C.O.O. Child of Owner

top 40 forbes

2008-01-31T00:24:00.001-08:00

he Philippines’ growing economy and robust stock market, assisted by a strong peso and a declining dollar, have boosted the fortunes of its richest citizens.

For the first time in years Forbes magazine has included a Filipino among the world’s top billionaires. It also listed 39 others as Philippines’ richest, with a total worth of $17 billion.

The complete list of the Philippines’ 40 richest:

1. Jaime Zobel de Ayala and family ($2 billion)

2. Henry Sy and family ($1.7 billion)

3. Lucio Tan and family ($1.6 billion)

4. Andrew Tan ($1.1 billion)

5. Manuel Villar ($940 million)

6. George Ty ($870 million)

7. Andrew Gotianun ($860 million)

8. Enrique Razon Jr. ($820 million)

9. Tony Tan Caktiong and family ($790 million)

10. Oscar Lopez and family ($775 million)

11. Vivian Que Azcona and family ($670 million)

12. Inigo and Mercedes Zobel ($660 million)

13. Eduardo Cojuangco Jr. ($540 million)

14. Emilio Yap and family ($445 million)

15. John Gokongwei Jr. and family ($430 million)

16. Enrique Aboitiz and family ($375 million)

17. Alfonso Yuchengco and family ($365 million)

18. Beatrice Campos ($220 million)

19. David Consunji and family ($210 million)

20. Luis Virata ($200 million)

21. Gilberto Duavit Jr. and family ($191 million)

22. Menardo Jimenez and family ($190 million)

23. Felipe Gozon and family ($165 million)

24. Mariano Tan and family ($140 million)

25. Ramon del Rosario Jr. ($137 million)

26. Ronaldo and Rosalinda Hortaleza ($110 million)

27. Manuel Zamora ($105 million)

28. Betty Ang ($100 million)

29. Tomas Alcantara and family ($90 million)

30. Frederick Dy ($70 million)

31. Wilfred Steven Uytengsu Sr. ($60 million)

32. Salvador Zamora ($55 million)

33. Oscar Hilado and family ($51 million)

34. Philip T. Ang ($50 million)

35. Magdaleno Albarracin Jr. ($49 million)

36. Jesus Tambunting ($47 million)

37. Antonio Roxas ($36 million)

38. Manuel Pangilinan ($35 million)

39. Marixi Rufino-Prieto and family ($33 million)

40. Lourdes Montinola ($30 million)

Viva lowers IPO price

2008-01-31T00:21:00.000-08:00

Film and entertainment provider Viva Communications Inc. has lowered the minimum price for its upcoming initial public offering (IPO) of shares to P8.10 per share from the previous P9.72 per share.

The company retained its maximum price offer at P12.93 each share.

Viva chairman and chief executive officer Vic Del Rosario said the company "widened the price range to provide further flexibility in determining the offer price given current market conditions."

The company is offering to the public a total of 142.85 million shares. The offering will run from Feb. 20-26 following a domestic roadshow that will kick off on Feb. 8. Pricing for the shares will be known on Feb. 15 while the listing for the shares has been tentatively set on March 5.

Viva’s IPO was supposed to start last Jan. 14 but had to be postponed due to weak market conditions

Proceeds from the offering, which could reach up to P1.85 billion, will be used to improve the programming of the firm’s cable channels, produce films and concerts and acquire foreign movies and equipment.

Other proceeds from the offering will be used for the digitization and restoration of its film library.

The company expects its net income to more than double in 2007, driven by higher sales from licensing overseas.

Viva intends to produce six films in the first quarter this year, two of which shall be co-produced with Star Cinema Productions with a budget of about P34 million per film. For the other four films, the company has allotted around P21.5 million.

For the first half of 2008, Viva is setting aside P60 million for the production of 10 concerts and P20 million for training and development of its artists/talents.

Yehey! to list shares via introduction

2008-01-31T00:20:00.000-08:00

Local Internet search engine Yehey! Corp. is getting ready to list its shares at the stock market by way of introduction.

Listing by introduction involves the direct listing and trading of a company’s stocks without going through an initial public offering (IPO). Among those that listed their shares by way of introduction include the Philippine Stock Exchange and Vista Land and Landscapes.

Yehey’s parent firm iVantage Corp. has received a certificate from the Bureau of Internal Revenue authorizing the transfer of 84.79 million shares of Yehey! to stockholders of record as of May 18, 2007.

This should also pave the way for the five percent property dividend declaration of iVantage totaling P89.42 million, payable in the form of common shares of Yehey! Under the offer, iVantage shareholders will receive five Yehey! shares for every 100 iVantage shares that they own.

The PSE allowed the introducing listing since the Yehey! shares were distributed through property dividend by a listed-issuer (iVintage) to shareholders.

After the dividend payout, iVantage will reduce its holdings to 63 percent of Yehey! while iVantage shareholders will hold 36 percent.

Yehey! develops online marketing campaigns and programs for various corporate accounts and operates the Philippines’ only integrated online payment gateway called Kaban.

Currently, Yehey! is the world’s number one Filipino Internet portal and search engine with a strong following among Filipino Internet users worldwide.

With Yehey!’s eventual listing, iVantage shareholders eligible for the dividend can potentially realize additional returns through any market price appreciation.

Yehey!, which is hitting an average of 30 million page views per month, has around 300,0000 registered members.

The company’s bread-and-butter remains online advertising, mostly coming from global-based accounts including Dell, Levi’s, Ford, Intel, Nokia, and Citibank, HSBC and Sun Life Financial.

Yehey! provides daily Philippine and Asian news, business and financial reports, sports, jobs and daily weather forecasts.

It offers 24-hour business feeds and real-time stock quotes for free.

Robinsons Land net income up 42% in 2007

2008-01-31T00:16:00.002-08:00

Robinsons Land Corp. of the Gokongwei group said Wednesday its net income rose 42 percent to P2.44 billion in 2007 from P1.72 billion a year ago.

In a statement to the stock exchange, the company said gross revenues also rose 29 percent to P8.99 billion last year from P6.97 billion in 2006.

"All business units performed remarkably well. Our drive to build our brand and be responsive to market demands made our performance possible. The strategic initiatives and expansion programs we had pursued in recent years continue to bear fruit," said Frederick Go, Robinsons president and chief operating officer.

Its mall division accounted for 39 percent of gross revenues with P3.54 billion.

The company said five of its malls house call centers and outsourcing offices that are expected to grow significantly in the next few years. Robinsons is currently constructing malls in Bulacan, Dumagueta, Nueva Ecija and Tagaytay.

Robinsons' high-end residential division posted a 60-percent growth in revenues to P3.635 billion in 2007 from P2.27 billion in the previous year.

Its hotels division registered gross revenues of P1.11 billion, up 22 percent from P907.3 million in 2006.

Robinsons is the real estate arm of conglomerate JG Summit Holdings Inc., which also has interests in branded consumer products, telecommunications, air transportation and financial services.

Forbes lists RP’s 40 richest

2008-01-20T06:13:00.000-08:00

Business opportunities: Medical tourism

2007-11-25T06:18:00.000-08:00

Over the years, economic improvements tremendously enhanced the lifestyle and health of the world's population.

According to a Pricewaterhouse Coopers study, 24 OECD countries spent $2.7 trillion on healthcare in 2002. The same study estimated that if this increasing trend in spending continues, the 2002 level will more than triple to $10 billion by 2020.

Meanwhile, dramatic changes in demographics are unfolding. Within the next two decades, the global population aged 65 and over will grow by an astonishing 88 percent, or almost a million people a month.

Back in 2000, 7 percent of the world population (or 420 million people) were over the age of 65. This is projected to double in 2025, when people over 65 will make up 10 percent of the world population (or a total of 800 million people).

These two developments are interrelated. As the population ages, there is more demand for healthcare which in turn, drives the cost of healthcare spending higher.

For every dollar, or yen or pound spent on healthcare, this means one less spent on computers, travel and other personal/consumable items.

While health expenditures increase with growth, reducing these expenditures may be a key factor to fuel economic growth.

Dilemma
Therein lies the dilemma for developed countries. How can they continue to sustain their health systems while battling with the double whammy of rising healthcare cost and aging population?

Globalization offered a solution.

For years, a global convergence in healthcare continues to unfold and already, it has radically altered the way this is managed and delivered.

From its early precursor of pharmaceutical companies who sought to broaden their market base by establishing global partnerships as a means of expanding their market reach, we now see a variety of global solutions employed to solve many local health problems.

The first to ride this wave is the Philippines. Our nurses were among and still the most aggressively recruited staff as many countries experience shortages of skilled health personnel.

Today, delivering the best healthcare is no longer defined by national boundaries.

It is not uncommon now for US physicians to receive training in foreign medical schools. Public private partnerships are making possible the establishment of new hospitals and clinics in more than 50 countries like Brazil, Gulf States, Sweden, Australia, Malaysia and UAE.

The already huge global expenditure for healthcare does not show signs of abating.

Countries are competing for the chance to serve the growing market - and Philippines is one of them.

What business opportunities have emerged or are emerging where Philippines can potentially compete in? These four areas show a lot of promise:

- Medical Travel/Tourism

- Retirement Destination

- Outsourcing opportunities

- Health human resource provider

Medical Tourism
Lauren Garret wrote: "In the newly globalized economy of the 21st century, no part of the planet is too remote, too exotic or too forbidding for travelers or business development."

This is truly opening up the global market for travel in pursuit of health and wellness.

Medical travel is now an attractive alternative to take advantage of health services that would normally be too expensive or too inaccessible because of long waiting lines in a patient's country of origin.

Services sought range from the simple ones like spa and wellness, dermatological services, aesthetic surgeries, executive check-ups and dental make-overs to the more complex ones like hip replacement and organ transplants.

Success stories keep getting repeated in various publications and on the Internet.

Among Asean countries, the early mover was Singapore, which is still working hard to increase its 200,000 tourists a year to a million by 2012 pushing the sector's GDP contribution above $1.6 billion.

Thailand is a serious competitor and has recorded at least 600,000 patients' arrivals a year. This year alone, it is expecting to earn more than $1 billion.

Malaysia, which treated more than a hundred thousand tourist-patients in 2005, is expecting to make $590 million in five years. India's medical tourism business is growing at the rate of 30 percent a year and projected to make at least $2.2 billion a year by 2012.

Let us not forget that these four countries expect to generate more than $4.4 billion by 2012. That is a lot of money for their economies.

The increase in medical tourism market has already overtaken the 4-6- percent growth in general travel bookings predicted for 2006 with the number of medical travelers swelling by 20-30 percent a year. The Philippines is moving to join the bandwagon.

Philippines is a natural for medical travel. Already, we are among the preferred tourist destinations with our amazing beaches, tropical weather, historical landmarks, golf courses and hospitality among many other enticements that tourists find attractive.

On the service delivery side, we have very competent doctors practicing in well-equipped hospitals. We are already a recognized global brand in healthcare and chances are, these tourists have been cared for by either Filipino nurses or doctors in their own countries.

We speak English fluently and what we lack in resources, we make up with our smiles and trademark hospitality. Surely we can give our competitors a run for their money.

An effort is also being made to enable the local players to enter the market. The DOT conceptualized the Philippine Medical Tourism Program in accordance with its mandate to promote and develop tourism as a major socioeconomic activity to generate foreign exchange and employment.

Other agencies likewise supported the initiative among them, the Board of Investments, which included medical tourism in the 2007 Investment Priority Plan, the Development Bank of the Philippines through its Health and Wellness Enhancement Access Loan Program and the Philippine Export Zone Authority through the establishment of medical tourism zones.

BOI, DBP and PEZA had already issued guidelines on how these incentives can be enjoyed by those desiring to invest in medical tourism activities.

Retirement
From a short stay medical travel, we move to a more long-term opportunity for the Philippines as a retirement destination and as a service provider for geriatric care. We are living in a graying world and projections show just how challenging this will be for the planet.

The current estimated over-65 population in US is roughly 13 percent of the total population or about 35 million persons. By 2025, this age group is expected to be almost 63 million, nearly 19 percent of the total population.

Aging population
In Europe, one in five Europeans will be more than 65 years old by year 2025. In Asia - Southeast Asian region, Japan will have the most number of elderly population.

A paper by Misako Ito revealed that the elderly population aged 65 years and older reached 25.33 million in 2005 - one out of every five people is at least 65 years of age.

Between 2000 and 2025, China's 65+ population will grow by 3.5 percent per year while its under-15 population will decrease by 25 percent. By 2015, the percentage of the 65+ population will reach 9 percent in China and Thailand; 10 percent in South Korea; 11 percent in Taiwan; and 15 percent in Hong Kong.

In 1985, children under 15 outnumbered people aged 65 and older by 5 to 1 in East Asia and 10 to 1 in Southeast Asia. These ratios will plummet to 2 to 1 and 4 to 1 respectively, by 2015.

Baby boomers
Why is there so much concern about the aging of the population especially in developed countries?

Two or three decades ago, the baby boomers were active members of the workforce and their contribution to the social fund is enough to support those who were retiring--a much smaller number in relation to the younger ones.

Today, the baby boomers are themselves about to retire--and the deceleration of population growth has considerably reduced the number of younger age group who should be taking over their place in the hierarchy to continue providing support through pension fund contribution.

Countries now face an inverted pyramid scenario with funding support diminishing while retiring employees are increasing, straining its ability to take care of their elderlies.

Governments are now forced to consider alternatives to maximize the depleting pension funds and 'outsourcing' may show them the way out: scout for locations where their retirees can avail of appropriate and affordable housing, enjoy greater independence and better quality of life--and all within their pension allotment.

The growing popularity of medical tourism is hastening the 'buy-in' for the "relocation" of retirement facilities in countries that will have the resources to build such communities and provide the required services that will support the needs of its residents.

Again, Philippines is presenting itself as an ideal second home for the growing retirement market. The cost of living is relatively low (at least, when you consider that foreign retirees will get more pesos for their dollars or euros) and the climate is pleasant and conducive to a more laid-back lifestyle.

The availability of healthcare services is also a major selling point. Retirees are in that age bracket where health worries abound and the presence of many health facilities is a competitive advantage.

The business imperative is to develop and implement a world-class retirement community that will be able to combine the best features in terms of physical infrastructure and use this to create a seamless yet flexible network of health and lifestyle services that will be in step with the age transitions of its senior residents from active to increasingly bed-bound condition.

Outsourcing opportunities
Another area that the Philippines can also explore is outsourcing engagements such as support services for healthcare.

Many disease management programs abroad make use of the services of call centers for monitoring and follow-ups. Our country is already a call center hub--we can extend the service coverage to include healthcare. Medical transcription is already an accepted outsourcing area and we can likewise capitalize on the English proficiency of our manpower to further increase the market.

In the health education sector, we are already linked with countries like Korea and China, which are sending their students for nursing degrees.

