1.

Dunkin Brands (DNKN) experienced a largely positive year, in what was a

challenging food distribution environment in 2014. While share-price
expansion over the course of the year was less than impressive, the
company has been able to grow in stride with the broader industry from an
operational perspective. Indeed, the top line expanded a respectable 5%
over the 2014 term, to nearly $750 million. And with the internationally
renowned business expecting a comeback from its Baskin-Robbins brand,
and high single-digit growth from its Dunkin Donuts units abroad, the
company seems poised to combat headwinds present in this industry.
Thus, we examine the companys potential to deliver long-term value amid a
bevy of challenges, including harsh weather conditions, increased
competition in the coffee and breakfast categories, and economic pressure
on middle- and low-income families. To do so, we will be taking a brief look at
Dunkin Brands business in this article by performing an easy-to-follow SWOT
analysis of the company, evaluating its Strengths, Weaknesses,
Opportunities, and Threats.
Business
Headquartered out of Canton, Massachusetts, Dunkin Brands has expanded
to more than 18,800 outlets in nearly 60 countries around the globe in its 65
years of operation, establishing itself as one of the worlds leading baked
goods and coffee chains. At the conclusion of 2014, the companys nearly
100% franchised business model encompassed about 11,300 Dunkin Donuts
restaurants and 7,500 Baskin-Robbins locations. Formerly a part of Allied

Domecq, the company was purchased by a group of private equity firms in

2006, including Bain Capital, Thomas Lee, and The Carlyle Group. In July of
2011, these investors took the company public, selling over 25.6 million
common shares at an initial value of $19.00 per share. The company now
trades on the NASDAQ Global Select Market under the ticker symbol DNKN.

Strengths
Brand Recognition: With its strong geographic coverage, legendary variety of
more than 1,000 doughnut products, and strong loyalty by the average Joe,
Dunkin Donuts is one of the most recognizable quick-service restaurants in
the world. The companys tag line America runs on Dunkin reminds us of
the loyalty that its customers possess for its pastries, bagels, muffins, and
coffee. It was this loyalty that thwarted an attempt by Canadian based Tim
Hortons to expand its American market share in 2010. Meanwhile, DNKNs
Baskin-Robbins brand is one of the most notable ice-cream parlors in the
world. Its trademarked 31 flavors helped it grow in the 1940s and 50s, and
the company now has roots in many of the largest economic markets in the
world.
Convenience: Dunkin Brands storefront offers customers a time-saving
opportunity that is valuable during breakfast hours. Many of its various
locations offer drive-up service and others are located strategically in and
around airports, train stations, and travel ports that generally necessitate
fast service. The advance that the company anticipates in China and the
Middle East over the coming years will likely stem from the companys
growing position in these geographies. But to weigh the value of this
characteristic, one would need to look no further than the increasing samestore sales figures for the company over the past year. Despite an
unappealing operating environment, it was still able to raise comps in the
December term by 1.4%. This missed expectations, but Dunkin still managed
to perform better than some of its industry competitors.
Weaknesses

Poor Franchisee Relationships: In order to grow a franchised business, the

franchisor must be able to attract new ownership to manage its locations.
The franchisor should offer a proven business plan and support the needs of
those that operate its storefronts. That said, Dunkin Brands has a significant
history of lawsuits with its franchisees. In 2010 alone, the company
experienced legal battles with 15 separate owners. And while those that
have opened franchises over the course of the companys history have been
able to fatten their wallets, this history of bad relationships could be enough
to deter potential investors from entering the DNKN family, particularly when
noting the bevy of successful franchises in a similar price range.
Domestic Expansion: Opportunities present in the emerging economies of
the world are intriguing for Dunkin Brands. However, maintained expansion
within the United States may not be as easy to come by over the long term.
The current layout of restaurants suggests there is little room for the
company to grow in the Northeast, where the majority of its sales come from.
Too, when delving into the companys geographic sales breakdown, sales
volume significantly drops off in the Midwest, and that could make it difficult
to find franchisees willing to take a position in those locations.
Opportunities
International Expansion: In its year-end 2014 earnings release, management
spoke of its intent to focus its expansion efforts in Europe, The Middle East,
and China. With roughly 19,000 total locations, and an expectation to expand
to more than 30,000, these markets will soon be saturated by locations. But
beyond these regions, there are a multitude of emerging economies that
could provide growth opportunities for Dunkin Brands. And, if the company
continues expanding its base on the West coast of the U.S., and generates
stronger volumes from its present locations in the Midwest, the top line
would certainly see a material increase.
Menu Diversification: The company has more than just entertained the idea
of breaking into lunch and dinner dayparts over the past few years. Dunkin
has added new sandwiches and drink options to its menu to meet this
growing demand. But to go even farther, the company has a significant
opportunity in the health craze that has swept the nation recently. Therefore,

