Title of the Case: MAMA BEAR

Time Context/Period: August of 2010/3rd Quarter of 2010

Summary/Abstract

Different business organizations aim to be successful with their chosen venture.

Most of them use different ways and strategies on how to attain their goal which require

rational decision making among its owners. Unfortunately, not all the owners commingle

with the same idea as of the others. Which leads to some difficulty in formulating a sound

and thorough judgment. In relation to that, this case leads us into an analysis of what best

alternative will the partners of Mama Bear choose to optimize the potential of the

partnership.

Mama Bear is a business that started with only four enrollees which radically

increased into greater numbers due to referrals of satisfied clients. Their hardships and

collaborative efforts drove them into the success more than they expected to be. The

partnership is experiencing a steady growth and studies show that the need for quality

child care is continuously increasing. With this juncture, they are planning to expand their

business into a corporation that caused the partners to some disagreements about the

said plan. Furthermore, this case analysis provides guidance into which action will give

the best outcome base on the analysis and considerations of the alternative courses of

action.
Corporate Social Responsibility

 Partners at the Mama Bear Child Care Center aim to help working parents

specifically mothers in addressing their work/life issue of taking full

responsibility of their children while their work done through the

development of quality childcare center.

 They also want to contribute to the alleviation of the country’s

unemployment rate through the employment of more personnel with the

addition of more centers.

I. STATEMENT OF THE OBJECTIVE

To distinguish the best course of action on how the partners will invigorate

the company’s potential as to whether the partners will retain or expand the

business.

II. CENTRAL PROBLEM

How will the partners venture to optimize the business' potentials and to

expand the business considering the different point of views of the owners that set

the disagreements between them.

III. AREAS OF CONSIDERATION

STRENGTHS

1. Mama Bear company is referred by satisfied clients to other working parents.

2. They have the advance tools and quality services that accommodates the

parents’ necessity. (e.g. The use of networked digital cameras so parents can

have real-time connection with their children.

3. The business is experiencing a steady growth of operations

4. They have co-partnered with big and stable companies such as PLDT,

Philippine Stock Exchange, CitiBank, HSBC, and BPI.

5. The partners are hardworking, frugal, and do have positive mindsets and

attitude.

6. The partners are proficient or expert on their assigned fields. (e.g. Alayn who

is a special education teacher and a childcare specialist.)

7. Their participation in helping others through Gawad Kalinga that gives a good

perception of the business.

WEAKNESSES

1. The conflicting point of views of the partners

2. The impertinence of the partners to their employees by not giving some of their

benefits.

3. Employees leave the company after gaining experience and training.

4. Unskilled employees assume temporarily the vacant roles of the employees

who resigned.

5. Partners do not have much bargaining power with customers and suppliers as

to what a big player does.

OPPORTUNITIES

1. They have a growing number of potential customers due to the increasing

number of women in the workforce.

2. The increase in demand for quality childcare due to the significant changes in

the family dynamics.

 3. The ability of the company to become a larger organization specifically being a

corporation.

4. Technological innovations to improve their business processes and give a

competitive edge.

5. Market opportunities that will exploit the company’s potential as the

organization becomes larger.

THREATS

1. The increasing number of competitors

2. The carnage that happened at the Quirino Grandstand that might lead to losing

some of their clients

3. Copycat businesses who imitate the services provided by the company.

4. Technological changes that might make their current services outdated

IV. ALTERNATIVE COURSE OF ACTION

1. Retain the current status as it is.

ADVANTAGES DISADVANTAGES

Lesser cost of converting larger business They will lose their opportunity to grow
organization as a business.

Less pressure on the partners with Fast growing competitors may surpass
respect to growing and declaring them.
dividends as a corporation.
Lesser time devoted on the decision They will lose chance to earn a higher
making process. profit.

