STRATEGIC MANAGEMENT

2GO GROUP INC.

Cruz, Klarisse Anne A.

Lopez, Hannah Grace S.
Ramos, Anna Jemimah L.

HRD42

November, 2018
 CHAPTER I
INTRODUCTION

2GO Group Inc., are now the largest premier logistics in the Philippines. The group

owns and operates successful brands such as 2GO Travel, 2GO Freight, 2GO Express,

and 2GO Logistics which offers an array of logistics and travel services. The group

maintains joint venture partnerships with renowned global supply chain companies such

as Hapag Lloyd and Hansa Mayer from Germany and the Kerry Logistics Group from

Hong Kong. This paper aims to study its internal and external environment that will help

to create a new strategy that will help the company to become the largest and premier

transport and supply chain in the industry domestically and internationally.

2GO Group Inc. is a Philippines-based company that is engaged in transporting

people and cargo using inter-island ferries and cargo ships of the former Aboitiz Transport

System which owned the brands Super Ferry, Cebu Ferries, Super Cat and Negros

Navigation. 2GO Group Inc. is the largest infrastructure in the Philippines with over

400,000 twenty-foot equivalent unit capacity, 16 passage and freight vessels, 15,000

containers, 35 warehouses nationwide 550 trucks and with 7,000 employees. 2GO began

on May 26,1949. Aboitiz Transport System was formed first the breakup of WG&A Super

Ferry into Super Ferry and Carlos A. Gothong Lines and then the merging of Super Ferry

with Cebu Ferries and Super Cat fast ferries to for the Aboitiz Transport System. In

December 2010, the former major stockholders of the company namely Aboitiz Equity

Ventures an Aboitiz and Company Inc. sold their shares to Negros Navigation Co. Inc.The

equity value included all the logistics and shipping businesses of the company, except its

interest in its joint ventures with the Jebsen Group of Norway. At the same time Negros
Navigation announced that the China-Asean Investment Cooperation Fund acquired a

controlling stake in the company through an equity infusion. The China-Asean Investment

Cooperation Fund is a Netherlands-based, private equity firm wholly owned and

controlled by the Government of the People's Republic of China. Because Negros

Navigation was a privately held firm the exact amount invested by the Fund was not

disclosed. In short, the mainland Chinese government set up the China-Asean Investment

Cooperation Fund, which then among other investments in the region took a controlling

stake in Negros Navigation, which in turn purchased SuperFerry and related brands and

re-branded itself 2GO Group. Today their work of ethics remain unchanged and they are

now the largest premier logistics provider in the Philippines. They owned and operates

successful brands such as 2GO travel, 2GO freight, 2GO express and 2GO logistics

which is opening an array of logistics and travel services. The group maintains their joint

ventures partnerships with renowned global supply chain companies such as Hapag Lyod

and Hansa Mayer from Germany and Kerry Logistics Group from Hong kong. 2GO

Logistics captures a big share of the sea-based delivery market in the country, handling

up to special containers such as isotanks and refrigerated vans. It also supervises

international logistics involving international sourcing and consolidation, customs

clearance and brokerage, project cargo management, heavy lift and special cargo

handling, global containerized transport, international freight forwarding, and

warehousing.

2GO Shipping Group is the largest passenger and cargo sea transport company

in the Philippines today. With the widest network of 22 ports of call covering Luzon,

Visayas, and Mindanao, 2GO Shipping offers the general public a wise alternative in
travelling and commuting from one island to another as well as moving containerized,

breakbulk, less-thancontainer-load, livestock and perishable cargoes with unparalled

reliability, frequency, and fastest possible transit time. 2017 was a challenging year for

the 2GO Shipping group. Under new management, reducing the operating costs of both

at land and at sea was the priority by thoroughly reviewing the group’s strategy and

direction. Redundant container yards were closed, while purchasing strategies were

improved on ship maintenance and tighter pricing controls. However, the increase in

global fuel prices pulled down profitability, notwithstanding major efforts to reduce variable

and fixed costs. As of December 31, 2017, 2GO and its subsidiaries has a total fleet of

26 vessels, of which 21 are company-owned ships. The fleet consists of 10 fast crafts,

eight RoRo/Pax vessels and eight freighters. The Company’s operating vessel fleet has

a combined Gross Registered Tonnage of approximately 128,690 metric tons, translating

to a total passenger capacity of approximately 14,161 passengers per day and an

aggregate cargo capacity of approximately 3,724 twenty-foot equivalent units (TEUs) per

day. To expand our service area, two fast craft vessels were constructed and deployed

to the Ormoc - Cebu route.