we would keep an eye on low-calorie items, and generally health-conscious

choices going forward.
Threats
Strong Competition: Dunkin Brands may have a strong presence in
Northeastern United States, but elsewhere it is not always the dominant
breakfast force on the market. Companies like Starbucks (SBUX) and Krispy
Kreme (KKD) have been worthy adversaries in the battle for quick-service
dominance in the breakfast daypart. And now, competition from local coffee
shops and bakeries has grown, as well, with cultural changes in some urban
areas resulting in an unfavorable view for large restaurant chains. All the
while, Restaurant Brands (QSR), the operator of Burger King, recently made
the move to acquire Tim Hortons, the Canadian coffee distributor. Under the
wing of the burger chain, we may soon witness another attempt by the
company to crack into the larger American markets.
Raw Material Costs: Coffee and other commodities are subject to substantial
price fluctuations and potential shortages. While there havent been
particularly noteworthy price changes recently (prices have actually declined
over the last 3 months), we have seen the negative effects that coffee
shortages have had in the past. If commodity prices rise again, which is
likely, franchisees could witness reduced sales due to lower consumer
demand stemming from higher retail prices. Too, interruptions in the supply
chain have the potential to magnify any potential cost increases, and would
hurt Dunkins lofty margins.
Conclusion
All told, Dunkin Brands has done a good job of overcoming a difficult
operating environment this past year. It recently introduced new products
like its Dark Roast Coffee and croissant doughnuts. And, it has incorporated
a new rewards program that has largely outperformed expectations. If the
company can bring these lucrative opportunities to their new locations
overseas, it has the potential to post strong gains over the long haul. The
stock also possess a dividend that is attractive, with a yield over 2%.
Dunkin Donuts Analysis of Threat of Entry, Rivalry,

Substitutes, Suppliers, and buyers

Michael Porter developed a Five Forces analysis that can be used on any
business and industry. This analysis is representative for an industry strategy
development. This analysis helps a company develop itself against the
competition within the industry. The rivalry consists of the threat of entry,
the threat of rivalry, the threat of substitutes, the threat of suppliers and the
threat of buyers.
The diagram below explains how these threats work

The rivalry with current competition is extremely high within the industry.
Dunkin Donuts competes against the likes of Starbucks, Krispy Kreme,
McDonalds, Caribou Coffee, and many other local and regional coffee shops,
doughnut shops and restaurants.
Dunkin Donuts customers possess substantial bargaining power because
there is no switching cost for the customers.
The threat of substitute products and services for Dunkin Donuts is
substantial. Substitutes for Dunkin Donuts Coffee include Starbucks Coffee,
McDonalds Coffee, tea, soft drinks, energy drinks, and water.
Dunkin Donuts suppliers have high bargaining power due to global coffee
demand. Coffee beans are produced only in certain geographical regions.
Issues with fair trade of coffee bean growers has become a paramount issue.
The threat of new entrants in the competition with Dunkin Donuts is low.
The market is highly saturated and a substantial amount of capital
associated with the real estate is required in order to enter the industry.

2.

Following are the advantages of international business:

1. Earning valuable foreign currency: A country is able to earn valuable
foreign currency by exporting its goods to other countries.
2. Division of labor: International business leads to specialization in the
production of goods. Thus, quality goods for which it has maximum
advantage.
3. Optimum utilization of available resources: International business reduces
waste of national resources. It helps each country to make optimum use of
its natural resources. Every country produces those goods for which it has
maximum advantage.
4. Increase in the standard of living of people: Sale of surplus production of
one country to another country leads to increase in the incomes and savings
of the people of the former country. This raises the standard of living of the
people of the exporting country.
5. Benefits to consumers: Consumers are also benefited from international
business. A variety of goods of better quality is available to them at
reasonable prices. Hence, consumers of importing countries are benefited as
they have a good scope of choice of products.
6. Encouragement to industrialization: Exchange of technological know-how
enables underdeveloped and developing countries to establish new
industries with the assistance of foreign aid. Thus, international business
helps in the development of industry.
7. International peace and harmony: International business removes rivalry
between different countries and promotes international peace and harmony.
It creates dependence on each other, improves mutual confidence and good
faith.
8. Cultural development: International business fosters exchange of culture
and ideas between countries having greater diversities. A better way of life,
dress, food, etc. can be adopted form other countries.
9. Economies of large-scale production: International business leads to
production on a large scale because of extensive demand. All the countries
of the world can obtain the advantages of large-scale production.

10. Stability in prices of products: International business irons out wide

fluctuations in the prices of products. It leads to stabilization of prices of
products throughout the world.
11. Widening the market for products: International business widens the
market for products all over the world. With the increase in the scale of
operation, the profit of the business increases.
12. Advantageous in emergencies: International business enables us to face
emergencies. In case of natural calamity, goods can be imported to meet
necessaries.
13. Creating employment opportunities: International business boosts
employment opportunities in an export-oriented market. It raises the
standard of living of the countries dealing international business.
14. Increase in Government revenue: The Government imposes import and
export duties for this trade. Thus, Government is able to earn a great deal of
revenue from international business.
15.

Other advantages:

Effective business education

Improvement in production systems.

Elimination of monopolies, etc.

Disadvantages of international business are as follows:

1. Adverse effects on economy: One country affects the economy of another
country through international business. Moreover, large-scale exports
discourage the industrial development of importing country. Consequently,
the economy of the importing country suffers.
2. Competition with developed countries: Developing countries are unable to
compete with developed countries. It hampers the growth and development
of developing countries, unless international business is controlled.
3. Rivalry among nations: Intense competition and eagerness to export more
commodities may lead rivalry among nations. As a consequence,
international peace may be hampered.
4. Colonization: Sometimes, the importing country is reduced to a colony due
to economic and political dependence and industrial backwardness.

5. Exploitation: International business leads to exploitation of developing

countries the developed countries. The prosperous and dominant countries
regulate the economy poor nations.
6. Legal problems: Varied laws regulations and customs formalities followed
different countries, have a direct b earring on their export and import trade.
7. Publicity of undesirable fashions: Cultural values and heritages are not
identical in all the countries. There are many aspects, which may not be
suitable for our atmosphere, culture, tradition, etc. This, indecency is often
found to be created in the name of cultural exchange.
8. Language problems: Different languages in different countries create
barriers to establish trade relations between various countries.
9. Dumping policy: Developed countries often sell their products to
developing countries below the cost of production. As a result, industries in
developing countries of the close down.
10. Complicated technical procedure: International business in highly
technical and it has complicated procedure. It involves various uses of
important documents. It required expert services to cope with complicate
procedures at different stages.
11. Shortage of goods in the exporting country: Sometimes, traders prefer to
sell their goods to other countries instate of in their own country in order to
earn more profits. This results in the shortage of goods within the home
country.
12. Adverse effects on home industry: International business poses a threat
to the survival of infant and nascent industries. Due to foreign competition
and unrestricted imports upcoming industries in the home country may
collapse.

