ASSESSING

EXISTING

MANAGEMENT PRACTICES

OF THE EXPORT INDUSTRY

IN METRO CEBU

___________________________________

A Mini-thesis

Presented to

MR. JUNEL CARTILLA

NATIONAL SERVICE TRAINING PROGRAM –

CIVIC WELFARE TRAINING SERVICES

University of Southern Philippines Foundation

Salinas Drive, Lahug, Cebu City, Philippines

__________________________________
By
 MAANO, RUFEL M.

MACOY, SAMANTHA ANGELI C.

MAGALLANO, CHERYL S.

JUMAPAO, JANET EVE

OCTOBER 2019

CHAPTER 1

INTRODUCTION

Rationale of the Study

In a pervasively capitalistic and rapidly globalizing era, exporting has
undoubtedly become an activity vital to the economic status of a country. National
governments go through great means to encourage and incentivize firms to undertake
export activities. In the Philippines, many exporting firms—whom Samar (2019)
asserts have become the backbone of the economy—have sprouted out throughout the
past few years.

This industry plays a significant role in the development of the Philippine

economy, creating jobs for an ever-expanding workforce, stimulating economic
development in rural areas, and providing support and/or supplier services to large
enterprises (Senate Economic Planning Office of the Philippines, 2012). Moreover, the
said industry is accounted for approximately 17.46% of all listed business
establishments in the country (PSA, 2017). Because of this, the economic success of the
exporting industry ties into the overall productivity of the country, and thus the
economy as a whole.

However, the exporting industry as a whole faces a variety of problems while

competing with international firms and larger industry sectors (Paul, Parthasarathy,
and Gupta, 2017). These issues are due to the lack of ability of the industry to produce
and trade goods and services as efficiently as their counterpart large enterprises
(Ghouse, 2017).

The purpose of this exploratory research is to determine and assess the

efficiency of the management practices that the Cebuano exporting industry employ in
carrying out their businesses. This is done in order to propose a recommendation to be
carried out by management meant to remedy issues that arise in the business.

THE PROBLEM

Statement of the Problem

The study aims to assess the existing management practices of export firms
located within Metropolitan Cebu. This is done in order to propose an intervention
program by the management. Specifically, it seeks to:
1. Describe the company profile.
1.1 Type of Business/Legal Structure
1.2 Years of Operation
1.3 No. of Employees
1.4 Job Positions
1.5 Sources of Raw Materials
1.6 Countries Exported
2. Assess the existing management practices.
2.1 Compliance with government regulations
2.2 Handling of employees
2.3 Setting-up the company’s direction
 2.4 Marketing their product
2.5 Sanitation Practices
3. Identify the challenges encountered by the management.
3.1 List of Challenges
3.2 Management Course of Action

Significance of the Study

This study hopes to provide and establish an understanding on the efficiency
and effectiveness of the management practices being implemented exporting firms in
Metro Cebu. Furthermore, the study could be of importance to the following:

To the field: The ideas presented can be used to improve on the over-all administering
of management policies and practices of local exporting industries targeting to
maximize their effectiveness not only within the metro, but nationwide as well. This
study will help identify the factors that need enhancement as to the functions of
Cebuano export firms that will enable to pacify their weaknesses in terms of the
characteristics, compliance, usage of digital marketing, and training needs of the
businesses.

To exporting industries: The results may enable them to formulate new management
practices that will improve their competency on the national and global level. This
could help them maximize their resources and deliver their duties and responsibilities
as exporting firms in a more efficient manner. Moreover, the study will aid the Cebuano
exporting industry as to how they can create and impose effective management
practices that will not only enhance their company’s competitiveness and portfolio, but
also enable them to strengthen their relations with their clients and employees.

To the business owners: The findings of the study will aid the business owners of the
exporting industries identify the lapses and weak points of the business. This will allow
them to make improvements and adapt new management practices that are
recommended based from the outcome of the study.

To the employees: This study will benefit the employees in the sense that they will be
under better management. Their working environment will adapt a more efficient
method in making their productivity enhanced. Furthermore, since the study will also
look into the employment of the company, the public will know as to how these
industries manage their relationship with their employees.

To the society: The outcome of the study will provide the public a sufficient overview
as to how these local export companies comply with government regulations and how
they market their products and services. This will allow them to make more educated
decisions on choosing which firms to endorse, ensuring them that the choice they make
will have lived up government-set standards. Furthermore, this could lead to the
implementation of environmental-friendly operations that will protect the environment
and promote sustainable development that will minimize the depletion of our natural
resources. Furthermore, since the study will also look into the employment of the
company, the public will know as to how these industries manage their relationship
with their employees.

To the government: The results of this study can help the government regulate these
export industries since they are in control of external policies and regulations. The
information presented will enable them to formulate further laws that will improve the
current situation of the export industries in the local scene.

To the future researchers: The information presented may be used as future

reference in conducting new researches or in testing the effectiveness and validity of
other related findings. This can provide an overview of the management practices of
local medium sized exporting firms.

Scope and Limitations of the Study

The scope of this study only concentrates on the management practices,
characteristics, and compliance with legally imposed regulations, types of marketing
used, and the training needs of the selected export firms located within Metropolitan
Cebu. This research was carried out within the short time-span of three months and
was without funding from any external parties. All costs incurred during the gathering
of data were shouldered by the researchers. Funds and time were limited. Furthermore,
the availability and cooperation of the respondents for this research was outside of the
researchers’ control. As a result, respondents of the study were unevenly distributed
thus the data gathered do not include from each and every city and municipality in the
metro. Specifically, the firms that participated in the study were located within Cebu
city and the surrounding cities of Lapu-Lapu, Mandaue, and Talisay; as well as the
municipalities of Consolacion, Cordova, and Minglanilla.

Definition of Terms
This section presents the meanings of the important terms included in the
Statement of the Problem. To understand and clarify the terms used in the study, the
following are hereby defined:
1. Challenges. These are the external or internal factors within the business
organization which hinders the success of the exporting companies.

2. Course of Action. These are sets of strategic and management actions done by
the business as a response to the challenges they encounter.

3. Employee. An individual who works part-time or full-time under a contract of

employment, whether oral or written, express or implied, and has recognized
rights and duties.
4. Expenses. This refers to the cost that is paid by the business for the purpose of
receiving a thing of value in return.
5. Export. It is a function of trade wherein the business produces goods and ships
the products to other countries for the purpose of sale.
6. Export Industry. It refers to the products that are made in the Philippines;
especially in Cebu City are sold in another country, or the business of sending
goods to another country in order to sell them there.

7. Government. This refers to the system that governs a community or place which
creates laws, rules and regulations that requires the business to comply.

8. Income. The flow of cash or cash-equivalents received from work, capital, or

land. Income is money that an individual or a business receives in exchange for
providing a good or service or through investing capita. It is used to fund day-to-
day expenditures. Individuals earn income through wages by working and/or
making investments into financial assets.

9. Job Position. This describes the position held by an employee in the company. It
reveals the level of the position or the amount of responsibilities of the employee
holding that position.

10. Legal Structure. It pertains to the type of business establishment, whether it

belongs to sole proprietorship, partnership, corporation or a cooperative.

11. Management. The word is defined in this study as the organization and
coordination of the activities of the export business in order to achieve their
objectives.

12. Management Intervention. This refers to the management practices proposed by

the researcher to improve business operations.

13. Management Practices. This refers to the working methods and innovations that
managers use to improve the effectiveness of work systems.

