Bulaklak Films, Inc. had been one of the leaders in the film processing industry, operating with four profit centers: the black and white negative processing, black and white positive processing, color negative processing, and color positive processing. Before color film processing progressed in the Philippines, local movie producers would have their films color processed in Australia and Hongkong due to lack of skills and equipment of local processors. BFI conducted intensive research and training of its staff to establish competence in the color film processing. The company eventually monopolized this service line.
The black and white film processing, on the other hand, was not anymore as in demand as the color processing as evidenced by the recent establishment of Image Duplicators and Exposures, Inc. both local color film processors. BFI charged processing fees in accordance with industry rates while Exposures, Inc. ’s rates were five percent lower than that of BFI, threatening the former company’s operations and position in the industry. Moreover, the latter company offered more liberal credit extension policies than BFI, which apparently was a strategy that could attract many local movie producers to have their films processed in Exposures, Inc.
In 1995, BFI was facing a rising competition and its management needed to come up with adjustments in their operations to maintain or even improve their performance and position in the industry. Problem Statement What are the strategies that Bulaklak Fims, Inc. should implement in order to maintain or improve their performance at the same time secure their dominant position in the film processing industry despite the threat of competition? The following are guide questions to help BFI in its decision making:
1. What should be the components of the company’s costs? 2. What changes in the company’s policies in classifying costs should be employed? 3. What appropriate methods of cost allocation should the company use? 4. What is the lowest possible processing fee that it can charge for each profit center? Analysis General assumptions were made to facilitate the analysis of this case. The numbers used in the computation of relevant figures in this case were the upper bound ones in case of range since this approach would best fit the worst-case scenario.
Di ko pa gets yung monthly normal volume. ) For simplicity and convenience, there would be 30 days in a month and four weeks or four Sundays in each month. Determination of BFI’s Projected Demand or Production Level from March to December 1995 Seasonal trend forecasting via QM center moving average with 12 seasons was used to arrive at the monthly production level. (reason why seasonal is used) The resulting figures were sum totals in feet so they had to be converted into number of films processed in each month.
It was assumed that each film used 50 rolls or 50,000 feet of negative stock. This number was used to determine the number of unedited films processed in the color and black and white negative processing unit. For the color and black and white positive processing unit, the figures already included the copies and originals of each edited film. It was assumed that 11 copies were made for each film. If the original processed film was included, there were a total of 12 copies made for each film. (to be continued :P)