Health human resource provider
All three preceding business opportunities require foreign nationals to come to our country to avail themselves of those services. Not all will be comfortable taking this route though because of strong family and cultural ties. Why not reverse the process and explore the opportunity of having our services made available to other countries on a fixed period/rotation basis?

One of the major worries of countries employing staff from overseas is that eventually, they will become citizens with all the entitlements. This, to their view, will strain further their already shrinking social services budget.

The "rotation model" will allow us to deploy staff in a host country where they will work for one to two years then come back to the Philippines who will then send a new batch as replacement. Rotation in the form of fixed employment period will minimize the adverse effects of migration such as shortage of skills for our own health system requirements and the social consequences of family separations.

At the same time, the skills that will be learned from the host country can improve the quality of our healthcare delivery at home. It's a win-win situation and the host countries can continue enjoying the benefits of well-staffed health facilities.

The bottom line is that healthcare is creating new market spaces and is opening up new doors where investments can come in, among them in these two major areas:

1. Infrastructure

Putting up more health and wellness facilities that are geographically dispersed over regions already considered as tourist destinations from spas, specialty clinics to hospitals;

Expansion of tourist accommodation facilities such as hotels, inns, etc.

Establishment of retirement communities including long-term care facilities

2. Services

Operation of transportation facilities

Schools and other facilities for health human resource development and workforce re-training

Operation of boutique travel agencies that cater to this specialized market

Operation of companies that can provide telemedicine services

Operation of lifestyle service companies to provide support services

Now is the time to take advantage of opportunities. Through the joint efforts of agencies such as DTI, BOI, Peza, DOT and DOH, investing in health and wellness initiatives are made more attractive through incentives ranging from income tax holidays to tax exemptions on customs duties ad importation.

In fact, our hospital, St. Frances Cabrini Medical Center has been recently proclaimed by the President of the Philippines as the first Medical Tourism Special Economic Zone—and our hospital has likewise been approved as the first enterprise-locator in this special medical zone.

Growing market
How then can the Philippines penetrate and seize leadership of the growing market in healthcare?

First, we need an engaged travel and tourism industry fully cognizant that medical tourism is a new game where old rules may not apply.

There is a need therefore for new synergies, a retraining of workforce and learning new skills that will allow proper handling of patients' inquiries, complaints and condition.

Second, we need to go beyond great slogans and classy brochures to translate every healthcare service requirement into an excellent experience for the medical travelers from the time of arrival till their exit.

The process flow must be seamless and hassle-free. This means better airport facilities, better coordination between and among government, health facilities and support services.

Third, we must establish track record through consistent performance and delivery. Quality must be a top priority.

It has been said that the healthcare system of the 21st century is a public-private partnership that harnesses the creative impulses of the private sector with the social justice function of the public sector. A public-private partnership has the potential of combining the innovations of the competitive marketplace with the larger social values of solidarity and health justice.

Countries who have successfully positioned themselves in this robust healthcare market leveraging on this partnership went on to reap economic benefits.

The Philippines can likewise become a beneficiary of this niche market.

Beyond profitability, the dollar earning potential of this market offers a unique opportunity to ensure that the gains will redound to the benefit of our countrymen who have poor access to quality healthcare.

The most tangible manifestation will be seen in a bigger budget allocation for health to upgrade and expand public health facilities ensuring equitable access to quality health services.

With the patronage and business from our international partners and clients, we can make this happen.

Healthcare has succeeded in breaking down barriers and making this planet an increasingly borderless world—because we all realize that at the end of the day, caring, healing, empathy and alleviation of pain recognizes neither color, money, country nor race.

So, expect tourists to go home from their travels bringing not only a couple of Batangas balisong, Cebu keychains or Boracay shirts but also a new hip or yes, a brand new face.

JP Morgan: Consumer-led RP growth hollow

2007-11-19T19:08:00.001-08:00

Despite the surge in the country’s gross domestic product, economists are saying that the consumer-led growth is hollow and has no real impact on the economy’s productive capacity.

According to JP Morgan, the prime movers of genuine growth have not been moving as they should, with investments which lagging behind the growth in domestic production.

JP Morgan economist Sin Beng Ong said future growth has been "based on faith" that the public sector would be able to deliver its infrastructure spending plan and work as a catalyst for private investments.

The GDP is projected to grow by seven percent this year but Ong said this raises no threat of a bust despite projections that growth in 2008 would drop to six percent.

"There is not going to be a bust because there clearly is no boom," Ong said.

To begin with, Ong said, broad inflation rate had been low not just because of the strength of the peso but also because there was no pressure on the demand side.

"So inflation will continue to be low. There is no second-order pressure outside of the energy sector because demand simply isn’t there," he said.

"The fact that there is no pick-up in demand is not good because that means there is no underlying demand for investments," he added.

The strength of the current accounts in the balance of payments, Ong pointed out, is indicative of lackluster investments which means that there will be a low demand for labor and therefore demand will be low as a whole.

Ong noted that the country also has a wide gap between savings and investments, indicating that investments are being financed largely by foreign borrowings instead of internally-generated funds.

According to Ong, there is strong liquidity but this is not being mobilized into savings and investments. Moreover, he said, credit demand had been dominated by real estate and personal loans with very little showing by the manufacturing sector.

"All of these is a reflection of what we think as hollow growth because there is no pick-up in domestic demand to sustain the growth momentum," Ong said.

"We are not sure why the GDP is so strong despite the yawning S-I gap but if we are looking for possible upturn in 2008, it will be led by the public sector," Ong said.

This means that future growth prospects have become an article of faith, Ong said, dependent on whether or not the public sector would be able to deliver its spending program under the Medium Term Philippine Development Plan.

"The question is whether public investments could catalyze private investments and I don’t know what the answer is," Ong said. "Theoretically, it should, especially if the government could allocate spending in a manner that will have the greatest multiplier effect."

SM Investments rated an outperform

2007-11-19T19:05:00.000-08:00

Macquarie Research Equities on Tuesday gave conglomerate SM Investments Corp. an "outperform" rating, saying it is confident that the company will meet its full-year income projection.

"Retail businesses always show higher earnings in the fourth quarter," it said in a recent client note.

The brokerage firm also gave SM Investments a 12-month target price of P395.

In the first nine months, SM Investments' net profit rose 14 percent year-on-year to P8.5 billion, which accounts for 65 percent of Macquarie's full-year profit forecast of P13 billion for the company.

Consolidated revenue for the period almost doubled to P82.6 billion, including contributions from SM Supermarket and SM Hypermarket.

"The results support our outperform rating on SM, which is our preferred pick in the conglomerates sector. Moreover, SM is the best way to play the reflation story in the Philippines given its strong presence in retail, banking and property development."

SM Investments, which is owned by tycoon Henry Sy, is the country's third-biggest company by market value.

Its subsidiaries include mall builder and operator SM Prime Holdings Inc., SM Development Corp. and Banco de Oro Unibank Inc., the nation's second-largest bank by assets.

Joel T. Go: Taking care of business at Ever Gotesco

2007-11-04T19:58:00.000-08:00

Joel T. Go is bent on continuing the legacy of his grandfather, Go Tong and his father, Jose Go, the two famous names behind the Ever Gotesco Group of Companies.

This 34-year old graduate of Electronics Communication Engineering was not involved in the family business until after the conglomerate was badly hit by the Asian financial crisis in 1997 when the Gos were forced to close down their banking arm, Orient Bank.

“Our father did not want to involve us in the business then. He wanted us to do what we want to do. He wants to make sure we live our lives the way we want it,” the young Go recalls.

Joel, however, believes that he, together with his brothers, are destined to become the keepers of the family’s business empire which begun in 1975 when the old Gos built their first mall.

“Being part of this family means a lot to me and my brothers. We want the public to know that despite what happened to us in the past, our conglomerate is here to stay and we will continue to stay resilient,” Joel says, with conviction.

The financial setback experienced before by the group, he says, serves as a challenge rather than a misfortune.

“It’s a good thing that we had this problem when we can still manage to repair the damages. Whatever fault we had before, we now have to make sure that we will never commit again,” he says.

Joel started to take part in the family’s enterprise seven years ago. Eldest of three brothers, Joel sees to it that the efforts of the old generation Gos, to establish a business that is anchored on family values will not go to waste. Only 27 that time, he was already a hands-on executive handling full operations and marketing of Ever Gotesco malls.

In 2004, Joel was assigned as president of the Metropolitan Medical Center which the Go family acquired. Along with managing the hospital, he also oversees the over-all operations of its school — the Metropolitan Hospital College of Nursing.

One of the few strategies and techniques injected by the young Go to the traditional business practice in the Gotesco group was the introduction of a middle management which he now heads.

“Our team is constantly on the lookout for fresh ideas to incorporate in our marketing strategies, unwilling to find ourselves behind the competition but always in the middle of it all,” Joel says.

Manned by young and talented group of professionals, the middle management sees to it that every little detail in the company’s operation will be reviewed; and must be consistent with the group’s core ideology which is “Enriching the Lives of the Filipino People.”

“We have been slowly keeping our phase. We have been moving forward. But this time, we have to be more careful. We are studying every step we are making,” he adds. “Continue to run the ‘malls for the masses’ will still be our battlecry.”

To keep up with this momentum, Joel says the group will now focus on the right market and invest on right projects. Being in the third generation of Gos, Joel is proud to say that he is also a “people person” himself.

He asserts that this distinct quality of the Gos will bring the conglomerate to the next level. “We are going to build a company that will last,” Joel says.

Future plans

Based on the company’s five-year plan, it will be spending about P2.5 billion for the construction of four to five medium-sized malls.

“As we observe, we can not really compete with big malls. Metro Manila is saturated. So we will have to concentrate on the unserved market particularly in the suburban areas,” Joel says.

The company is now in the process of identifying the sites for the future malls. Among the areas being explored by the group are Parañaque, Laguna and Dagupan.

Aside from Gotesco Grand Central Mall, the group also runs Ever Gotesco Commonwealth Center, Ever Gotesco Ortigas Complex, and The Manila Plaza (Ever Recto).

Funds to finance these projects, he says, will partly come from internally-generated income. “Our cash flow is getting better. The revenue level of the group is stable,” Joel adds.

Joel says a number of banks have already approached them for possible loan arrangements.

“This only shows that many financial institutions still believe in the company’s ability to recover and expand its operation,” Joel notes.

The business blueprint of the company will also involve the renovation of its existing malls.

Next year, the group will start renovating one of its oldest malls, the five-hectare Gotesco Grand Central Mall located in Monumento, Kaloocan City.

By 2009, they will be putting up the first new mall with an estimated investment of more than P500 million.

Aside from pouring in capital in the expansion and renovation of malls, he says they will be investing P800 million to double the bed accommodation of UDMC to 800.

Modernizing the equipment and facilities of the hospital to cater to more advanced medical needs of their clientele, he says, is also part of the company’s medium-term plan.

The group also owns and manages a secondary hospital and nursing/retirement home in its 400-hectare golf course property in near Tagaytay. The Evercrest Golf Club Resort and Chateau Royal Sports and Country Club are being managed by the group’s Gotesco Land Inc.

A possible joint venture with a US-based hotel/ property developer is being explored by the group to take advantage of the growing potentials of the Batangas-based property.

“We can put an enclosed leisure/entertainment complex that may include spas, casinos in this property. This may also have a retirement home to cater to OFW retirees or even foreigners who want to spend their retirement period here,” Joel says. The idea of putting up a retirement home, he says, is consistent with the Gotesco group’s vision to maintain a family-oriented business.

“For one, our Ever Gotesco Malls shall become the household name for value-added shopping and every Filipino family’s mall of choice,” Joel concluded.

Competitive intelligence and ethics

2007-10-05T21:16:00.001-07:00

QUESTION: Our head office in the US has just reorganized our marketing research department to direct its focus on competition. This has been renamed “Competitive Intelligence Department.”

Our head office’s CIS (Competitive Intelligence System) that we’ve been asked to install was developed by an ex-military. Some of its techniques for uncovering and monitoring competition are treading along the thin line separating what’s ethical from the unethical.

Also, the system has a whole lot of competitive information that it’s asking us to gather on a periodic or continuing basis. Those information fall under five categories: (1) the competitors’ capability and track record to develop new products and to innovate; (2) their capability to manufacture and bring new production capacity online; (3) their capability to market, to command a strong channel support and point of sales presence; (4) their capability to finance and to shift budgets among brands and market segments; and (5) their capability to manage and retain key managers.

There are over three dozen items under these five categories and with just one product line, we have 5-8 major competitors! We don’t know if we can adequately set up for the required intelligence requirements. But our CIS model says these data are necessary for us to be able to anticipate competitors’ future strategies.

We have two questions. First, what ethically acceptable competitive intelligence method can you suggest that will give us just as helpful a set of competitive knowledge? Second, does your method include a way for us to short list the vast number of competitive data our CIS requires for us to be able to predict a competitor’s future strategy?

Answer: On your first question, here’s that ethically acceptable competitive intelligence method.

We call it “The Survey Based Competitive Benchmarking Study.” Its complete research details are in the senior MRx-er’s third edition book, “User Friendly Marketing Research.” For answering your question, it’s enough to limit ourselves to the logic of the method and to an example of the results of its application so that we can appreciate its power at "insighting" competitor behavior and strategy.

The model does its competitive intelligence function along two related logics: a “behavioral logic,” and an “analytic logic.” Its basic behavioral premise states that everything that your brand does versus its competitors gets registered with the target consumers. For example, consider the case of your ethical marketing of a medication to doctors. Your brand’s marketing campaign consists of its ethical prescription and ethical OTC promotion activities versus those of your brand’s competitors. The target response of your brand’s campaign is its target doctors’ prescription behavior. To what extent the promo activities of your brand’s campaign has succeeded in generating doctors’ prescriptions can be gauged from the data on how doctors rate those promo activities against their priorities and against competitors’ promo activities. Those data are forthcoming from an MD survey.

The analysis of those data follows the logic of a simple functional equation. The equation simply states that a leader brand’s share of doctors’ prescriptions is a function of superior ethical prescription and ethical OTC promo activities and inputs. The analysis’ “benchmarking” framework directs a focus of the data analysis. That’s on “best practice” or the “best practicing brand” which is the market leader brand.

The example we used to illustrate the model’s behavioral and analytic logics involved the four competing brands in the NSAID (non-steroidal anti-inflammatory disease) category. These brands were Feldene, Mobic, Orudis and Ponstan.

In terms of shares of prescriptions (SORx), the survey pointed to Mobic as having the highest SORx and therefore the market leader. Ponstan was No. 2 while Feldene was No. 3. Orudis was the fourth ranking brand in SORx.

How did the market leader brand, Mobic, attain the “benchmark” position in the category?

To answer this, the survey based competitive benchmarking study gathered two sets of data: (1) how the prescribing doctors prioritized 16 ethical prescription promo activities in terms of how doctors regarded each of these activities as necessary for a pharma company to do to gain their prescription, and (2) which NSAID brand these same doctors regarded as doing the best or the most among the doctors’ prioritized promo activities.