14. Marketing. It involves researching, promoting, selling, and distributing the

products and services.
 15. Operation. The work of managing the inner workings of a business so that it runs
as efficiently as possible. Operations transform resource or data inputs into
desired goods, services, or results, and create and deliver value to the customers.

16. Sanitary Practices. This pertains to the practices implemented in the business to
ensure the safety and quality of the products and the working environment for
the sake of both consumers and employees.

17. Small and Medium Export Enterprises. This refers to small and medium sized
businesses engaged in export operations. An SME is defined as any enterprise that
has: an asset size of up to PhP100 million; and an employment size with less than 200
employees (SEPO, 2012).

Organization of the Study

This research study discusses the companies’ profile, management practices, and
challenges encountered by management. The research paper contains five chapters that
discusses the overall status of the export industry in Metro Cebu.

Chapter 1 is the Introduction to the study. The first section of the chapter is the
Rationale, which contains the overviewand context of the study. It also provides the
reasons why the researchers choose this specific study. The following section of the
chapter is the Problem which includes: the Statement of the Problem, Statement of
Assumptions, Statement of Hypothesis, Significance of the Study, Scope and Limitations
of the Study, and the Definition of Terms. The last section of the chapter is the
Organization of the Study.

Chapter 2 focuses on the Theoretical Background, which enumerates the

theoretical foundations of the study. The Review of Related Literature presents the
review of related studies such as published thesis, books, and journals. The Theoretical
Framework and the Conceptual Framework presents the visual interconnectedness of
the concepts and the variables used in the study.
 Chapter 3 presents the Research Methodology of the study. The Research
Environment contains the research setting of the study and describes why the research
is conducted in that place. The Research Respondents focuses on the participants
involved in both qualitative and quantitative methods. Likewise, the Research
Instruments section explain the medium used during the data gathering, such as survey
questionnaires and interview guide questions. The last part of this chapter is the
Research Procedures section which has two sub-sections, namely Gathering of Data and
Treatment of Data. The Research Procedures describes on how the data, both primary
and secondary, has been collected and how is the data be treated with the use of
statistical treatment.

From the data gathered the Chapter 4 now contains the Presentation, Analysis
and Interpretation. This chapter shows the data collected by the researchers and is
presented through graphs, tables and figures and is interpreted and analyzed.

Finally, after presenting the data the Chapter 5 presents the Summary of the
findings, Conclusions from the findings and Recommendations for further studies and
researchers. This section provides the final content of the study.
THEORETICAL BACKGROUND

Review of Related Literature

I. The International Export Industry
The importance of the export industry to a country’s economy cannot be
undermined. Export is one of the most important functions in international trade. A
reliable and successful export industry is oftentimes a sure marker of the strength
and stability of a nation’s stability trade (Department of Trade and Industry, 2015).
In recent years, exporting has become the most common and popular way for
countries to engage in international markets (Morgan, Katsikeas, and Vorhies,
2011). Globalization has brought about an era of mutual interdependence between
nations, so much so that in today’s international economic environment it is
difficult to find an example of a completely closed economy (Vijayasri, 2013).
Among the countries that are closest to being considered as closed economies are
North Korea and Laos (World Bank, 2019). Both are socialist command economies
with less freedom for trade. Brazil ranks as the country with the least number of
imports worldwide (World Bank, 2019). But even then, these countries are not
completely closed off from foreign trade. North Korea in recent years has begun to
open special economic zones for trade, while Laos in the past decade has pushed for
more trade liberalization and has become heavily reliant on foreign donors for
economic stability (Fane, 2007). Brazil is the country with the least amount of
exports, and as a result it suffers from slower economic growth and lack of trade
dynamism (World Bank, 2015). Overall, it can be inferred that opening a nation’s
economy to global trade is much more beneficial for that nation than isolationism
is.
Nearly all recognized countries in the world are members of the World Trade
Organization (WTO Statistics, 2019), with only a miniscule number of nations—
such as North Korea—not being included. In total, the WTO has 164 member
nations, each one granted the following trade benefits: benefits on quotas, tariffs,
trade regulations and standards, lessening of trade barriers, broadening of markets,
and negotiating power with other nations (WTO).

If one could recall, export trade is the exchange of goods and services across
national boundaries. According to Seyuom (2009), export trade is the most
traditional form of international business activity and has played a major role in
shaping world history as it allows manufacturers to seek and sell their products,
services, and components in other countries. Export plays a vitally important role in
maintaining balance of payments in nearly every country worldwide, contributing
to the financial and economic stability of a country, according to Vijayasri (2013).
Overall, exporting helps improve economic development and stability, social
welfare, and enriches employment opportunities of nations, as shown by Rentala
and Anand, (1999). As shown in their paper, exporting has had an overall positive
effect on the growth of a nation’s economy and is also a marker of its economic
stability. Countries with stronger export capacity are shown to have had better
economic performance and consistency than nations with weaker export capacity.
Borrowing from Adam Smith, Vijayasri (2013) puts forth that the need for
international trade is rooted in the need for countries to attain goods and services
that would otherwise be difficult for them to attain on their own. Trade makes
everyone better off, and so exchange of goods and services will help improve
economic growth. National economies are differentiated in their degree of
specialization in producing certain products and/or services; as such countries
specialized in certain goods will have a relative abundance in said product. This
disparity in specializations pushes countries to trade that which they have in
abundance for that which that which is scarce for them. Kilavuz and Altay (2012)
draw a correlation between exporting and economic growth, borrowing from Smith
and Ricardo’s “Classical Foreign Trade Theory”, they imply that exporting provides a
venue for nations to exploit and develop a comparative advantage over competing
firms. This allows competition in the market to thrive, helping to make possible
economic growth and development. To them, exporting is as much a driving force as
it is a venue for growth.

Firms engaged in the export industry contribute to a multitude of purposes

beneficial to the country—be it by creating job opportunities, spurring economic
growth, helping to stabilizing the financial status of the country, and improving the
productivity of the nation as a whole(Rentala and Anand, 1999; Philippine Institue
for Development Studies, 2015). Pettinger (2017) links growth in a country’s export
sector to increased employment and economic growth. It is understood that growth
in exports of a product can lead to the potential creation of more jobs in the
particular industry in which said product is produced. Likewise, increase in exports
denotes an increase in trade, affecting the success of related service industries and
stimulating economic growth. Bernard and Jensen (1999), in an earlier study, find
that exporting firms grow faster than their non-exporting contemporaries in terms
of both number of shipments carried out and in overall employment rate. Their
implications show that the very nature of an export firm puts it at a comparative
advantage over other types of firms in terms of employment rate. They also show
that exporting allows for the reallocation of goods from less efficient sectors to
more efficient sectors. This results in an increase in the overall efficiency of a nation
and eventually economic growth.

The ongoing trade war between the United States of America and the People’s
Republic of China has had a significant impact on global trade. The International
Monetary Fund (2018) identifies the United States of America and the People’s
Republic of China as the world’s number one and two economies, respectively. The
United States is the world’s largest importer of goods and services, holding 13.4%
of global imports and is followed by China, which holds 10.2% of global imports
(World Trade Organization). China is the world’s largest exporter of foods and
services, holding about 2 663.33 billion USD in exports, followed by the United
States that holds 1546.72 billion USD. In addition to this, many countries around
the world have become dependent on trade with these countries in recent years
(World Trade Organization). Cali (2018) shows that the trade war has affected the
economies of multitudes of nations engaged in trade with these countries. The
presence of US sanctions on Chinese goods has caused an understandable increase
in the cost of certain Chinese goods, affecting trade with nations everywhere.
Continuing export tensions between the two could have far-reaching consequences
on international trade as a whole, leading to more sanctions and an increased
number of barriers that hinder overall trade.