3.
a. Debenhams
Debenhams has differentiated itself by bringing on board a raft of designers
who produce unique fashion sold at healthy own-brand margins, which has
allowed the company to invest in pricing at a time when consumers are
increasingly price-sensitive. Its paid off, with positive same-store sales over
the summer and an upgrade to full year profit forecasts which helped push
up the shares by almost 4% in morning trade.

Considering that Debenhams is well-known for its sales and promotional days
(it started its Summer sale five days early, earning a welcome competitive
advantage over its high street rivals), Mr. Sharp assured journalists on the
early morning call that its not just about promotions, but about everyday
value and the right pricing on non-promotional stock. It hit gross margins but
lifted sales so the company expects to beat full year forecasts, no mean feat
in the current environment.
Competitive Advantages
1. High brand equity in fashion world and high brand recall among
consumers.
2. Company has stores spread in UK, Ireland and Denmark with 150+ stores
and presence in around 40 countries which gives them strong international
presence.
3. Company has strength in merger and acquisitions of companies
4. Strong multi-brand retail stores with excellent customer services
5. Products and services include Fashion clothing, shoes, accessories,
cosmetics, home and furniture, electrical, gifts, toys
6. Nearly 30,000 employees are working for it.

b. TopShops
Topshop is a British multinational retailer which specializes in fashion
clothing, shoes, make-up and accessories. Topshop is estimated to have
around 440 shops in 33 countries and currently operating online shopping
systems in some of its markets. Topshop belongs to the Arcadia
Group alongside with the other retail outlets which consist of Burton, Dorothy
Perkins and Miss Selfridge. The whole business under Sit Philip Greens
management and Topshop is currently focusing on expansion to new
dynamic markets, with its strength of variety in products and the reasonable
prices. (wiki) In 1964, Topshop was founded as its original brand Peter
Robinsons Top Shop with the first store opened in 1974. This fashion brand
focusing on youth sector was first located within the Sheffield branch of Peter
Robinson, a now-defunct department store chain. With the strong and stable
base varied across the world, Topshop obtains potential opportunities in an
expansion plan into new emerging economy.
Competitive Advantages

hit-the-trend styles

affordability and choices might make survive the recession

accessibility - store coverage all over the country

numerous choices in product lines

numerous options in collections and styles, e.g. vintage boutiques

choices at multiple price points - for different choices of styles and

qualities

store space (especially the London Oxford flagship)

additional services - cafe, nail salon, etc

established brand image and market position (in the UK)

variety of collections to appeal to a broader range of customers

(current and potential)

over 300 stores in UK and 100 overseas - increased competitive edge

on the international retail market

Charity work w/ PETA, Breast Cancer, and TRAID & Starlight - providing
a strong brand image and establishes a trustful relationship with its
stakeholders. Charity work provides opportunities to target a greater
range of potential customers, those who wouldn't normally shop at
TopShop otherwise

Great range of awards won, making it a highly recognized High Street

Retailer in Britain, and overseas

New collection every week.

Explore the brand- combining media culture and celebrities to produce

products.

Different types and styles of garments.

Many sections- salon, nails beauty, caf and a lot of fashion

magazines, customers can spend whole day in the store.

Internet website where garments sell out quickly making shopping

accessible to every body also international customers. Here you can

buy key garments for the season and see the latest trends. Also
offering podcasts of new collections and behind the scene events, thus
keeping up with the new technology and creating good PR and
generating more sales.

Top Shop has a lot of services that makes the customer life easy, like:
Style Advisor, Membership Card, Topshop To Go, Topshop Express,
Concierge, In-store

Targeting young consumers - very fashion-cautious group that will

spend on fashion more. They offer a student discount. This is good
because a majority of their target market.

association with celebrities - creating fame and attachment to brand

affordability and choices might make survive the recession

International expansion opportunities with its mature market position

and status among consumers in the UK

Brand expansion - they are starting to carry Men's clothing line on their
website, which allows them to enter a new customer market &
potentially open Men's top shop stores

association with celebrities - creating fame and attachment to brand

Increase in popularity and strength of brand image (use of Kate Moss world renowned model), provides expansion and recognition
opportunities all across the world. Kate Moss is a prescriptor who
catches young people attention, and they are biggest fashion
consumers

Website management- producing and selling the products by website,

customers shopping by internet without visiting the store, also it can
shipping to USA and Europe.

It is the good stage for new fashion designers to present their works.

Internet market offers many opportunities for Top Shop.