The survey identified nine out of 16 as the doctors’ priority ethical promo activities. Doctors rated Mobic, the market leader brand, as statistically significantly superior over its competitors on only four out of the nine. These were on the promo activities of: (1) doing the most regular visits to doctors, (2) doing the most frequent detailing, (3) doing the most product sampling, and (4) doing the best doctor PR.

What do these results say about how to succeed or gain the highest market share in the NSAID category at the time this survey based competitive benchmarking study was conducted?

There are at least two competitive intelligence insights here. First is that Mobic attained competitive leadership by focusing on just on detailing and product sampling. Regular visits and doctor PR are variants of detailing. Secondly, competitive superiority is achievable without attending to all or even most of the available competitive activities. It is focusing that made for the strategic difference.

As you can see, you can learn and monitor competitors and their competitive strategies without directly sourcing data on them. Surveying our common target customers presents the best competitive intelligence source and at the same time is the most ethical approach.

In ethics, nothing beats the old golden rule: do unto others what you want others to do to you. As a reference for business ethics, a good resource would be John Maxwell’s book, “There’s No Such Thing As ‘Business’ Ethics (There’s Just Ethics).”

Competitive intelligence that does not cross ethical lines

2007-10-05T20:59:00.000-07:00

THIS IS THE RESPONSE TO A READER’S second question, “Is there a way to short list the vast number of data your CIS requires on competitor capabilities as a way to predict a competitor’s future strategy?”

We have found that the key is to have a focus. Here’s the logic we apply to this search for a focus: “None of a competitor’s physical, technical, financial and marketing resources and capabilities can make for a competitive difference and advantage without someone orchestrating, navigating and controlling them.” So what is the implied focus?

Know your competitor’s face. Who is the brand manager, the marketing director or the marketing VP of your major competitor? What is he like in responding and/or attacking his brand’s leading competitor brand/s?

To know your competitor’s face and answer the preceding questions, it’s obvious that you have to profile this person’s competitive style. In our competitor profiling experience, we have found at least four competitive styles.

The first is what we call “the indifferent competitor.” This competitor will respond to you with this almost complacent mindset: “I have loyal customers and they’ve stayed that way for a long time. As long as I do everything to keep them loyal, that’s my best protection against any competitor.” So what can you predict about how this competitor will react to your moves? Most obviously and most likely, no reactions will be forthcoming at all.

The second competitive style is the “Hamlet” competitor. This one will respond but he or she will do so after a long, long time. This competitor’s brain works like Shakespeare’s character, Hamlet, and therefore thinks this way: “To compete or not to compete. That is the question. … But maybe it’s better to wait. In 80 percent to 90 percent of the cases, nothing really bad comes out of these competitor moves. So most of the time, I’m better off waiting things out.”

So what can you predict about how this competitor will react to your moves? It’s likely that the reactions will come after a long period of time.

The third competitive style we’ve seen is in a “game, fun-loving” competitor. This competitor looks at marketing life as a game of fun. He or she expresses this outlook along this script: “I love this competitive game. That’s especially fun when I’m playing against a worthwhile adversary who knows what he’s doing. At first he wins, and I lose. But I learn why I lost and come back. Then I win, and he loses. He learns, and then he comes back. And the cycle repeats and afterwards, we both are better off as competitors than at the start.” So we ask again: What can you predict about how this competitor will react to your moves? Most obviously, smart and sometimes surprising reactions will be forthcoming. So prepare and be equally smart if not smarter.

The fourth type is fearsome— “the ruthless competitor.” We say this competitor is fearsome because his or her competitive brain cells reason out this way: “My response rule is simple: It’s always better to overreact than to under-react or wait. My attack rule is just as simple: You don’t just hurt competition. You come in for the kill. Annihilate the enemy.” What can you predict about how this competitor will react to your moves? It’s obvious—be extra careful unless you have the guts and resources to go to war.

Are these competitive styles consistently practiced by their advocates? What we’ve observed it that they change over time and according to the situation. Even an indifferent or a Hamlet competitor can at times take on a ruthless competitive style because of a traumatic experience.

But in all these, what you must now keep in mind is this basic proposition: “In dealing with the issue of a competitor’s future strategy, remember that a leading competitor will usually do what he/she has gotten used to do in the past, shaped or reshaped, directed or redirected by that competitor’s current or changed competitive style.”

Keep up with emerging competitive intelligence practices and trends. For this, you may want to every so often visit the web site of The Society of Competitor Intelligence Professionals (SCIP):www.scip.org.

Send questions to MarketingRx@pldtDSL.net. God bless!

Seven resolutions for marketers in 2007

2007-10-05T20:58:00.000-07:00

BY the time you read this column, you (like millions of other people across the globe) would have made a handful of New Year’s resolutions.

Here are seven suggested resolutions that marketers can make and KEEP to have a better, more profitable new year in 2007.

As a marketer, why not resolve to …

1. Start or continue practicing “Truth in Advertising.”

Make this one of your core values. Focus on telling the true benefits of your product to build trust with your customers. Quite a number of developers and/or their ad agencies state that their project locations in the Cavite / Laguna / Tagaytay area are a mere “45-60 minutes” drive to Makati City. Immediately, this creates disbelief and distrust for those veterans who ply the South ‘Suffer’ Highway. I have personally timed the travel to several of these projects and it is almost impossible to make it under 60 minutes. Just tell the truth and say something like “average travel time is about an hour or two, depending on traffic conditions, but it’s well worth the drive.” As BrandChild author Martin Lindstrom says, “to build word of mouth (the best form of advertising), underpromise but overdeliver.”

This brings us to a question that a reader asked: “If consumer perception is the primary basis for motivating prospects to buy, then does this mean that truth in advertising is irrelevant in marketing? ”

To which we answered: On the contrary. What this means is that marketers ought to be extra careful in their use of consumer perception to motivate consumers via their advertising. As a marketer you can use consumer perceptions for a good purpose or for a bad one. Truth in advertising is a good purpose. Deception is bad and if you get away with it at first, it won’t last. Consumers will, sooner or later, find out how you’ve been fooling them. Abe Lincoln has been, is, and will be right: “You can fool some of the people some of the time. But you can’t fool all of the people all the time.” (Read Seth Godin’s book, "All Marketers Are Liars: The Power of Telling Authentic Stories.")

Deception of course includes cases of keeping quiet about what you know may harm consumers. That’s withholding of a “truth.” Take the case of Merck’s Vioxx, the acute painkiller and anti-arthritis medication, that had to be withdrawn from the market because Merck or more precisely its medical researchers withheld from publication in the New England Journal of Medicine knowledge of three heart attacks among Vioxx’s patients participating in the large scale clinical study of Vioxx.

The heart attacks took place in the final five weeks of the trial study. The patients who had the heart attack were supposedly at low risk for heart problems. But this was not the only thing the Merck researchers withheld. The study had apparently found “more cardiovascular problems potentially connected to Vioxx.” These problems were not reported in the published study. They should have been since in medical science and research, such withholding is highly unethical and a serious breach of the Hippocratic oath.

In pharmaceutical marketing, published clinical studies are a powerful “advertising” material for persuading doctors. So that withholding of the three heart attacks and the connection to more cardiovascular problems was also a truth in advertising infraction.

2. Grow bigger by going after “smaller” markets.

Today, market niches are all around you ... even in the mass market. Look at Unilever’s deodorant brand, “Axe.” This brand successfully made sales and profit by nicheing into the population of young men, not all of them, but only those young men who are “after a deep relationship with a girl.” That’s a niche, a small population size. But their usage frequency is high and willing to pay a premium for a deodorant specifically tailored to their needs. We understand from our Unilever friends that it is now the main contributor to the more than 10 percent growth in the company’s participation in the deodorant category! There’s a local equivalent (though in a different category) to Axe. That’s Eskinol’s “Master,” the Eskinol for a special niche of young men.

The extreme in market niche-ing is in real property marketing. Look at Ayala Land. Its initial target market was the niche of all niches: the very few and countable Class AAA consumers. Yet selling to this niche, say, a less than 100-unit condo project gave Ayala Land billions in revenue. The magnitude of the marketing task (MMT), another marketing concept worth your mastering, is accountable and manageable.

3. Focus!

It was a joy to host marketing legend Al Ries and his daughter/partner, Laura Ries, last June 2006. One of the most memorable pieces of advice that they gave was to focus.

Al Ries’ advice on choosing what to focus on is that “First, you want to be first in a category. Remember, not just first in manufacturing the product, but first in the mind of the customer. It doesn’t matter if a hundred of people are producing it already, if you are first in mind you will generally win. Second, you want to bet on the future. Pick ideas or concepts that fit in with future trends. In food, for example, you might want to focus on low-calorie products. In clothing, you maybe want to focus on the younger generation, because they buy more and will be around longer. Third, you want to be the opposite of the leader. If the leader is Coke and focused on the older generation, then Pepsi should focus on the younger generation. If the leader is McDonald’s and focused on kids, then Burger King should focus on adults, or grown-up kids.”

4. Put effort into internal marketing.

We hate to sound like a broken record, but this resolution is one of the most favorite ones to be broken every year. Before you market and sell to the world, make sure you’ve sold yourselves and the other departments/teams in your company on your product and its marketing plan.

Marketing to the target market and consumer segment is what gets formally planned. That marketing is what has come to be called “external marketing.” But every company has its “internal customers.” These are the people in the marketing and sales department, and those in the other departments including especially, manufacturing, supply chain, finance, and human resources. To win their support, these “customers” need to be sold to the company’s product and marketing plan. They must buy in if the external customers are to likewise buy and if the marketing plan is to gain the support it needs from them. This is marketing to the internal customers. It’s “internal marketing.” If it is to succeed, it needs the same kind of formal planning, implementing, monitoring and control that we routinely give to external marketing.

We’ll be back next week for the next three resolutions that marketers need to make.

Seven resolutions for marketers in 2007 - Part 2

2007-10-05T20:57:00.001-07:00

APOLOGIES to our readers for the delay in publishing the second and last part of this series. Here it is! Thanks for your patience.

As a marketer, why not resolve to…

No. 5. Build your brand by putting more time and resources into Public Relations

Resolve to read "The Fall of Advertising and The Rise of PR" by Al Ries and Laura Ries, a controversial book that was -- or still is -- a wake-up call for an advertising industry obsessed with winning creative awards. PR practitioners, of course, love every page of this book.

Why put more money into PR? Ries and Ries build the case that PR builds brands because it is more credible than advertising. People tend to believe the stories they read or hear more than the advertising that “interrupts” their reading, viewing, or listening.

Here’s Al Ries’ advice:

“Over several decades, advertising has gotten more expensive at the same time as there has been a dramatic increase in the volume of advertising. These two factors make advertising less effective (too much volume) and less efficient (too expensive.)

Advertising agencies have responded to this problem by de-emphasizing selling and emphasizing the creativity of the advertising. As long as everyone was aware of a company’s advertising what difference did it make if nobody bought the client product, went the thinking. Selling is not our problem, said the advertising industry. Creating awareness by creative advertising is what we are all about.

Advertising has many advantages: You can reach exactly the right people at the right time with the right message as often as you want to reach them.

But advertising has one major problem. Advertising lacks credibility. People just do not believe what they read (or see or hear) in an advertisement. They recognize the fact that advertising is self-serving. What you say about yourself has little or no credibility. Contributing to the credibility problem, of course, is the volume of advertising. Consumers turn off most advertising because there is just too much of it. In many ways advertising is like spam on the Internet. It’s not believable because there is too much of it and the messages are self-serving.

Public relations or PR has many disadvantages. You can’t control the media, you can’t control the timing, and you can’t control the message. But it has one major advantage: PR has credibility. Consumers tend to believe what they read in the editorial pages of newspapers and magazines and what they hear on radio and television from independent people. It’s what we call “the third party effect.” What others say about you has credibility.

PR and advertising can work together. Use PR first to create credibility for the brand. Then use Advertising second to reaffirm and reinforce that credibility.

We recommend that companies launch new brands with PR only. Then when the brand has awareness and credibility in the mind, the company can switch to advertising to maintain the brand.”

No. 6. Stop being fooled into buying awards to build your brand

Winning awards for your company or brand can be very good PR for you. But it’s funny how thousands of companies, both large and small, can be duped into buying awards. In the past year or so, we’ve seen good reputable companies emblazon on their print ads and brochures the dubious logos of such awards that were practically sold to them.

Other “entrepreneurial” deviants, determined to make a quick buck, have joined the bandwagon of selling awards. In the past few months, we’ve been getting faxes and calls from these deviants congratulating us on our accomplishments. Now would we mind paying the “joining fee” to participate in the awards program? Ha, ha, ha.

Legit or just moneymaking?

Because of the current proliferation of these business and marketing awards, a good number of our marketing friends have asked: “Is this award legit?”

It pays to do a little checking into the award giving body, company, or so called “Institute” before joining. Many bodies do organize awards for both fund raising and recognition but are definitely legit. Take, for example, the Clio advertising awards in the US or the Araw Awards that accompany the Philippine Ad Congress. Every entry pays a fee that isn’t exactly cheap. But participating ad agencies don’t seem to be bothered and no adverse negatives are heard about the award’s required entry fee. Of course there are awards where the entries do not pay but are instead “paid” to those nominees who win as in the case of the most prestigious award in the world: the Nobel Prize (Winners get a $1M check). The Ramon Magsaysay Awards, known as the Nobel Prize of Asia, does the same thing but the check is in pesos—about P1M. These are the “Superbrands of Awards.” Their branding carries the name of their founder who is known and acknowledged for his or her life of excellence and professional and personal values.

Awards for sale

We’ve received some concerned calls from company heads and marketing professionals who have been receiving what look like generic form letters from awards program organizers. The letters inform them that based on "consumer surveys" their brands have been selected as a winner in a category. Some of these shoppers/brand/marketing award promotional campaigns then ask for a P15,000 to P50,000 award support fund/subsidy. The “leading” solicitor of such awards for sale has a team of account executives. They in turn “sell” thousands and thousands of awards on a local/regional and national level and asks awardees to shell out at least P15,000 for a plaque and the right to use the award logo on their marketing collaterals. Do the math—that’s a cool P15M for every thousand awards that you give!

According to one respected but skeptical marketing professor, the difference is that these awards programs inform you that you have won already and to participate in the awards program and to include your brand name in the subsequent advertising and promotions, all you need to do is return the contract that accompanies the congratulatory letter together with your "support fund" or "subsidy."

“What they are doing are selling awards to companies!” says the marketing professional who received several awards confirmation letters for his brand but refused to pay the award subsidy/fund that was asked of him.

No. 7. Keep on learning

We always end our MarketingRx New Year’s resolutions with this one and we see no reason to change or replace it. As a marketing executive, you must have a personal growth plan to be a better, more effective marketer. Keep on reading the best and latest books, journals, and articles on marketing. Go back to “school” by attending marketing seminars and conferences here and abroad. Marketing is one of the most challenging careers characterized by constant change. To rely on what you learned about two years or a year ago is business suicide. Keep on learning and you’ll have a really prosperous new year!