 CHAPTER II

RESEARCH DESIGN AND METHODOLOGY

The group used descriptive research design to analyze the strategic management

of 2GO Group, Inc. We did a research about the company’s SWOT, mission and vision,

environmental analysis, and other aspects of the companies that needs to resolve or to

improve.

We obtained the information from the website of 2GO Group, Inc. and also did an

informal interview from one of the employees in 2GO Travel. The questions that we asked

is about the competitors of the company and about the strength, weaknesses,

opportunities, and threats.

We used the result of the interview and information from the website to analyze

the company’s needs and to create best strategy that fits from the problems or

weaknesses encountered. We made new vision and mission statements based from

David’s nine elements. We will also create long-term objective for the company and

formulate strategies.
 CHAPTER III

VISION AND MISSION

VISION STATEMENT

The vision of 2GO Group, Inc. for the next 2020 is “To be the best and biggest

company in the transport and supply chain industry providing memorable travel

experiences, moving products and catalyzing business growth in domestic and

international markets.”

2GO Group, Inc. is already known for its best service all over the Philippines. We

recommend a new mission statement for the company to improve and to expand the

business not only in domestic but also in different countries that don’t have yet service

from 2GO Group, Inc. The new vision statement is indicated below:

New Vision Statement

“To be the largest and premier transport and supply chain industry in domestic and

international markets by providing 24/7 service with smooth travel experience,

transporting products and catalyzing business not only in the Philippines but all over the

world.”

MISSION STATEMENT

 Our business is to create memorable, fun filled and safe travel for passengers and

provide total supply chain solutions and excellent services to clients building on

our 180 years of existence.

  We delight our customers with innovative and technology driven services while

customizing to their needs and ensuring seamless operations.

 We connect the Philippines 7,100 islands to Asia and the world, catalyzing

business growth, promoting tourism and partnering in nation building.

 We offer employees a rewarding working environment while delivering value to our

shareholders.

The mission statement of 2GO Group, Inc. is based on David’s nine elements which are

the about customers, markets, technology, concern for employees, and services. Some

of the new mission that we recommended is also based from David’s nine elements or

criteria. The new mission statement is indicated below:

New Mission Statement

 Our business is to create convenient, fun filled and smooth travel for passengers

and provide total supply chain solutions and excellent services to clients building

on our 180 years of existence all over the world.

 We expand our networks to airlines, hotels, tour operators and travel agents within

Philippines as well as overseas to build relationship and catch big investors.

 We provide 24/7 of service for the customers to make their travel experience

convenient.

 We keep on satisfying people, customers and employees by giving value to their

work and loyalty to the company.

 CHAPTER IV

ENVIRONMENTAL ANALYSIS

Environmental analysis is important to know the factors that could affect the

business operations. Through this process, we can come up with the list of opportunities

that can benefit a firm or list of threats that can be avoided.

I. Political

The political landscape in the Philippines has drastically changed over the past 5

years. Although, political leadership has changed, businesses have remained stable

in our country. The fact still remains that the country is a good place for investments

and for doing business.

II. Economic

Economic issues continually challenge businesses to adapt and change to meet

current conditions. This means business owners and management must deal from one

period to the next with inflation and periods of recession, high levels of unemployment

and other economic factors. The issues that can affect the bottom line generally take

priority for most business enterprises and tend to recur over time. Globalization is a

leading concept which has become the main factor in business life during the last few

decades. This phenomenon affects the economy, business life, society and environment

in different ways, and almost all corporations have been affected by these changes.

These changes are mostly related to increasing competition and the rapid changes of

technology and information transfer. To challenge these changes, companies need to

keep in mind various aspects of the main effects of globalization.

III. Socio-cultural

A major socio-cultural factor influencing businesses and business decisions is

changing customer’s preferences. What was popular and fashionable 20 years ago may

not be popular today or 10 years down the road. Different styles and priorities can

undermine long successful products and services. Logistics providers are responsible for

the movement of goods and face different cultural challenges in each region that these

goods move. People must realize and accept cultural differences to develop strong

working relationships. Misunderstandings, loss of money, and loss of contracts can occur

if cultural differences are not accepted.

