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BA 105 THR
Prof. Jasslyn Tan
Mar. 29, 2016
Operations Audit 1

Name of Company: ACM Land Holdings, Inc.

Vision
To be for its customers, the most preferred developer of affordable, quality homes and a steward of
sustainable and earth-friendly communities
Mission
1. To build for our customers quality and environmentally sustainable communities that will not only satisfy
but will ultimately exceed customer expectations
2. To remain for our customers as a strong and professionally managed company that continually instills in
its people the spirit of entrepreneurship and ownership which will transform them into stakeholders of the
company
3. To achieve quality and sustainable earnings, enabling the company to meet and enhance expectations of
its customers and all its other stakeholders
Introduction to Line of Business or Industry
Main Line of Business: Property Development
The Philippine property development sector, particularly that in Metro Manila, is abound with a vast rush
of high-rise condominiums and office spaces. According to an article published by the Wall Street Journal
last year, there has been a marked increase in both the number of new condo units and new office space
built in last five years. ACM Landholdings, however, specializes more in the building of residential
communities rather than the massive townships or condominiums other larger property developers are
creating. It is unfortunate to note that the demand in this particular segment of the industry, as pointed out
by the same article, is lagging behind the greater growth in supply. The good news, however, is that much
of this demand is strongly being driven by the rising middle class brought about by the many OFWs
looking to invest their money back home. It is these types of opportunities that can lead a business such as
ACM to garner the success they need to grow in a market wherein demand may be hard to acquire.
Target Market and Key Customers
Target Market: Low to Middle Class
The company started out and continues to work towards its aim of providing affordable yet quality
housing for the low to middle income class individuals and families. Its main differentiating factor, at
this time, was to establish homes and communities that brought more value to the customers through
amenities and home design tailored to deliver comfort to the homeowners above that of its competitors.
Key Customers: Overseas Filipino Workers (OFWs) particularly Seafarers
ACM also has partnered, through a strategic marketing alliance, with Philippine Transmarine Carriers,
Inc. (PTC), one of the nations largest crew management companies, for ACMs Corporate Social
responsibility program. Through this, ACM has been able to capture the potential demand of the many
OFWs that PTC deploys every year.
Competitors
Competitors: Property Developers like:

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Pro-Friends, Inc.,
Vista Land & Lifescapes, Inc. (under subsidiary Camella Homes Inc.)
Ayala Land Inc. (under subsidiaries Amaia Land Corp. and Avida Land),
AXEIA (formerly known as the Asiatic Group of Companies), and
Similar to ACM, these property developers engage in building affordable and low-cost residential
properties made available to all Filipinos, particularly middle class. AXEIA and Pro-Friends, like ACM,
operate their projects mostly in Batangas & Cavite and other places in Luzon including NCR. Amaia,
Avida and Camella on the other hand operate nationwide.
Overall Operations Strategy and Key Success Factors
ACM is a property developer catering to the particular niche of the low to middle class. As evidenced by
both its Vision and Mission, ACMs focuses primarily on providing affordable homes whose quality
exceeds the customers expectations through home and village design that is made to promote a better
sense of intimacy and comfort within the community. Their developments are primarily located in Cavite
and Batangas areas.

Key Success Factors for any property developer in this niche include:
1. Location - Buyers factor many elements in deciding to buy a real estate. Some think that
accessibility to focal points (such as marketplace and workplace) may play a large role in buying a
property (keeping cost and quality constant). Others on the other hand may prefer the serenity and
ambiance of the location, while the rest may want to buy a property on a developing area (as a
form of investment). Whichever may be, buyers are willing to pay even a premium for a good real
estate location.
2. Costs of Supplies and Materials - Construction businesses profit not only from efficiently
utilizing one's resources but also in effectively procuring materials. Businesses involving
construction are often associated with buying materials in bulk. As building a whole subdivision is
tantamount to buying materials in bulk for almost like at least thirty houses or establishments at
once, the business obtains a larger bargaining power against its suppliers (in addition to having a
broader range of option in rendering types of housing due to affordability of materials).
3. Connections - Connections could be in the form of a relation with buyers and third party groups
or agencies. Some businesses create strong ties with buyers (such as investors or politicians) and
profit from a larger customer lifetime value created from such a connection. The relevance of
relations with third-parties or groups, on the other hand, can more evidently be seen through
getting larger sales (i.e. through commission based agents) and by increasing the potential output
(i.e. forms of housing offered, its quality, and even size of subdivision) of the firm (through
contracting third party agencies such as other construction companies).
4. Branding - A companys name could signify quality and affordability of a business' services.
Branding plays a large role in enticing/creating potential buyers and building loyal customers
which could independently aid in promoting the business to the rest of the market. Just as how it
could use its name to create a position or a tagline for itself to create, maintain and capture the
attention of both existing and potential customers, it could also help in designating the niche where
it could maximize capturing customer value.
Descriptions of Basic Conversion Processes
Major Inputs