What to do with ad budgets when sales are down

2007-10-05T20:55:00.000-07:00

QUESTION: How do we decide on our advertising budget? As they say, you spend what you earn. In 2006, one of our brands performed poorly. So this year, its ad budget is very small, so small that it’s impossible to support production of a TV material. How should we address this problem?

Answer: First, resolve for the New Year that you will no longer make marketing decisions according to “rules of thumb.” Rules of thumb are convenient decision shortcuts that enable us to cope with difficulties including decision challenges. But when they are based on assumptions that are no longer current, they obviously lead to wrong decisions.

This is true when deciding on your advertising budget as a percentage of your sales.

The rule of thumb is: “When sales go up, up goes your ad budget as well. When sales rise, down goes the ad budget as well.” Most of the time, it’s the reversal of the rule that is appropriate.

When sales go down, that’s when your product needs more support from your advertising to help move up sales.

Remember, advertising is one of your marketing mix tools for generating sales. Advertising is a means. Sales are an end. When you say the ad budget should be a percentage of sales, you’re saying the end should determine the means.

As one of your sales generators, any specific ad campaign has marketing functions you want it to perform, like raise your brand awareness by so much, brand image rating by so much and purchase intention for your brand by so much.

You have norms or you can get industry norms for each of these functions and you can benchmark on how much an average ad campaign will cost to undertake each of those functions.

This is the more logical basis for deciding on your ad budget.

Q: How do we properly segment the market for our products when the buyers are mothers but the end users are their children? Whose (product priority) value do we prioritize?

A: Your product category represents the case where the decision-maker or the buyer is one person, namely the mother, while the end-user is another, namely the child. It’s a family product and not an individual product.

Marketing 101 tells us that in such a case, you should respect the differing priorities of your two consumers, the buyer and the end-user.

Take the case of Sustagen when it was relaunched in the early 90s to compete against Milo and Ovaltine. Sustagen’s research revealed that it was in exactly the same situation as your product. The decision-maker and buyer was the Mom. The end-user was the child. The same research showed that the priority value of Mom for the chocolate drink of her child was “nutrition” while “taste” was a secondary value. The child’s priority was almost exclusively for a “yummy taste.” To the child what was yummy must be nutritious.

So what does Marketing 101 mean when it says you ought to respect these differing (and in this case, diametrically opposed) priority values? That simply means that in your communication with Mom, you support and reinforce her priority favoring nutrition. And that’s exactly what the Sustagen TV ad campaign did. It converted the TV into a nutritionist who announced that she’s better off giving her child Sustagen with its 23 “'resistensya' [resistance] builders.” On the other hand, in its communication with the child, another TV ad talked to the child about Susy and Geno, who told the child how to concoct his or her own tasty Sustagen shake.

Was that the right move? Marketing 101’s recommended GMP (Good Marketing Practice) was vindicated.

Q: My daughter, who’s taking up Integrated Marketing Communications, surprised me when she said the 4Ps are out and 4Cs are in.

Here’s the correspondence: product, out; consumer values, in; price, out; consumer costs, in; place, out; convenience, in; promotion, out; communication, in.

Is this true? What’s this 4Cs concept?

A: That’s one of the things daughters are for: to surprise us. Sometimes, they surprise us with the truth and a new reality.

But the 4Ps and the 4Cs are basically the same. Both are about the marketing mix. The 4Ps are the marketing mix components seen from the marketer’s perspective, the marketer’s decision tools for generating sales. On the other hand, the 4Ps are the marketing mix components now seen from the consumer’s perspective, the consumer’s decision considerations for making purchases. Remember, consumer purchases equal marketer sales.

The concept of the 4Cs as the consumer-centric marketing mix came when the “marketing concept” became and was accepted as the single most fundamental marketing principle. This concept simply said this: “In planning or implementing any marketing program, be it a product intro, pricing, an ad campaign, a consumer promo, or even a trade promo, a sales distribution program, never start from where you (as the marketer) are. Always start from where the consumers are.”

This is not of course saying that if you do marketing according to the 4Ps, you will go wrong. If your specific 4P decisions converge with where the consumers are with each of your 4Ps, then your marketing mix will still work. It is when there is divergence between the two that the 4P-driven marketing mix or program will fail or won’t get results as good as when convergence is present.

Just consider our Sustagen example above. The marketer-driven 4Ps concept was about choosing between the Moms and the children as alternative PTM segments. That’s because the Sustagen positioning will be different if the PTM segment is the Moms and if it’s the children. Looking at the marketing decisions from a consumer-driven 4Cs concept told us that the PTM segment decision is not a choice between alternatives. The two segments are the PTM segment because Mom will not buy a chocolate mix that’s not nutritious. But the child will not drink (many or most of them won’t) a chocolate mix that’s not yummy. And if the child does not drink, Mom will stop buying. The problem solution is clearer and more compelling in the 4Cs problem definition than in the 4Ps specification.

Of course, the marketing reality does not always work out in favor of the consumer-driven marketing. In a previous column, we spoke of consumer-driven marketing. That’s the 4P marketing or marketer-driven marketing. We’ve seen that with the phone companies and their very successful marketing and selling of SMS services and ring tones, to mention just two. Here, it was the marketers who taught the consumers that they needed SMS to stay connected with their loved ones. Consumers didn’t tell the phone companies that they have a need for SMS. The process didn’t start there. It started with the marketers. And when the consumers finally learned what the marketing phone companies were teaching them, and were finally convinced, they bought and revenue literally exploded.

So tell your daughter her IMC professor is probably trying to teach through shock value through exaggeration. Tell her not to go for a half-truth but instead go for the whole truth and nothing but the truth. So help us God!

‘How can Blue Ocean marketing strategy help my business?’

2007-10-05T20:49:00.000-07:00

MANILA, Philippines -- Just the other day, we had lunch with a director of a Fortune Top 10 company who is being besieged by new competition, including copycats. He asked us “What’s this Blue Ocean marketing [strategy] all about?” This is not the first time we’ve been asked this question. Our readers are also curious about Blue Ocean Strategy.

The Blue Ocean marketing strategy refers to the “Blue Ocean Strategy,” a bestseller written by W. Chan Kim and Renee Mauborgne and published by the Harvard Business School Press in 2005. The book has sold over a million copies (translated in 37 languages) and has made this Korean and French tandem one of the most sought-after business speakers in the industry. Last time we checked, Kim and Mauborgne now command $150,000 each, per talk!

To answer the question we turned to Josiah Go, prolific marketing author, and chairman of Mansmith and Fielders training company, who had the foresight to acquire the license to teach the Blue Ocean Strategy here in the Philippines. (Thus saving the Philippine marketing community $150,000 -- you could hire Go to speak, at a tiny fraction of what it would cost you to hire either Kim or Mauborgne.) Go is the first and only Filipino to successfully complete the Blue Ocean Strategy qualification process in France and the first professor of a three-unit, full-semester Blue Ocean Strategy in Southeast Asia.

This week, Go answers your frequently asked questions about Blue Ocean Strategy.

Question: What are the key principles of Blue Ocean Strategy?

Go: To win in the future, companies must stop competing with each other the traditional way. Instead, a change in paradigm is needed -- the only way to beat the competition is to stop trying to beat the competition. The concept of value innovation, which places equal emphasis on both value and innovation, is the cornerstone of Blue Ocean Strategy (BOS). This is done by creating a leap in value for buyers and the firm, thereby opening up new and uncontested market by aligning innovation with utility, price, and cost positions. Blue oceans are thus created in a sustainable manner by simultaneously driving costs down while driving value and differentiation up for the buyers.

Q: How is BOS similar to or different from marketing strategy?

Go: In terms of customers, BOS is similar to marketing strategy in that both aim to assemble products or services that can satisfy the target consumers. The difference is that traditional marketing strategy looks at existing demand and satisfying current customers, while BOS is not competition-based, and it looks at non-customers and captures new demand in an uncontested market space.

In terms of competition, both traditional marketing strategy and BOS need to compete, however, traditional marketing strategy aims to beat existing competition by gaining market shares while BOS tries to create new value to make existing competition irrelevant.

In terms of company, traditional marketing looks at incremental improvement in revenue and profit, while BOS looks at a giant leap of value, thus giant leap in revenue and profit growth. Also, profit-wise, traditional marketing strategy seldom looks at how to reduce cost while BOS is both differentiation and cost-based. Thus, while the whole system of an organization’s activities in traditional marketing strategy is aligned with differentiation; BOS is aligned with both differentiation and low cost simultaneously.

Q: Does my company/business really need this Blue Ocean strategy? We’re doing all right with our current promos. Are there Filipino companies adopting this strategy?

Go: A lot of companies are suffering in red oceans -- they continuously try to outperform rivals by competing on price or promo, grabbing a piece of the existing known market space without looking at other viable options. Their promo does not even help them build their brand equity. Many also have a wrong concept of a low-price offering. They focus too much on the competition and brand switching without looking at what customers really need and want. They should continuously be alert asking one simple question -- what fundamental change in offering level buyers receive will make the competition irrelevant?

HBC is one of my favorite examples of a Blue Ocean Strategy company in the Philippines. From an obscure retailer mixing incompatible grocery products and beauty care products, they dropped groceries and canned products and focused on pushing beauty products. From selling brands of multinational manufacturers, they successfully built their own multi-brand private label lines now accounting for over 60 percent of their total sales; thus enabling them to be both differentiated and have low-cost at the same time. Instead of competing with the traditional beauty care “vaciador” stores, they have repositioned themselves and attracted new customers who used to visit retail shops selling imported and branded beauty care products, transforming them from a retailer losing money four years ago to winning the Most Outstanding Retailer award given by the Philippine Retailers Association.

Another example is "C2," with great value innovation -- green tea brewed and bottled on the same day, matched with great taste, great image at an affordable price. Universal Robina Corp. positioned it against soft drinks that at the time of launch were 47 times bigger than ready-to-drink (RTD) tea and four times bigger than the company size of URC. Today, C2 sells much more than the original market size of RTD tea when the product was launched.

"C2" is a blue ocean strategy launch because instead of looking at the existing RTD tea market as competition, it looked at alternatives and competed in a relatively uncontested market space. Instead of beating the competition, they made the competition irrelevant. Instead of exploiting existing demand by simply convincing people to switch RTD tea brand, "C2" created and captured new demand from those no longer drinking soft drinks -- people who are health conscious or those who would like their family members to drink something healthier than the usual soda. And because Universal Robino is part of the JG Summit conglomerate, the synergy from the bottles and the sugar supplied by their sister companies made the product both differentiated and low-cost at the same time, breaking the traditional value-cost trade off.

Josiah Go will talk on “How to Formulate New Products via Blue Ocean Strategy and Make Competition Irrelevant” at the Third Market Masters Conference on March 21, Mandarin Oriental Hotel and co-sponsored by the Philippine Daily Inquirer. Profit will go to Mansmith and Fielders’ charity and advocacy projects. Call +632 7222318 or +632 7277142.

WII

2007-10-03T21:00:00.001-07:00

Nintendo's New Look
Rachel Rosmarin, 02.07.06, 10:00 AM ET

	Perrin Kaplan




	Nintendo

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Nintendo ® Creates a Blue Ocean and Wii Win

2007-10-03T20:46:00.000-07:00

Nintendo ® Creates a Blue Ocean and Wii Win

In a Forbes.com interview last year, Perrin Kaplan, vice president of marketing and corporate affairs for Nintendo of America told us about the influence of Blue Ocean Strategy in the development of Nintendo's new games console. After a well mediatised launch during the holiday season, its time look at the results.

Recently, Laurent Fischer, Marketing Director for Nintendo Europe commented:
"We have enjoyed one of the most successful Christmas holidays ever, with both Nintendo DS and Wii selling at staggering rates. The success of our products this Christmas clearly shows that Nintendo's drive to make gaming accessible to everyone has attracted people of all ages and abilities to the industry. We are facing such high demand for both platforms that unfortunately we are facing stock shortages, however we are doing everything possible to combat this by attempting to deliver both consoles and games to retailers on a daily basis."Last week, Nintendo increased its projected worldwide financial performance for the year ending on March 31 to be the best in company history.

go to Perrin Kaplan's Forbes.com interview

go to www.wii.com

Ford Model T - a blue ocean strategic move

2007-10-03T20:45:00.002-07:00

In 1908, while America's five hundred automakers built custom-made novelty automobiles, Henry Ford introduced the Model T. He called it the car 'for the great multitude, constructed of the best materials.' Although it only came in one color (black) and one model, the Model T was reliable, durable, and easy to fix. And it was priced so that the majority of Americans could afford one. In 1908 the first Model T cost $850, half the price of existing automobiles. In 1909 it dropped to $609, by 1924 it was down to $240. In comparison, the price of the horse driven carriage, the car's closest alternative at the time, was around $400. A 1909 sales brochure proclaimed, 'Watch the Ford Go By, High Priced Quality in a Low Priced Car.'

courtesy of Ford

Ford's success was underpinned by a profitable business model. By keeping the cars highly standardized and offering limited options and interchangeable parts, Fords revolutionary assembly line replaced skilled craftsmen with ordinary unskilled laborers who worked one small task faster and more efficiently, cutting the labor hours by 60 percent. With lower costs, Ford was able to charge a price that was accessible to the mass market.

Sales of the Model T exploded. Ford's market share surged from 9 percent in 1908 to 60 percent in 1921, and by 1923, a majority of American households owned an automobile. Ford's Model T exploded the size of the automobile industry, creating a huge blue ocean. So great was the blue ocean Ford created that the Model T replaced the horse-drawn carriage as the primary means of transport in the United States.

Curves ® - reconstructing market boundaries

2007-10-03T20:45:00.001-07:00

Since franchising began in 1995, Curves has grown like wildfire, acquiring more than two million members in more than six thousand locations, with total revenues exceeding the $1 billion mark. A new Curves opens, on average, every four hours somewhere in the world.

What's more, this growth was triggered almost entirely through word of mouth and buddy referrals. Yet at its inception, Curves was seen as entering an oversaturated market gearing its offering to customers that would not want it, and making its offering significantly blander than the competition's. In reality, however, Curves exploded the demand in the U.S. fitness industry, unlocking a huge untapped market, a veritable blue ocean of women struggling and failing to keep in shape through sound fitness. Curves built on the decisive advantages of two strategic groups in the U.S. fitness industry - traditional health clubs and home exercise programs - and eliminated or reduced everything else.

At the one extreme, the U.S. fitness industry is awash with traditional health clubs that catered to both men and women, offering a full range of exercise and sporting options, usually in upscale urban locations. Their trendy facilities are designed to attract the high-end health club set. They have a full range of aerobic and strength training machines, a juice bar, instructors, and a full locker room with showers and sauna, because the aim is for customers to spend social as well as exercise time there. Having fought their way across town to health clubs, customers typically spend at least an hour there, and more often two. Membership fees for all this are typically in the range of $100 per month - not cheap, guaranteeing that the market would stay upscale and small. Traditional health club customers represent only 12 percent of the entire population, concentrated overwhelmingly in the larger urban areas. Investment costs for a traditional full-service health club run from $500,000 to more than $1 million, depending on the city center location.

