Premier Cement Corporation - Case Study

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- Alternative B: Since PCC is currently only operating on around 50 - 60% of their maximum capacity, it can be assumed that PCC has many unused assets. To be able to absorb the company’s current net losses and provide liquidity for PCC, the company can sell 15% of its unused equipment.

Advantages: This would lessen the expenses of the company for there will be less recorded expenses for depreciation. The sale would also provide the company cash that it may use to boost production and increase capacity.

Disadvantage: The disadvantage of this course of action would be increasing the risk of spending more for production should the company recover sooner than expected and would need additional equipment to employ in their production.

- Recommendation

It is recommended that Mr. Jose Ylagan should take Alternative Course of Action A which is to find new suppliers which they can but raw materials at minimum cost. There seems to have agency problem within the PCC. The owners of the supplier companies of PCC are also stakeholders of the same company. To add, Mr. Jose Ylaga could proposed to add incentives to the employees if ever the company performs well. He should present to the BOD that finding new supplier which will provide them lesser cost will help the profitability for the company and provide higher reuturns to the stakeholders. Moreover, he could also propose to find other channels of distribution for their products other than Premier Marketing Corporation to reach wider product recognition so that sales will increase.

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