c. Zara

At Zara, speed and responsiveness are more important than cost. Other
brands churn out fast fashion; Zara, which is based in Spain and is owned by
the distribution group Inditex, attempts the mind-spinning supersonic.
The founder, Amancio Ortega, founded Zara in 1975 in order to better
understand world markets for his fashion merchandise. A decade later, he
formed Inditex as a parent company for Zara, as well as several other retail
concepts and suppliers that he had built.
While Zara originated in Spain, it has stores in 86 countries today - in Europe,
the Americas, the Middle East, and Asia. In 2012, Inditex reported total sales
of US$20.7 billion, with Zara representing 66 percent of total sales (US$13.6
billion).
The brand is renowned for its ability to deliver new clothes to stores quickly
and in small batches. Twice a week, at precise times, store managers order
clothes, and twice a week, on schedule, new garments arrive. The company
produces about 450 million items a year for its 1,770 stores in 86 countries.
To achieve this, Zara controls more of its manufacturing and supply chain
than do most retailers. For Zara, its supply chain is its competitive
advantage.
Competitive Advantages
Synergy between business and operations strategy
Zaras overarching strategy is achieving growth through diversification with
and vertical integrations. It adapts couture designs, manufactures,
distributes, and retails clothes within 2 weeks of the original design first
appearing on catwalks.
The company owns its supply chain and competes on its speed to market,
literally embodying the idea of fast fashion.
Just in time production
The retail giant delivers fashionable and trendy numbers catered for different
tastes through a controlled and integrated process just in time.
Zara keeps a significant amount of its production in-house and makes sure
that its own factories reserve 85 percent of their capacity for in-season
adjustments. In-house production allows the organization to be flexible in the
amount, frequency, and variety of new products to be launched.
The company often relies heavily on sophisticated fabric sourcing, cutting,
and sewing facilities nearer to its design headquarters in Spain.

The wages of these European workers are higher than those of their
developing-world counterparts, but the turnaround time is miraculous.
Zara's supply chain
Zara also commits six months in advance to only 15 to 25 percent of a
seasons line. And it only locks in 50 to 60 percent of its line by the start of
the season, meaning that up to 50 percent of its clothes are designed and
manufactured smack in the middle of the season.
If a certain style or design suddenly becomes the rage, Zara reacts quickly,
designs new styles, and gets them into stores while the trend is still peaking.
Store managers communicate customer feedback on what shoppers like,
what they dislike, and what theyre looking for. That data is instantly
funneled back to Zaras designers who begin sketching on the spot.
Zara also has extra capacity on hand to respond to demand as it develops
and changes. For example, it operates typically 4.5 days per week around
the clock on full capacity, leaving some flexibility for extra shifts and
temporary labor to be added when needed.
This then translates to frequent shipments and higher numbers of customer
visits to the stores, creating an environment of shortage and opportunity.
This strategy allows Zara to sell more items at full price because of the sense
of scarcity and exclusiveness the company exudes. Zaras total cost is
minimized because merchandise that is marked down is reduced
dramatically as compared to competitors.
Zara gets 85 percent of the full price on its clothes, while the industry
average is 60 to70 percent. Unsold items account for less than 10 percent of
its stock, compared with an industry average of 17 to 20 percent.
Most companies are riddled with penny-wise, pound-foolish decisions to
reduce cost, says Kasra Ferdows, a professor at Georgetown Universitys
McDonough School of Business. Zara understands that if they dont have to
discount as much, they can spend money on other things. They can see the
benefit of this certainty and rhythm in the supply chain.
This is also the reason why Zara can afford the extra labor and shipping costs
needed to accommodate and satisfy changes in seasonality and customer
demand.
Inventory management

Zara is fully aware of the saying, inventory = death. It avoids piling up

inventory in any part of its supply chain from raw materials to finished
products.
Inventory optimization models are put in place to help the company to
determine the quantity that should be delivered to every single one of its
retail stores via shipments that go out twice every week. The stock delivered
is strictly limited, ensuring that each store only receives just want they need.
This goes towards the brand image of being exclusive while avoiding the
buildup of unpopular stock.
This quick in-season turnaround, from production facilities located close to
Zaras distribution headquarters in Spain, allows Zara to ship more often and
in smaller batches. If the design Zara hastily creates in an attempt to chase
the latest trend does not in fact sell well, little harm is done.
The batch is small, so theres not a ton of unsold inventory to get rid of. And
because the failed experiment is over in a jiffy, theres still time to try a
different style, and then a different one after that.
The secret to their success has been centralization, says Felipe Caro, an
associate professor at the University of California at Los Angeless Anderson
School of Management and a business adviser to the company. They can
make decisions in a very coordinated manner.
Zara sticks to a deep, predictable and fast rhythm, based around order
fulfillment to stores.
Each Zara outlet sends in two orders per week on specific days and timing.
Trucks leave at specific times and shipments arrive in stores at specific
times. Garments are already labeled and priced upon destination.
As a result of this clearly defined rhythm, every staff involved (from design to
procurement, production, distribution, and retail) knows the timeline and how
their activities pan out with respect to other functions. That certainly also
extends to Zara customers, who know when to visit stores for fresh new
garments.
Solid distribution network
Zaras strong distribution network enables the company to deliver goods to
its European stores within 24 hours, and to its American and Asian outlets in
less than 40 hours.
According to Nelson Fraiman, a Columbia Business School professor who
wrote a 2010 case study about Zara, the retail giant can get a product out

from concept to store in just 15 days, while the industry standard is 6

months.
At Zara, change doesnt disrupt the system; its part of the system.
This brands success story shows the strength of its operations. Its crossfunctional operations strategy, coupled with its vertically integrated supply
chain, enables mass production under push control, leading to well-managed
inventories, lower markdowns, higher profitability, and value creation for
shareholders in the short and long term.