At the other extreme is the strategic group of home exercise programs, such as exercise videos, books, and magazines. These are a small fraction of the cost, are used at home, and generally require little or no exercise equipment. Instruction is minimal, being confined to the star of the exercise video or book and magazine explanations and illustrations.
The question is, What makes women either trade up or down between traditional health clubs and home exercise programs? Most woman don't trade up to health clubs for the profusion of special machines, juice bars, locker rooms with sauna, pool, and the chance to meet men. The average female nonathelete does not even want to run into men when she is working out, perhaps revealing lumps in her leotards. She is not inspired to line up behind machines in which she needs to change weights and adjust their incline angles. As for time, it has become an increasingly scarce commodity for the average woman. Few can afford to spend one to two hours at a health club several times a week. For the mass of woman, the city center locations also present traffic challenges, something that increases stress and discourages going to the gym.

It turns out that most women trade up to health clubs for a principle reason. When they are at home it's too easy to find an excuse for not working out. It is hard to be disciplined in the confines of ones home if you are not already a committed sports enthusiast. Working out collectively, instead of alone, is more motivating and inspiring. Conversely, women who use home exercise programs do so primarily for the time saving, lower costs, and privacy.

Curves built its blue ocean by drawing on the distinctive strengths of these two strategic groups, eliminating and reducing everything else. Curves has eliminated all the aspects of the traditional health club that are of little interest to the broad mass of women. Gone are the profusion of special machines, food, spa, pool and even locker rooms have been replaced by a few curtained off changing areas.

The experience in a Curves club is entirely different from that in a typical health club. The member enters the exercise room where the machines (typically about ten) are arranged, not in rows facing a television as in the health club, but in a circle to facilitate interchange amongst members, making the experience fun. The Quickfit training system uses hydraulic exercise machines, which need no adjusting, are safe, simple to use, and nonthreatening. Specifically designed for women, these machines reduce impact stress and build strength and muscle. While exercising, members can talk and support one and other, and the social, nonjudgmental atmosphere is totally different from that of a typical health club. There are few if any mirrors on the wall, and there are no men staring at you. Members move around the circle of machines and aerobic pads and in thirty minutes complete the whole workout. The result of reducing and focusing service on the essentials is that prices fall to around $30 per month, opening the market to the broad mass of women. Curves' tag line could be " for the price of a cup of coffee a day you can obtain the gift of health through proper exercise."

Curves offers the distinctive value at a low cost. Compared with the start-up investment of $500,000 to $1 million for traditional health clubs, start-up investments for Curves are in the range of only $25,000 to $30,000 (excluding a $20,000 franchise fee) because of the wide range of factors the company eliminated. Variable costs are also significantly lower, with personnel and maintenance of facilities dramatically reduced and rent reduced because of the much smaller spaces required: 1,500 square feet in nonprime suburban locations versus 35,000 to 100,000 square feet in prime urban locations. Curves' low-cost business model makes its franchises easy to afford and explains why they have mushroomed quickly. Most franchises are profitable within a few months, as soon as they recruit on average 100 members. Established Curves franchises are selling in the range of $100,000 to $150,000 on the secondary market.

The result is that Curves facilities are everywhere in most towns of any size in America. Curves is not competing directly with other health and exercise concepts; it has created new blue ocean demand.

JCDecaux® - reaching beyond existing demand

2007-10-03T20:43:00.002-07:00

Consider how JCDecaux, a vendor of French outdoor advertising space, pulled the mass of refusing noncustomers into its market. Before JCDecaux created a new concept in outdoor advertising called “street furniture” in 1964, the outdoor advertising industry included billboards and transport advertisement. Billboards typically were located on city outskirts and along roads where traffic quickly passed by; transport advertisement comprised panels on buses and taxies, which again people caught sight of only as they whizzed by.

Traditionally outdoor advertising was not a popular campaign medium for many companies because it was viewed only in a transitory way. Outdoor ads are typically exposed to people for a very short time while they are in transit, with the rate of repeat visits low. Especially for lesser-known companies, such advertising media was ineffective because it could not carry the comprehensive messages needed to introduce new names and products. Hence, many companies refused to use such low-value-added outdoor advertising because it was either unacceptable or a luxury they could not afford. Having thought through the key commonalities that cut across refusing noncustomers of the industry, JCDecaux, a French company, realized that the lack of stationary downtown locations was the key reason the industry remained unpopular and small. In searching for a solution, JCDecaux found that municipalities could offer stationary downtown locations, such as bus stops, where people tended to wait a few minutes and hence had time to read and be influenced by advertisements. JCDecaux reasoned that if it could secure these locations to use for outdoor advertising, it could reach beyond existing demand and convert noncustomers into customers.

This gave it the idea to provide street furniture, including maintenance and upkeep, free to municipalities. JCDecaux figured that as long as the revenue generated from selling ad space exceeded the costs of providing and maintaining the furniture at an attractive profit margin, the company would be on a trajectory of strong, profitable growth. Accordingly, street furniture was created that would integrate advertising panels. In this way, JCDecaux created a breakthrough in value for advertisers, the municipalities, and itself. The strategy-eliminated cities’ traditional costs associated with urban furniture. In return for free products and services, JCDecaux gained the exclusive right to display advertisements on the street furniture located in downtown areas. By making ads available in city centers, the company significantly increased the average exposure time, improving the recall capabilities of this advertising medium. The increase in exposure time also permitted richer content and more complex messages. Moreover, as the maintainer of the urban furniture, JCDecaux could help advertisers roll out their campaigns in two to three days, as opposed to fifteen days of rollout time for traditional billboard campaigns.

In response to JCDecaux’s exceptional value offering, the mass of once refusing noncustomers flocked to the industry. As a medium of advertisement, street furniture became the highest-growth market in the overall display advertising industry. Global spending on street furniture between 1995 and 2000, for example, grew by 60 percent compared with a 20 percent total increase in overall display advertising.

By signing contracts of eight to twenty-five years with municipalities, JCDecaux gained long-term exclusive rights for displaying ads with street furniture. After an initial capital investment, the only expenditure for JCDecaux in the subsequent years was the maintenance and renewal of the furniture. The operating margin of street furniture was as high as 40 percent, compared with 14 percent for billboards and 18 percent for transport advertisements. The exclusive contracts and high operating margins created a steady source of long-term revenue and profits. With this business model, JCDecaux was able to capture a leap in value for itself in return for a leap in value created for its buyers.

Today, JCDecaux is the number one street furniture-based ad space provider worldwide, with 33

4,000 panels in forty-one countries. What’s more, by looking to refusing noncustomers and focusing on the key commonalities that turned them away from the industry, JCDecaux also increased the demand for outdoor advertising by existing customers of the industry. Until then, existing customers had focused on what billboard locations or bus lines they could secure, for what period, and for how much. They took for granted that those were the only options available and worked within them. Again, it took noncustomers to shed insight into the implicit assumptions of the industry that could be challenged and rewritten to create a leap in value for all.

NetJets ® - reconstructing market boundaries

2007-10-03T20:43:00.001-07:00

NetJets ® - reconstructing market boundaries

Consider NetJets, which created the blue ocean of fractional jet ownership. In just over twenty years NetJets has grown larger than many airlines, with over six hundred and ninety aircraft, operating more than three hundred and seventy thousand flights to more than one hundred fifty countries. Purchased by Berkshire Hathaway in 1998, today NetJets is a multibillion-dollar business. NetJets’ success has been attributed to its flexibility, shortened travel time, hassle-free travel experience, increased reliability, and strategic pricing. The reality is that NetJets reconstructed market boundaries to create this blue ocean by looking across alternative industries.

The most lucrative mass of customers in the aviation industry is corporate travelers. NetJets looked at the existing alternatives and found that when business travelers want to fly, they have two principal choices. On the one hand, a company’s executives can fly business class or first class on a commercial airline. On the other hand, a company can purchase its own aircraft to serve its corporate travel needs. The strategic question is, Why would corporations choose one alternative industry over another? By focusing on the key factors that lead corporations to trade across alternatives and eliminating or reducing everything else, NetJets created its blue ocean strategy.

Consider this: Why do corporations choose to use commercial airlines for their corporate travel? Surely it’s not because of the long check-in and security lines, hectic flight transfers, overnight stays, or congested airports. Rather, they choose commercial airlines for only one reason: costs. On the one hand, commercial travel avoids the high up-front, fixed-cost investment of a multimillion dollar jet aircraft. On the other hand, a company purchases only the number of corporate airline tickets needed per year, lowering variable costs and reducing the possibility of unused aviation travel time that often accompanies the ownership of corporate jets.

So NetJets offers its customers one-sixteenth ownership of an aircraft to be shared with fifteen other customers, each one entitled to fifty hours of flight time per year. Starting at $375,000 (plus pilot, maintenance, and other monthly costs), owners can purchase a share in a $6 million aircraft. Customers get the convenience of a private jet at the price of a commercial airline ticket. Comparing first-class travel with private aircraft, the National Business Aviation Association found that when direct and indirect costs—hotel, meals, travel time, expenses—were factored in, the cost of first-class commercial travel was significantly higher. In a cost-benefit analysis for four passengers on a theoretical trip from Newark to Austin, the real cost of the commercial trip was $19,400, compared with $10,100 in a private jet. As for NetJets, it avoids the enormous fixed costs that commercial airlines attempt to cover by filling larger and larger aircraft. NetJets’ smaller airplanes, the use of smaller regional airports, and limited staff keep costs to a minimum.

To understand the rest of the NetJets formula, consider the flip side: Why do people choose corporate jets over commercial travel? Certainly it is not to pay the multimillion-dollar price to purchase planes. Nor is it to set up a dedicated flight department to take care of scheduling and other administrative matters. Nor it is to pay so-called deadhead costs—the costs of flying the aircraft from its home base to where it is needed. Rather, corporations buy private jets to dramatically cut total travel time, to reduce the hassle of congested airports, to allow for point-to-point travel, and to gain the benefit of having more productive and energized executives who can hit the ground running upon arrival. So NetJets built on these distinctive strengths. Whereas 70 percent of commercial flights went to only thirty airports across the United States, Net-Jets offered access to more than five thousand five hundred airports across the country, in convenient locations near business centers. On international flights, your plane pulls directly up to the customs office.

With point-to-point service and the exponential increase in the number of airports to land in, there are no flight transfers; trips that would otherwise require overnight stays can be completed in a single day. The time from your car to takeoff is measured in minutes instead of hours. For example, whereas a flight from Washington, D.C., to Sacramento would take 10.5 hours on a commercial airline, it is only 5.2 hours on a NetJets aircraft; from Palm Springs to Cabo San Lucas takes 6 hours commercial, and only 2.1 hours via NetJets. NetJets offers substantial cost savings in total travel time.

Perhaps most appealing, your jet is always available with only four hours’ notice. If a jet is not available, NetJets will charter one for you. Last but not least, NetJets dramatically reduces issues related to security threats and offers clients customized in-flight service, such as having your favorite food and beverages ready for you when you board. By offering the best of commercial travel and private jets and eliminating and reducing everything else, NetJets opened up a multibillion-dollar blue ocean wherein customers get the convenience and speed of a private jet with a low fixed cost and the low variable cost of commercial airline travel.

Blue Ocean Strategy

2007-10-03T20:36:00.000-07:00

Blue Ocean Strategy^[1] is a corporate strategy and bestselling business book written by Professors W. Chan Kim and Renée Mauborgne, of INSEAD. The book offers examples of how successful businesses captured uncontested market space, and thereby made competition irrelevant. This was formerly described as "Value Innovation," in 5 articles for the Harvard Business Review by Kim & Maubourgne before they released the book in 2005. Blue Ocean Strategy is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000).

Concept

The "ocean" refers to the market or industry. "Blue oceans" are untapped and uncontested markets, which provide little or no competition for anyone who would dive in, since the markets are not crowded. A "red ocean", on the other hand, refers to a saturated market where there is fierce competition, already crowded with people (companies) providing the same type of services or producing the same kind of goods.

Their idea is to do something different from everyone else, producing something that no one has yet seen, thereby creating a "blue ocean". An essential concept is that the innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. The authors critique Michael Porter's idea that successful business are either low-cost providers or niche-players. Instead, they propose finding value that crosses conventional market segmentation and offering value and lower cost.

Examples

Some examples of companies that may have created new market spaces in the opinion of Kim and Mauborgne include Cirque du Soleil (unique circus format) and Home Depot (offering the prices and range of lumberyard, while offering consumers classes to help them with DIY projects). A current example of this strategy is the success of the Nintendo Wii, which Nintendo designed to target audiences not traditionally known to play videogames.

Criticisms

While the professors offer approaches to finding uncontested market space, at the present there are few if any success stories of companies that applied their theories. This hole in their data persists despite the publication of Value Innovation concepts since 1997. A critical question is whether this book and its related ideas are descriptive rather than prescriptive. Kim and Maubourgne take the marketing of a value innovation as a given, assuming the marketing success will come as a matter of course. ^[2] The authors present many examples of successful innovations, and then explain from their Blue Ocean perspective - essentially interpreting success through their lenses.^[3]

Zobel gets highest alumni award from Harvard

2007-10-01T16:26:00.001-07:00

JAIME AUGUSTO Zobel de Ayala, chair and chief executive of Ayala Corp., has become the first Filipino to receive the highest achievement award for a graduate of Harvard Business School.

Zobel is also the youngest alumnus to receive the Alumni Achievement Award from Harvard Business School, which gives the award annually to "distinguished graduates who have contributed significantly to their companies and communities while upholding the highest standards and values."

According to the award-giving council, "the outstanding men and women who receive this most important honor represent the best in the alumni body and inspire all those who aspire to have an impact on business and society.

Zobel received a Master of Business Administration degree from Harvard Business School in 1987. He had graduated from Harvard College in 1981 with a bachelor's degree in Economics, cum laude.

In between those years, he worked overseas before joining the Ayala group of companies, where he held several line positions.

Today, together with his younger brother Fernando, who serves as president and chief operating officer of Ayala Corp., Zobel is credited for the Ayala group's successes in telecommunications and water distribution as well as its continued successes in real estate development and financial services.

Recipients
The first to receive the Harvard Business School Alumni Achievement Award was Robert McNamara, in 1968, when he was president of the World Bank. Other outstanding recipients since then have included Daniel Burke, chair and CEO emeritus of Johnson & Johnson; Dr. Daniel Vasella, chair and CEO of Novartis AG; Ratan Tata, chair of India's Tata group; Louis Gerstners Jr., former chair and chief executive of IBM; Phillip Yeo, chair of Singapore's Agency for Science, Technology and Research; and Minoru Makihara, former chair of Mitsubishi Corp.

