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Group Number 5: Jeds Group BA 291.

1 STRATEGIC MANAGEMENT TOPIC: PHENOMENAL GROWTH

PHENOMENAL GROWTH
Many companies, especially new ones, struggle in keeping up with the demands of their business. Managers are immersed in almost every detail of their operations and are busy in taking care of day-to-day affairs. For this reason planning and implementing the growth of the firm comes only as a second priority. As a result, growth is normally expected to be gradual and to take a lot of time. But how come there are companies out there who seem to leave the others behind in terms of growth? What makes them so special from others? We refer to this occurrence as phenomenal growth. As defined by the group (or as agreed between us), the term phenomenal growth may refer to the extraordinary speed that a company develops its operations due to its exceptional performance in the market. Aside from speed, it may also hint toward the outstanding level or intensity of growth that a company achieves compared to the average of its industry. For this topic presentation, we examine what factors might have helped companies to experience a period of phenomenal growth. The group intentionally chose Filipino companies who experienced phenomenal growth as our examples to highlight the entrepreneurial spirit of our fellow Filipinos and also to celebrate and learn from their success.

MANG INASAL
BACKGROUND Edgar "Injap" Sia II is the man behind Mang Inasal, one of the fastest growing food companies in the Philippines, which has become a modern icon of the Ilonggo culinary culture. Injap was born of Chinese father and Japanese mother, thus the nickname. Both parents are businesspersons and were very influential to his entrepreneurial spirit. He engaged in business as early as when he was 20 y/o. He managed the family owned, Four-Season Hotel, followed by Mister Labada, a Laundromat, then Injap Color Express, a photo developing shop all of which are based in Iloilo. His flagship venture was, Mang Inasal, the specialty of which is grilled chicken. It opened on December 12, 2003 in Robinson's Mall Carpark-Iloilo. Mang Inasal became an instant commercial success and experienced rapid growth, opening multiple branches in Visayas and Mindanao and later on, in Metro Manila. It was open for franchise in 2005, just about 2 years after its foundation. By 2009, Mang Inasal opened one hundred stores and in October of 2010, 70% of Mang Inasal was acquired by Jollibee Foods 1 Corporation for P3 billion ($68.8 million). According to their official website, to date, Mang Inasal already has 394 branches nationwide. STRATEGIES 1. Differentiation Apart from the usual food presentations of multinational food company copycats, Mang Inasal endeavors to adhere to elements that bear a distinctively Pinoy stamp-grilling with charcoal, rice wrapped in banana leaves, a marinade concocted out of local spices and herbs, bamboo
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http://en.wikipedia.org/wiki/Mang_Inasal

sticks for skewers, and the ambience that encourages kinamot (the Ilonggo term in eating with the hands) whenever chicken inasal is served. All these evoke a rush of nostalgia for tradition, culture, and most of all, home.2 Also, it is the only fast food chain that offers Chicken Inasal, a favorite Filipino food that used to be offered only from expensive specialty restaurants. It is also evident that the ambience that is very homey and local propelled Mang Inasals phenomenal growth. 2. Low-Cost Unlimited rice and affordable meals became a hit to customers, mostly, the working class who need a quick fix of good quality food. The group would like to attribute part of its commercial success to the Pinoys concept of value for money. Mang Inasals unlimited rice offering was an early differentiation that contributed to the popularity of the brand. Now that they are already a part of the food industry giant, Jollibee Corporation, Mang Inasal will now have the advantage of economies of scale and an even stronger network. LESSONS LEARNED: THE 3 BILLION SUCCESS SECRET3 How does one go from one restaurant in his neighborhood mall to selling 70 percent of his company for P3 billion in seven years, selling Ilonggo-style native grilled chicken? Mang Inasals success would make any entrepreneur green with envy. According to the data and articles from Entrepreneur Magazine, here are the five secrets to his P3 billion success: 1. Ready, fire, aim! Sia was presented with an opportunity when a slot at the Robinsons mall in Iloilo became vacant. He reserved the space without knowing what to put up. His gut just told him that there was an opportunity since he saw potential in the space. After a few short weeks, he came up with the concept of a Chicken Inasal fast food store the first fast food, value-for-money type of Inasal restaurant. His approach to expanding to Metro Manila and Luzon was the same: I was not very familiar with Manila, because I was born and raised in the Visayas. I only visited once a year, and it was usually for very short stays. So I knew I was in for quite a challenge taking Mang Inasal to Luzon, Sia said. 2. Work your butt off! Sia worked his butt off day and night. He wasnt afraid of getting his hands literally dirty. He was known to work long hours and help mop and clean up the first store. Then he would come home and help prepare and marinate chicken for the next day. He realized it was going to be lots of work, but he didnt give up. His work ethic and attitude brought him through lots of disappointments and trials. 3. Think innovation. Simple innovation pays dividends. Just dont copy, copy and add something of value. Sia entered the Inasal scene late. But he simply did the positioning game of Al Ries and Jack Trout and scored a slam dunk. Mang Inasal was the FIRST Chicken Inasal restaurant that offered quick service with unlimited rice. For P49, a student or office worker can have a filling tasty, grilled chicken meal. 4. Think BIG! Sia started getting franchise inquiries fast, but held off for two years before offering the first franchise. He did the right thing by networking and getting help from the Philippine Franchise
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http://www.manginasal.com/mi/capturing_the_heart.html Mang Inasals P3B success secret By Ned Roberto, Ardy Roberto Philippine Daily Inquirer First Posted 23:43:00 10/21/2010