The World Bank (2017) identifies the Philippines as one of the fastest urbanizing
nations in eastern Asia. And according to statistics provided by the Hongkong
Shanghai Banking Corporation (HSBC) in 2019, the nation’s economy is expected to
see more favourable growth than its Southeast Asian contemporaries in the near
future. However, escalations in the trade war between the USA and China could
potentially hinder this predicted economic growth and development. Cali (2018)
has shown that East Asian countries are key suppliers of financial intermediaries to
China, and as such the expected drop in Chinese exports to the USA may adversely
affect these countries’ economies via backward linkages. This means that the
changes forced by the conflict of interest between the two nations have caused
 serious economic and financial deprecations on other nations. The Philippine
economy has a heavy reliance on trade with both the United States and People’s
Republic of China (World Trade Organization). The United States is the Philippines’
largest export partner, representing $ 966.35 million or 16.6% of total national
Philippine exports; while China is its largest import partner, with imports valued at
$1.86 billion or 19% of total imports (Philippine Statistics Office, 2018).
Furthermore, there has been a growing trend of increase in the Philippine
dependency on Chinese Imports in recent years this would lead to a potential
decrease in agricultural exports. In terms of exports, the Philippines exports
electronic products the most. The United States followed later by ASEAN nations
are the chief recipients of such exports.

Furthermore, the Philippines is bound by obligations to the World Trade

Organization to grant most favored nation treatment to any and all WTO member
countries (Hongkong Trade Development Council, 2019). This means that member
nations (most especially the USA and China) get preferential treatment over non-
member countries in terms of trade partnerships and dealings. Should tensions
persist between the two nations, economic risks will increase, potentially stifling
growth, jobs, and consumer prices (World Trade Organization, 2018).
II. The National Export Industry
The Economic Complexity Index (2017) ranks the Philippines as the World’s 37 th
largest export economy. The country’s major export commodities are electronics,
machineries and related manufactured products, representing roughly 70%; food
and agricultural products; representing around 10%; manufactured consumer
goods, representing about 8%; metal and metal products, representing 7%; and
chemical fuel products, representing 5% (World Trade Organization, 2017). Its
major export partners are the United States, China, Japan, Hongkong, and South
Korea.
In a study of Bautista & Manzano (2018), a sizeable number of existing firms in the
country belong to the exporting industry, employing 62 percent of the country’s
workforce. Furthermore, according to Kruger (2013), workers in the exporting
 industry account for more than 50% of people employed in Southeast Asia. In the
Philippine Setting, majority of the export sector is comprised of Small-Medium
Enterprises or SMEs (Senate Economic Planning Office of the Philippines, 2012). In
total, the export industry account for 17.46% of all listed business establishments
in the country (PSA, 2017). To put these into perspective, statistics provided by the
Philippine Statistics Authority in 2018 show a population total of 106 512 074, and
a labor workforce of approximately 43 million people.

In terms of employment, people working in the export industry account for more
than 60 percent of the employed in the country (Philippine Institute for Development
Studies, 2015). Because of this, the development and support of the industry has been a
priority policy agenda not just in the international level but also in the national level
(Bautista &Manzano, 2018). Throughout the decades, the Philippine government has
traditionally relied on the efficacy of the export industry in order to push forward the
overall economic growth of the country (Briones and Rapera, 1996). It can be inferred
that these enterprises play a vital role in the development of the economy. Samar
(2007) draws an intimate link to the success of the export industry and the progress of
the nation, going so far as to assert that they have become and may continue to be the
backbone of the country’s economy for years to come.

The Philippine economy has historically depended on its exports to meet its foreign
exchange needs (Briones and Rapera, 1996). The Department of Trade and Industry
(DTI), through its Export Marketing Bureau (EMB), has stated that the country has
been on a solid growth in recent years. Total exports had expanded by 11.68
percent with total sales of $53.11 billion between January to October 2017 when
compared to the same period last year with a total of only $47.55 billion in export
sales (Silva, 2017). However, a more recent statistic done by the Philippine Statistics
Office in 2018 has shown that the Philippines has veered more towards a more
import-oriented than export-oriented mode of conduct in terms of international
trade in recent years. Total national imports have risen while total national exports
have lessened. The preliminary data from the PSA (2018) has also shown that the
country’s October trade deficit had risen to a record high of $4.212 billion, higher
than the $2.585 billion in October of the previous year. Combating this deficit has
become a major point for the government in their formulation of the Philippine
Development Export Plan (PDEP) for 2018-2022. Thus, by extension, the Philippine
export industry is significantly dependent on SMEs to fulfil such needs.

However, the reality of the matter is that the industry faces a comparative
disadvantage when competing against larger and more internationalized business
firms and industries (Parul, Parthasarathy, & Gupta, 2017). This could be due to a
multitude of reasons. Parul, et al., cite funding and production limitations as some
of these significant factors. Ghouse (2017) pins this comparative disadvantage on
the inability of the industry to produce and trade goods and services as efficiently
as their counterpart large enterprises due to their lack of funds, lack of manpower,
and lack of general market influence. A study by the Asian Development Bank
(2013) cites other reasons for why the exporting industry struggle in the global
market. These are: lack of finance due to market imperfections, higher business
risks, limited access to markets, inputs, and technology; and individual
characteristics of the owner. Market imperfections include specific firm
inefficiencies, flawed pricing mechanisms, information asymmetries, and
externalities (Cohen and Winn, 2007). Due to their small size and comparatively
more limited resources of SMEs, the export industry is more prone to suffering from
the aforementioned impediments. Smaller size means a smaller number of
employees to work in production, putting them at a disadvantage when put up
against larger firms with hundreds of workers to produce goods. Poor pricing
mechanisms also put the industry at risk due to the greater risk associated with the
changes in price. Information asymmetries refer to when market information is not
efficiently disseminated to all participants in the market and some market players
have a disproportionately greater amount of information than others, resulting in a
comparative disadvantage to those less-informed (Bergh, Ketchen, and Orlandi,
2018). SMEs in the export industry struggle with information asymmetry due to
their lack of tools and staff to better reduce the risk of it. Externalities are also a
concern for the export industry due to the fact that their lack of resources puts
them at risk of increasing costs to a point of loss (Parul, et al. 2017).

While most of these factors are external to the enterprises within the industry,
there are also internal factors that affect their growth and competitiveness. These
are: inadequacy of owner’s human capital (Wiklund et. al, 2009); effects of
entrepreneurial orientation on business growth (Wiklund and Shepherd 2005);
limited organization and management competencies; human resource constraints;
inadequate entrepreneurial ability and; weak tendency to innovate due to over-
reliance on technologies brought in by large multinational enterprises (Asasen, et
al. 2003; Asian Development Bank, 2015). Human capital refers to the skills and
efficiencies of the employees and managers of an organization. Lack of staff
capabilities can lead to harmful consequences for export firms (Mohammadzadeh,
2012). Limited organization and management competencies are also relevant
internal factors affecting firm export productivity due the fact that lack of skill of
the employees and lacklustre dispersion of talent can harm the efficacy of the
production process (Iranzo, Schivardi, and Tossetti, 2008). Human resource
constraints, inadequate entrepreneurial ability, and weak tendency to innovate all
fall into the same category as limited organization and management competencies
in that the smaller and less complex nature of SMEs are one of the root causes of the
issue.