IV. Technological

The evolution of technology is pushing the boundaries and changing how the world

does business. Today, we’re accustomed to everything being online and right at our

fingertips for immediate access. Improved technology has also increased productivity in

the supply chain, minimizing costs and errors. These advances benefit all areas of the

logistics industry: trucking transportation, international transportation, supply chain

management, and shipment tracking. Technology advances that are changing the future

of the logistics industry such as the shipment racking system, RFID, autonomous trucks

and drones, enhanced GPS accuracy and social media

V. Environmental

The Philippines evident risk to natural disasters is due to its location. Being a

country that lies in the Pacific Ring of Fire, it is prone to earthquake and volcanic

eruptions. In addition, the country is surrounded by large bodies of water and faces the
Pacific Ocean where 60% of the world's typhoons are made. One of the most devastating

typhoons that hit the Philippines in 2013 was Typhoon Haiyan, or "Yolanda", that killed

over 10,000 people and destroyed over a trillion pesos worth of properties and damage

to various sectors. Other environmental problems that the country is facing include

pollution, illegal mining and logging, deforestation, dynamite fishing, landslides, coastal

erosion, wildlife extinction, global warming and climate change. Although, we have a lot

of environmental problems 2GO remains to be a compliant company to environmental

lost internationally and domestically.

VI. Legal

Taxation practices impacts individual and business internationally. Change in tax

policy like TRAIN Law lessen the income tax of employees but imposes a greater tax of

goods that’s why tax policies have crucial implication for any business. This could be

threat the company because of high rate tax that can be result into a low profit. This will

also affect the price of goods.

 SWOT ANALYSIS
STRENGHT
 Good management
 Wide array of logistics services
 Reliable logistics company
 Offer new destination
 New technology
 External partnerships with known
logistics companies
 Affordable package/cargo deals
 Loyal customers
 Strategic office locations
 Supply chain systems
OPPORTINITIES
 Rapid Growth of Logistics Industry
 Increasing number of customers
 Expanded services
 New locations
 The use of social media platforms
 Improved economy
 Increasing number of OFWs
 Reduced government red tape
 Advertisements
 Ease of doing business
WEAKNESESS
 Limited services
 Slow lead time for delivery
 Limited cargo vessels
 Limited packages
 Limited shipment routes
 Lack of Manpower
 Lack in monitoring and tracking of cargos
 Slow actions to customers complaints
 Weak relationship with business partners
 Poor marketing strategy
THREATS
 Increasing number of competitors
 Climate Change
 Cancelation of bookings
 Substitutes
 TRAIN Law
 New Government Regulation
 Changing weather conditions
 Accidents
 Delay of shipment
 Customs regulations
 CHAPTER V

INDUSTRY AND COMPETITOR ANALYSIS

A. Industry Analysis

Transportation and Logistics are considered main catalysts of economic growth

in the Philippines. The country’s transport system is intermodal in character, which

includes inter-island as well as intra-island mobility, and typically combines air, sea and

road transport modes. 2GO travel has seen an increase in Filipino travelers in some of

the major ports it served. 2GO believes it has changed the traveler’s perception about

shipping and has helped boost tourism in the country. However, competition is varied and

it involves shipping, airlines and in some areas, bus service. Competition remained

intense in the long haul routes such as Manila to Visayas and Manila to Mindanao, as

airline companies continue to offer promo fares. 2GO travel compete with other transport

and logistics service provider and some airlines such as DHL, DB Schenker, Royal Cargo,

Cebu Pacific and Air Philippines which deployed bigger craft, that further heat up

competition in the Manila to Cebu, Cagayan and Davao routes while, smaller craft were

used to open their service in smaller markets like Iloilo to Cagayan and Davao.

PORTER’S FIVE FORCES

THREAT OF NEW ENTRANTS – HIGH

Entering in the transportation and logistics industry will be more risky and the high

cost of capital needed because 2GO as well as its competitors are all experienced in the

industry.
BARGAINING POWER OF CUSTOMERS – MODERATE

Customers nowadays, are more informative than before and everything is now

transparent. Some customers check prices through company website or pages in the

social media. If the company wants the customer to pay higher, they have to came up

with some unique tour packages to delight their customers. In logistics, they sometimes

came up for discounts depending on the volume of goods.