Association (PFA) and coming up with a franchise opportunity that was affordable. For a startup franchise fee of about P800,000, you can have your own Mang Inasal franchise. (Total investment is about P3 million to P4 million). After his first franchise offer in 2005, there are now over 300 branches/franchisees. 5. Think Marketing. The marketing message of Mang Inasal remains simple and focused. All you see is a picture of a tasty-looking piece of grilled chicken, the name Mang Inasal, (sometimes you see the price: P49) and a bold tagline: Unlimited Rice! Given the success of the business, the young Sia, aka Mr. Mang Inasal, will surely inspire many entrepreneurs and marketers for years to come

QUEZON POULTRY AND LIVESTOCK CORPORATION (QPLC)


BACKGROUND This is a second hand story of phenomenal growth from a resource person closely linked to the owner of company. QPLC is a poultry integrator that grows and markets broiler chickens to wet markets and various institutions in Luzon. Majority of their farm sites are in the CALABARZON area. In 2006 super-typhoon Milenyo stuck Bicol, Southern Luzon and Manila. The aftermath devastated the company. A big number of their contract growers had their farms collapsed. The owner, Mr. Noel Raya, was left with a very difficult predicament. They have already scheduled the production of chicks to be delivered to these farms for growing. So they have no farm to load their chicks for growing. In the contract growing set-up, the farms are not owned by the company. The grower owns the building and manages the flock while the company takes care of the inputs (feeds, medication, and chicks) and control marketing. The grower earns incentives for efficiently grown birds. Mr. Raya figured that to sustain the production line, he has to repair and reconstruct the poultry buildings owned by his contract growers. This is against most principles of investments and asset management since the company does not own the land and poultry buildings. The action was very crude that even that contract for the repair had multiple loopholes. But against advice, he spent for the repairs. He argued that if he waits for the growers to recover at their own pace, he cant capitalize on the huge shortage of chickens that he anticipates to happen a few months later. He spent a lot on the reconstruction of most of his growers farms. But since he was first to recover, he was the first to continuously market chicken in the area. Construction lasts for months so competitors werent able to follow-suit right away. With this advantage, he was able to attain full recovery of his repair costs, and was able to attract more growers allowing his company to grow by more than double of their initial population. In this case, a natural disaster that caused damages was actually a window of opportunity to the owner. It gave QPLC to outplay the competition by being the first to react and taking risk in a relatively unconventional strategy. This is similar to the popular movie, Forrest Gump, where the lead character survived a typhoon that sank all other shrimp-catching vessels giving him instant monopoly. STRATEGY 1. Speed in recovery - First mover wins the contest. QPLC made the right choice in reconstructing their growers farms. Since they were first to recover, they were the first to continuously market chicken in the area and as a result, were able to cater to their competitors customer base as well. By being available during this time of hard times, they were able to increase their market share.

