MANAGEMENT TEAM

PRIMAN

Co Lim, JobelleIrinco, ArjayLazo, CandiceLukban, EuniceRomana, RaffySahilan, JoySalvani, Enrique IIISee, KarlSychingping, Kenneth O.Tantengco, RacquelVida, Mila Roselle

BRIEF ANALYSIS Philippines current Research and Development strategy The Philippines needs to invest more in research and development (R&D) to boost the competitiveness of local industries particularly manufacturing deemed crucial in achieving inclusive growth, according to the country’s chief economic planner. According to Socio economic Planning secretary Mr. Arsenio Balisacan there are three pillars of competitiveness: Technological readiness, business sophistication and innovation. He said that many neighboring countries have recognized the value of science and technology in long-term growth and economic development.Other countries have made a significant investment in research and development while our country stayed at a level of around 0.11 to 0.14 percent of GDP, which is among the lowest in Asia. According to Sec. Balisacan the Philippines needs to invest at least P220 billion in science and technology. The amount translates to two percent of the country’s GDP that reaches at P11 trillion to P12 trillion at current prices. Developing countries are investing close to two percent of their GDP for science Apart from promoting rapid growth, Balisacan stressed that scientific and technological innovations can also promote inclusiveness. Industry led the pace of the country’s economic expansion, growing at 10.9 percent in the first quarter of 2013, with manufacturing, the sector’s biggest component. GDP grew 7.8 percent during the period. How did other countries became successful in Research and Development Taiwan's economy suffered severe damage during the Second World War. Priority was given to the development of the textile and electric power industries, so as to increase agricultural and industrial production. The next stage in Taiwan's economic development consisted of a period of import substitution based on labor-intensive light industries. Through the exportation of agricultural products, both processed and unprocessed, Taiwan was able to earn foreign exchange. The third period saw rapid growth of Taiwan's exports. During the next period, the overall growth rate for labor-intensive light industries rose to new heights, the economy as a whole continued to grow, and Taiwan began to develop a trade surplus. Taiwanese enterprises began to transform and upgrade themselves, and to invest overseas; in particular, more and more SMEs in labor-intensive industries began to invest overseas. During this sixth period, global and regional organizations became increasingly important. The arrival of the knowledge-based economy era, aided by the application of the Internet, e-commerce and IT, has provided SMEs with a new operating model and has enhanced the speed and efficiency of business operations. Taiwan signed a Bilateral Investment Agreement (BIA) with Japan, covering the three key areas of investment promotion, investment protection and investment liberalization. A significant number of Japan's modern high-technology industries, many of which were established during the immediate pre- and post-war periods, have developed into industry leaders. After establishing such heavy industries as steel and automobiles, thereby laying the framework of Japan's explosive economic growth, the government began strongly supporting companies engaged in high-technology. The national government helped Japanese high-tech industries to become more advanced, both by funding them and by assisting in the acquisition of foreign technologies. The government of other foreign countries played a vital role in establishing and updating the technology of their countries. They invested more on research and development.

SWOT

External Assessment Opportunities Threats

- The Filipino market and competition is not that challenging (no Filipino firm at this time is into the same business as Micrologic).- Full implementation of the GATT through the WTO and AFTA- Government's present incentives for R&D, as well as tax incentives for pioneer industry

- Failure of local market to provide support to Micrologic because of its colonical history and pre-disposition to foreign technology- The local industry organizations do not sponsor seminars or lectures on recent technologies. No support is also given to researchers.- Absence of support facilities such as standards and calibration laboratories- Presence of a clear policy on industrialization- Advanced technological capabilities of foreign competitors.