BARGAINING POWER OF SUPPLIERS – HIGH

Some big companies have great power of negotiation with suppliers because those

big company’s owns aircrafts and ships which will further lower the cost of operation. The

company touches their suppliers business that seeks long term cooperation so that the

cost of supplier will be lower.

THREATS OF SUBSTITUTES – HIGH

Substitute in travel and logistics industry are plentiful. Tourist can go for self-driving

tour instead of using travel agent. In a sense of Maps GPS equipment are substitute

products.

THREATS OF COMPETITIVE RIVALRY – HIGH

Knowing the intensity competitive rivalry is the number of competitors. 2GO Group

Inc., main competitors are DHL, DB Schenker, Royal Cargo, Cebu Pacific and Air

Philippines as they provide the same services.

 EXTERNAL FACTOR EVALUATION MATRIX (EFE)

KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE

OPPORTUNITIES
1. Rapid Growth of Logistics Industry 0.06 2 0.12
2. Increasing number of customers 0.06 4 0.24
3. Expanded services 0.06 3 0.18
4. New locations 0.05 3 0.15
5. The use of social media platforms 0.05 2 0.10
6. Improved economy 0.06 4 0.24
7. Increasing number of OFWs 0.04 2 0.08
8. Reduced government red tape 0.03 2 0.06
9. Advertisements 0.03 2 0.06
10. Ease of doing business 0.06 2 0.06
THREATS
1. Increasing number of competitors 0.05 3 0.15
2. Climate Change 0.04 3 0.12
3. Cancelation of bookings 0.05 4 0.20
4. Substitutes 0.04 3 0.12
5. TRAIN Law 0.06 3 0.18
6. New government regulation 0.06 4 0.24
7. Changing weather conditions 0.05 3 0.15
8. Accidents 0.06 3 0.18
9. Delay of shipment 0.03 2 0.06
10. Customs regulation 0.06 4 0.24
1.00 2.78

B. KEY SUCCESS FOR THE BUSINESS

The following are the factors that will determine the success of 2GO Logistics:

 The quality of service – It was organized and registered with the Securities and

Exchange Commission for the purpose of transporting passengers and cargo at

various ports of call in the Philippines. For the past decades, Nenaco led the

domestic shipping industry in pioneering programs focused on continuously

elevating the quality of shipping services to world class standards.

 Flexibility – they combine flexibility and an integrated menu of services as they

provide solutions to their customers. Capitalizing on their areas of expertise, they

 focused on four key service areas: delivery and transport, special services,

tracking & customer support and supply chain solutions.

 Profit – 2GO became the most profitable company in the Philippine shipping

industry with a record Php 600 million through sheer determination will and hard

work.

 Service equity – 2GO offers domestic luxury cruise and sea travel around the

Philippines. A luxury cruise typically consist of several onboard entertainments and

activities and some package deals that are not just affordable but worth the pay.

 Core Values

Customer First- they develop deep and strong relationships that make a

positive difference in their customers and stakeholders

Good Corporate Citizenship- they are good citizens in their communities

and they look after the environment

Accountability- they are accountable in all dealing transactions, 2Go do

this by delivering their commitments

Quality and Excellence- they provide highest standards for products and

delightful service that together deliver premium value to their customers

Honesty and Integrity- they uphold the highest standards of honesty and

integrity in all their actions

Teamwork and Collaboration- they enjoy working together in order to

meet the needs of their customers and to help the company win

Innovation- they constantly adapt to the changing needs of their customers

and continuously innovate the way they work

 C. COMPETITOR ANALYSIS

2GO Inc. is the largest premier logistics provider in the Philippines, it emerged

as one of the successful transport and logistics. However competition remained intense

in the Transport and Logistics Industry. 2GO Inc. competes with different transport and

logistics Industry and some airlines such as:, DHL, DB Schenker, Royal Cargo, Cebu

Pacific and Air Philippines.

DHL is the global market leader in international express , overland transport and

air freight. It is also the world’s number 1 in ocean freight and contract logistics. DHL is

present in over 220 countries ang territories across the globe, making it the most

international company in the world. DHL operated under four specialist divisions DHL

Express, DHL Global Forwarding, DHL Sypply Chain, DHL Global Mail. They are

providing various services such as freight transportation, warehousing and distribution,

supply chain solution, customs security and insurance, industry sector solutions. They

are operating in some locations in North ans South Luzon, Visayas and Mindanao. Their

major customers are SM Malls, SC Johnson, Procter and Gamble Philippines, Avon,

some telecome network giants: Ericcson, Nokia, Siemens and Huawei, and electronic

firms: Integrated Microelectronics Inc.

