Q1. What are the factors that contributed to Universal Robina Corp’s success? Universal Robina Corporation (URC) traces its beginnings all the way back to 1954. John Gokongwei was doing very well then as a trader/importer. He had learned the trade when his father died before the war, and had worked hard through the war and postwar years to prosper. However, while he thrived, he took a long hard look at his company, and correctly predicted that trading would remain a low-margin business. On the other hand, a successful manufacturer controlling its own production and distribution would command more profitable margins. Mr. John decided to construct a corn milling plant to produce glucose and cornstarch, Universal Corn Products (UCP), the first linchpin of the company that would become the URC we know today. For a time, business was good. However, Mr. John was still looking ahead, working with an eye towards the future.
While the business was doing very well, it was producing essentially a commodity, which a customer could easily access elsewhere. To stay ahead in the game, Mr. John had to diversify by producing and marketing his own branded consumer foods, similar to the multinational companies in the country like Nestle and Procter & Gamble. In a sense, he wanted to put up the first ‘local’ MNC, borne out of their best practices. Thus, in 1961, Consolidated Food Corporation was born. Their first ‘home run’ product was Blend 45, the first locally-manufactured coffee blend, dubbed as the “Pinoy coffee”. This became the largest-selling coffee brand in the market, even beating market leaders Café Puro and Nescafe. After coffee came chocolates. Nips, a panned chocolate was a staple of Filipino childhood. In 1963, Robina Farms started operations, beginning with poultry products. This was also the beginning of the vertical integration of the Gokongwei businesses, as the farms would be able to purchase feeds from UCP in the future.
Later that decade, Robichem Laboratories would be put up, to cater to the veterinary needs of the farms businesses. Robina Farms expanded as it entered the hogs business in the latter part of the 70s. 1966 saw the establishment of Universal Robina Corporation, which pioneered the salty snacks industry through Chiz Curls, Chippy, and Potato Chips, under the “Jack ‘n Jill” brand. Other snack products would follow over the years, as the company successfully introduced market leaders like Pretzels, Piattos, and Maxx. The coming decades saw more acquisitions and expansion. In the early 1970s, the family entered the commodities business through the formation of Continental Milling Corporation, for flour milling and production. The late 1980s brought the acquisition of three sugar mills and refineries, under URC Sugar.
These two businesses provided stable cash flows, and allowed for further vertical integration in the supply chain, to help URC weather any volatility in the cyclical commodities markets. In line with this strategy, the late 1990s saw the entry of URC into the plastics business, through URC Packaging. While the businesses became more diversified, the companies were slowly integrated in order to streamline and minimize costs. In 2005, the present structure of the group was completed. All the different companies are now organized under the Universal Robina Corporation umbrella, divided into 3 focused groups: the Branded Consumer Food Group, comprised of BCFG Domestic (including packaging) and International the Agro-Industrial group, comprised of Universal Corn Products, Robina Farms, and Robichem and the Commodities group, with the Sugar and Flour divisions Behind a business success’ is a great leader. URC took the risk of diversifying its products although they don’t have the assurance that their products will be accepted by the public. They made products that they know it will be easily liked by the consumers with affordable price at right place with extensive promotion. Another factor is they are using technology that helps their work easier and faster.
Q2. Analyze the growing market based in Asia. How did Gokongwei take advantage of it?
John Gokongwei offered great quality products with affordable prices to us for he knows that people today are buying goods that they will get benefits from it and tend to buy for a cheaper one. Another one is that he did was he made sure that the business that was established grows faster in the business industry. Also he made innovations to the product not only for their costumer to remain loyal to them but also to gain more buyers. These are the only examples of how did Gokogwei took advantage of the growing market in Asia.
Q3. Based on Gokongwei’s words of wisdom, how can the Philippines compete globally?
As of today, Philippines has 86 million people. With this population, he believes that Philippines could create our own global brand. One of the factors that contribute to a business success is its human resources or manpower. The Philippines exports labor around internationally. And if Filipinos can contribute to other countries’ businesses, what more if they work together to build Philippines own global brand. Filipinos must be business minded so that they can compete globally. Added by Gokongwei’s wisdom stating “self-determination”, we can achieve our goals.
Q4. Are there hindrances for the Philippines’ inability to have its own global brand? Explain.
To be honest, yes. Many of us Filipinos do not buy, or the perfect term is ‘patronize’ our own local products. They are captivated by the goods that are being imported here. For the Philippines to be able to have own global brand, first we Filipinos should be the first one to buy it, and to like it so that when it would be known to many especially in the other countries, it will be the start for our own local brand to be a global brand. I think the bottomline is that the main problem is us Filipinos.
Q5. Identify Gokongwei’s entrepreneurial traits which made him successful.
He is a positive thinker. His visions are all about innovations. He has a soul for public and he loves the work for social responsibility. He is good in strategic management. And of course, he has self-determination; he would do anything for his business although there are people making it hard for him to be successful. Although there was this one time that he lost in his business career and it was publicized, he didn’t stop to work hard. And the result is that he became successful in business. What I love most is he always works harder and harder, beating his best, and pushing boundaries.
Q6. Make a research on the acquisition of Sun Cellular by PLDT. Make your comments.
In the short span not more than five years, Sun Cellular managed to have big returns for the corporation. PLDT did not actually fully acquired Sun Cellular but they gained the almost half of the controlling interest (52%) from where 48% is still vested to the corporation. I agreed to Gokongwei that it was difficult for them to sold Sun Cellular but he wanted is to have a partner which is PLDT to gain more profits than the last 4 years. The Sun Cellular service to the subscribers will remain though it was acquired. I think they should continue this kind of way about their telecom, and improve those who lacks improvements.