Internal Assessment

Strengths

- Micrologic is known to develop and market a number of innovative micro-processor based products (e.g., fire alarm system, combination of sensors, detectors, and control devices, integrated circuits, etc)- Strategic advantage of the firm is that it always disaggregate technologies, in order to see what can be developed within the firm and what can be accessed locally.- Micrologic is forward-looking and is not afraid to face competition (i.e., it aims to produce more technologically sophisticated and high-value products and services in the next 10 years)

SO Strategies ST Strategies

- The firm has an active and permanent R&D unit whose sole purpose is to carry out technology, forecasting, assessment, selection, and sourcing.- The firm has an adequately staffed R&D unit : the members of Micrologic have strong science and engineering backgrounds, as well as comprehensive design and production experience- Micrologic encourages its people to pursue further studies to improve their technology know-how- It also has a specialized technical library and electronics library.- Micrologic looks at technology as a vital business source and not as a cost to be minimized (i.e., the firm acquires capital goods and equipment every 3 to 5 years)- The firm always attends industry fairs in order to decipher any technology that it finds useful- Management of technology is practiced in the firm

1) The firm should exhaust its active R&D unit as well as its other technological resources to launch its own innovative products.

1) The foreign market is already saturated with technological products. The firm should focus on the Filipino market instead.

2) Since the company has already built its technology know-how on micro-processors, the company may opt to leverage this.

3) Micrologic should innovate products geared towards the local market.

Weaknesses WO Strategies WT Strategies

- Micrologic is not yet at the peak of its innovative and creative stages- None of the management team formally studied management of technology

1) The firm should strive hard to provide more technologically advanced products.

1) Micrologic compared to foreign products might be inferior. The firm should focus on providing products and services for the local market.

PORTER’S FIVE COMPETETIVE FORCES A. POTENTIAL TO NEW ENTRANTS· High – government presents incentives for R&D; accelerated rate of technological advancement reduces barriers to entry B. BARGAINING POWER OF BUYERS· High – preference of Filipinos for foreign technology C. BARGAINING POWER OF SUPPLIERS· Low – no Filipino firm at this time is into the same business as Micrologic D. THREAT OF SUBSTITUTE PRODUCTS· High – availability of other technologies especially in the foreign markets that may serve the same purpose as the products of Micrologic E. RIVAL AMONG COMPETITORS· Low – in the Philippine setting due to lack of competitors· High – saturation of the foreign markets with technological products STRATEGY: FOCUSED DIFFERENTIATIONMicrologic’s R&D should focus on developing a new technology that is perceived as a unique and valuable product. A valuable product is one that addresses the needs of local businesses and offices. When combined with excellent Information Systems Management, Micrologic can provide the Philippine market, especially the government offices, with business process improvement products and services. To deter the entry of new competitors, the company should invest in establishing a strong hold of the Philippine market.

OPERATIONS MANAGERFor the Operations.We can start by defining Operations Management. It refers to using various tools and techniques to ensure that goods and services are delivered successfully to customer or clients. This involves bringing people, processes, raw materials, and technology together to create value.As an Operations Manager, my responsibilities are:· Ensures that the day-to –day operations of the business run smoothly.· Helps improve the operational systems, processes and policies in support of organization’s mission· Handling of logistics of the organization, and overseeing the supervision of employees· Manage and increase the effectiveness and efficiency of Support Services (HR, IT and Finance)· Controls and evaluates plans and strategies If the company will push through offering new product or acquiring licensing, Operational Planning is very important. We should also consider the Layout of the facility and for Micrologic, we have cellular layout/innovative layout where it is based on grouped-technology principles where everything flows from one station to another. Staffing flexibility is not a problem since everyone in the company is experienced that each can perform tasks and assist coworkers as needed.The Operations Manager ensures that the goals of Micrologic are being met. The Manager does this by practicing Management by Objectives.Through Management by Objectives:1. Set Goals. This is in connection with one of the responsibilities of Operation Manager by making sure that the day to day activities will answer the question “What we are trying to accomplish?” or “What will make us saleable and unique from our competitors?”. In the case of Micrologic, since it is a R&D company, they have the practice that all team members participate in setting goals.2. Developed Action Plan. Actions needed to attain the stated goals.3. Review Progress. Are the strategies working? These reviews informally occur between managers and subordinates. This will help us check if we are still aligned with our company’s mission/vision and if a corrective action is necessary.4. Appraise overall performance. This will shape goals for the next year. The employee deserves an appraisal or reward for a job well done. This will also assess if we are employing the right people.The pros:· New training and development opportunities for employees· Competitiveness in the market· PartnershipsThe cons:· Offering innovation is crucial, for Micrologic, planning is based on assumptions and manager can’t know what the future holds for the industry or for our competitors in the foreign market.· For introducing new technology, do we have the resources?· Do we have enough people?Strategies:· Management by Objectives Planning· Contingency Planning – it is how the company responses in case of setbacks and unexpected conditions. If for example, in entering licensing agreement, the cost will be high, if we can afford the cost, are we really getting a good return from it?. If the demand is not met, The manager can develop contingency plans like hiring experienced people, or new sales effort.· Building scenarios – looking at trends especially we are on research and development.