d. Bershka
Bershka presents itself as a reference point for fashion targeting this
increasingly demanding public and, in just 2 years, has consolidated its
brand image in 100 shops; Today, 15 years on, the chain has over 910 shops
in more than 64 countries, with sales representing 10% of the total revenue
of the group. Bershka has a sales area of over 338,000 square meters. The
company's business encompasses the design, manufacture, distribution and
sale of fashion in the shops.
Bershka's public is characterized by adventurous young people, who are
aware of the latest trends and are interested in music, social networks and
new technologies.
Competitive Advantages: Key success factors of the industry
Quality of products and brand reputation
For Norwegian customers quality is important thus they are prone to pay
more in order to maximize the clothing replacement cycle. Due to higher
awareness of natural fabrics and their quality, organic garments are gaining
more and more popularity. Brand reputation is also important, especially that
Norwegian customers pay lots of attention to working conditions for
employees in the production and perceive them as a necessary factor while
producing high quality garments. Therefore, the domination of global brands
will be dependent on the reputation the companies will present (Euromonitor
2013a).
Combining differentiation with low cost
Since apparel industry is fairly fragmented allowing customers to choose
from variety of products it is important for companies to differentiate their
offer and make their products be superior in some way to those offered by
competitors (MarketLine 2013a, Bordean et al. 2010). However, in order to
be successful, companies have to combine differentiation with low cost

employing different factors like economies of scale, technological

advantages, outsourcing or learning effects that will enable them to save
cost where possible and thereby make their price be competitive at the end
(Bordean et al. 2010, Grant 2010).
Responsiveness to customers' taste preferences
Since Norwegian customers use apparel as a way of expressing their
personality it is important for companies to adjust their products to the
changing trends and specific Scandinavian taste which is a combination of
classic style and latest fashion trends as well as comfort and innovation.
Fashion can be seen everywhere in Norway, also in gyms where people like
to wear trendy clothes as they want to look good while working out.
(Euromonitor 2013d).
Fast response to changing fashion trends
Since fashion trends change rapidly, so do customers' demands, it is
important for companies to react quickly to those changes. It not only allows
companies to cut some costs but also to gain competitive advantage since
the faster the response is, the more customers can be gained (Crofton and
Dopico 2007). Rapid reactions allow also to reduce the amount of inventories
left since those quick reactions enable companies to quickly cancel further
production if particular product turns out to be unsuccessful thus avoiding
further accumulations that prompt the profit-draining clearance sales
(Crofton and Dopico 2007, p. 44).

e. Aboitiz Group of Companies

Aboitiz Power Corporation (AboitizPower), a subsidiary of Aboitiz Equity
Ventures, Inc. is a power generation company. It carries out the power
generation, distribution and retail activities in Philippines. The company
operates as a holding company for the Aboitiz Group's investments in power
generation, distribution, retail and power services. AboitizPower produces
clean and renewable energy through its hydroelectric power generation
facilities, thermal and geothermal plants. It also has interests in electricity
distribution utilities that distribute electricity to the customers in the
Philippines. The company owns interests in several distribution utilities in
Luzon, Visayas and Mindanao. AboitizPower is headquartered in Cebu,
Philippines.
Competitive Strategy:
The Company believes that it is well positioned to pursue further growth and
success. Moving forward, AEV intends to grow its core businesses to their

maximum potential. The Company will also seek out major investment
opportunities that build on its competencies. The Company is also working
towards the sustainability of the enterprise by aiming to strike the triple
bottomline balance of People, Profit, and Planet.
AEV is encouraging its strategic business units to look for growth
opportunities in their respective sectors that capitalize on the Aboitiz Groups
competencies.
For the Companys power business unit, the strategy is to increase
shareholder value by developing new generation projects, selectively
acquiring existing generating facilities, expanding its electricityrelated
services, shifting the bulk of its sales under capacity-based contracts, and
continuing to improve the operational efficiency of its existing generation
and distribution facilities. 23
On the other hand, UnionBank, AEVs financial services unit, aims to become
one of the top universal banks in the Philippines in respect to market
capitalization, profits and customer coverage, grounded on its purpose of
Making the Diff! by connecting and enabling communities through Smart
Banking. Key initiatives include the prioritization of customer satisfaction
through enhanced retail focus and stronger sales management approach;
performance improvement of earning assets portfolio, with loan asset
acquisition in the retail, middle-market and corporate sectors, investment in
technology, cultivation of partnerships and rationalization of branch network
expansion in strategic areas to maximize growth in both deposit and loan
accounts.
Meanwhile, Pilmicos long-term strategy is to grow the core business while
continuing to focus on maximizing and optimizing the companys resources
to remain being a low-cost producer. Additionally, Pilmico will continue to
look for opportunities to expand its portfolio to ensure stability and minimize
risk. The company views the volatile commodity prices of wheat, corn and
soya bean meal in the world market as its biggest risk and challenge. To
minimize the impact of volatility, the company aims to improve its
procurement capabilities with emphasis on risk management.
AEVs real estate unit envisions considerable growth and plans to expand its
operations nationwide. As most developers come to Cebu for its booming
real estate industry, AboitizLand will strengthen its position in Cebu while
looking for opportunities in other geographical areas. Aside from
strengthening its residential, commercial and industrial businesses,
AboitizLands strategy also includes participation in various government-lead
PPP infrastructure projects.

AEV also seeks to capture opportunities in sectors in which it believes it

could further leverage on its core competencies, is scalable, and with strong
recurring profits and cash flow. To this end, the Company formed a Business
Development Team in late 2011 to evaluate new business opportunities that
do not fall squarely into the companys traditional core business areas of
power, financial services, food manufacturing, and real estate. AEV has
ongoing efforts to develop key projects in select sectors (both PPP and nonPPP) that stand to gain in line with the countrys growth trajectory.
Looking forward, the Company aims to further strengthen its commitment to
environmental responsibility and sustainability as it strives to evolve from
simply being the neighbor of choice of the Companys host communities to
becoming a good example to others. In striking a balance among people,
planet and profit, the Company and its business units adhere to five
sustainability pillars Rejuvenate Nature, Re-use/Recycle, Reduce,
Renewable Energy and Recharge Communities. By continuing to strengthen
its relationships with the local communities where it does business and build
support and goodwill among the residents, non-governmental organizations,
local government units and other stakeholders, the Company believes that it
increases the likelihood that it will benefit from political and social stability in
the areas where it operates.
Competitive Advantages:
-reduced labor costs
-skilled workforce
-existing distribution and sales networks
-high growth rate
-high profitability and revenue
-domestic market
-Barriers of market entry
-experienced business units
-new products and services
-growing economy
-growing demand
-growth rates and profitability
-venture capital

e. Ayala Group of Companies

Competitive Advantages:

