METROPOLITAN MINING AND

INDUSTRIAL CORPORATION
 SWOT ANALYSIS
Facts of the case S W O T


MMIC has a distributor Present in New York named Oceanic Inc.


The company had two copper mines, one in Sipalay, Negros Occidental
and another in Bacagay, Samar with total milling capacity of 15,000 and
1,000 tons daily capacity respectively.


The company Operated a cement plant in Antipolo, Rizal with a rated
capacity of 60,00 bags per day and was the biggest cement plant in the
country.

 
A nickel refinery was put up in Nonoc, Surigao which at full capacity,
processed 3.5 metric tons of latenite ore per day out of which 68.4 million
pounds of pure refined nickel and 33 million pounds of Cobalt
MMIC’s copper production was committed for export to Mitsui Mining
and Smelting Co., Ltd. Of Japan. It had been MMIC’s sole buyer for the  
past 18 years
 SWOT ANALYSIS
Facts of the case S W O T

 
MMIC is a Board Of Investment registered firm


The Sipalay copper mining site is in bad need of five copper
stripping dump trucks worth US$ 162,000 each

 
There are currently only two offered modes of financing the
acquisition of the trucks


The Peso showed an average deprecation rate (relative to dollar)
of some 5 to 10% per year prior to august 1983 and an average of
20 to 25% per year.


MMIC was facing some pressure from its creditors due to the
substantial long-term borrowings
 TIMEFRAME

March 1985 to 30 th of June 1985

 VIEWPOINT

Mr. Jose Santos

Vice President for Finance
 STATEMENT OF THE PROBLEM

What mode or method of acquisition should

the company employ in acquiring five copper
stripping dump trucks by the start 1985’s
third quarter?
 STATEMENT OF THE OBJECTIVES

• To enable the Sipalay copper mining site to perform at

satisfactory levels, in terms of by-product management
during the expanded operations in that mine and in the
succeeding years.
• To obtain the five copper stripping copper dump trucks at
optimal financial benefit.
• To comply with BOI provisions
 AREAS OF CONSIDERATION
• The Sipalay copper mining site is in bad need of five copper stripping dump
trucks worth US$ 162,000 each
• There are currently two offered modes of financing the acquisition of the
trucks
• The Peso showed an average deprecation rate (relative to dollar) of some 5
to 10% per year prior to august 1983 and an average of 20 to 25% per year.
• MMIC was facing some pressure from its creditors due to the substantial
long-term borrowings
• MMIC is a Board Of Investment registered firm
• MMIC has a distributor Present in New York named Oceanic Inc.
ALTERNATIVE COURSES OF ACTION

A.Accepting the loan offer

B. Buying secondhand
dump trucks from States

C. Buying old models of

dump trucks from states
 EVALUATION OF ALTERNATIVES
Alternatives Advantages
Alternative A:  The trucks will be made
available immediately
Accepting the loan offer  Includes grace period
Alternative B:  Acquire the trucks at
relatively lower prices
Buying secondhand dump trucks
Alternative C:  Acquire the trucks at
relatively lower prices
Buying old models of dump
trucks
Disadvantages
o High interest rate
o Added liquidity pressures
o The trucks will not be
available immediately
o Maintenance and repair
expense risks
o The trucks will not be
available immediately
o Maintenance and repair
expense risks
 Computations based on real historical commodity prices

Site Production
2 Copper Mines
16,000 tons = 32,000,000 pounds
Copper per pound during march of 1985:
$0.5990 32,000,000 pounds x $0.5990 =
$ 19,168,000/ P 354,608,000
Nickel refinery
Nickel per pound during 1985: 68.4 million pounds x $2.5510 =
EST $0.2814 $ 19,247,760/ P 356,083,560
Cement
Cement per bag during 1985: P 100 60,000 bags x P100 =

$324,324 / P 6,000,000
If these were true, then the company would
be more than capable to buy the trucks in
cash and there would be no problem.
I assumed that the dump trucks specified in
the first paragraph of the case were not
available in the Philippines

Because
 Because
1. The biggest producer of cement in the Philippines
2. A company that Built a refinery through six years of research
3. A company with trade relations with Japanese and American
companies
4. A Board of Investments registered company

Would not be that incompetent

because that would be unrealistic
 Quantitative analysis
Alternative Details
Alternative A: Terms: 10 years payable semi-annual

Accepting the loan offer Principal $ 810,000

Interest rate 32% : +259,200
Total $ 1,069,200
P 19,780,200
 Quantitative analysis
Alternative Details
Alternative B:
Cost of new Dump trucks: $810, 000
Buying secondhand dump trucks
Used for more than 5 Used for less than 5 Fairly new :
years: 50% discount years: 30% discount 10% discount

$ 405,000 / $ 567,000 / $ 729,000 /

P 7,492,500 P 10,489,500 P 13, 486, 500
 Based on true story
• There is a popular truck brand in
America during the late 1970s to late
1980s. Each year they have a new
model of trucks called “S 1900
international series”, “Classes 6 to 8”
was the designated class number for
trucks that were made heavy work
which had an average estimated useful
life of 20 years and it had various
types and fortunately, one of its type is
a dump truck type. Assuming that the
dump trucks specified in the problem
were the latest 1985 model and an old
model would be a late 1970s model
would be an “Old model”.
 Quantitative analysis
Alternative Details
Alternative C:
The price for an old model would be at least
Buying old models of 80%

dump trucks $648,000 or P 11,988,000

 RECOMMENDATION
Criteria A B C
Control 5 10 7.25
Liquidity 5 10 10
Time 10 5 5
Overall score 20 25 22.25
 PLAN OF ACTIONS
Phase 1
Specific Action Person responsible Timeframe Budget
Prepare presentation
and Proposal P 500
Includes scouting of 2 weeks of march Telephone bill
sellers of used trucks Mr. Jose Santos &
and their prices through Vice President for Printing
Oceanic, Inc. Finance
Inform President with
the proposition
Within 3rd week of
Approve the proposition President of the march
and call for a board company
meeting
 PLAN OF ACTIONS
Phase 2
Specific Action Person responsible Timeframe Budget

Conduct the Mr. Jose Santos

presentation in the Vice President for P 20,000
board meeting Finance 4th week of march
Honorariums + Snacks
Approve the Proposed
purchase of Second  President of the
hand Dump trucks company
 Board of Directors
Choose the
combinations of trucks
 PLAN OF ACTIONS
Phase 3
Specific Action Person responsible Timeframe Budget

Accumulate funds for P 10,000,000

the proposal Trucks
Whole month of
may P 92,500
Transfer funds to Oceanic,
Inc. and place an order for Commission of Oceanic
the chosen combination of
Finance Division Inc.
trucks.

Shipping of Trucks Two weeks of June P 50,000

through the ship used to
import to Oceanic, Inc. for
the last week of June

The trucks will arrive before the start of the third quarter of 1985
Ask your Questions Please

• There are no financial statements

• Real historical prices cant be applied