DB Schenker established in January 2007 with the emerging of BAX Global,

Inc., CPI Transport Inc., and Star Trans International. A subsidiary DB SchenkerTransport

and Logistics Division of the DB Group. They are committed to deliver total customer

satisfaction by providing value, world class quality and differentiated service solutionsDB

Schenker provide various types of services such as air freight, ocean freight, logistics,
and transportation. They also offer cross-docking,kit assembly, light assembly,

reconfiguration, labeling, price tagging, bundling and unbundling, sequencing, technical

inspection, and refulatory compliance. They are only operating in some locations: Batino

Calamba Laguna, Mandaue City Cebu,Rosario Cavite, Subic Bay Freeport Olongapo

City, Clark Pampanga Taguig City Davao City and their corporate office is located at

Parañaque City. DB Schenker provide innovative and cost efficient transportation and

logistics solutions that deliver superior value to their customers and shareholders.

Royal Cargo is a Filipino company with an international footprint. It has

established offices in China, Cambodia, Germany, Guam, Hong Kong, Palau, Singapore,

United Kingdom and Vietnam. German Michael Kurt Reauber has built Royal Cargo

Group of Cos. to become the first Philippine multinational freight-forwarding company with

presence in over 100 countries worldwide. Royal Cargo is part of a group of companies

namely Royal Global Service Inc., Royal Cargo Lines, Inc., TMW Express Worldwide,

Ins., IRIS Logistics Inc., and Lima Logistics Corporation. Royal Cargo offers different

services such as niternational freight forwarding via air and sea, warehousing and

distribution, projects and heavy lifts, trucking, customes brokerage, moving and storage,

Freeport or ecozone, liquid solutions, business process outsourcing and crane rental.

They are operating in some ares in the Philippines located at Baguio, Pampanga, Subic,

Bataan, Laguna, Aabang, Sucat, Batangas, Manila, Cavite, Cebu and Cagayan De Oro.

Cebu Pacificand informally known as Cebu Pac, is a Philippine low-cost

airline based on the grounds of , Pasay City, Metro Manila, in the Philippines. It is Asia's

oldest budget or low-cost carrier airline, founded in 1988. It offers scheduled flights to

both domestic and international destinations. Its main base is Ninoy Aquino International
Airport, Manila, with other hubs at Mactan-Cebu International Airport, Clark International

Airport, Kalibo International Airport, Francisco Bangoy International Airport, Iloilo

International Airport, and Laguindingan Airport. Also Cebu Pacific is providing cargo

services, Cebu Pacific Cargo or CEB Cargo is the largest cargo carrier in the Philippines,

providing competitive, fast, flexible, and straightforward air cargo service to individual

shippers and cargo agents locally and overseas. CEB Cargo utilizes Cebu Pacific's

modern aircraft fleet. It has interline partners for cargo to and from Europe, Africa and the

Americas.

Philippine Airlines (PAL) is the flag carrier of the Philippines. Headquartered at

the PNB Financial Center in Pasay City, the airline was founded in 1941 and is the first

and oldest commercial airline in Asia operating under its original name. Air Philippines

Corporation and formerly branded as Air Philippines and Airphil Express, is an airline

under the ownership of Philippine Airlines. It acts as PAL's domestic division, with

services from Manila, Cebu, Davao and Zamboanga. Air Philippines offers special cargo

services for the commodities that require special or advance arrangement, packing,

handling and in certain cases, documentation. Acceptance of these type of cargo are

subject to specific regulations such as baggage and special effects that are treated with

special care and stored at a special location. Perishables are shipments which are so

labelled and are stored under specific temperature. Valuable Cargo are shipments with

very high commercial value. Restricted Articles or Dangerous Goods like inflammables,

explosives, radioactive materials and corrosive substances like acids that may endanger

the safe operations of the flight and also livestock, live animals and llants are shipment

that need special attention and care.