· Exploit Core Competence – successfully competes in the international markets and is not intimidated by foreign competitorsHelpful questions to achieve strategies:1. What Business are we in? This is helpful if we are to consider corporate-level strategy since we are thinking of divestment of product lines.2. How do we compete? Business – level strategy. If we are to offer new technology and compete.3. How do we support the Business-Level Strategy? Functional level strategy is needed since it involves all of the major functions including finance, research and development, etc.

FINANCE Historically, a number of innovative products were developed by Micrologic (Pyroscan Fire Alarm Panel, Addressable Building Automation System, and others). However, the success was not reflected in the sales and financial aspects of the business. According to case, the sales were not enough to cover the overhead expenses and the payroll. Micrologic faced the challenge of several expenses to support the need for more sophisticated knowledge of the advance technology or in short, financing product development. Meanwhile, the firm looks at technology as a business resource to be managed rather than a cost to be minimized. In an article, it says that R&D costs no longer appear as intangible assets on the balance sheet. Immediate expensing is justified since the amount of costs applicable to the future cannot be measure with any high degree of precision, doubt exists as to whether any future benefits will be received, and if benefits are expected, they cannot be measured. Roughly, a technology-competent firm spends 17-19% of revenue to R&D, 28-35% of revenue on selling, general and administrative expenses, 44-46% for cost on revenue (percentage given is from example of a firm specializing on video and audio production technology). Strategy 1: For the company to continue to develop proprietary products by strengthening its focus on R &DThe definition of a proprietary product is defined as an idea or object that is owned entirely by the owner. Proprietary products, ideas and objects are the property of the owner and cannot be recreated without the consent of the owner.Benefit(s):1. Provides an absolute advantage. It develops for exclusive use which can be provided to business with an absolute advantage in the marketplace.2. Generates a large revenue base because of the exclusive use in their accompanying device. Checking the market, one example is Fuji as the leader in digital cameras is the perfect example of a company who benefits tremendously from the revenue generated by proprietary products. They have a hand in almost every section of the popular digital camera market. This is a very big advantage to keep profits within the company by having their devices work with only their products. Benefits of proprietary products are also seen in the revenue aspect of business. If a company owns the exclusive right to something, then they have the advantage of receiving all the sales for that specific product. Camera manufacturers such as Fuji have struck gold with the creation of their xD Picture Card. With thousands of digital cameras sold daily and added way to earn more revenue is allowing those same cameras to only work with the xD picture card. This guarantees a solid stream of income for those same camera manufacturers. It can change the financial fortunes of companiesCost(s)1. High overhead and payroll expenses. A knowledge based company would require high2. Additional Costs on Marketing the Product. The company needs to sell its product to survive. Strategy 2: For the company to acquire a licensing technology from a foreign company.Licensing is most commonly applied to innovations that involve sophisticated technology protected by intellectual property (IP) agreements. The innovation itself may not be a complete product, and may need to be integrated into a broader offering in order to create value for the end-user.Benefit(s):1. Licensing works well in situations where developing an entire product independently is not feasible.

