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Matthews Publishing: Company and Industry Profile
Leadership and Strategy 10
Ms. Emma Maglaque
March 17, 2010
I. The Research
This case study would cover specific business processes of the company St.
Matthew’s Publishing, which is a sole-proprietorship business owned and operated by
Raymund Catabijan and Isabel Diaz-Catabijan. It is limited to the files and data given to
the group by the company, though some of the data will also come from the group’s own
inferences. This study covers the firm’s internal environment, history, its competitive
environment, its national and global environment, and the group’s own analysis of the
industry. The data was gathered through interviewing the owners of the firm and through
the use of the files that they provided the group with.
B. Significance of Research Findings
Through the use of data and files gathered, this study can provide a concrete
analysis of the industry – its stand in its competitive environment, national and global
environment, and in its internal environment. Through these, it will also give the reader
an idea of how the company is doing in the industry, and how the said firm operates. The
analysis that the group will provide can help in seeing the significance of the company in
the society and how greatly it can influence it. The group chose this specific industry
because it is different. People will often choose to study popular food/clothing industries,
not to mention the fact that brands and industries in these mainstream markets arewell-
analyzed and studied already. The group would like this paper to serve a purpose, and
that is helping the company in making decisions with regard to how its administrators can
run the business better and with regard to how to maximize their profit.
II. The Firm and its Internal Environment
A. Background History
St. Matthew’s Publishing is a sole-proprietorship business, owned and operated
by Raymund Catabijan and his wife, Isabel Diaz-Catabijan. The company was
established in 1990 together with the help of the late Vicente C. Catabijan, Jr., who was
then the owner of St. Mary’s Publishing. The vision he had for St. Matthew’s Publishing
was to produce books for the purpose of contributing to the knowledge and education of
preschool children. (Catabijan)
In 1989, the official preschool-level curriculum was first released by the
government agency, DECS. The proprietors of St. Matthew’s Publishing, then a non-
existent company, were fortunate enough to have the first look at the preschool level
curriculum. In a year’s time, the company was established and the first publication was a
set of books for all subjects in the kindergarten level. The book came with a complete
guide for teachers that, in effect, creates not only interesting learning experiences for the
students, but also meaningful experiences for the teachers. (Catabijan)
The set of books first released by St. Matthew’s Publishing, from then on, has
been the book of choice in the Manila division of public schools, and the company is
expanding to the provinces as well. The most valued customers of the company would be
all the DepEd divisions of Manila and some major provinces and cities nationwide. St.
Matthew’s Publishing creates books for both public and private schools in the countryand
to make sure that the books they release are at par, or even exceed, the standards of the
schools. In the effort to provide quality books, the company has commissioned
academician, who are authorities in the education of children in their early stages. The
company aims to uphold its commitment to its clients, which is “to produce quality
learning books for early learners.” (Catabijan)
Since its first successful publication of books in the early 1990’s, St. Matthew’s
Publishing gained popularity by word-of-mouth. The books they published were a hit, not
only amongst the students, but with the teachers as well. Their books were personally
requested by the teachers from the schools, and the schools would happily oblige to the
requests since the teachers would be the ones using the books for a whole year. Another
reason for schools to prefer the books published by St. Matthew’s would be that the
books are not commercialized and second handedly distributed by commercial
bookstores, which would add to the costs. St. Matthew’s exclusively distributes their
books to their clients and therefore it generally comes at a more affordable price as
compared to other books. (Catabijan)
The disadvantage of a publishing business would be that the demand for books
would be seasonal, particularly only for the few months before the start of a new school
year. In the Philippines, those months would be March and April. In 2008, the sales of
books were close to a million copies. This is a good number of sales for the company,
and with loyal customers that purchase their books from the company, the business does
not show any signs of slowing down any time soon. (Catabijan)
St. Matthew’s applied for its certificate of incorporation in 2009 as it is looking to
expand its business. The certification from the Securities and Exchange Commission is
currently still being processed. St. Matthew’s Publishing Company currently has 18
employees in its head office and 25 agents nationwide. The main office is located at
744Baltazar St. Cristi Compound GitnangBayan I, San Mateo Rizal. Its branch is located
at the 4
floor of the First RVC Bldg., at #92 Anonas Corner K-6 Sts., East Kamias,
Quezon City. The office can be reached via telephone numbers 926-7956, 426-5611, 433-
5385 with fax number 426-1274 and email address email@example.com.