 Competitive Profile Matrix

DB ROYAL CEBU AIR

DHL SCHENKER CARGO PACIFIC PHILIPPINES
Critical Success Weight Rating Score Rating Score Rating Score Rating Score Rating Score
Factor
Advertising 0.05 2 0.10 1 0.05 2 0.10 3 0.15 3 0.15
Service Quality 0.15 3 0.45 3 0.45 3 0.45 3 0.45 4 0.60
Price 0.10 3 0.30 2 0.20 3 0.30 2 0.20 2 0.20
Competitiveness
Management 0.10 3 0.30 3 0.30 3 0.30 3 0.30 3 0.30
Financial 0.15 4 0.60 3 0.45 4 0.60 3 0.45 4 0.60
Position
Customer 0.15 1 0.15 1 0.15 3 0.45 2 0.30 3 0.45
Loyalty
Global 0.15 4 0.60 3 0.45 4 0.60 3 0.45 3 0.45
Expansion
Market Share 0.15 2 0.30 1 0.15 3 0.45 2 0.30 3 0.45
Total 1.00 2.80 2.20 3.25 2.60 3.20
 CHAPTER VI

COMPANY ANALYSIS

The mission of this company is to give everyone a good and comfortable services

which will be benefited both the customers and the company. 2GO Group continues to

serve its customers and stakeholders as the Philippines’ largest end-to-end logistics

solutions provider. The Group provides shipping, logistics and distribution services to

small and medium enterprises, large corporations, and government agencies throughout

the Philippines. The shipping group operates ocean-going freighters, roll-on/roll-off freight

and passenger vessels, and fast ferry passenger vessels. The logistics group offers

transportation, warehousing and distribution, cold chain solutions, domestic and

international ocean and air forwarding services, customs brokerage, project logistics, and

express and last mile package and e-commerce delivery. The distribution group

leverages 2GO’s shipping and logistics services to provide value-added distribution

services to principals and customers. During 2017, management’s focus centered on

strengthening corporate governance and ensuring that the proper internal controls and

systems were in place and were effective. For 2018, the Group continues its corporate

governance initiatives, and aims to expand and further enhance its service offerings to its

customers and stakeholders. The Group plans to achieve this through more streamlined

operations and collaboration within its business units, investment in warehousing and

logistics information technology solutions for customers, and synergies and best practices

from its new shareholders. Management is confident that 2GO will further its growth and

become an even stronger logistics solutions provider going forward.

 2GO Group, Inc. and subsidiaries reported PHP21.6 billion of Revenue in 2017,

13% higher than 2016, and Net Loss of PHP310 million versus Net Income of PHP344

million in 2016. Revenue increased in 2017, driven by the Group’s Non-shipping business

(Logistics and Distribution) which continued its strong growth. Non-shipping revenue grew

30% in 2017 driven by increased service offerings to existing strategic customers (e.g.,

end-to-end warehousing, inventory management, cross-docking, delivery,

merchandising), the addition of new customers, and an overall focus on customer service.

With the strong growth of the Non-shipping business, the revenue mix of the Group further

pushes towards Non-shipping which now accounts for 61% of total revenue. Shipping

revenue decreased by 6% in 2017. While freight volumes remained relatively consistent

in 2017 and 2016, revenue decreased due pricing pressures from the increased

competition in the freight market. Revenue from passage continued to grow in 2017 as

total passengers carried increased during the year. Costs of Services and Goods Sold

increased by 22% in 2017, driven primarily by the increase in fuel prices, costs of goods

(inventory) sold in the Distribution business, and non-recurring items described below.

Fuel prices increased by 34% during 2017, where the Group was impacted by a negative

price variance of PHP525 million. General and Administrative Expenses decreased 7%

in 2017 primarily due to the Group’s focus on controlling costs and higher restatement

related adjustments incurred in 2016 than in 2017. Net Income excluding Non-recurring

Costs totaled PHP314 million in 2017. EBITDA excluding Non-recurring Costs totaled

PHP2.9 billion in 2017.

Results of Operations for the Years Ended December 31, 2017 and 2016
Financial Position as of December 31, 2017 and 2016

Total Assets increased 5% to PHP16.5 billion, while Total Liabilities increased 10%

to PHP12.9 billion.

Assets

Current Assets increased 13% to PHP8.6 billion from PHP7.6 billion. Cash and

Cash Equivalents increased 48% to PHP2.1 billion from PHP1.4 billion primarily due to

improved collections of accounts receivables from customers, more efficient

management of Inventories, and an increase in Trade and Other Payables. Trade and

Other Receivables, net of Allowance for Doubtful Accounts, increased only 4% to PHP4.4

billion from PHP4.2 billion, while Revenue increased 13% in 2017 from 2016. Non-current

Assets remained at approximately PHP8.0 billion as of December 31, 2017 and 2016.