There are several factors can help SMEs in the export industry overcome these
challenges. One of which is their internationalization through global value chains
(Botelho and Bourguignon 2011; Asian Development Bank, 2015 as cited in
Francisco, Canare, &Labios, 2018). A 2017 survey carried out by Canare, et al.
showed that among 530 firms in Metro Manila and a series of key informant
interviews among exporting SME owners and managers. This pinpoint policy
solutions in improving the integration of Philippine SMEs into Global Value Chains
(otherwise known as GVCs. However, it is difficult for the export industry to
participate in GVCs as they also face their own struggles on their plate. Regardless,
 the Asian Development Bank has conducted a study on 2018 pertaining to the
obstacles and enablers of integration of the Philippine export industry to GVCs, in
which it had identified two crucial factors in connecting the said enterprise
industry to the global value chains. The first refers to the ability of firms to produce
competent goods and services both nationally and abroad at an excellent quality
and a bargain of a price. The second refers to the ability of the exporting industry to
connect to the value chain, such as supplying larger firms in the domestic market
and opening supply links with suppliers and buyers abroad. Needless to say, these
two factors would highly need a significant increase in workplace productivity, as
all in all, this would help boost the overall productivity of the country’s
macroeconomy, and help foster more inclusive growth and shared prosperity as the
majority of firms and workers belong to the sector (Francisco, et al., 2018). In other
words, the more closely-knit nature of it allows for more centralized, inclusive
policies that would benefit all the members of the aforementioned sector in the
economy.
III. The Cebuano Export Industry
Cebu City considered the centre for commercial, industrial, and educational
development in the Central Philippines Islands (Naerssen, 2019). This means that
the city is central hub for business activity and investment. Furthermore, Mijares
(2018) shows that Cebu is one of the most export-oriented provinces of the
Philippines. The province has also garnered an international reputation for being a
hotspot for trade and enterprise, attracting multinationals with investor-friendly
initiatives (Far Eastern Economic Review). The city is consistent in its ability to
maintain its impressive economic track record and is widely considered to be one of
the fasting growing economic sectors in the nation (Cebu City Economic Factbook,
2016). Their growths in the past five years have been considerably greater than any
other province in the Philippines. The city is only seconded by Metro Manila in
terms of ability to attract business and foreign investment. And even then, it
surpasses the latter in accessibility since it has more domestic air and sea linkages
than the capital city. Cebu city is the country’s main export provider of furniture,
toys, fashion accessories, and household wares. Cebu city’s top export partners are
Japan, the United States, Hong Kong, and China, representing 35.66%, 16.07%,
14.74%, and 10.95% of total export shares respectively.
It has been shown that the export industry is of great importance to the economic
status of a country. In the Philippines, the export industry in particular is shown to
be an active and highly relevant part of the nation’s economic sector. This is
especially apparent in the province of Cebu. According to statistics from the
Department of Trade and Industry in 2017, Central Visayas is home to nearly 60
000 SMEs, many of which are concentrated in the Cebu province, with Cebu City
and its surrounding areas in particular holding upwards of 30 000. In fact,
according to Lorenciana (2017), Cebu remains a major hub for industrial operations
supported by the dynamic and fast-growing export sector, which reportedly raked
in a total rise of exports by nearly a fifth to US$31 billion from January to June 2018
with Cebu being a key contributor to the country’s export bill. Papulova and Mokros
(2007) state that SMEs have more influence in the economic development of an
area than large firms because they are more closely connected with the region than
their larger counterparts, meaning that the decisions of managers of SMEs, as well
as the general development of the industry, have an effect on the particular sector
that they are situated in.

Although SMEs play a vital role in Philippine economic development, when

compared to larger firms, they have shown to be lagging behind in productivity in
recent years (PIDS, 2017). In order to remedy this, PIDS recommends steps be taken
to rebuild the capacity of the sector and deepen linkages between small and large
firms. Ghouse (2017) shows that SMEs face disadvantages at both the macroscopic
and microscopic levels, and that it is the duty of the managers to combat such
issues. There is a growing need to develop more efficient strategies for SMEs to
better penetrate the market.

Much research has gone into examining the weaknesses and strengths of SMEs
involved in the export industry. Such literatures include ones such as the paper of
 Parul, et al. (2017) which provided a general overview of the global industry and
proposed a future research agenda; and Zou (1998) which reviewed empirical
research on the industry from 1987 to 1997. The Export-led growth hypothesis
(ELGH) is a key export theory that indicates that export growth is a key factor to
economic growth. Overall, scholarly research on export theory has been thriving
these past years (Parul, et al., 2017). However, in depth research on the status of
SMEs in the export industry of the Philippines, and more particularly in Cebu, are
scarcer. As such, further research on the topic must be carried out in order to attain
a more comprehensive and in-depth grasp on the topic.
IV. The Significance of Good Management Practices
Export performance is dynamic and is affected by a multiplicity of factors: no one
factor can be accredited to fully encapsulate to complexity of this dynamism
(Kahiya, Dean, and Heyl, 2010). Carniero, et al (2011) refers to it as a
multidimensional complexity that cannot be attributed solely to a single factor.
However, multitudes of scholarly researches have yielded various findings as to
which factors affect it the most. One particularly relevant factor among these are
managerial decisions and practices.
Fundamentally, managerial practices are sets of general practices used by firms to
achieve better results. These are often masked in the term management techniques;
wherein creative strategies are utilized to reinforce a firm’s efficiency (Brito&Sauan
2016)
Managerial decisions in the export industry have a profound effect on the economy
(Samar, 2009). It has been shown in the preceding sections that the industry can be
a potent force for the economic growth of a nation. Papulova and Mokros (2007)
refer to them as engine for society development, while Samar refers to them as the
backbone of the nation. The sheer number of contributions that the industry has for
a nation’s economy indivertibly makes them a driving force for national economic
growth. This makes the need for good management practices in these enterprises’
paramount.
The Philippine Institute for Development Studies or PIDS (2015) note that regional
production networks have been a great source for economic development in East
Asia; however many SMEs in the Philippines have yet to “latch on” to said networks
and thus have failed to harness the source of economic growth for the country
efficiently. PIDS points out those managerial inadequacies are to blame for this
situation. PIDS cites that proper management decisions are crucial if proper steps
are being taken in order for SMEs to better optimize themselves in order to take
advantage of said opportunity.

Seringhous and Rosson (1991) show that the success of enterprises in international
markets is tied to their competitive competence and the skill of managers in
implementing international marketing activities.Carniero, Rocha, and Silva (2011)
cite internal firm characteristics such as risk aversion, organizational culture,
market orientation, tolerance for ambiguity, and managerial competence as key
factors of a firm’s export performance. Based on their assertions, firms possessing
such characteristics were more successful. Bakotic (2013) links job satisfaction
with organisational performance, noting managerial decisions and organisational
environments to be factors affecting it. Alrashidi (2011) lists managers’ personality,
management style, and demographic characteristics as factors affecting managerial
risk perceptions. Araujo and Neira (2006), borrowing postulations from Child’s
strategic choice paradigm state that an organization’s future direction is in the
control of key decision-makers. Export performance and economic growth then
hinge on the choices of said decision-makers. Included in this group of people are
managers. Carneiro, et al. (2011) indicates a positive relationship between the
better systematization of export planning of a firm’s management and overall
export performance. A study by the Asian Development Bank (2013) cites
individual characteristics of an enterprise’s owner as one of the key factors
affecting the success of SMEs. The study also stresses the importance of proper
financing decisions and risk handling methods to the growth of small and medium
enterprises. A comprehensive survey carried out by Baldwin (1997) showed that
71% of bankrupted SMEs cited lack of general and financial management
knowledge as the most significant internal factor contributing to their bankruptcy.