B. Ownership and Management Profile
The following contains the names, positions, educational background and general
experience of the top decision makers of the company:
President - Raymund S. Catabijan
BS Mechanical Engineering Technology, DLSU-Manila
Former plant manager, St. Mary’s Printing Press
Former Finance Manager, St. Mary’s Publishing
Finance and administration manager - Isabel D. Catabijan
BS Business Administration, major in Accounting, P.S.B.A - Manila
Former sales statistician, General accountant Rorer - Phils, Inc.(American pharmaceutical
Former financial planning, budget and treasury assistant for Rhone-Poulene-Rorer Phils,
Certified Public accountant
Tax consultant (Construction and hauling firms)
EDP-in-charge- Sarah De los Reyes
BSC- accounting, Sacred Heart College
Former accounting staff pattern farm mtg. and the international university & St. Mary’s
General accountant- Josephine S. Hernaez
Associate in Computer Science, Alejandro Institute of technology
Former sales clerk and accounting staff for St. Mary’s publishing
Production and distribution- Rodolfo L. De la Paz
Electronic technology, Philippine college of arts and trade
Former editing, clerk, RCPI; Production-in charge, Classic printers, St. Mary’s
EDP Staff- Maria Gina D. Ilustrisimo
BS Business Administration Management major, PSBA
Former money sorter, Solid bank
Accounting staff- Maria Carmela P. Acosta
BS Business administration- Marketing; PUP
Former office clerk, Burgundy Place condos, association, Inc.
Cashier- Janet C. Pastor
BS Commerce- accounting, University of the east
Former secretary in Clerk Emmaus Formation Center and Gretamare Dental office and
Organizational Chart of St. Matthew’s Publishing
Among the top decisions-makers of the company, three are related to each
other:Raymund S. Catabijan and Isabel D. Catabijan are husband and wife and Mrs.
Catabijan and Maria Gina D. Ilustrisimo are sisters. Outside of this group, many of the
employees are somehow related to each other and have previously worked together in St.
Mary’s Publishing. (Catabijan)
C. Mission/Vision/Values, BHAGs
The company’s mission is to produce books that will contribute to the relevant,
fundamental education and Christian life of preschoolers. Its vision is to become the
number one source for preschool textbooks and workbooks and to let their clients know
that it provides high quality educational materials at reasonable prices. (Catabijan)
Its BHAG is to gain more sales by depending on its already diverse market--
preschool and grade school –the reason being that efficiency will not be compromised
this way. The quality of service/performance of the company should be placed higher
than the range of its buyers. The company will seek to publish books only for the grade
school and preschool levels, and not for high school level because expansion might
compromise their efficiency and overall sales. (Catabijan)
Expansion and efficiency for them is negatively related because the competition is
fierce and it will take a lot of effort to publish these kinds of books because it is harder to
regulate them. Difficulty in regulating means delays in publishing while struggling to
deal with the demands of a growing market.
D. Marketing and Sales Management
St. Matthew’s Publishing publishes books for preschool and gradeschool. The
target market of the company are students in the preschool level for two reasons: (1) the
preschool industry is a basic ground students take and it is not yet part of the curriculum
of the Department of Education (DepEd), and (2) the parents of these children are eager
to buy instructional and functional books to improve and accelerate their children’s
learning. St. Matthew’s Publishing does not directly put its products in the market. It has
distributors over the country that delivers the product to public and private schools. It
caters to public schools in the cities of Makati, Manila, Marikina, Pasig, San Juan,
Valenzuela, Malabon and Navotas, while also catering to public schools in NCR, some
provinces in Luzon, Visayas, and Mindanao. These books are printed by accredited
printers and make use of Class A newsprint paper (provided by the company, which cuts
the cost of production to a smaller amount). The books are updated every three to five
years or when revision is called for by the Department of Education (DepEd).