Liabilities

Current Liabilities increased 10% to PHP12.4 billion from PHP11.2 billion. Short-

term Notes Payable increased 14% to PHP2.6 billion from PHP2.3 billion, while the

current portion of Long-term Debt decreased 8% to PHP3.1 billion from PHP3.4 billion as

2GO took advantage of lower borrowing rates under short-term credit facilities. Trade and
Other Payables increased 20% to PHP6.5 billion from PHP5.4 billion primarily due to

advances from its parent company (Negros Navigation Co., Inc.) for use in operations,

and accruals for recurring and non-recurring costs. Non-current Liabilities remained at

approximately PHP500 million as of December 31, 2017 and 2016.

Equity

Total Equity decreased 8% to PHP3.6 billion from PHP3.9 billion due to the Net

Loss incurred in 2017. All significant elements of income or loss from continuing

operations are discussed in the management discussion and notes to the consolidated

financial statements. Likewise, any significant elements of income or loss that did not

arise from continuing operations are disclosed either in the management discussion or

notes to the consolidated financial statements. There are no known trends, events,

material changes, seasonal aspects, or uncertainties that are expected to affect the

Group’s continuing operations. Except as disclosed in the management discussion or

notes to the consolidated financial statements, there are no other known events that will

trigger direct or contingent financial obligation that is material to 2GO, including any

default or acceleration of an obligation. There is no material off-balance sheet transaction,

arrangement, obligation, and other relationships of 2GO with unconsolidated entities or

other persons incurred during the reporting period. The Group does not expect any

liquidity issues within the next twelve months. Capital expenditures are funded through

cash generated from operations or additional borrowings.

Key Performance Indicators (KPI)

The following are the key financial ratios of the Group as of and for the years ended

for the years ended December 31, 2017 and 2016.

Current Ratio remained at 0.7 as of December 31, 2017 and 2016. Debt to Equity

Ratio increased to 3.5 in 2017 from 3.0 in 2016, which is attributable to the increase in

Trade and Other Payables described above. Revenue Growth remained robust in 2017

with an increase of 13% from 2016, driven by growth in 2GO’s Logistics and Distribution

business. Revenue growth of 16% in 2016 benefited from national, regional and local

government elections. Net Income Margin decreased to negative 1% in 2017 from

positive 2% in 2016 primarily due to increased fuel costs and non-recurring costs. EBITDA

and EBITDA Margin remained strong at PHP2.2 billion and 10% in 2017, and PHP2.6

billion and 14% in 2016, respectively. The decrease is attributable to the Net Loss incurred

in 2017 primarily due to increased fuel costs and non-recurring costs.

 INTERNAL FACTOR EVALUATION MATRIX (IFE)

KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED

STRENGTH SCORE
1. Good Management 0.05 2 0.10
2. Wide array of logistics services 0.06 3 0.18
3. Reliable logistics company 0.06 3 0.18
4. Offer new destination 0.05 3 0.15
5. New technology 0.04 2 0.08
6. External partnerships with known logistics 0.05 2 0.10
companies
7. Affordable package/cargo deals 0.05 2 0.10
8. Loyal customers 0.04 3 0.12
9. Strategic office locations 0.05 2 0.10
10 .Supply chain systems 0.05 3 0.15
WEAKNESESS
1. Limited services 0.05 3 0.15
2. Slow lead time delivery 0.04 3 0.12
3. Limited cargo vessels 0.06 3 0.18
4. Limited packages 0.04 2 0.08
5. Limited shipment routes 0.06 3 0.18
6. Lack of manpower 0.04 2 0.08
7. Lack of monitoring and tracking of cargos 0.06 2 0.12
8. Slow actions to customers complaints 0.07 3 0.21
9. Weak relationship with business partners 0.04 2 0.08
10 .Poor marketing strategy 0.04 2 0.08
Total 1.00 2.54
 CHAPTER VII

STRATEGIC (LONG-TERM) OBJECTIVE

Based on generated internal and external environments, the following are objectives to

become the leading logistics company in the industry:

 To increase efficiency by 20% for the next 5 years.