Although the macroscopic factors affecting the productivity of the export industry
are more difficult to combat, microscopic factors such as internal stability are much
more easily controlled and managed (Ghouse, 2017). This is because unlike
macroscopic factors, which are external in nature and difficult to predict,
microscopic features are smaller and more easily managed and thus more easily
prepared for. Bubilek (2017) shows that internal firm characteristics such as
efficiency of internal audit and strength of internal control systems are
determinants of the productivity of a firm’s daily operations. Papulova and Mokros
(2007) show that market failure of SMEs are more often caused by internal issues
rather than external factors.

There are many other kinds of factors affecting a company’s export production
efficiency due to the complexity of the subject (Kahiya, Dean, and Heyl, 2010).
However, this following section of this paper shall be dedicated more towards
discussing and explaining the internal factors affecting it. This is done in order to
exercise conciseness, to specify the scope and reach of the paper as a whole, and to
provide a fundamental basis for the need to asses existing management practices of
the sample population of firms. The internal factors that shall be discussed are: the
need for compliance of government regulations (Sadeghi, 2018; Carniero, et
al.,2011; Saak, 2015; Vijayasri, 2013), the need for proper handling of employees
(Vosloban, 2012; Ice, 2014; Bakotic, 2013), the importance of setting-up company
direction (Kahiya, et al 2010; Araujo, et al.,2006;Paulova, et al., 2007; Carneiro, et
al., 2011; Mohammadzadeh. 2012; Iranzo, Schivardi, and Tossetti, 2008), the
importance of product marketing and brand image (Al-Aali, et al., 2013; Kazmi,
2010; Vosloban, 2012; Lu, 2008), and the need to comply with and apply proper
sanitation standards ( Honda, et al., 2015; Parul, et al., 2017; Murina and Nicita,
2012; Vijayasri, 2013; Henson, et al.,2000).

1. Compliance with Government Regulations

Sadeghi (2018) says that firms’ compliance with established international trading
laws and regulations contribute to creating a conflict-free and safer environment
for the industry. Violating said laws and regulations, on the other hand, contribute
to fostering an unsafe industry. This claim is further corroborated by Carneiro, et al.
(2011) who note that trade barriers act as interferences to otherwise prosperous
trade activities. Sadeghi also shows that export compliance measures of firms may
vary depending on the size of the firm in question. Smaller firms might opt for
having a single expert responsible for managing firm compliance with international
trade regulations, while larger firms might choose to decentralize these authorities
and instead distribute powers to many employees rather than just one.
Nonetheless, export compliance is shown to have a significant effect on firms, and
the managerial role in it cannot be dismissed as negligible. Effective compliance
with said regulations can lead to more favourable outcomes for firms (Saak, 2015).
Compliance programs are created by managerial staff at multiple departments of
firms. As such, the responsiveness, flexibility, and effectiveness of said programs
depend on the capabilities of the managers involved in the process of its
conception. Economic growth is a result of export when policies are catered to
accommodate to cope with the social and financial changes that come along with it
(Vijayasri, 2013)

2. Handling of Employees
The good treatment by management and handling of a company’s employees is
shown to have a positive effect on overall export performance. Vosloban (2012)
carried out a study that showed individual employee performance had a direct
effect on firm productivity. Vosloban also shows that employee satisfaction
contributes to the growth and development of a company, and that managers’ role
and adapted strategies have a significantly important effect on employees and will
reflect on the growth rate of the company. Bad managerial decisions can alienate
workers and cause a significant decrease in firm productivity, while good
managerial decisions are shown to have resulted in increased worker satisfaction,
and as a direct result an increase in firm productivity. Ice (2014) in his study shows
that employees’ commitment to the company and workforce is directly related to
retention percentage. Managerial decisions should then be made with the mind to
improve employee loyalty. Higher employee retention results in overall better firm
production capability and an increase in innovation (Kundu and Gahlawat, 2016).
Both contribute to export performance: the first due to the direct relation between
firm capability and performance, and the second due to the importance of
innovation as a tool for firm competitiveness. Good management decisions can also
lead to increased employee job satisfaction, bolstering up organisational
performance (Bakotic, 2013). Organizational performance is seen by Bakotic as
directly tied to and determined by job satisfaction of employees. He even goes so far
as to conclude through his study that job satisfaction more strongly determines
organizational performance than organizational performance determines job
satisfaction. His conclusions imply that employee satisfaction should be taken as the
greater consideration when measuring organisational worth. The need for
managers to emphasize on employee job satisfaction in firms is then held
paramount in order to culture a safe and healthy work environment that produces
willing and dedicated workers.

3. Setting-up the Company Direction

Managers’ decisions play a determining role in the performance of a firm. The
proper export attitude and its consequential effects on management decisions of a
manager can significantly affect firm productivity. Kahiya et al. (2010) show a
relationship between firm size and performance and the mediating role that
managers have between the two. Managerial decisions should aim to build
management policies and practices catering around the specific needs of the firm:
smaller firms ought to set long and short-term goals in alignment with their more
limited capabilities, likewise larger firms ought to determine the best strategy at
better utilizing their comparative advantage over smaller firms while at the same
time objectively analyzing firms larger than they are. Kahiya, et al., then show the
need for managers to carry out their mediating role in the ordeal prudently. Araujo,
et al., (2006) stress the need to recruit risk-tolerant and non-aggressive managers
in order to better stir firms towards growth. A manager having the proper mentality
towards trade can greatly affect the direction of the firm. Furthermore, indolence
and over-confidence on the part of small firm owners can lead to poorly made
decisions and have a negative impact on productivity (Paulova, et al., 2007). This is
because small firm managers have nearly complete power over the planned
direction of the firm, making their managerial decisions all the more significant.
Internal firm characteristics and strategies greatly affect export performance
(Carneiro, et al., 2011). Internal characteristics, according to Carneiro play a vital
role to the development of good export policies and thus impact export
performance of firms. Internal firm characteristics are the determinants of how a
firm is to approach the market, thus the stability and efficiency of a firm’s inner
structure should be relevant priorities for managers.

Mohammadzadeh (2012) stresses the importance of managers in export firms to

carefully select the right employees for their firm in order to help facilitate
dissemination of tasks and increase effectively of the business process. Staff
qualification has a direct effect on export readiness and will ultimately affect the
efficiency of the firm as a whole. If staff are not well equipped and not educated to a
sufficient extent, then the impact on firm capacities are abounding. Iranzo,
Schivardi, and Tossetti (2008) show a positive relationship between skill dispersion
and firm productivity. There is a need for an adequate distribution of skill among
workers of an organization’s departments in order for a firm to run smoothly. A
manager’s role in this then is to hire skilled workers and properly allocate their
talents to the different parts of their firm. In order to help mitigate risks to internal
stability, the need for good managerial practices in the workplace must be
addressed for the overall growth of export firms.