To Zobel and this year's four other recipients, the awards were presented at Harvard on Sept. 27 in a ceremony hosted by Prof. Jay O. Light, dean of Harvard Business School.

The other recipients were Donna Dubinsky of Numenta, an intelligent-computing software firm; A. M. Mixon III of Invacare Corp., the world's leading manufacturer and distributor of home healthcare products; Sir Martin Sorrell of global advertising company WPP Group PLC; and Hansjoerg Wyss of Synthes Inc., manufacturer and distributor of orthopedic implants and instruments.

Ideal candidate
To Zobel, Professor Light said: "The impact you have had through Ayala Corp. makes you an ideal candidate. This award is a symbol of Harvard's appreciation of the standard you have set."

That standard has deep roots in the Ayala group--in the values and principles it stands for, as much as in its history and track record.

It is reflected in a remark Zobel made when he accepted the Management Man of the Year award: "Success is not measured by quick and one-time gains but by enduring beliefs and created by a disciplined approach to creating value. Second, success also entails combining profitability with a broader contribution to society."

The business successes of the 173-year-old Ayala group are well known, as are its wide-ranging contributions to social development. But not always seen are the ways it has affected countless Filipino lives and many communities.

While Ayala has always chosen to engage itself actively in the national development process, it continues to take this step further by finding solutions to various socioeconomic challenges. Many enterprising Filipinos--from merchants and service providers at the Ayala malls, to microfinance institutions through Bank of the Philippine Islands, and to small entrepreneurs that rely on Globe Telecom Inc. and Manila Water Co. Inc. for their livelihood--are able to nurture their dreams through the Ayala group.

Similarly far-reaching are the group's sustained actions to promote education in training student leaders, providing elementary education and spearheading the multisector initiative called Gearing up Internet Literacy and Access for Students, or Gilas, which helps to provide Internet access and basic computer literacy programs for students in all Philippine public high schools.

For certain, these social development contributions wouldn't be possible without the business successes, but the correlation between the two is deliberate, and has been rooted in the Ayala group's nearly two-century Philippine heritage.

Zobel calls Ayala's social development work "promoting the public good through the benefits of excellent professional management."

That is a well-appreciated statement of underlying characteristics that exhibit the conglomerate's long-term vision and commitment to national development.

The public's trust
The corporate professionalism and the social commitment have given Ayala a most solid reputation for integrity, and over many decades earned the public's trust for the Ayala brand.

"Building on trust has enabled us to mobilize talent and to bring together the best people to cater to an increasingly diverse array of customer needs," Zobel says.

It has also enabled Ayala to build capital and bring in some of the world's most respected corporations--including Mitsubishi Corp., Singapore Telecom and Development Bank of Singapore, among others--as strategic partners.

With its "human capital"--a highly empowered organization--and strong, global partners, the Ayala group today includes four listed corporations (Ayala Land, Bank of Philippine Islands, Globe Telecom and Manila Water) and accounts for about one-third of the Philippine Stock Exchange index.

For the corporate and other triumphs, Zobel pays tribute, first, to his father, Jaime Zobel de Ayala--who was voted Management Man of the Year in 1987--for decentralizing the group management structure in the 1980s and building the management foundations of present-day Ayala.

Second, he cites the leadership sharing he has with his brother, Fernando--"in an arrangement that it not very common in public, private or family institutions...The Ayala of today would not be where it is without the leadership Fernando has provided on myriad fronts and for his equal participation in decisions I have made."

And he acknowledges the group's organization--and the macro context in which it functions.

"Leadership," he says, "depends on the corporate context, economic history and organizational capability of any institution."

"Beneath the bright surface of performance of any business leader is the solid substance built by a longer history of a larger community of talented, motivated and disciplined executives that made such performance possible," he adds.

The Ayala group "collective wisdom, drive and vision shape and constantly refresh my own," Zobel says. "At the most senior level, we take pride in working as colleagues and partners, whether one works at the holding company or at the operating level.

"We like to encourage a spirit of collegiality, sharing and constructive criticism. The best ideas that flow out are certainly not always mine and the many backgrounds and experiences of our executive rank are too valuable to be kept limited in specific roles."

Ayala's evolution
The Ayala group itself has changed in character over the years, Zobel observes. In the past century, what had started as an agriculture- and trading-based group grew into a major Philippine manufacturing and services concern.

The Ayala group started investing in sectors that have become its core businesses well before Zobel joined it in 1981. It pioneered in real estate development in 1960 and modern banking in 1970. It went into telecommunications in 1974 and electronics manufacture in 1988. As its platform for social development contribution, it established in 1961 what has become Ayala Foundation.

And then, "the world changed on us," Zobel recalls. "Competition in real estate exploded. The banking and telecom sectors were liberalized and new markets were created by the resurgence of new technologies. Globalization altered most of the landscape ... And corporate social responsibility moved into the center of business concerns."

"History is not destiny," Zobel says. "The challenge for a company with a long history is how to keep fresh the energies on which it was founded while retaining the enduring values that define it. For the Ayala group, the challenge has been how to keep succeeding in changing times by building on the fundamental strengths with which we began."

Today the Ayala group focuses on three major businesses--real estate, financial services and telecom--plus emergent businesses in electronics manufacturing, technology investments, water distribution, automotive dealerships, international real estate markets and business processing outsourcing.

Zobel is also chair of Globe Telecom, Bank of the Philippine Islands and Integrated Microelectronics Inc.; vice chair of Ayala Land Inc.; and co-vice chair of Ayala Foundation. He is a member of the JP Morgan International Council, Mitsubishi Corp. International Advisory Committee, Toshiba International Advisory Group, Asia Business Council, Harvard University Asia Center Advisory Committee and the board of trustees of the Asian Institute of Management.

He also serves on the national council of the World Wide Fund for Nature (WWF-US), and chairs WWF Philippines.

The involvement in the environmental movement is one of the ways Zobel demonstrates his personal profound concern for the planet and future generations. And among underprivileged children in the Philippines, is perhaps the most recognizable face of Children's Hour, of which he is a trustee.

In all likelihood, it is a concern that the Harvard Business School award-giving council shares.

Lifestyle center stirs up Naga City’s commercial devt

2007-10-01T16:23:00.000-07:00

Banker Fidel L. Cu, chairman of the G7 Holdings Corp., has changed the landscape and stirred new trends in commercial development here when he built and opened in 2006 the Avenue Square, a commercial enclave designed as a lifestyle center.

With a 65-room, four-star designed hotel and a mix of bars, spas, diners, fitness and wellness center in its 2,000-square-meter commercial spaces and 600-person capacity function hall, Cu’s Avenue Square has not only changed the city’s landscape but their lifestyle as well.

A website literature defined the lifestyle center as “a shopping center or mixed-used commercial development that combines the traditional retail functions of a shopping mall but with leisure amenities oriented toward upscale consumers.”

In the Naga City setting, the lifestyle center Cu built is a high-end place where businessmen and associates can meet, transact business or just enjoy the amenities.

New trend

Engineer Emeterio Aman, real estate developer in Naga City, said the commercial development Cu pioneered made him revise some components of the real estate development plan of one of his subdivision projects.

He said that instead of a two-story building that would provide hotel services in his project Hacienda de Naga, he would instead build cabanas and fully furnished hotel-like apartments to complement Avenue Square’s lifestyle center.

Aldolfo Olivan of the Metro Naga Chamber of Commerce and Industry and the Filipino-Chinese Chamber of Commerce and Industry acknowledged that Cu’s pioneering initiative has set a new trend in commercial development here.

Olivan said Avenue Square has become instrumental in bringing in new experience because of its leisurely ambiance and comforts brought about by the architecture and interior design.

“Magayon baga” [“It’s beautiful”], he said.

Impressed by the impact of the Avenue Square on the thriving commercial strip of Magsaysay Avenue here that changed the Naga City’s beat after a year’s operation, Olivan decided to develop his adjacent property following designs of commercial buildings that harmonize with Cu’s lifestyle center.

Citations from city

Wilfredo Prilles, chief of the Naga City Planning Office, said that Olivan had originally planned to put up warehouses in the property in front of the Avenue Square but changed his plan when advised that this would destroy the ambiance of the whole area and violate city zoning ordinance.

Prilles said they were happy Olivan heeded their advice.

He said one reason why the Avenue Square thrives is the large segment of the city’s middle class while its poverty incidence is the lowest in Bicol, with only 1 out of every 5 households living below the poverty line.

Prilles noted the decisive role of the business sector in shaping the socioeconomic and socio-cultural scenes here.

He said the city government has not anticipated the private sector’s track of commercial development in Magsaysay Avenue, far from the city governments’ designated Central Business District II, that has yet to be developed, even though the SM group plans to put up a mall there.

In his inaugural policy statement upon assumption to his last term of office, Mayor Jesse Robredo noted that Avenue Square has perked up the economic activities in the city and made the city more vibrant and tourist-friendly.

Cu’s business achievements have earned recognition from the local government unit here when the city council passed Resolution 2007-260 that commended his “exemplary accomplishments and remarkable contribution to the business community that has brought sustainable growth and development of Naga City.”

Last year, the Metro Naga Chamber of Commerce and Industry also bestowed to this banker and developer the 2006 Halayao (archaic Bicol word for merchant) Award as Bicolano Businessman of the Year.

At the helm of the Avenue Square’s operation is Cu’s son Allan, the president of G7 Holdings Corp., while daughter-in-law Gwen is its managing director.

Vegetarian restaurants win health buffs in Baguio

2007-10-01T16:22:00.000-07:00

The weather and its vegetables are among the top draws of the country's summer capital.

But while Baguio is a major outlet of vegetables produced in Benguet and Mt. Province, only a handful of vegetarian restaurants thrive in the city.

These restaurants, however, survive the intense competition among local food outlets because they serve a steady and loyal market among health buffs and members of various groups who avoid meat in their diets.

Ed Joel Carlos, owner of the Azotea Greens, said that he wants to promote a vegetarian diet in a community known to be predominantly "meat eaters" to advocate a healthy lifestyle.

"We do not belong to any spiritual movement which promotes vegetarianism but they inspire us, they are part of our market," Carlos said.

He said he and his wife Ave became vegetarians eight years ago because they wanted to live healthier. They were co-owners of the '70s Bistro, a popular music joint and bar in Quezon City.

Carlos said it would take a lot of creativity to prepare a dish using only vegetables.

He said they had to make their dishes appealing to their clients and even to those who are not strictly vegetarians so they prepare popular Pinoy dishes like adobo, afritada, nilaga, kaldereta and ginataan using "vegetable meat."

Carlos said they use "veggie meat" made of soy, wheat and corn protein and carageenan (edible seaweed) as substitute for real meat.

He said Azotea Greens became popular for its "mushroom sisig," a family recipe made of minced button mushrooms, tofu and spices. Aside from Filipino dishes, Azotea Greens also serves Italian and Chinese vegetable dishes. The restaurant is located at the second floor of the La Azotea building on Session Road.

'Heaven on Earth'
The Heaven on Earth Vegetarian Center, at the fourth floor of Abanao Square on Abanao Street, serves another set of clients for its vegetarian fare.

Rafael Wasan, Heaven on Earth owner, said his membership to the spiritual movement Ananda Marga helped him embrace a healthier lifestyle.

"We would like to provide a choice...that was why we put up this place," he said.

Wasan and his wife Rose said since becoming vegetarians in the 1980s when they joined the Ananda Marga, they rarely get sick.

He said eating "just vegetables" would not make one's body weak as vegetables could provide the required dietary needs even without meat.

Heaven on Earth serves a complete meal, consisting of two viands and a cup of brown rice, for P39. It serves Filipino adobo, afritada, sisig and other dishes using veggie meat and tofu.

Wasan said they do not use dairy products--milk, butter and eggs--and avoid garlic and onion in their dishes.

He said they use herbs (basil, oregano) and other spices (turmeric) in their dishes because these are healthier.

"What we are doing is more of an advocacy than profit," he said.

Bliss Café
Now on its third year, Bliss Café remains popular among Baguio residents and tourists looking for fine dining experience.

Located at the second floor of Munsayac Inn on Leonard Wood Road, this vegetarian restaurant prepares "slow food" because all meals are cooked as ordered.

Shanti Isla and Jim Ward, owners of Bliss Café, said they wanted their clients to enjoy the food and ambience of Bliss Café.

"From a business standpoint, we are categorized as fine-dining restaurant that is why the food costs higher. More than 70 percent of our clients are tourists," Ward said.

"We love what we are doing, but it is still an uphill battle to get Filipinos [accept a] vegetable diet. I think there should be more education on proper diet," he said.

He said Bliss Café is a place where one can meditate. The scent of incense and images of Buddha would greet clients at the art gallery and dining area. Books on vegetarianism and Buddhism are available for clients.

Bliss' "mock-duck" adobo curry style is among the favorite dishes. The "duck meat" is made of special gluten and is served with pasta and eggplant.

The "Mexico set" (burritos filled with red beans, corn, cabbage and cheese) and Indian set (paneer or Indian white cheese sauteed in curry and cumin seeds, potato and basil) are also popular among customers.

The restaurant also serves pasta, vegetable salad and sandwiches. It also hosts art exhibits, poetry reading sessions and film showings.

OMG!
To say that "Oh My Gulay" is a vegetarian restaurant is an overstatement.

The restaurant is one of the features of the Victor Oteyza Community Art Space (Vocas) run by filmmaker Kidlat Tahimik at the family's La Azotea building on Session Road.

Tahimik describes his restaurant as "semi-fine dining" where meals are "not cheap and not expensive."

"We are a restaurant with no ideology in a nonmeat enterprise. We do not have any expectations in terms of profit. We put up the restaurant to support the activities of Vocas. With its modest profit, [we hope] it can support the art space," Tahimik said.

Vocas' interior design and its art space filled with paintings and woodcarvings of local artists draw clients to the place and eventually to the restaurant, said Tahimik.

Oh My Gulay offers a choice of pasta dishes, salad, sandwiches and beverage that uses the freshest vegetables and fruits from the local market. A dish costs at least P90.

Their pasta putanesca (playfully called "Anak ng Putanesca") usually elicits laughter from clients browsing the menu.

Benguet undergoes 'branding' for tourists

2007-10-01T16:20:00.000-07:00

Trade and tourism officials are pushing the "branding," or formulation of taglines, as a new strategy to promote the province's unique resources and attract more investments and tourists.

But the marketing approach, designed to sell the province's potentials beyond its being the country's "vegetable bowl," is expected to stir some problems for tourism and local officials of Kibungan, one of the 13 towns being promoted.

The Department of Tourism (DOT) earlier cautioned local officials on wrong impressions created by "inappropriate branding."

Purificacion Molintas, DOT Cordillera director, said a foreign tourist became frustrated when he found out that there were no snow slopes to ski on in Barangay Madaymen in Kibungan despite being widely advertised as the "Switzerland of Benguet."

Madaymen, a farming community where potatoes and carrots are grown, is Benguet's coldest village from December to February, with frost appearing from time to time.

