High Interest on Deposits

+6 Lowest Loan Rates

-2 Good Reputation

+5 Barriers to Entry

-2 Loyal Members

+5 Access to Financing

-2 Loyal and Competent Employees

43

Average = -1.60

Y Axis

Total of X Axis score: 3.73

Financial Strength

Average = 5.33

Environmental Stability

+6 Increasing Current Ratio

-1 Increasing Educational Needs

+6 Stable Debt to Asset Ratio

-2 Increasing Housing Projects

+5 Profit Margin Ratio

-3 Lifestyle Trends

Average = 5.33

Average = -2.00

Total of Y Axis score: 3.33

44

Conservative

Aggressive

3.33
3

3.7
33

Defensive

Competitive

As a result, the SPACE Matrix shows that the cooperative should

go for an aggressive strategy in penetrating the market for it has a
competitive characteristic. Along with this approach or strategy should
be regulating policies to avoid the risk of failing. There should be a
contingency plan along with it.

45

The IFE Total Weighted Scores

The EFE
Total
Weighted
Scores

Strong 3.0-4.0

Average 2.0-2.99

Weak 1.0-1.99

I SMPC

II

III

Medium

IV

VI

2.0-2.99
Low

VII

VIII

IX

High
3.0-4.0

1.0-1.99

46