LESSONS LEARNED - Finding opportunity in bad times 1. Seek opportunities There is a saying that opportunities knock softly which is why businessmen must always be prepared. This can be achieved by keep an open mind. By deciding not to wait QPLC was able to gain advantage over his competitors. 2. Right attitude and positive thinking There is always a bright side in everything which is why you should not let adversity stop you. Like QPLC, businessmen should never give up and look for other ways to win the goal. Always think win/win 3. Take calculated risks.

CHOOKS TO GO
BACKGROUND Masarap kahit walang sauce Chooks To Go of Bounty Fresh is one of the latest roasting chicken businesses in the Philippines. Joining the likes of Andoks and Baliwag Lechon Manok, Chooks To Go has created an innovative version of Lechon Manok. Its tasty and delicious without a sauce. Today, Chooks-to-Go is now the largest chain of roast chicken outlets in the country, with more than 1000 outlets to date. Catching the nation by storm starting in June 2008, Chooksto-Go has brought its juicy, absolutely tasty oven-roasted chicken to every major nook and corner of the country. STRATEGIES Chooks-to-Go is a forward integration expansion of Bounty Fresh. The agribusiness giant is the 2nd largest producer of chicken in the country (Magnolia, San Miguel Food Corporation is #1). They have the advantage of having an extended value-chain where-in they produce their own chickens. One noticeable innovation about Chooks-to-Go is that there chickens are in a variety of sizes namely budget, regular, and jumbo, with varying prices. This gives customers options based on their available budget. This also allows them to have a more secure inventory because the large volume of roasted chicken would be difficult to sustain if the brand has only 1 particular size, like in the case of its competitors, Manok ni Sr. Pedro and Andoks litson. This allows them to sell at more competitive prices. Another innovation is the maximization of their stall which functions as a chicken depot and rotisserie in one. Aside from their roasted chicken, Chooks-to-Go stalls also offer other Bounty Fresh products such as fresh chicken and processed goods which are sold at lower prices because supplies come directly from their processing plants (killing-the-middleman strategy). Chooks-to-Go captured the taste of masang Pilipino. They even made a very powerful marketing strategy like their TV commercials. Many people have tried the product and the result is positive. The next project will be to enter franchising. To date, company does not offer franchising yet, but marinated chicken and other chicken products are available. However rights to the name, Chooks-to-Go is still exclusive. All their branches are company owned and managed. LESSONS LEARNED - Question tradition and the old ways, finding new ways Grilled chicken is an existing product and there are many companies such as Andoks and Baliwag who offer this. In Chooks to Gos case, they were able to find a way to improve on an existing product by being creative and innovative. By questioning tradition and the old ways,

They were able to find a new and alternative way of marketing grilled chicken. Grilled chicken that is masarap kahit walang sauce

LEVEL UP! GAMING4


BACKGROUND Level up Gaming was brought here in the Philippines by the father-and-son of Mr. Nonoy and Ben Colayco. They are the pioneers of Massive Multiplayer Online Gaming (MMOG) in the country. Nonoy, being an investment and finance expert and his son Ben being a young marketer and on-line game fanatic were a very odd couple, initially. Nonoy got the idea from one business trip to Korea where he learned that MMOG was very popular there. He then asked Ben, who was working in a marketing firm abroad, to go home and start the project. Being an online gamer himself, he got excited with the project and immediately went home. STRATEGIES Two significant strategies to the success were the registration scheme and marketing strategy. They started trying out two game Oz World and 3D Chat, which were not very popular. They used it to see how they can monetize to venture. They figured that having a paid online registration and user log-in would allow them to sell gaming time to the users. They then purchased Ragnarok, a more popular brand of online game in Korea. The challenge was how to sell the game. The marketing budget was fairly low. So what waived traditional advertising media and chose simpler, more direct distribution channels. They simply gave away installation CDs to comics, magazines, gaming shops, and even went as far as sponsoring school activities like sports fests and proms. Soon enough, Ragnarok had 20,000 subscribers and later became a nationwide craze. According to Ben, they connected to their target market and became one with them. The subscribers were able to create a subculture and felt like they owned the Ragnarok world. The father-and-son tandem is searching the globe for countries that are capable of accepting the similar Level Up! subculture. They are now eyeing Brazil and India and planning have already begun. LESSONS LEARNED Leveling Up! 1. 2. 3. 4. Understanding the industry. The game is the foundation of innovation. Creativity that is not grounded in the logic of the game is not innovation The best bond in partnership is not physically seen. It is shared vision and values Innovators do not stop at the first level. Level up is a never ending process of innovation, the best defense from copy cats are innovations that bring the level of the game up. There is always a need for continuous improvement to win the market