But to refer to Madaymen as "'Switzerland' would be misleading," Molintas told the Philippine Daily Inquirer last Wednesday. "This is a case of mistaken branding. In fact, the foreigner brought with him a complete set of skiing gear, but he was disappointed when he saw vegetables instead of snow."

But an investment brochure that the Department of Trade and Industry and DOT will issue next month still identifies Kibungan as "Switzerland of Benguet," a tagline that Kibungan officials refused to remove despite objections from the DOT.

In the brochure, the following lines accompany the tagline: "Kibungan is a cool place of rocky mountains and pine trees resembling that of Switzerland's."

Molintas said Kibungan officials invoked a resolution that the town council passed earlier declaring the town as the "Switzerland of Benguet."

Vilma Cruz-Abad, DTI investment promotions officer in Benguet, said the use of "Switzerland" became a subject of debate when the brochures were being prepared.

Cruz-Abad was advised to ask the town council to pass another measure withdrawing the resolution that declared Kibungan as the "Switzerland of Benguet."

The investment brochures for each of the 13 towns were part of an investment and tourism project the DTI and the DOT prepared in the last two years.

No objections were aired to the other taglines: Benguet (Where gardens bloom beneath the heavens), Mankayan (The bosom of gold and copper in Benguet), Atok (Where vegetables flourish and cacti flowers bloom), Tuba (Cradle of nature's gift), Sablan (Fruit basket of Benguet), Bokod (The sulfur spring of Benguet), Tublay (Land of the fascinating caves), La Trinidad (Strawberry capital of the Philippines), Itogon (Land of golden opportunities), Kapangan (The cocoon producer of Benguet), Buguias (Vegetable panorama of the north), Bakun (Home of god Kabunian) and Kabayan (Home of the centuries-old mummies).

Free TV still main medium for most Filipinos

2007-10-01T16:15:00.000-07:00

More Filipinos turn to free television than to other mass media as main source of news, information and entertainment, a recent survey showed.

According to Synovate’s Media Atlas survey, 92 percent of respondents from A, B, C and D classes watched free television the day before and only 41 percent read a daily newspaper.

Only 46 percent had watched cable or satellite TV.

Watching television is the most common way for Filipinos to relax, with 94 percent saying so, Synovate said.

Also cited were resting (89 percent), spending time with family (85 percent), listening to music (74 percent) and eating out, chatting with friends, listening to radio and shopping.

In the preceding seven days, only 43 percent said they had read a Sunday newspaper and 79 percent said they had listened to a radio station, according to the survey.

Synovate’s first Media Atlas survey was done in the Metropolitan Manila and Greater Manila areas from June 2006 to July 2007.

It primarily measures local print media habits, spending patterns, product ownership, lifestyle, attitudes and values, especially across the expanding upper income groups.

A sample of 2,538 respondents, living in the Greater Manila Area aged 15 to 64 years old were polled using Computer-Assisted Telephone Interviewing (CATI) and face-to-face interviews.

CATI defines the media habits of upscale audience where telephone landline penetration is over 70 percent. This refers to socioeconomic classes A, B and C+.

Face-to-face approach was applied across all surveyed areas to pick up the classes broad C and D.

Synovate, however, did not provide reasons for preferences in network viewership, radio listenership and newspaper readership.

Favorite channels

Among the free channels, GMA Network’s Channel 7 ranks highest with 89 percent from among A, B, C and D classes who said they have watched the local channel within the past seven days.

This was followed closely by ABS-CBN Broadcasting’s Channel 2 at 83 percent, which is meanwhile the most preferred free channel among the affluent (AB classes).

Channel QTV 11 ranks third among preferred free channels with 48 percent viewership.

For radio, 37 percent of respondents preferred listening to FM station DZMB Love Radio (90.7 Mhz), followed closely by YES FM (101.1 Mhz), which is preferred by 30 percent.

Among AM stations, 17 percent listened more to DZMM Radyo Patrol (630 Khz) while 13 percent preferred DZRH (666 Khz).

Broadsheet readership

For daily broadsheets, the Inquirer enjoys the top spot from Mondays to Saturdays with an average issue readership (AIR) of 614,631.

Following closely is Manila Bulletin with an AIR of 585,806. Philippine Star ranks third with an AIR of 488,387.

AIR is defined as the number of readers who, on average, read a copy of a particular title.

On Sundays however, Manila Bulletin was said to have the widest reach per issue with an AIR of about 1.19 million or a reach of 17 percent of the sample polled.

Inquirer’s Sunday edition follows with an AIR of 747,927 or an 11-percent reach while Star has a 9-percent reach with an AIR of 603,894.

Among the affluent (AB) which have household incomes of more than P50,000, 44 percent preferred the Inquirer, 38 percent read Manila Bulletin and 34 percent for Star.

Inquirer is also the most read paper among those who have cars, credit cards and other financial investments.

Among newspaper sections, the top three most important sections were front page, according to 61 percent of respondents; entertainment, 44 percent; and sports, 39 percent.

Notably however, Filipinos spend only a short time in reading a daily newspaper with 49 percent of respondents saying they read for less than 15 minutes, given today’s increasingly fast-paced lifestyle.

About 30 percent said they spend 15 to 30 minutes in a day to read a newspaper.

The survey also showed that 63 percent of these respondents read at home while 24 percent read in either their office or school.

Spa for P299, anyone?

2007-10-01T16:13:00.000-07:00

MANILA, Philippines -- Most of the time, the words “spa” and “cheap” seem unlikely to be used in the same sentence. As spa has always been associated with the elite, the regular Juans find it hard to imagine spending their hard-earned money on such a luxury.

Big Apple Express Spa aims to debunk that notion. Established to be the spa for the “masa,” it deviates from what people usually get from other spas, like sauna, shower, and steam room, and instead focuses on the essentials of a good spa: cleanliness, competent staff, and privacy.

“We forego all those facilities (sauna, shower, steam room) in order to give more value to the customers through affordable prices, but we also make sure to maintain all the essential elements of a spa,” says Karlo Nisce, one of the owners of Big Apple Express Spa.

Established in 2005 by business partners Nisce, Victor Fernando, Roselin Gaw-Pagunsan and Mark Orbos, who are all massage enthusiasts, Big Apple Express Spa is the group’s answer to all the high-end spas dominating the market. But instead of competing head-on with the others, they saw the opportunity to create a niche by catering to what they believe are the ones who really get physically tired: the average, lower class workers.

Upon finding out through a study that most spa-goers only avail themselves of the massage but skip the other amenities, Nisce and his business partners realized that customers can do away without other facilities and just have the massage. But what they lack in the usual perks offered by other spas, they compensate with the things that matter the most to customers.

Big Apple Express Spa prides itself in offering clean, private rooms and very good services. In other spas, customers have to pay extra for a private room, whereas in Big Apple, every customer has his own.

They also invest on excellent training program for the staff to make sure that customers get quality services. By doing this, the spa was able to lower its prices, making them really affordable to their target market.

The most popular services are the Manhattan Anti-Stress, which is designed to make the customer feel calm and relaxed using mineral oil, and the Wall Street Energy, a dry massage that uses pressure to energize the body.

A massage costs P299.

Other services are “Massages of the World, such as the Pinoy Hilot, Balinese Massage, and Hawaiian Lomi-Lomi. They also offer foot spa, facial, scalp treatment, manicure and pedicure.

They also choose locations that are convenient and very visible to the people. One of their branches is inside the Gateway mall near the LRT, a strategy that enables everyone to see the outlet every time they take the train. Other branches are in Market! Market!, SM Mall of Asia, and SM Lipa.

Big Apple also believes in helping people by giving them jobs that do not require a college degree.

“We hire people based on attitude,” Nisce says. “As long as they believe in the concept. Even if you don’t know how to massage, we’ll put you into training; in two weeks time, you’ll already know how to massage. There are so many people out there looking for jobs, and that’s part of our vision, to help the Filipino people by providing them with jobs.”

As more and more people discover the benefits of a budget spa, Big Apple aims to go global in a few years time. Other budget spa may sprout and imitate what Big Apple has started, but Big Apple is confident that it can still be on top. Knowing that they have tapped a market that also needs to indulge in their desire to relax and pamper themselves without straining their budget, Big Apple believes that they have carved their own niche.

Big Apple Express Spa outlets are soon to open in Robinsons Galleria, the Bonifacio Global City, the provinces of Nueva Ecija and Nueva Vizcaya, and Subic. Big Apple Express Spa is open for franchising.

Good to Great

2007-09-24T22:44:00.000-07:00

Good to Great: Why Some Companies Make the Leap... and Others Don't is a management book by James C. Collins that aims to describe how companies transition from being average companies to great companies and how companies can fail to make the transition. "Greatness" is defined as financial performance several multiples better than the market average over a sustained period of time. Collins finds the main factor for achieving the transition to be a narrow focusing of the company’s resources on their field of competence.

One of the keys that Good to Great showed was that Value Based Organisations (companies with ideals above just monetary goals) were the longest lasting companies.

These companies demonstrated over and again that human beings are driven by idealism and emotion and then create greatness within the framework of putting Meaning and Purpose into their work. Dr Tal Ben- Shahar the lecturer of Harvard Business School's most popular subject, Positive Psychology, states in his book "Happier" (McGraw Hill 2007) that there are two kinds of currency - Financial and Emotional currency. Companies that focus only on financial currency provide no meaning to their workers and therefore are doomed to fail. Human beings simply will not perform well for any length of time without meaning and purpose. Money creates a short term buzz but happiness is sustained through Pleasure, Meaning and Purpose. The focus by companies in the last 40 years on financial currency only may suggest why western worlds have never been richer in financial terms and yet never been poorer in happiness terms (the happiness rate of Americans has halved in the last fifty years whilst the standard of living has doubled).

"The days of creating and building Value Based Organisations where companies are built based around the Family Village Tribe structure and their people feel a sense of belonging and devotion from their leaders is coming. Those who have already grasped that concept (such as South West Airlines) are not only enjoying great financial rewards but also rewards of pride and belonging which every human heart craves" - Alan Peck, Director Positive Leadership, www.positiveleader.com

Built to Last: Successful Habits of Visionary Companies

2007-09-24T22:41:00.000-07:00

Built to Last: Successful Habits of Visionary Companies is a book written by Jim Collins and Jerry I. Porras (Publisher: HarperBusiness October 26, 1994) . The book outlines the results of a six-year research project into what makes enduring great companies. Two primary objectives for the authors’ research were: “to identify underlying characteristics are common to highly visionary companies” and “to effectively communicate findings so they can influence management.” The research conducted by Collins and Porras and articulated in Built to Last is presented with great examples based on stories and validated by research data.

Collins and Porras listed a total of eighteen companies they identified as ‘visionary.’ They defined a visionary company as one that is a premier institution in its industry, is widely admired by knowledgeable businesspeople, made an imprint on the world, had multiple generations of Chief executive officers (CEOs), had multiple product/service life cycles, and was founded before 1950. The list of visionary companies was determined based on the results of a survey of 1,000 CEOs. The authors ensured representation across all industries and various sized organizations by sampling from Fortune 500 industrial companies, Fortune 500 service companies, Inc. 500 private companies and Inc. 100 public companies. The survey yielded a 23% response rate with 3.2 companies listed per response. An important caveat the authors express is the fact that through their research, they can claim a correlation, not a causal link between their findings and the success of companies.

The list of eighteen companies identified as visionary:

These companies have taken leadership roles in their industries, offering innovative products and services and consistently outsmarting rivals. What made the research particularly useful and interesting is that Collins and Porras compared and contrasted these visionary companies with a control set of rivals. For instance, Boeing was compared and contrasted with Douglas Aircraft, Marriott was compared and contrasted with Howard Johnson, and Merck was compared and contrasted with Pfizer. The findings are based on what the visionary companies do that is different than close competitors who have achieved a high level of success, but not to the extent of the visionary companies. From 1926 through 1990 the comparison companies outperformed the general stock market by two times whereas the visionary companies outperformed the market by fifteen times.

THE ONLY GAME IN TOWN

2007-09-24T21:41:00.000-07:00

JOSE GO IS BETTING big on golf. The Philippines currently has 68 courses. Another dozen will be built within 18 months, of which three belong to Go. The billionaire retailer reckons that eventually about 15% of his group's earnings will come from golf resorts. To Go, just an average player himself, green is foremost the color of money.

It is not surprising why. When Go built his Evercrest golf resort outside Manila just two years ago, he sold the first 1,000 shares at up to $25,000 each. The $17 million raised covered the cost of the development. Now he is marketing the remaining 1,000 shares at close to twice the original price. This will gain him some $42 million - all profit.

Golf, long popular most elsewhere in Asia, is finally in full swing in the Philippines. Rising incomes and increasing leisure time among Filipinos have fueled the bonanza. So have overseas visitors. Many of the courses in the Philippines are world-class, yet golfers do not have to pay hefty amounts to play them. Local green fees average only 1,500 pesos (about $57) while caddy charges are about 300 pesos for 18 holes. These figures are a quarter or even less of what a golf buff will shell out in Japan. Says Eduardo Ermita, president of the Golf Association: "The Japa-nese enjoy golf here more than they do in Japan."

Many other people also appreciate golfing in the Philippines. Early last year, the country hosted the prestigious Johnnie Walker Classic. And this November, the world amateur golf team championship will take place in the country. Says Ermita: "The Philippines is fast becoming Asia's golf [center]."

Other countries may dispute that assertion. But there is no arguing that golf has become big business in the Philippines. Over the years, the values of shares in clubs and resorts nationwide have jumped manifold. Octavio Espiritu, the president and CEO of Far East Bank - handicap: 5, probably the best among local bankers - bought his membership in the Manila Golf Club for about $27,000 in 1983. Today, it is worth nearly $1 million.

Such mouth-watering valuations have persuaded many companies to venture into golf. Property developers and hotel chains lead the way. But getting involved, too, are businesses with no connection to the game at all. Espiritu's Far East Bank has a 20% stake in a 300-hectare development in southern boomtown Cagayan de Oro which will feature an 18-hole course. Another three banks - Solidbank, Metrobank and Philippine Commercial International - are taking a 10% stake in the $192 million, 277-hectare Splendido Taal residential village and golf resort overlooking the Tagaytay volcano in northern Cavite Province. It will boast a course designed by top Australian pro Greg Norman. Even the military's pension fund is investing in two courses.

The game has also been boosted by President Fidel Ramos - handicap: 16 or 17, depending on what kind of day he is having. He spends plenty of time on the greens, patching up cabinet squabbles, broking a joint venture or barking orders to rescue the latest kidnap victim. Ramos often makes it a point to visit, if not inaugurate, new courses.

Not everyone is happy with the growing number of courses. Envi-ronmentalists believe they waste water, use pesticides harmful to people and animals and feature sandtraps made of ground coral. Ramos has declared that courses must require environmental clearance certificates. Given golf's growing value, the government can expect to be deluged with green applications for greens for years to come.