2. Marketing support. Its saves time, expertise and certain costs. Licensing can assist in successful marketing and distribution. It represents a way to brand without making a major investment in new manufacturing processes, machinery or facilities. At the same time, there is a freer exchange of business information.Cost(s)1. High cost of entering licensing agreements. The question as a licensee in deciding is to assess whether you can afford the cost that the license will add to the product or technology to sell. Given this, the right pricing strategy requires an assessment of the market, that is, if a certain price is charged to the product, the question if it is the price the market can bear. Is the technology worth it?2. It may hinder the development of a strong company profile only one element of a complete product. Depending on the agreement on the contract, there is little or no control over marketing, advertising and sales. Analysis:Micrologic is largely an innovative product development-based company. Largely, the goals of the company, financially speaking, are oriented towards entering a licensing agreement. It needs an effective marketing and strong support to level up its position in the local market and to eventually, compete in the international market. It is important that Micrologic is able to make good judgments about the specific nature, function and performance and value. To address the cost of the licensing, rather than making lump sum payments, it can pay through royalties. It can be based on per unit sales or certain percentage of revenues from the products. To cover itself, it can cap the royalties where it pay up to a certain fixed amount. This gives the prospect of using the technology “free” after a certain period of successful sale of the product incorporating the licensed technology. It is therefore important to negotiate leverage and flexibility and there should be a successful understanding of the positions of both licensee and licensor as to each term.

PURCHASING Micrologic is an R&D company that relies heavily on product innovation and development. The company is looking to either expand its R&D department to develop a new technology or License a technology. In terms of Purchasing, the company needs to weight the cost of building their own product from scratch versus building products purchased under their Licensing agreements. It is written in the case that most of their hardware needs are those typical of any electronics laboratory. This is ideal for them since they don’t have to import costly hardware not available in the country. Moreover, they can just use the same hardware for various product prototypes. However, expanding its R&D to create a new technology can also be costly for the company. They need to produce the technology and hardware needed for the project to materialize if there’s no readily available hardware from the industry or if current technology are already patented. Several prototypes must be created to test and determine if the right materials were used to deliver the desired results. In producing the proper hardware, the company needs to purchase materials such as packaging, metal fabrication, manufacturing supplies, quality screws and other electronic and electrical components necessary in their course of research. As written in the case, these materials can be sourced locally with occasional problems in satisfying their basic standards. If the company wishes to maintain and provide their clients with a consistent standard, the company may want to consider sourcing these materials from abroad particularly since majority of Micrologic’s clients are abroad. If Micrologic opts to go for its second option of Licensing a technology, they can save on developing and testing prototypes of their new technology. They can bank on the product testing expertise of their Licensee instead of doing the product testing themselves. Moreover, this partnership would provide them access to the Licensee’s suppliers giving them cheaper hardware, equipments and materials,

HR The Main Responsibilities of the HR Representative:1) Recruit the right people appropriate for the job.2) Provide trainings for the overall growth of the employees.3) Ensure that wages and benefits are properly allocated to different members of the organization. The administrative officer’s tasks involve the effective matching of the needs, talents and opportunities of both the employer and the employee. The success of an organization is highly dependent on its people’s performance. In the case of MICROLOGIC, several strategies can be undertaken by the administrative officer to be able to contribute to the accomplishment of the company’s goals.A. Recruit Foreign Employees from developed countries Pros:Since the Philippines is not a well known producer of the highly innovated products such as cellular phones, laptops, tablets and other gadgets that are in demand in our society nowadays, it will be a good strategy for MICROLOGIC to hire professionals from developed countries such as US and Japan. 1) One benefit is that they have numerous experiences and ample knowledge on improving and developing products which can be applied in the country.2) They can contribute to the training programs of the company and can teach as well as provide information to the local employees of the company. 3) Recognition of new technological innovation will be to the company. Cons: 1) Even though there is no budget constraint, recruitments from other countries requires high amount of money. It will be very costly for the company and the allocation of finances might be affected.2) Since ex pats are high maintenance, allowances given will be higher compared to the local employees. This will also include unequal allocation of wages and benefits which might lead to comparison with local employees. B. Partner with a Foreign Technologically Advanced CompanyPros:1) When Micrologic merges with a foreign company, there will be no need to hire foreign professionals outside of the company. They will provide the site with home grown talents which can largely contribute to the company.2) It will be less costly for the company as the expenses will be shared by the partners.Cons:1) There is a tendency that the bigger company might overshadow the smaller one. For example, if there are new discoveries or advancements, the recognition might go to the foreign (bigger) company rather than the developing company.2) The possibility of conflict due to different business goals and perspectives. C. Scout Talented Recruits from Top Schools in the Philippines