4 neGOsyo: 50 Inspiring Entrepreneurial Stories. 9. Level Up! Bringing the gaming world to a whole new level Nonoy and Ben Colayco. pp.66-71.

HYPERGROWTH MANAGEMENT
Hypergrowth Management Rule/Strategy Focus first on sales (Sell first and ask questions later) Mang Inasal/Chooks-to-Go Strategy (What did they do?) Mang Inasal and Chooks-to-Go focused on establishing as many outlets as fast as possible. Level Up! amassed sales by giving away thousands of installation cds for them to attract sufficient subscribers. Mang Inasal - unlimited rice = value for money concept - home concept different from typical fast food chains - quick service concept Chooks-to-Go - different sizes/different pricing of their chicken thereby giving customers more choices - also sold other Bounty Fresh products in the same store thereby ensuring a second revenue stream aside from roast chicken Level Up! - Used simple, old fashioned distribution and not limelight media to distribute the product - Expansion to potential countries using the Philippine experience Mang Inasal and Chooks-to-Go have standard processes that are followed in each of their outlets. Operational details like order management, logistics, menu and in-store merchandizing standardized across all outlets. Mang Inasal the owner himself led by example by working on the frontlines thereby getting first-hand knowledge about the business and customers. Mang Inasal - the owner led by example by working long hours and was not afraid to "get his hands dirty" by working hands-on in the operations.

Innovate with caution (Dont try too hard too innovate)

Standardize structures and processes (Organize like McDonalds)

Delegate decisions to field managers (Push decisions out in the front-line) Reward action and initiative (Foster a can-do culture)

SUMMARY
1. Differentiation/Low Price Strategy Most if not all of our examples have their own ways to be distinct from their respective competitors. A pricing strategy in which a company offers a relatively low price to stimulate demand and gain market share is also a way for product differentiation. The low price strategy, however, is very evident to Mang Inasal and Chooks to Go. Mang Inasal offers unlimited rice for a reasonably low price with a homey ambiance bringing the Ilongo culinary culture. On the other hand, Chooks to Go offers Bounty Fresh products such as fresh chicken and processed goods which are sold at lower prices because supplies come directly from their processing plants (killing-the-middleman strategy).

2. Franchising/Distribution

Franchising is the practice of using another firm's successful business model. In case of Mang Inasal, the company had earned so much from it franchisees. The franchisees will have to pay Mang Inasal a million pesos for operation support, opening marketing and training support and use of brand trade name. A royalty service fee per month is also guaranteed which comprised of 5% of gross sales of the franchisee. As Mang Inasal became popular, more and more entrepreneurs are also encouraged to get a Mang Inasal franchise. To ensure that an entrepreneur would gain profit from his business, Mang Inasal would be the one to select the store location. They are also open for the entrepreneurs location suggestion and would do a project study before the approval of the suggested store location. 3. Finding a technology partner It is important to have a technology partner if you are in a technology business especially if you plan to go global like the Level Up. Having a joint venture or partnership to local partners will promote sharing of risk and ability to combine the local in depth knowledge with a foreign partner with know-how on technology process. THE SUCCESS OF PHENOMENAL GROWTH Above all, let us all be reminded that business concepts and management strategies need to have the following factors in order to be successful: 1. 2. 3. 4. 5. 6. 7. Great ideas Great timing Great need With a little help from family and friends The value of education Connections Lots of luck