4. Marketing of Product
Marketing capabilities of management is a key determinant in a company’s export
performance (Al-Aali, Lim, Khan, and Khurshid, 2013). Without the capacity to keep
up brand image, customer appeal, and overall marketability of a business, export
performance will stagnate or in the worst cases halt to produce profit or fail. Firms
that implement better marketing strategies will have a considerable advantage over
firms with less effective ones. Customer perceptions have an effect on and are a
determining factor in a product’s popularity, usage rate, and marketability (Kazmi,
2012). Management ought to put emphasis on improving distribution and brand-
promotion capabilities of their firms in order to improve export performance. Both
distribution and brand promotion allow for firms to increase the overall amount of
exposure of their product or service, resulting in positive export performance.

This holds true for firms selling both high involvement and low-involvement
products. Though, the importance of advertising is higher in the former than in the
higher, as shown by Radder (2013). This is because customers are keener on the
specifics of the higher involvement product than they were of the low-involvement
ones. Radder’s findings, do however show that brand name and logo do still have an
important role in raising brand awareness and usage of a product. Overall, product
marketing is an important factor to consider when considering the profitability of a
certain product.

There is also a need for firms to culture loyalty among their customers. Vosloban
(2012) shows that customer loyalty breeds a relationship of mutual trust between
them and the firm. This leads to the promotion of brand image in the market,
ultimately increasing sales and bolstering export productivity and profitability. Lu
(2008) shows the comparative advantage that firms that market using the internet
over firms that do not market using the internet. The internet allows for the faster
and more cost-effective dissemination of information of a particular brand to the
target market. Overall, advertising through internet marketing and the like
improves firm communication, networking, marketing research, brand image, cost
reduction, competitive advantage, and customer perceptions. Lu’s
recommendations stress the need for management to incorporate internet
marketing schemes in order to better capitalize on the opportunities.

5. Sanitary Practices
 The need to comply with international food sanitation regulations has also arisen as
a potential hurdle for exporting firms (Honda, Otsuki, and Wilson, 2015). Smaller
firms, or SMEs struggle from such constraints (Parul, et al, 2017). This is since
health and sanitary regulations oftentimes cause increases in costs of production,
resulting in extra expenditures for the firms. In other words, the cost required to
meet said international sanitary standards has caused a loss of competitiveness for
some firms due to their incapability to cope with the surges in prices brought forth.
Smaller firms, such as SMEs located in developing countries such as the Philippines
are affected significantly by this (Murina and Nicita, 2012).

Cost compliance with sanitary regulations has taken a heavy toll on agriculturally
dependent and developing countries. This is because said developing countries
oftentimes lack the resources or the means to tackle such hurdles (Vijayasri, 2013).
What is more is that nations with smaller economies are oftentimes very dependent
on trade with their larger partners in developed nations. Better management
practices ought to be enacted in order to combat such potential disadvantages and
ease market access. The inability of management to comply with such regulations in
such a way that does not harm their firms financially can prove to have dire
consequences. Henson, et al (2000) identify sanitary food measures and health
regulations to be the greatest impediment for agricultural exports and food exports
for developing nations. While the international community has pushed for a more
open international trade by overcoming cost walls set by sanitation requirements,
less developed nations still struggle. Coping with these issues this is the duty of the
manager.

Theoretical Framework

Management Theory is concerned with the different concepts that may be used
by the management in implementing managerial strategies. According to Bittner, 2006,
management concepts were built as a structure: the rules of bureaucracy, like rules and
procedures, hierarchy and a clear division of labor; scientific theories, involving
machine-worker relationships; and administration, including the flow of information
within an organization. These concepts are helpful within the management in order to
established good outcomes which will both affect the internal and external controls of
the company. Rocha, and Silva (2011) cite internal firm characteristics such as risk
aversion, organizational culture, market orientation, tolerance for ambiguity, and
managerial competence as key factors of a firm’s export performance. The goal of the
theory is for the business to have a stable framework and having a most suitable
business in such work settings.

Management is very essential for organizations. Managing helps in achieving

one’s goal in an orderly process with the assistance of other people in accomplishing or
achieving its objectives. The management has its functions, and each function plays vital
role for an organization to prosper. “A Theory of Management” by Rue and Byars shows
the major principles and concepts which is applicable in analyzing and studying the
theory of management. This model will help the management analyze their internal
capabilities and controls by understanding and applying the information presented in
the diagram below.
 Figure 1.A Theory of Management

In the flow of the theory of management, management foundation successful

management and responsible management are the main points in the flow. The
background which comprises of the definitions and history together with the basic
management functions which include planning, organizing, directing, controlling,
coordinating and behavioral aspects – includes leadership, motivating, work groups,
communications, conflict and power will lead to management foundation. It is also
reflected that with the management foundation together with the emphasis on
individual performance which incorporates encouraging effort, developing abilities and
defining direction and lastly, an understanding of the processes which produce the good
or services will equate to successful management. Furthermore, with the incorporation
of successful management together with an appreciation of contemporary issues and
the future, ethics, social responsibility and future of management will lead to a
responsible management.

The management theory is divided into two: The Classical Approach and Modern
Approach. In this study, classical approach is being used by the researchers. The main
reason for choosing Classical Approach is that it tackles well on ways that an
organization can increase efficiency and effectively on producing good products in a
wise decision-making. This will also serve as a guide in this research study to help the
management understand better as well as to perform best ways in dealing with
different specific jobs in the organization. Bakotic (2013) links job satisfaction with
organizational performance, noting managerial decisions and organizational
environments to be factors affecting it. This approach will not only benefit the
management but also to the customers as well because the satisfaction of customers
will depend on how well the management or the business produced high quality
products. The Classical Approach has four types namely: scientific management theory,
administrative theory, and bureaucratic management theory (Ali, 2014).
 Scientific Management Theory
Scientific Management is the application of scientific methods of study and
analysis of various management problems (Ali, 2014). It involves supervision, scientific
recruitment and training and good relationship between management and workers.
Generally, it is considered with improving productivity in an organization. Scientific
Management is basically defined as carrying out the work through people in general
(Turan, 2015). This approach was developed by Frederick Winslow Taylor (1856-
1915), who was an American engineer.

The Scientific Management theory has five different categories (Ali, 2014). Time
and motion study: It is a technique of scientific management that was developed to
define employee productivity standards. In this technique, a complex job is first divided
into a series of simple tasks. After that, the way these tasks are performed is observed
to determine and eliminate waste motions. In this way, the precise time taken to
complete the job is determined, which further helps in developing delivery schedules
and incentive schemes. Time and motion study are most appropriate for repetitive jobs.
Differential piece rate plan: This plan was developed by Taylor on the assumption that
all the workers have different capabilities and must be paid accordingly. This plan is
also based on an assumption that the production system is based on piece rates. Under
the plan, time and motion study is used to estimate the standard time of completing a
job. Based on the standard time, two piece rates are devised, namely higher and lower.
The workers who exceed the standard time are given higher piece rates as wages. On
the other hand, lower piece rates are given to those workers who do not meet the
standard. Supervision: Taylor suggested that work in an organization must be planned
and assigned to the workers by foremen. Foremen should assign work based on
workers’ specialty and supervise the performance of workers. For that, an organization
should hire adequate number of foremen. Scientific recruitment and training: Taylor
laid emphasis on training workers and developing their skills so that they can efficiently
perform more than one type of job. Friendly cooperation between management and
workers: Taylor believed that both management and workers have one common goal,
i.e. increase in production. Therefore, both management and workers must work
together in harmony to achieve the common goal.

The old type of management success depends on, almost entirely, getting the
“initiative” of the workmen (Dean, 2001). However, it is a rare case in which this
initiative is really attained. The “initiative” of the workmen (which refers to their hard
work, their good-will, and their ingenuity) is obtained with absolute uniformity and to a
greater extent than is possible under the old system; and in addition to this
improvement on the part of the men, the managers assume new burdens, new duties,
and responsibilities never dreamed of in the past.