To be able to identify exceptional talents from young professionals, the company can sponsor competitions where the students can showcase their talents and be able to be recognized. By then, the company can recruit the people as early as when they are still in college. Pros: 1) More opportunities for local employees to be hired.2) The company will be able to filter the pool of talents that they need as early as possible.3) There is assurance of hiring the best professionals who are experts in certain fields in the country.Cons:1) Numerous trainings are needed for fresh graduates to be able to adapt to the working environment.2) Since most fresh graduates are risk takers and are looking for jobs that will best fit them, it will not be hard for them to shift from one job to another. Thus, there are higher chances of the increase in the company’s attrition rate. D. Sponsor Trainings/MBAs/Further Studies Pros:1) Provide motivation to the employees.2) Enhance various skills (esp. management skills) of the current employees of the company.3) The skills that the employees will develop will contribute to the success of the company.Cons:1) After the trainings, the employee might leave the company. Sometimes requiring bond from the employees might discourage them to take further studies.

ASSEMBLERS Representative for the assemblers in all issues in terms of the following:1.) Transitioninga. Quality of outputb. Demand against Supply Capabilities 2.) Employee concerns such as the following:a. Required trainingb. Additional Incentivesc. Organizational changes Also included are concerns related to:Pros and Cons for assemblers for buying technology abroadvs investing on your own R&D TransitionQuality of Output As newer technology comes in for assembly, product knowledge is something that the staff might not be familiar with. With this being said, quality of output and the number of defects can be questioned from the workers. Assemblers will need time to get to know the product in detail. Questions for the assemblers will include how to fix certain problems, and/or mistakes encountered, to where spare parts can be readily available.Demand against Supply Capabilities Productivity of assembly workers is often questioned when changing products. First of all, as the new product will be made by the assemblers, they will still have to familiarize themselves with the actual process. It will take them a while before they can really get to achieve maximum productivity as they would have to be trained, and get used to doing the new work that they have. As demand can be very unstable for new technology, matching output with the demand is also very difficult. Making sure that the size of the team is big enough to accept spikes in demands is one concern of the assemblers. Also, investing more in equipment and machinery can help increase the productivity of the workers. The question and concern for the assemblers when getting new technology, whether from other countries or from our own research and development, is having the workforce to be able to meet the demand. Employee ConcernsRequired Training As assemblers, it is very important to have the needed skills and training to be able to do the job right. Training is something that assemblers would want from the company. Learning more about the products, and processes involved in actually making these products from industry leaders from abroad may be requested by the team, especially when Micrologic will have plans to grow in the future. Training that the employees would want would not only be on how to actually assemble the products, but they would also want to know the whole processes actually going on.