 Increase the number of vessels

 Improve aggressive marketing strategy

 Improved manpower

 Address customer complaints

 Add new shipping routes

 CHAPTER VIII
STRATEGY FORMULATION

Strategy formulation is a step in strategic management wherein the company is

choosing an appropriate actions to achieve the company goals. This step is needed to

have a successful company because it provides framework of actions that will help to

anticipate the results. Strategic plans should communicate to all employees so that they

will become aware of the company’s goal, mission, vision and purpose. Strategy

formulation will force the company to look at the changing environment and to become

prepared for the possible changes. This will also help the company to assess and

evaluate its resources, budgets, and carefully strategize the plans.


Internal Strengths
(S)
1. Good management
2. Wide array of logistics services
3. Reliable logistics company
4.Offer new destination
5. New technology
6. External partnerships with known
logistics companies
7. Affordable package/cargo deals
8. Loyal customers
9. Strategic office locations
10. Supply chain systems
Internal Weaknesses (W)
1. Limited services
2. Slow lead time for delivery
3. Limited cargo vessels
4. Limited packages
5. Limited shipment routes
6. Lack of Manpower
7. Lack in monitoring and tracking of
cargos
8. Slow actions to customers
complaints
9. Weak relationship with business
partners
10. Poor marketing strategy
TOWS MATRIX
External Opportunities External Threats
(O) 1. Increasing number of competitors
1. Rapid Growth of Logistics Industry 2. Climate Change
2. Increasing number of customers 3. Cancelation of bookings
3. Expanded services 4. Substitutes
4. New locations 5. TRAIN Law
5. The use of social media platforms 6. New Government Regulation
6. Improved economy 7. Changing weather conditions
7. Increasing number of OFWs 8. Accidents
8. Reduced government red tape 9. Delay of shipment
9. Advertisements 10. Customs regulations
10. Ease of doing business
SO ST
"Maxi-Maxi" Strategy "Maxi-Mini" Strategy
Establish new shipping routes for cargos Improve partnership with existing logistic
(S4,O4) companies (S6, O9)
Add new logistics services (S2, O3)
WO WT
"Mini-Maxi" Strategy "Mini-Mini" Strategy
Focus on customer satisfaction
(W8, O2) Initiate good relations with government
Add new cargo vessels (W3, O2, O7) agency (W9, T6)
Improve marketing strategy (W10, O5) Develop good relationship with customers
Add manpower (W6, O3) (W8, T3)
Add new country and provide services
(W1, O7)
 Chapter IX

ACTION PLAN AND DEPARTMENTAL PROGRAM

The following are the programs and action plans on how to achieve and implement

the strategies:

Activity Budget Timeframe Person In-Charge

Create Php. 1,000,000 1 year Project head
collaboration
advocacy in
partnership with
other logistic
companies
Train employees to Php. 1,000,000 Every year HR Department
have good
relationship with
customers
(customer service)
Participate in Php. 500,000 1 year Planning
government Department
activities
Contact and Operations
constant Management
communication with
the government
Contact agencies in Operations
the area where in Management
the shipping routes
will be establish
Add manpower Php 500,000 HR Department
Add logistics 2-5 years Operations
services Management
Add 2 more cargo Php 1 Billion
vessels
Collaborate to other 1-5 years Operations
countries and offer Management
logistics services
for Filipino OFW
 CHAPTER X

STRATEGY EVALUATION/ MONITORING CONTROL

Monitoring and controlling the planned strategies will be evaluated such as in

internal and external environment.

 Daily meeting of every department of the company headed by the managers of

each department. Through this daily meeting everyone will be updated, all

members of the department if there is any changes or any problems encountered.

 Weekly meeting of all department managers headed by the operations manager

and all departments must have representatives every meeting if ever the manager

is not available. But, any emergency meeting can be set on the day that is needed.

Through this meetings all concerns, changes or problems can easily raise and

resolve. Performance will be also updated weekly

 Weekly meeting off all employees with the managers this will help to keep all

employees updated on the company status and this will be led by the HR manager.

 Meeting of all manager if there is anything to discuss that is not being able to

discuss on the other meetings. This will led by the operations manager, all

decisions, problems, issues are resolved.

 Every other week meeting of the executive staff but, any urgent meeting can be

set anytime. This meeting is being attended by all managers headed by the CEO

to monitor all performance that is align to the goals of the company.