The strategic advantage one business entity has over its rival entities within
its competitive industry. Achieving competitive advantage strengthens and
positions a business better within the business environment.
Cost Leadership Strategies
This can be used for allow cost producer within a mass, the cost
leadership is often driven by company efficiency, size, scale, scope and
cumulative experiences. The Cost leadership Strategy aims to exploit scale
of production, well defined scope and other economies, the example is a
good purchasing approach, producing highly standardized products using
high technology. The cost leadership is different from price leadership. This
is usually gained by companies that are able to achieve economies of scale
in production and marketing.
Differentiation Strategies
Approach under which a firm aims to develop and market
unique products for different customer segments. Usually employed where a
firm has clear competitive advantages, and can sustain an
expensive advertising campaign. Differentiation is used when offering
something unique that is perceived by the consumer to be better or different
to other products. A differentiation strategy can provide
a competitive advantage by differentiating your business from your
competitors and at the same time offering what your customers need. A
differentiation strategy will pursue a unique position among your
competitors. The aim of the strategy is for the business to become unique in
the minds of its customers. For example, you can offer a specific design that
your competitors cannot offer and target a specific group of consumers. The
aim of differentiation strategy is to create brand loyalty, which in turn can
create price in elasticity on the part of buyers. As a result, customers will be
less sensitive on price decisions, and more sensitive on the actual product. In
turn, it can erect competitive barriers to entry, higher margins and possibly
mitigate the power of buyers who will eventually lack acceptable substitute
products. When altering factors like design , technologies and more to
differentiate yourself, it is important to focus on the customers needs in
order to design those factors appropriately. Differentiating the product or
service of the firm means creating something that is perceived industry wide
as being unique. Differentiation may take the form of design or brand image,
technology, product feature, customer service, dealer network, etc.Ideally;
the firm differentiates itself among several dimensions that are important to
the customer. Differentiation does not mean that the firm will ignore costs,
although costs are not the primary strategic target. Achieving differentiation
may preclude gaining a high market share since it often requires a

perception of exclusivity. Achieving differentiation implies a trade-off with a

cost position if the activities required in creating it are inherently costly, such
as extensive research.
Focus Strategies
A marketing strategy in which a company concentrates its resources on
entering or expanding in a narrow market or industry segment. A focus
strategy is usually employed where the company knows its segment and
has products to competitively satisfy its needs. The focus strategy targets a
particular buyer group, segment of the product line, or geographic market.
Whereas low cost and differentiation are aimed at achieving their objective
industry wide, focus is build around serving a particular target or niche
extremely well. The strategy rests on the premise that the firm can serve its
narrow strategic target more effectively or efficiently than more broadly
based competitors. The firm may achieve differentiation from better meeting
the needs of the particular target or lower costs in serving the target. If the
firm is good or lucky, it may manage to do both. Even though the focus
strategy does not achieve low cost or differentiation from the perspective of
the market as a whole, it does achieve one or both in its narrow market
target. The focus strategy always implies some limitations on the overall
market share achievable and involves a trade-off between profitability and
sales volume, but not necessarily a trade-off with overall cost position. Often
the focus strategy of filling a limited need or offering a product that only a
few buyers will purchase allows for products to be priced at a premium since
the company is satisfying the desires of a small cluster of buyers. Most
winning midsize growth companies are leaders in market niches, often in
markets they have created through innovation. Such niche strategies are
often born of necessity, since these firms lack the resources to fight broad,
head-to head battles with larger, entrenched competitors. They succeed by
seeking out niches that are too small to interest the giants. Alternatively,
some firms pick niches that can be captured and protected by sheer
perseverance and by serving customers extremely well.
Cooperative Strategies
A strategy in which firms work together to achieve a shared
objective. The Cooperative Strategy involves Strategic alliances represents a
shift from achieving strategic competitiveness and above-average returns
through competitive strategy (establishing strong positions against external
challenges, minimizing weaknesses, and maximizing core competencies) to
achieving them through cooperative strategies. There are a number of
justifications or rationales for strategic alliances. These reasons vary by

market situation--slow-cycle, standard-cycle or fast-cycle.

Reasons for entering alliances in slow-cycle markets

gaining access to a market that is not open to other entry strategies

establishing a franchise in a new market

maintaining market stability

Reasons for entering alliances in standard-cycle markets

gaining market power

gaining access to complementary resources

overcoming trade barriers

meeting competitive challenges from other competitors

pooling resources for very large capital projects

learning new business techniques

Reasons for entering alliances in fast-cycle markets

speeding up the development of goods/services

speeding up new market entry

maintaining market leadership

forming an industry technology standard

sharing risky R&D expenses

overcoming uncertainty

A strategic alliance is the primary cooperative strategy and represents a

partnership between companies whereby companies' resources, capabilities,
and core competencies are combined to pursue mutual interests to develop,
manufacture, or distribute goods or services. They represent explicit forms
of relationships between companies.
Types of Alliances There are three basic types of explicit strategic alliances:

1. A joint venture is an alliance where a new, independent company is

formed from two or more partners, with each partner company
contributing assets.
1. An equity strategic alliance is an alliance where partner companies
own unequal shares of equity in the venture and are considered to be
superior at passing on know-how between companies because they are
closer to hierarchical control than no equity alliances. For example,
Ford Motor Company and Mazda Motor Corporation formed a longstanding equity strategic alliance.
1. A non equity strategic alliance is an alliance where a contract is
given to supply, produce, or distribute a company's products without
any equity sharing. Other types of non equity strategic alliances
include licensing, distribution agreements, supply contracts, and
marketing agreements (such as code-sharing agreements among
airlines). For example, OPEC seeks to manage the price and output of
oil companies in member countries.
These strategic alliances represent explicit alliances. However, there also
are implicit cooperative alliances such as tacit collusion, which exists when
several companies in an industry tacitly cooperate to reduce industry output
below the potential competitive level to maintain higher-than-competitivelevel prices. Another form of tacit collusion is mutual forbearance, which is
recognition of interdependence. These forms of cooperative alliances are
illegal unless regulated by the government, which is currently the case in the
power industry.
The number of companies with multiple alliances continues to increase.
Companies use alliance networks as a foundation for a network cooperative
strategy for several reasons.

to share complementary resources, capabilities, and competencies

to exploit emerging technologies

to share the risk and cost of large capital investments

to keep pace with or establish industry standards

This last reason is particularly important in the computing and

telecommunications industries, in which the standard-setter can potentially
dominate (consider Windows and Intel in the personal computer industry).
Alliance networks are also important in industries in which rapid change and

company reinvention are necessary for long-term survival. Networked

companies can gain exposure to an array of developing technologies and
provide the company with strategic, technical, and operational options for
experimentation.
There are several issues that should be addressed when forming an alliance
network:

determining whether the alliance should be horizontal or vertical

deciding the number of companies to be networked so that

effectiveness and efficiency are maximized

determining how to minimize member company conflicts

specifying the strategic intent of the alliance so that all members

benefit

determining how the network will be managed

Failure to address these issues reduces the potential for alliance success.
Because companies that are cooperating also may be competing with each
other, significant risks accompany cooperative strategies. These risks
include:

poor contract development that may result in one (or more) of the
partners acting opportunistically and taking advantage of other
venture partners

misrepresentation of partner companies' competencies by misstating

or exaggerating an intangible resource such as knowledge of local
market conditions

failure of partner companies to make complementary resources

available to the venture

being held hostage through specific investments (whose value is

associated only with the venture or partner), especially if laws in a
foreign country do not protect investments in the case of
nationalization (or re-nationalization with a change in governments)

misunderstanding a partner's strategic intent

In addition to the risk that a partner may cheat or act opportunistically, there
also are competitive risks to cooperative strategies, such as: the capability to
form and manage a joint venture effectively, the capability to collaborate,
the ability to identify trustworthy venture partners. Trust between partners
increases the likelihood of alliance success and may be the most efficient
mechanism for governing economic transactions. Trust creates confidence
between partners that actions taken will serve both parties' interests. Trust
increases the probability that a company will understand its partner's actual
strategic intent as it participates in an alliance, which leads to more
predictable partner actions. If both partners are trustworthy, companies are
able to allocate fewer resources to monitor and control the alliance.
Trust is valuable, rare, imperfectly imitable, and often non substitutable, thus
yielding competitive advantage when forming and using cooperative
strategies. Partner trustworthiness reduces the company's concern about the
inability to control or influence each operational aspect of an alliance through
a contractual agreement.
The two basic approaches to managing cooperative strategies that come out
of this discussion are: cost-minimization and value-creation maximization.
1)
The cost minimization approach requires companies to develop
capabilities to create effective partner contracts and contract monitoring
capabilities. However, these contracts have drawbacks. Writing protective
contracts and developing effective monitoring systems are costly. Protective
contracts and monitoring, by shielding parts of each organization from the
other, may limit opportunism and preclude the organizations from taking
advantage of unforeseen opportunities.
2)
The value-maximization approach requires partners with
complementary assets and emphasizes trusting relationships. As a strategic
asset, trust can enable partner companies to reduce the cost of contracting
and monitoring because the probability of opportunistic behavior is reduced
if partners are able to trust each other.
Trust also may enable the venture to take advantage of unforeseen
opportunities. Thus, because trust will enable partner companies to reduce
venture related contracting and monitoring costs-and add to the venture's
flexibility, a venture between partners that can be trusted is more likely to be
able to both reduce costs and add or create value.
1. Ayala Land has its financial strength from its resources and the stability of
its parent company.
2. Ayala land has its organizational strength because they just hire the best
of the best.
3. Ayala land has its business stability, quality products and service
strength.

4. Country's largest conglomerate for the time

5. They have the largest Malls and residential area here in the country.
6. They also have the prestigious hotels and resorts.
7. There are more Idle land here in our country more opportunities for them
8. The population gets higher need more houses.
9. The need of the people gets higher for the growing countries like
Philippines.
4.
Philippine Legal System
Legal System
The legal system of the Philippines is a combination of continental civil law
and the Anglo-American common law system. The Philippines gained
autonomous status from the US in 1935 when the first Philippine constitution
was implemented. The present constitution originates from 1987 and is
similar to the US constitution.
The Philippine justice system is composed of the Supreme Court, the Court of
Appeals, the regional trial courts, the Court of Tax Appeals and the
metropolitan and municipal trial courts.
The high level of criminality and disorder can be partly blamed for the
country's instability, but on the other hand these problems occur from the
structure of the society in general. As an attempt to increase the stability of
the society the government restored the death penalty in 1993. Although
around 40 prisoners have been condemned to death since then, none of
these sentences has been executed.
It is very important to find a reliable local lawyer. It's worth putting some
effort this recruitment, because there are also some unskilled and even
fraudulent lawyers catching new clients. Making a mistake here might cost
you a huge amount of money. Consultations with other Finnish companies
present in the country could help in finding a reliable lawyer. Unlike lawyers
in Finland, some are eager to present their clients as reference. This might
also give some idea of the lawyer's reputation, but one should always
remember that business cards can't be trusted as a reference and as an
indication of factual clientship.
Commercial Law
The commercial law in the Philippines is western like when compared with
the surrounding countries. For example, the Philippine Code of Commerce is