Additional Incentives As the size of the company may grow, and as added processes have to be learned and done, the assemblers will be wanting additional incentives. Salary increases, or other kinds of benefits can be included in the package here as incentives for the people to work with added responsibilities in their plate. Also, knowledge and mastery of the products and processes in the organization will give these assemblers something to negotiate about. Organizational Changes As the company continues to grow, there will always be organizational changes. When it comes to the size of workforce, to needing a leader, or a supervisor, change will always be there. As change is just around the corner, employees want to know that they still have a future in the company, and their job security is still intact. Buying VS Investing in R&DPros and Cons of buying technology from a foreign firmPros:Staff can be very excited about the trainings from abroadForeign support can be very helpful for best practicesCons:Service and support may be very limitedLack of information about the product, in terms of troubleshooting, and/or any problems that may ariseNot sure if materials, technology, and product knowledge will be good enough for that specific productsEmployees will feel they will be easily replicable Cons for the company: Training time and costs will be very costlyVery expensive to bring staff to abroad. Pros and Cons for investing in own R&D armPros:Assembly personnel can easily communicate with R&D as early as the development stages.Assembly line employees can be more accountable for what’s happening in the company.Cons:Even with bigger investments in R&D, there’s a chance that we still can’t be at par with companies from other countries. Employees might think that the jobs they have is very routinary/no growth as they compare themselves with other countriesTraining will be very limited, while jobs can be routinaryProblems solving will also be an added function for these workers

TRADE AND LEGAL RESEARCHER Some Points to consider in exporting products from R&D for MICROLOGIC Licensing of intellectual property rights (including patents, trademarks, and copyrights) is an increasingly common way to create business opportunities in foreign markets. A license is a contractual grant of a legally recognized right; it becomes an international marketing tool whereby the license of a business entity in one nation is extended to a party in a difference nation. Even beyond patents, trademarks, and copyrights, a business in one nation may license trade secrets, trade dress, minor technological methods or processes, or protectable business plans and processes (as in franchising). Franchising from one nation to another involves substantial elements of intellectual property: trade secrets and trademarks are both integral parts of franchising. There are various reasons for a business in one nation to consider licensing intellectual property to a foreign entity rather than undertake direct production of goods or providing of services in a host country. Perhaps the transportation of goods across great distances is cost-prohibitive, or perhaps the nature of the goods themselves makes shipping by sea inadvisable. Or perhaps the culture of the home country is so different from that of the host country that local expertise must be called on to make the franchise’s brand viable. Trying to manage the brand from the host country may not be the best marketing strategy. Also, a foreign market sometimes has national laws that restrict the import of finished goods; licensing a foreign entity to produce the product allows the owner to collect royalties through contract with the foreign entity, and allows the foreign entity the chance to capitalize on the brand name and goodwill of the product’s owner.Restrictions on franchising can be found in many municipal legal systems. Some states in the United States restrict a franchisor from terminating a franchisee without cause. In European Union, there are important guidelines that govern contractual relations and limit what franchisors and franchisees can do.Stronger patent protection would increase affiliate sales and licensing payments, the result driven by the countries with strong imitative capacities Threat or Opportunities?In 1994, under mounting pressure from the United States, Japan, and Europe, the Trade-Related Aspects of Intellectual Property Rights (TRIPs) Agreement was adopted at the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). TRIPs was established as an agreement under the newly formed World Trade Organization (WTO), and today, any nation wishing to join the WTO must comply with the standards set forth in TRIPs. TRIPs define minimum standards of protection for copyright, trademarks, patents, trade secrets, and contracts. Furthermore, it requires a twenty year protection period for all inventions, products, and processes, in every area of technology. Developing country governments are concerned that the legal standards required by TRIPS, especially for patents, may simply be too high for their countries at the present time. For example, they worry that having to extend IPR protection to advanced industrial fields such as biotechnology and information and communications technology will only benefit foreign businesses, since their domestic firms lack the capacity to innovate in this field. Being unable to freely copy such inventions, they feel, may hinder local firms' efforts to enhance their own technological capacity and become more innovative in the future.