The most prominent single element in modern scientific management is the task
idea (Dean, 2001). This refers to when the work of every employee is fully planned out
by the management at least one day in advance. Each man then receives a complete
written instruction, describing the task in detail which he is to accomplish, as well as
how the work is to be done properly. The work planned in this way constitutes a task
which is to be solved not by the workman alone, but in almost all cases by the joint
effort of the workman and the management. This task specifies not only what is to be
done but how it is to be done and the exact time allowed for doing it. Whenever the
employee finishes the task, has done it properly and within the given time he receives
an incentive in his ordinary wage.

Taylor has received harsh criticisms for this theory. (Turan, 2014). Human factor
is seen as a commodity of the primary criticisms directed towards it. Some writers have
carried out substantial studies to develop Taylor’s ideas. An example for this would be
Hawthorne experiments. Although the studies seem to refute Taylor’s ideas, today
people witness that most of his ideas are the basis of implementation. Especially, even if
the scientific selection of the personnel, which is the title of our proceeding, differs from
one country to another, the same logic works in principle. Private sector gives more
importance to the personnel selection for it acts in the direction of profit since it will be
a material and moral burden to discharge the personnel both for the establishment and
the employee after recruiting non-qualified personnel. It could be said that Taylor was
effective in the development of long-term employment by suggesting recruiting the
personnel by means of scientific methods. It could also be expressed that this case is
different in public bodies because it becomes harder for the public official to be
dismissed from compared to the private sector.

Administrative Management Theory

Administrative management is concerned with the design and management of
an organization. This theory involves the delegation of power and authority to the
executives which is in line with their area of responsibilities and a clear division of
labor. Administrative management theory gives rational structure in an organization
(Gramsley, 2019). Administrative management theory helped in contributing to the
development by prioritizing its control and the departments’ responsibility and
accountability.

Administrative management theory gives rational structure in an organization in

general (Gramsley, 2019). According to the bureaucratic theory of Max Weber,
bureaucracy is the basis for the systematic formation of any organization and is
designed to ensure efficiency and economic effectiveness. It is an ideal model for
management and its administration to bring an organization’s power structure into
focus. With these observations, he lays down the basic principles of bureaucracy which
are utterly useful for every management, and that allows for high efficiency and
consistent execution of work by all employees. In addition to the administrative
management theory in context, Sahni&Vayunandan (2009) emphasizes the theory of
administrative management is primarily focused on the higher hierarchical echelons of
the organization. Thus, it would be ardent on how the upper management have a
tendency to entertain the needs of both employees and the firm with maximum
efficiency in emphasis. Furthermore, Wren, Bedeian, & Breeze (2002) elaborated on
the different foundations of the theory itself. One can define that in a specific manner,
the administrative department would entail on the assurance of unity and order in the
enterprise, decent chain of command in the workforce, maintaining good relations
between the various departments, coordination of all efforts towards a fixed goal, and
sustaining satisfaction on shareholders and employees. As stated by Wren, Bedeian, &
Breeze (2002) that the administrative theory has its limitations in terms of its duties as
it remains general and demanding. Still there is no demarcation line in between the
administrative section towards the other sections as they are intended to be
interconnected with each other; parallel to how the other systems in our physique, the
administrative department has subsidiaries in the different parts of each organization
as one cannot exist without the other.

Henry Fayol was the first expert of Administrative Management Theory. In

today’s managing organizations, they still follow Fayol’s management principles but
there are some criticisms to it. According to Akrani (2011), the Administrative
Management Theory is criticized on the following grounds: Management Oriented
Theory - It does not give much attention to the problems of the workers; Lack of
Importance to Informal Organization - It gives importance only to the formal
organization structure; Concepts Borrowed From Military Science - Henri Fayol gave
importance to "commanding" and not "directing" the workers; and Mechanical
Approach - It does not deal with some of the important aspects of management such as
motivation, communication and leading.
He laid down 14 principles of Management, which are:
1. Division of Work. 8. Stability of Tenure.
2. Equity. 9. Remuneration.
3. Discipline. 10. Unity of Direction.
4. Initiative. 11. Centralization.
5. Authority and Responsibility. 12. Scalar Chain.
6. Esprit De Corps. 13. Initiative
7. Subordination of Individual 14. Unity of Command
Interest to General Interest.

Bureaucratic Theory
According to the bureaucratic theory of Max Weber, bureaucracy is the basis for
the systematic formation of any organization and is designed to ensure efficiency and
economic effectiveness. It is an ideal model for management and its administration to
bring an organization’s power structure into focus. With these observations, he lays
down the basic principles of bureaucracy which are utterly useful for every
management, and that allows for high efficiency and consistent execution of work by all
employees.

Weber formulated three types of administration: the traditional, charismatic,

and bureaucratic. In the traditional administration, the managerial positions are
transmitted down from one generation to another regardless of intelligence,
knowledge, and experience. In charismatic administration, management functions are
for all, and every employee are viewed to be the loyal subjects of a leader. In
bureaucratic administration, an employee is handed out a managerial responsibility
based from his/her qualifications. In Weber’s view, in all the organizations,
bureaucratic was the ideal one and the most appropriate. The practice of bureaucratic
management theory may result to the highest level of efficiency, rationality, and worker
satisfaction in every organization. When an organization practices the bureaucratic
management, it has a hierarchical management structure, equal division of labor, fair
and just treatment of employees, formal selection and promotion, career orientation
and, a uniform set of rules for everyone. The principles of bureaucracy are so logical
that it would be possible to transform all of society’s organizations to better ones.
Hence the Max Weber's essential characteristics fundamental to ideal bureaucracies:
 Division of labor: to increase specialization.
 Authority hierarchy: to set up a chain of command from the highest level
of management to the lowest level of the enterprise.
 A formal system for the selection of employees: this officially decides the
hiring and promotions based of the expertise and merit.
 Career orientation: this assures the professionals in the organization to
seek careers within their field of training, to give a continuity to the operations
of the organization.

Record of all administrative acts, decisions, and rules: there is the need to keep a record
of all administrative activities, such as policies, rules, and decisions, because it can be
used in the future studies regarding the nature of activities and people in the
organization. Unfortunately, each of the bureaucratic characteristics have a negative
result. The large amount of red tape, paperworks, certain office culture, and slow
bureaucratic communication due to its many hierarchical layers are some of its
disadvantages. It is also extremely dependent on regulatory and policy compliance. This
restricts employees to come up with innovative ideas, making them feel like less of an
individual.
 Today, organizations that practice this type of management may have taken a
negative connotation of bureaucracy which is associated with excessive paperwork, apathy,
unresponsiveness, and inflexibility. Weber believes in a more rigid formalized structure,
that is a well-defined formal hierarchy, chain of commands such as rules and regulations,
division of labor, and that managers should maintain competence and impersonal
relationship between employees. However, one critique claims that bureaucratic theory is
based on rational legal authority. Scott (1994) noted that Weber said authority rest both in
the legal incumbency of office and on technical competence. This works if supervision has
more knowledge and skill, but often this is not the case.
Conceptual Framework
Figure 2. A conceptual framework for the development of a feasible intervention program for

Cebu City’s export companies

Figure 2-2 presents the conceptual framework to help guide the researchers in
structuring this whole paper. The focus would be on selected companies in Cebu City
specializing in exports. This framework is designed to assist export companies to develop
and implement strategies to achieve a better export management. By using a direct
approach, this framework will help these companies address the political, legal, economic,
social, technological, and environmental issues of the companies. The export industry’s
existing management practices and current challenges are the study’s focus in determining
the most feasible intervention program to improve the efficiency of the selected companies.
As presented in the schematic diagram, the framework is divided into three levels. The
study will begin with a thorough initial assessment of the selected export company’s
profiles and the identification of the issues regarding the efficiency of the Cebu City export
industry. This will be done by collecting data as mentioned in the research methodology.