Lesser span of control results to more The opportunity for bargaining power will
accurate control of the company. also not be attained

Lesser people in the hierarchy means little

Lesser risk of losing capital and profit due contribution of ideas in the decision and
to risky decisions strategy making of the company.
2. Expand the business by making it a corporation
ADVANTAGES
There will be a greater chance of earning
a higher profit
They will have the bargaining power to its
customers and suppliers
There will be more ideas contributed that
will help in the decision and strategy
making of the company.
Market opportunities will help the
organization exploit its potential.
Being a corporation helps the company to
have more funds through investors that
may become attracted because of its new
structure.
3. Sell the whole business
ADVANTAGES
It will take out the tension of the partners
with the problems that the company
entails.
There will have more time for themselves
for there will be no more business that will
take much of their time.
The proceeds from the sale of the
business can be used into other forms of
business for each partner.
DISADVANTAGES
Higher cost incurred of changing into a
new organizational structure
It requires a higher capitalization.
The possibility of having a business failure
if they keep numb of significant market
data that is relevant to the business.
Continuous innovation to keeping updated
with the new trends requires more cost.
It will take longer time for a decision to be
processed.
DISADVANTAGES
They partners lose a huge amount of
income.
They will lose the chance earn a higher
profit
They will lose the opportunity to exploit the
potential of the company.
V. RECOMMENDATION/STRATEGY FORMULATION

I therefore conclude that the best solution to the problem is alternative

course of action number 2 which is to expand the business by making it a

corporation because even though incorporating it as a corporation is risky, the

returns and the rewards that it constitutes will be beneficial to the partners and to

the future investors of the corporation. Although there are disadvantages with this

alternative, this can be reduced or prevented to the implementation of different

strategy and plan of action that the company will create. Since risk is directly

proportional to returns and rewards, it would be good for everyone in the long run.

Expanding into greater business structure leads to a lot of market opportunities

that will exploit the company’s potential. There will also be greater capital from

investors that is necessary for the corporation’s continuous growth that will result

into gaining higher profit. It will also help reduce unemployment in the country

because larger companies require more personnel which in turn achieves its

corporate social responsibility objective. Risk is inherent in every business and if

we don’t have the courage to do it, we wouldn’t be enjoying the rewards and

benefits associated with it.

VI. PLAN OF ACTION

1. Before restructuring the partnership into a corporation, every partner should

agree to the chosen alternative course of action. The benefits associated

with fulfilling the alternative must be clearly presented to everyone to help

them convince to form a corporation.

 2. They must raise enough capital or funds in preparation of the company’s

change of business structure. They could take the advantage of having a

good credit line to borrow funds needed for the said expansion.

3. They must seek for the help of an expert or an adviser to ask for advice to

give them the details and information that they will need as they go along

with the business restructuring.

4. Look for a venture capitalist who has a meaningful and relevant experience

that can greatly contribute creative and essential ideas that is of great help

to the business for further success

5. Study and research for applicable marketing strategy to improve the

corporation’s performance and standing in the competition

6. Employ skilled and qualified workers that will give value added services to

the business

7. Reduce the weaknesses of the business such as giving incentives to the

employees for their overtime work.

VII. POTENTIAL PROBLEMS

1. What if the funds needed or the contributions from the prospective

shareholders do not meet the required amount?

2. What if there is a sudden decrease in demand for quality childcare center

due to the internal failure caused by the personnel?

3. What if the survey that was used as basis for target customers suddenly

becomes unfavorable on the part of the company?

 4. What if the expected cash inflow does not cover and exceed the estimated

cash out flow?

5. What if the government imposed a new order that is unfavorable for the

business?

6. What if a change in technology makes the currently used tools of the center

outdated and requires the fund established to be used for improvement

rather than forming a corporation?

7. What if economic fluctuations arise affecting the company as well as the

prospective investors?

VIII. CONTINGENCY PLAN

1. Since Mama Bear has a good credit standing, the partners could borrow the

amounts needed to suffice the required funds.

2. The partners should think of a marketing strategy or prove that the failure is

already solved that will clear their name out of the internal glitch and any failure

of the personnel should be given appropriate actions.

3. The partners must think of a new way on how they could be into the current

trends even if they are experiencing a decrease in target customer.

4. Look for some cost that can be reduced prior to the formation of the corporation

and also seek for an advice on how to increase the business’ cash inflow.

5. Retain the business as a partnership because unfavorable effect of the

imposed policy might result to a risk not being compensated with the returns

and rewards expected if the formation of the corporation was still pursued.
6. The partners should choose to acquire the necessary tools needed for

improvement rather than forming the corporation because the tendency is that

the partnership will lose its clients and go to some other child centers who is

better than Mama Bear. It is better to secure the partnership’s customers than

to form a corporation with no clients in the future.

7. The partnership must be retained as it is to reduce the risk associated with the

change from partnership to corporation because economic fluctuations will

cause the risk to be higher and make this risk into heavy losses of the capital

invested rather than being compensated with high returns and rewards.