Micrologic is a Filipino R&D corporation specializing in the design of high- technology products, such as portable scanners and automated tollway systems. Throughout its history, the company has been deemed as technologically competent, as it is “forward- looking and is not afraid to face competition, either local or international, even in an era of free trade”. Micrologic is unique in the sense that no other company in the country is in the same line of business; i.e., there is no domestic competition for the firm. Furthermore, the company feels that there is a lack of support from local industry organizations. As such, Micrologic turns to foreign competitors and foreign markets for the needed “push” for the development of innovations and improvement of its products and services. In fact, the company is actually using the standards already set by developed countries as its benchmark, and sees potential growth upon the full implementation of the General Agreement on Trade and Tarriffs (GATT) and the AFTA (ASEAN Free Trade Area). Also, although its portable scanners are geared for the US market, it does not perceive the North American Free Trade Area (NAFTA) as a threat. The GATT was signed in 1947 and lasted until 1994, after which it was replaced by the World Trade Organization (WTO) in 1995. It is a multilateral trade agreement on international trade. The GATT’s main objective is to diminish barriers to trade through the reduction of tariffs, quotas, and subsidies. In particular, the GATT has a council working for the cutback in tariffs for information technology products. Similar to the GATT, the AFTA also aims to reduce trade barriers (i.e. tariff and non- tariff, such as transport costs). However, the AFTA covers only the ASEAN region. By eventually eliminating trade barriers through the Common Effective Preferential Scheme, the AFTA aims to project the ASEAN region as a production base in the world market, as well as to attract more foreign investments. On the other hand, the NAFTA is a trilateral trade agreement among the United States, Canada, and Mexico. Apart from removing tariffs between the three countries, it also aims to protect the intellectual property rights of the products. As disclosed, Micrologic considers itself to be somewhat monopolistic in the country, as it does not have any direct competitors here. The reduction of trade barriers will allow foreign firms to place their products in the Philippines. Although this may lead to increased foreign competition for Micrologic here in the country, this could also provide the company with an edge, as it can also export its products to other WTO and ASEAN member countries while having lower tariffs. Likewise, Micrologic may be able to have access to more raw materials for their products. Alongside the freer flow of goods will be easier access to talented and/ or skilled staff for the R&D team. Meanwhile, the NAFTA may favor goods within the trilateral agreement. Thus, Micrologic’s portable scanners must have a viable edge in order to be competitive in the US market. The said edge could be derived from lower labor costs in the Philippines, which could still translate to a lower product price as compared to similar products from Canada or Mexico. The aforementioned trade agreements have safeguards in place for the protection of intellectual property rights, particularly for the NAFTA. If Micrologic were to license and develop a foreign company’s product, it should ensure that it follows all the stipulations in the agreements.

CONCLUSION The management team has decided to pursue the strategy of acquiring licensing technology from a foreign counterpart. Historically, highly-developed countries started by “copying” foreign technology, adapted it to their own needs and made it their own. However, we would not simply copy the foreign technology. Our added value would be its adaptation to the local market. Our advantage over foreign companies is that we are more accessible and we have higher knowledge regarding local culture and needs. Our ultimate aim is to be of par with international companies. However, haste is not a good thing. We can start by forming our niche, which is the domestic market. Once we have set a good foundation, we can expand and export our products. This is somewhat similar to the paths taken by international technological companies from Asian countries. This strategy will be consistent to the company’s objective of having a purely Filipino management with mixed staff. On the finance and purchasing side, licensing technology would not only be cheaper but also less risky. We could also take advantage of the branding of the foreign partner to increase our credibility. We could also implement a royalty scheme with royalty cap to make our projects more worthwhile. This strategy would also benefit our staffs as we could acquire training from the foreign partner which our staffs would not normally have access to cheaply. We can reassure any fears from our staffs with regards to this move by being transparent with each step and guiding them the whole time. An additional point from human resource would be to aggressively recruit young college graduates. We could sponsor some engineering competitions in college in order to market our company to these young minds. This is important as we are a research and development company. As such, creativity is our main capital. We can only move forward by acquiring the best young minds from the country. The management team can also be provided basic management and accounting training. This is because much of our background is basically intuitive without real solid foundation. Globalization is something that we cannot prevent. As such, we can embrace it and take it to our advantage. Instead of fearing the foreign competition, we could move fast and adapt their foreign technology first. Again, having familiarity with the local scene is to our advantage. The IP state of the country may not be that good but it is not much of an issue as we deal with high technology products. We would already be several projects ahead once an old project becomes mainstream and copy-able.

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