The study will be able to extract significant and relevant information in order to
construct a functional intervention program, which includes the company’s existing
management practices and challenges. The existing management practices that will be
introduced in this study will comprise of the companies’ abilities to comply with
government regulations, the effectivity and fairness in the handling of their employees, the
establishment of clear and practical company goals, and the efficiency of their marketing
departments. Each of these variables is significant because these determine the ability of
the business to flourish in the long run. Every variable that consists in the framework
represents how the business can work with changes in government such as that of their
policies and the relationship the enterprise has not only within its subordinates but as well
as its customers and competitors. These variables are main focus of the study in order for
them to be identified and be of use to export enterprise in the locality.

The company profile shows the background of the respective export businesses
which are the following: general business information, background and production
information. In the study, the researchers will describe the company profile of the in terms
of number of employees, job position, years of operation, types of business/ legal structure,
annual income, and product/ service description. This may also include the company’s
technological level of advancement in order to provide better and faster products and
services. The company profile will also provide economic development organizations of an
export industry to help determine potential customers and investors. With this, it will be
used as a marketing tool, for selling purposes and as well as for recruiting new employees
and other professionals to apply in the company.
 The study will also present the general challenges these export companies
encountered. Freight and finance management, language/cultural barriers, technology, and
the segregation of duties will be incorporated under this heading. Other unforeseen
variables will be suggested for future research. Under these challenges, the study will
identify the right course of action to mitigate these issues according to data gathered from
literature reviews, interviews, and surveys. These will be relevant to the goals of the study
because it will be useful in providing a smoother flow of the processes in the production,
marketing, and delivery of goods and services. The study also considers the fact that an
effective management for exports without appealing to the demand and interests of
potential target markets is just as ineffective as an unimproved practice; thus, it is relevant
to include communication barriers into assessing the functionality of a probable
intervening program. A company’s flexibility in undergoing changes and complying with
the rules and regulations of foreign lands are also significant in the improvement and
success of the export business. Lastly, to increase efficiency and security, it is imperative
for the businesses to segregate duties according to specializations to avoid giving personal
opportunities to violate business ethics and to maximize the use of the scarce fundamental
resource, time.

It can be understood from the figure that the determination of the status quo and
company profiles can help assess the environments and situations of these companies. It
will help in the identification of the discrepancies that may occur during the management
and production processes, as well as, the personnel and financing departments, in order to
create sound economic decisions for the improvement of the industry. From the diagram,
the numerous issues that arise from the business cycle of a company can be used as an
opportunity to enhance the customers’ product/service experience. In the subsequent
chapters following the introduction of this framework, these variables are highlighted in
order to garner the study’s desired outcome, a practicable intervention program.
 CHAPTER 2

RESEARCH METHODOLOGY

This chapter presents the discussion on the research methodology of the study:
the subjects, environment, the sampling technique, research instruments, procedure of
data gathering, and the statistical treatment used for accurate data analysis and
interpretation.

Research Design
This study utilizes the descriptive analysis method to assess the existing
management practices of the export industry in Metro Cebu. It is descriptive in the
sense that the data obtained will be analyzed and described thoroughly with an in-
depth interview and a quantitative survey.

The study is established as a combination of the quantitative and qualitative

method of research. The convenience sampling technique is used in selecting the
respondents of the study.

The validated researcher-made survey questionnaire and the interview guide

will be utilized as the instruments of this study. Based on the results of the survey and
interviews conducted, the researchers will be able to determine the details of this study
using tables and figures interpretation.

Research Environment
The setting of this exploratory study is withinMetropolitan Cebu. Specifically, a
randomly distributed number of firms within Cebu city and the surrounding cities of
Lapu-Lapu, Mandaue, and Talisay; as well as the municipalities of Consolacion, Cordova,
and Minglanilla. A close up satellite image taken from Google maps is found on the next
page.
 Figure 3. Satellite images of Metro Cebu

Research Respondents
The respondents of the study consist of the 36export companies operating
within Metro Cebu. These export companies are legally structured as either sole
proprietor, partnership or a corporation. However, there are no other qualifications or
criterions that are set in selecting these companies aside from engaging in exporting
business. The minimum standard of research respondent is set to 30 due to the
limitations and time constraints of the study. Nonetheless, the student researchers
strongly believe that having this number of respondents from the research
environment will provide enough information needed for this study.

Research Instruments
Interview Guide (Semi-structured)
The interview guide will be semi-structured in which the interviewer does not
strictly follow the list of interview questions (Doyle, 2018). The interview guide will be
composed of 5 main and 10 supporting questions which are all open-ended questions
that will be categorized into two segments (See Appendix B)regarding the existing
management practices of export companies within Metro Cebu. The first segment
intends to know the general information of the companies alongside their annual
income from last year. The purpose of the second segment is to determine the existing
management practices, which is categorized into three subparts, namely Human
Resource Management, Marketing Management, and Management and Organization.
Moreover, typical management challenges of companies are also delved into as well as
to how executive officers deal with them from day-to-day basis accordingly.

Survey Questionnaire
The questionnaire will consist of fourparts (See Appendix C ). The first part
consists of the general information of the export companies. Parts two to four will ask
questions regarding the firms’ human resource management, marketing management,
and general management and organizational issues. Part two contains one question on
the businesses’ compliance to government permits and standards, followed by seven
questions on the treatment of employees. Part three asks a question about the type of
marketing strategies used by the firms. Part four asks three questions regarding the
presence (or lack thereof) of issues or challenges to business. Respondents are asked to
elaborate on the issues and to explain their existing strategies to combat them.

Research Procedure
Data Collection Method
The primary data will be obtained from the qualitative interview that will be
conducted over the course of this research study with the managing respondents.
Moreover, the qualitative interview will be transcribed thoroughly to assess the existing
management practices of the export industry in Metro Cebu. The second source will be
the quantitative survey that will be conducted within the research environment. The
data gathered will be retrieved, collated, tallied, interpreted, and analyzed using tables,
figures, and descriptive writing to answer the objectives of this study. Furthermore, the
results will be utilized to draw conclusions and recommendations, and to propose an
intervention program to the research respondents.
Treatment of Data
For the primary source, namely the in-depth qualitative interview, the results
that will be obtained and transcribed will be analyzed to formulate the overall findings
of the study.

On the other hand, the data and information gathered from the secondary
source, specifically the quantitative survey will be treated statistically for the
computation of results using simple percentage and chi-square statistical tools. The
simple percentage statistical tools will be utilized to interpret the basic information and
profile of the target market as well as their corresponding responses prior to the
existing management practices of the export industry in Metro Cebu. The formula is
shown below with its components.
4. Simple Percentage
Frequency Distribution:
Where: P = the percentage
f = the frequency of the responses
N = total sample size
5. Mean

Mean:
Where: X = average or mean
∑X = the sum of the responses
N = total sample size
6. Sample Standard Deviation

Sample:
Where:
s = sample standard deviation
X = average or mean
∑ = summation
X = the number of responses
n = total sample size