SERVE THE POOR - AND PROSPER

2007-09-24T21:40:00.001-07:00

JOSE GO, 48, WORKS 12-hour days overseeing the day-to-day operations of his Ever Gotesco retailing and real-estate empire. Reputedly a billionaire, the Filipino entrepreneur made his fortune by targeting the low-income group. Senior Correspondent Antonio Lopez recently spoke with Go in Manila. Excerpts:

Why do you focus on the masses?

The majority of our people are poor. But what they lack in income, they make up for in numbers. Now their salaries are growing and so is their purchasing power. The Filipino wage earner is a family man. If he draws his salary on a Saturday, on Sunday he is at the mall spending that money with the family.

The prospects for retailing are very good. Our gross national product is getting bigger; per capita income is growing fast. The expansion of the retail market is accelerating and may reach a rate of 37% per annum. Personal consumption expenditures will grow 5% this year, compared with the historical average of 3.7%.

So what happens to Ever when most Filipinos have become prosperous?

Everybody is now price conscious. Even the affluent no longer care so much for brands. Besides, the consumer market is huge and it will take time before everyone graduates to the higher income bracket. Anyway, we will follow market trends. If consumers want brand names, we will give them brand names.

At 0.5% last year, your net income as a percentage of sales was the thinnest among the big retailers.

Our margins have been reduced considerably because of renovations in our stores, which involved improvements such as adding airconditioning capacity and better interiors. With the increased comfort, we expect bigger crowds and thus higher volumes. This year, our profit margin will be 7.5% of sales. Despite that, we will maintain quality control. We go directly to our suppliers and we import goods ourselves. With the reduction in tariff duties, we have increased our importations. This year, about 30% of our products will be imported, up from 20% last year and 5% to 10% five years ago.

Do you favor allowing foreigners into retailing?

Yes. Competition will be good for customers. They will get quality goods at better prices. As a retailer, we have the distinct advantages of knowing our customers and our market, having the right price and being at the right location. And high volume turnover will keep our profits healthy. When foreigners come in, they will move into major locations - where we are now. We can tie up with them. They can give us access to a worldwide purchasing system and technical know-how. We can provide manpower, good relations with suppliers and knowledge of the market.

Where do you see your group going?

We will put up one shopping center every year over the next five years. We will be in resort hotels as well as low-cost housing. We are also going into what we call backward integration - developing our strategic, engineering and design expertise to support our projects. We will become one of the country's leading real estate companies. And I will be very happy if we become No. 10 among the top business conglomerates in this country.

DISCOUNT BILLIONAIRE

2007-09-24T21:37:00.000-07:00

FOR FILIPINOS, IT WAS the year of living dangerously. In 1972, students and workers held demonstrations almost daily demanding the ouster of President Ferdinand Marcos. The rallies along Claro M. Recto Avenue in Manila's university belt often turned violent. It was not a good place to do business. But 24-year-old commerce graduate Jose Go opened his five-story Ever Emporium along Recto anyway.

Marcos imposed martial law in September 1972. Within two years, the stability brought by authoritarian rule and a surge in prices of the Philippines' commodity exports boosted the economy. Ever became a shopping hub. "I started the one-stop shopping concept in the Philippines," says Go proudly. Because customers were mainly the district's tens of thousands of students on slim allowances, Ever department store and supermarket - the mall also housed three cinemas - kept prices low. But volume made up for thin margins.

Soon, Ever recouped construction expenses of $150,000. In 1975, Go used the profits from the Recto Avenue emporium to build the $6 million, 40,000-square-meter Ever Gotesco mall in Kalookan City, a populous but downmarket part of metropolitan Manila. In five years, Ever retail stores in three shopping centers had sales of 4.86 billion pesos - $648 million in 1980 dollars.

Fast forward to 1996. Now 48 and chairman of the Ever Gotesco group of companies, Go recently formed Ever Gotesco Resources and Holdings (EGRH), which owns two major shopping malls and is building two more outside Manila. It will sell 27.5% of its stock in an initial public offering later this year. Go has also acquired 85% of listed Suricon, a struggling mining concern that will be renamed Gotesco Land. He has injected assets valued at $192.3 million into the firm, including a 120-hectare low-cost housing project in Bulacan province north of Manila and a 120-hectare hot springs resort in Laguna down south. Go is building golf courses and has bought a small bank and 20% of a paging company. His goal: to build a $2-billion retail and property conglomerate that earns $350 million a year.

Can he do it? The six Ever department stores and supermarkets notched sales of $346 million last year, but net profit was only some $173,000, a poor 0.05% return. Go says gross profit was actually 20% for department stores and up to 10% for supermarkets. But Ever had gone on a renovation spree. With that out of the way, he expects 1996 net profit to top $33 million, 7.5% of forecast sales of $450 million. He is unfazed by the imminent entry of foreign retailers. Despite industry protests, the Philippine Congress is expected to scrap a 1954 law that allows only 100% Filipino-owned corporations in the retail sector. Go says he is talking with U.S.-based Wal-Mart and Price Ventures about a partnership.

With or without a foreign backer, the go-getting retailer is expanding in a big way. By 2000, says Go, his group will be operating nine retail outlets and raking in $760 million in revenues. They will be housed in a string of shopping malls across the country. EGRH's shopping centers in Laguna and Pangasinan provinces on the main island of Luzon are scheduled to open in 1997 and 1998. "We are negotiating to buy future mall sites in Mindanao in the south," says Go, "10 hectares each in the cities of Davao and General Santos, and six hectares in Cagayan de Oro City." He is spending millions on property and resorts development, but retailing remains Go's first love: "It's what made me what I am today."

More to the point, he credits the Filipino masses for making him a billionaire. Along with supermarket chain Uniwide, Ever has focused on the lower classes . That is a huge market in a country of 68.5 million people with a per capita GNP income of only $1,100 a year. "Up to 70% of the average Filipino family's income goes to food," says Go. "This is why we're putting up supermarkets, which account for the bulk of our retail sales. The remaining 30% of a poor family's income is spent on clothing and other products like appliances. So we opened department stores." Ever is today the Philippines' third-largest retailer in sales. Uniwide, which is also planning an initial public offering, is No. 1 with revenues of $423 million last year.

The more well-known Shoemart stores, which target the middle class, is second with 1995 revenues of $350 million. But the department store and supermarket chain owned by the acknowledged sultan of retailers, Henry Sy, is the most profitable. At $14.7 million, Shoemart's profit last year represents 12% of turnover. In contrast, Uniwide earned only $338,400, a return on sales of 0.08%. The disparity in margins points up the importance of traffic in targeting the low-income segment. "The idea is to generate enough volume to make a profit," says Go. One advantage of serving the poor: "They pay in cash." That means Ever need not worry about commissions to credit card companies, which typically take a 4.5% bite out of sales.

In expansion, Ever has the edge over Uniwide, which is only now moving into shopping malls. And Go is not building in affluent places but in areas convenient to low-wage earners. In addition to the Recto mall and two others in Kalookan, Go also owns shopping centers in the Metro Manila towns of Las Pi–as and Cainta, and Commonwealth district in the outskirts of suburban Quezon City. Go had bought the out-of-the-way properties when almost no one wanted them. He values the land and shopping malls today at $1.5 billion.

The retailer is also making sure that Ever prices remain hard to beat. Go sells a can of Hormel corned beef for 40.95 pesos ($1.60). It costs about a peso more at Uniwide. A 340-gram can of meat loaf retails for 66.15 pesos at Ever. It is 69.70 pesos - 5% more expensive - at Shoemart. Go says Manila's reduction in tariff duties is helping Ever keep prices low. So do cheap wages. Like many other retailers, Ever hires workers from local employment agencies for six months at a time, avoiding paying benefits like bonuses and vacation leaves. That's a practice that legislators say they want to curb by allowing foreign retailers in. Because of the new competition, argues Sen. Sergio Osme–a III, local retail workers "will have to be made permanent and paid better."

But the country's two supermarkets associations oppose the scrapping of the retail law, which was enacted to protect small sundry stores owned by Filipinos from competing Chinese merchants. Ironically, ethnic Chinese businessmen who have become naturalized citizens are leading the fight against deregulation. Jose Albert, president of the Philippine Association of Supermarkets, warns of "predatory pricing" by foreigners to carve out market share: "This is what will kill a lot of retailers because the Philippine market is very price-sensitive."

Surprisingly, Go does not share the worries of his fellow retailers. Consumers will benefit from tighter competition, he says, and local operations can tap the expertise of the newcomers. European discounter Makro has already teamed up with Shoemart and the Ayala group, the Philippines' oldest property developer, to open a members only, no-frills wholesale store east of Manila. Also said to be interested in the Philippines is Wal-Mart, which has joint ventures in Indonesia, Taiwan, Thailand and Hong Kong, and is opening outlets in southern China.

Go says Ever will continue to compete because of its intimate knowledge of the low-end market. He says the facelift last year - additional airconditioning units were installed and shop interiors were redesigned - would also help. Even the exteriors have been spruced up. Ever Gotesco Commonwealth Center, completed in 1994, looks like a Disneyland castle. Ever Laguna Plaza will have a science fiction theme. One shopping mall, the $20-million Ever-Gotesco Grand Central in Kalookan, is the envy of other retailers because of its location. It houses the northern terminal of the 15-km LRT elevated mass transit system. Some 500,000 commuters go through the turnstiles every day.

Then there are Go's other enterprises. Last year, he bought bankrupt Bangko Silangan, now known as Oriental Bank, and infused $11.9 million in new capital. "It's a service to our customers, suppliers and contractors," says Go. Turning his attention to the upscale market, he is building a yacht club at a private hideaway in Batangas province and a 240-room hotel at nearby Evercrest White Cove Beach Resort, which he also owns. Some $17 million worth of golf membership shares have been snapped up; Go expects an additional $276 million when the Securities and Exchange Commission approves the sale of shares in the yacht club and the Chateau Royale Theme Parks due to open in 1997.

After starting work on two housing estates last year, Go has launched three more in 1996. The 39-hectare Evergreen Executive Village in Kalookan will be completed this year. Among other projects, Gotesco Land will be building the 200-hectare Kang-Irag golf resort in the central city of Cebu. Aren't golf courses harmful to the environment? "Our modern drainage and sprinkler systems recycle water," says Go. "And the clubs provide the poor job opportunities." He also dismisses fears about a property glut in the Philippines. Says Go: "There is so much demand to be met. And the economy is getting better and better."

Another part of the Go empire is Gotesco, the hardware and electrical supplies manufacturer started by his late father, Go Tong, an immigrant from the Chinese city of Xiamen. The patriarch had financed his son's first mall from the small factory's earnings. Gotesco (1995 sales: $67.6 million) now benefits from synergies with Go's construction projects. Like his father, Go credits 12-hour office days for his success "Hard work is the secret of every business," he says. "It's 60% hard work - and 40% luck." And the ability to read the people's pulse.

RP poised to capture bigger slice of Japan travel mart

2007-09-24T21:24:00.000-07:00

TOKYO, Japan — The Department of Tourism (DOT) is confident the country is well positioned to capture a bigger share of Japan’s travel market with a more focused marketing campaign specially targeted at the growing number of outbound Japanese female travelers.

At a recent travel fair here organized by the Japan Association of Travel Agents (JATA), Tourism Secretary Joseph Ace Durano expressed confidence the Philippines is ready to compete head on with other major travel destinations in Asia with the recent shift in branding campaign focusing on a person’s “wellness from the inside out.”

“The recent focus on health and wellness which features hilot as the traditional Filipino healing method using herbs, oils and natural essences, has added a new and exciting dimension to the already established ‘Premium Resort Islands Philippines‘ brand in Japan,” Durano said.

Japan is considered one of the world’s lucrative travel markets with 17.4 million big-spending outbound travelers. By 2010, the Japanese government expects the number of outbound travelers to hit 20 million. In 2006, 17.53 million Japanese went abroad. For this year alone, the number of outbound Japanese travelers is expected to grow to 17.7 million.

Of this, the country aims to attract one million Japanese tourists over the next three years by focusing on three fast-growing markets: the ladies market, the active seniors and the scuba divers.

Durano said the DOT has shifted its campaign for Japanese tourists to cater to the young, single, female group. “In the past, most of the packages were geared towards the Japanese male, but it was a segment that was declining. That is why we decided to shift our focus to the fastest growing segments which are the Japanese ladies and the scuba divers.”

Based on DOT study, Japanese female travelers visiting the country are more inclined to spend on beauty, wellness and pampering.

With this in mind, Team Japan head Benito C. Bengzon Jr. said the DOT has repositioned its campaign to promote the Philippines as an attractive health and wellness destination for the Japanese market.

“Japan is a mature market. It is also a highly competitive market. But the Philippines has a wide range of products that can be offered to the discriminating taste of travelers, particularly the Japanese tourists,” Bengzon explained.

Tourist arrivals from Japan reached the 400,000 mark for the first time in 2005 and climbed to an all-time high of over 420,000 in 2006. For this year, the government expects the number to hit more than 450,000.

Of total tourist arrivals in the Philippines, which hit 2.8 million in 2006, roughtly 21 percent were Koreans, 18 percent were from North America and 15 percent were from Japan.

Makeover boosts Burger King sales

2007-09-24T21:18:00.000-07:00

The Burger King fastfood chain in the Philippines has seen a significant rise in its daily sales in the past three months after it completed its makeover.

In June, daily sales rose eight percent to P60,008 compared with the same period last year. In July, daily sales reached P61,598 which increased further to P64,581 the following month.

Among Burger King’s best-performing branches are Glorietta, Robinsons Galleria, Gateway and SM San Lazaro.

Last year, the company registered sales of P500 million.

BK Titans, the new owner of the Burger King fastfood chain, is spending P600 million over the next five years for the construction of an additional 75 stores and the refurbishment of existing branches.

The new branches will increase store network to 100 by 2011 or 2012.

For this year, the company is planning to put up at least four new branches — one in Ortigas, two in Makati and one in Trinoma North Edsa.

To date, there are 22 Burger King outlets in the Philippines.

The company said it will continue to expand as strategic locations become available. Preferred locations are those near tollways, airports or those with high foot traffic.

To attract more clients, the group is considering putting up computer kiosks to be managed by Netopia internet café which offers Internet access, desktop publishing equipment, and network gaming services.

Funding will come from internally generated cash.

Shareholders of BKT include former Customs Commissioner Alberto Lina, telecommunications tycoon Manuel V. Pangilinan, Airfreight president Angelito Alvarez and Tanduay Holdings Inc. president Wilson Young.

BKT bought the Burger King fastfood chain in the Philippines from Ayala Corp. last year as part of the latter’s strategy to focus on its core businesses which include real estate, financial services, telecommunications, utilities and electronics.

Ayala exited the food business in 2001 when it sold Purefoods Corp. to San Miguel Corp., but the Burger King business was not part of that transaction. Since that time, Ayala and BK Asiapac had looked for a buyer for Burger King.