based on the old Spanish Code of Commerce. This continental influence is

evident, especially when it comes to the structure and sources of the law.
The sources of commercial law are very occidental paying attention to the
legislation, contracts made, commercial usages and practices, etc.
Another important law in the field of commercial law is the Code of
Corporations.
Contracts and other arrangements are to be executed and complied within
good faith, that is, according to the terms in which they were made with the
usual meaning of spoken or written words. Also, the will of the parties is to
be served. The time of performance of obligations is fixed in the Code of
Commerce. However, the observation of the contracts does not always meet
western standards. The execution of contracts through the legal system can
be ineffective and take even years. The civil procedure law of the Philippines
allows means to delay the procedure, even to such an extent that voluntary
settlements are often made.
There are many other relevant laws, too. For example, laws and regulations
concerning antitrust and securities issues, banking and finance, product
safety and quality requirements, advertizing and sales practices are worth
noting. For example, in marketing, the state of Philippine society should be
carefully observed. Even the simplest consumer goods can be dangerous
when they are bought by people who have never used any similar product
before.
The Labor Code of the Philippines sets an 8-hour working day and a 48-hour
working week. Employees are granted at least an hour for meals. Minimum
wages are defined regionally in order to adjust the disparities in the cost of
living in different regions. Women who have been employed for at least six
months have the right to have an 8-week maternity leave with full pay. The
minimum age limit for employees is mainly 15 years although minors
between 15 and 18 years are not allowed in hazardous work. Every employer
is obligated to cover his employees with the Social Security System
-program.
Further, the law also includes the prohibitation of discrimination based on sex
(e.g. favoring a male employee in promotion, studies, education,
scholarships etc. and payment of lesser compensation solely on account of
gender). However, in practice the implementation of the provisions is poor.
For example, it's very common that in job advertizing the job is offered only
to one sex.
Investment Law

Since the Ramos administration took over the reins of government, the
Philippine economy has opened itself to foreign investors in order to
strengthen its competitiveness. Many government operated companies,
monopolies and other arrangements that have restricted competition have
been removed. Furthermore, the capital market has been liberalized. This
privatization program has already achieved success: the amount of foreign
investments has multiplied recently. However, the Philippines has not quite
been as attractive for foreign investors as some of its neighboring countries.
The legal framework for foreign investments is the Foreign Investments Act
of 1991 and the Omnibus Investments Code of 1987. These laws regulate the
processes by and conditions under which non-Philippine nationals may invest
and operate in the country, The major government body dealing with foreign
investors is the Board of Investments (BOI). On the other hand, the authority
to register and supervise all corporations and partnerships doing business in
the Philippines is held by the Securities and Exchange Commission (SEC).
The recent Investments Act allows as a main rule 100% foreign participation.
Exceptions to this rule are dependent on the type of the activity. The division
related to domestic market and export enterprises also has importance when
examining the restrictions or incentives foreign corporations meet.
At the international level, the Philippines have signed the Convention
establishing the Multilateral Investment Guarantee Agency (MIGA), the
Settlement of Investment Disputes Between States and Nationals of Other
States, and the New York Convention on Recognition of Foreign Arbitral
Awards. In the cooperation with the ASEAN countries, several conventions
regarding investments have been signed. However, these conventions have
not proven influential in affecting the content of everyday business. The Paris
Convention for the Protection of Industrial Property is of more use. The
protection of intellectual rights in the Philippines is more effective than in
most countries in the area. The tradition in the protection of intellectual
property rights originates from the US rule. Therefore, the legal framework is
based on the US laws, regulations and practices. One player in the fight
against intellectual property rights violators is the Delegation of the
European Communities. The delegation keeps an eye on the protection of
these rights and can take actions against the violator. However, some
problems with trademarks can be seen, e.g. T-shirts of Saab-Scania brand
are sold.

The Philippine Code of Commerce includes provisions e.g. on

merchandise
commerce

 maritime commerce
certain types of commercial contracts
insolvency law
commercial registries
bookkeeping
The Philippine Code of Corporations includes provisions e.g. on
incorporation and organization of corporations
board of directors, trustees and officers
power of corporations
meetings of the corporation
stocks and stockholders
corporate books and records
merger and consolidation
dissolution
foreign corporations
Comment on this:
Philippine legal system
The Philippines has been under the colonialism of other country so it is not
sudden to adopt the legal system of the other countries. These provisions
were organized formed and establish particularly for the need of fairness and
equitability of the society and also for the benefit of individuals, group and
organizations having a secure and peaceful society by giving them the
protection that was provided by the law of Philippine Constitution.
Our laws come primarily from the Congress, which is approved by the
Executive Department of our government. And the Judicial department will
interpret this laws and the power is vested to them to make pronouncement
about disputes. The legal system is provided to make orderly environment.
And it is convey to be respected and abide by everyone. The high level of
criminality and injustice is because of the instability of the law. The phrase
'ignorance of law excuses no one' is sensitive in a way that our laws are
written in English with tangled words therewith. It would be at ease if it is
written in a way that everyone will understand and could apply it to his own
business. As regards to business it is important to have a good house rules
or instruction to follow. There are many other relevant laws, for example,
laws and regulations concerning antitrust and securities issues, banking and

finance, product safety and quality requirements, advertising and sales

practices.