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Made up of four factors: Land, Information, Labor, Capital, Materials. Land is prepared by the
company through initial investments made prior.
ACM Land Holdings chooses key locations in previously mentioned areas where there is great
potential for customers to approach them. Potential for these locations is known through the
market research information and feasibility analysis done by the company.
Labor for construction is almost always contracted through third parties and sometimes with the
assistance of the companys Construction Services group.
Search of potential buyers is done through direct advertisement or sale and through
commissioning third-party groups and brokers.
Capital is usually provided by the company itself alongside its customers installments or through
bank financing, after the customers have purchasing their services.
And finally Materials are acquired through channels found by the Companys Inventory, Cost and
Expenses group, with the assistance of its own Purchasing and Warehousing group as well. These
materials are often, however, bought by the same contractors that ACM assigns in the projects,
with ACM acting as overseer in this case. These groups ensure the companys materials are kept
at both the quality standard that is acceptable and at a cost that is in line with the proposed
housing development.
Transformation/Conversion Process
After all inputs are contracted and secured, the very start of the real estate development project
begins with planning and designing. Human capital, those which employ their intellectual and
technical skills, is the onset of this line of business. After the designs and plans are laid out, the
following step would be securing the business permit and all the necessary safety permits as
required by law. The real estate development process begins once capital equipment (and
materials) and human resources are transported and gathered at the site. Site development which
consist of the leveling and grading of land, clearing of obstructions, creation of pavements, septic
systems, sidewalks, driveways and similar improvements compose the initial stage of the project.
Building the structures (houses) would follow where a mixture of these inputs (land, labor,
capital, and materials) are employed simultaneously with one another in subdividing the estates
and in the construction of houses. The latter part of this real estate development business consist
of finding a buyer and securing the sale through various legal means (such as sales contracts and
mortgages if applicable). Manpower from both the company and third-parties or agencies are
employed for these matters.
Major Outputs
The companys usual output consist of a fully furbished property on a specific tract of land,
complete with amenities unique from its competitors. Much of its completed projects adhere to its
human-centered design philosophy, which hosts wider than industry standard roads, open parks
and basketball courts, and community run greenhouses and gardens. The houses itself vary
depending on the customers wants, but all provide the basic necessities, with additional
concessions scaling proportionally to its cost.
Product/Services Development Process
Main Stages in the Project Development Process (Exhibit A)
1. Land Acquisition Phase
The company searches for a suitable land that corresponds based on:
a. 4 levels of Feasibility (Financial, Market, Technical, and Legal)
i.
Financial Feasibility - this corresponds to the cost of capital of the land required for their return of
investments

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ii.
iii.
iv.

Market Feasibility - this corresponds on the target market

Technical Feasibility - this corresponds on the specifications/desired attributes of the land for project
development.
Legal Feasibility - this corresponds mostly to the zoning of the land and whether it can be developed for
residential purposes
Then, given these feasibility requirements, the land is purchased.

2. Pre-Development Phase
After the land is acquired, the company then creates a development plan for the project to be developed.
This phase also includes acquiring the permits and necessary documents for the juridical rights of the
subdivided lots of land, as created by the development plan.
a. Creating the Development Plan
- It indicates the plan for subdividing the land purchased into individual lots
b. Approval of Development Plan from Local Government Unit (LGU)
- The company then seeks for the approval of the development plan from the corresponding local
government unit governing over the land to get the development permit for the execution of the project
development.
c. Approval of Development Plan from Housing and Land Use Regulatory Board (HLURB)
- The company also seeks for the approval of the plan from HLURB to get certain documents such as:
1. Technical Description of Individual Lots - it states the legal, property, and boundary of the lot.
2. License to Sell - This is usually given to the client upon completion of a certain required percentage of
Land Development.
d. Approval from Land Registration Commision (LRC)
- Then the company gets the final approval for the Technical Descriptions of Individual Lots ready for
registration.
e. Registration of Individual Lot Titles at Registry of Deeds
- The company then registers the Individual Lot Titles at Registry of Deeds in preparation of the turnover
of the Title of the Lot to the client.
3. Land Development Phase
The company then executes the approved development plan wherein they hire and oversee the
subcontractors for land clearing and development. During this phase, the company search for
potential property buyers as soon as the land development is nearly done.
4. Housing Construction
The actual construction of the house will only proceed if the buyer has paid a
partial/downpayment amount that will serve as a bind in honoring the purchase of the house and
lot. Once the buyer has paid the partial amount, the company then gets the necessary building
permits and housing subcontractors for house construction.
5. Turnover
As the construction of the house is complete and has been fully paid, The company can now
transfer ownership of the house to the buyer/new owner.

Key Points and Critical Considerations in Product or Service Design

In Land Acquisition
The company goes through great lengths to ensure that the land to be purchased conforms with the 4
levels of feasibility previously mentioned
Land that is not marketable, or too expensive will mean a significant loss for the company should it be
wrongly purchased
In Pre-Development
All steps in the Pre-Development stage hinge on the Development Plan

Each step in the Pre-Development stage is a prerequisite to the next, from the LGU, the HLURB, the LRC
and the Registry of Deeds
The varying approvals and permits from this stage trigger other various phases in the process:
The Development Permit (LGU) allows the company to begin its Land Development phase
The License to Sell (HLURB) allows the company to begin Pre-selling units to its customers upon
receiving it
The individual lot titles can be registered upon the approval of the Technical Descriptions by the LRC
In Housing Construction
ACM does not begin construction of a house until the house has been considered sold
Exhibits and References
Exhibit A:

ACM Land Holdings, Inc is a company with a medium degree of variability in its services. Since houses
could be custom-made or personalized according to a customer's preference however are still limited by
the capacity and ability of the company to deliver in addition to restrictions or infeasibility to integrate
inviable customer preferences in outputs ( in consideration of safety of stuctural design), it generally only
requires a medium degree of customer contact in introducing customer inputs into the outputs(being on
the contrary to a product design which has little or no processing variability) generally make-to-order
(batch type). On the other hand, the company could also be seen as a product company in the respect that
not only do they render services for developing real estates, but also in casually creating and offering a
product (real estate and housing) to the market (i.e. subdivisions) which have little variability or little
customer contact adopted or tethered to a product design of the structures (one which centers efforts on
uniformity, cost, and efficiency) near assembly or repetitive but more like a project.