What is good about this company is that they have the same price (fixed price),
whether the school is private or public in Metro Manila. The products are low-priced
because most of its clients are from the province and in public schools or daycare centers.
Freight-in, or shipment, fees only apply for those in non-Metro Manila areas in Luzon,
Visayas and Mindanao.
For promotions, the company holds seminars and training for the teachers and
administrators that are either their current clients or part of the company’s target market.
This shows their commitment to the teachers especially in the provinces and this is also a
response to the government’s lack of funding. This also causes their sales to increase due
to the numerous orders of the schools that inquire about the products during these
seminars and trainings. Apart from these, it also contracts special deals with its clients by
providing them free writing notebooks and other incentives. The sales agents also give
their part in promoting the company during the time given them to scout for clients.
Reliable freight forwarders and the company’s deliverymen handle the placement
of the products. The agents sometimes personally deliver the books to their clients or the
clients receive the books care of the relatives of the sales agents.
E. Operating/Manufacturing Management
The production process of this company begins with getting the curriculum of the
school first, and then making the book in accordance to fit the curriculum. Usually the
books are updated every three to five years or when revision is called for by the
Department of Education (DepEd). This is due to the complaints and requests of parents
to ensure the quality of the books their children are using. It then holds a meeting and
presents the manuscript and layout. Their artists are freelancers and they their
contributions are done per page, and the entire process takes about two months. Later on,
the drafts are sent to their consultant for editing, and then it goes back to the company for
finalization before it is decided that it is ready to be taken to the company’s outside
source for its initial printing. Samples of the book are produced and approximately 4000
copies are made after the first batch of printing. Production for the books is seasonal—
from March to May or sometimes during June for public schools. The company gives
their manuscripts to their suppliers around February, together with sourced-out paper.
The major facilities that the company owns are a warehouse for storing the
finished and screened books, the main office and the delivery vehicles that are either
stationed in the office (5 vehicles) or with the sales agents (20 motorized agents). Printing
is not done by the company but by trusted subcontracting printers.
The quality of the supplies and printing that the company avails of are thoroughly
screened by its administrators. It takes care of providing the printers with the type of
paper they want to be used. This is advantageous for the company as well because it is
less expensive when the printers do not also supply the paper. St. Matthew’s presents
standards for the printers in producing its books, quickly follows-up on errors, and gives
notices and warnings to the printers about any problems concerning the books’ turnout.
F. Human Resource Management
The company has a total of 43 employees. From this number of workers, 18
employees make up the office and warehouse personnel. The office workers handle the
financial accounts of the company. The warehouse personnel consist of the deliverymen
and the overseers of the logistical needs of the company. The remaining 25 employees
are composed of the sales agents that are the point persons of the company in the
different regions of Luzon, Visayas and Mindanao. Outside of the company’s official list
of employees, the sales agents scout for their own sub-agents who get a share of the sales
agents’ commission of about 10-15% of their generated sales. (Catabijan)
The average age of employees in the company is 35 years old. Most of the
employees have rather close ties with each other because they either have previously
worked together in St. Mary’s Publishing—the company which St. Matthew’s stemmed
from—or are relatives or coming from the same province. (Catabijan)
The average educational attainment for the office staff is an undergraduate degree
in administration and management courses. On the other hand, not all of the non-office
staff members are college graduates. In terms of recruitment, what matters more to the
company are the experiences and skills of the applicants.For the sales agents, the
administrators mostly base their decision on hiring sales agents on the quality of their
public relations skills. The company’s other means for recruitment are through
recommendations of potential staff members given to them by trusted employees and
close relations of the administration, especially from St. Mary’s Publishing. (Catabijan)
With the relatively small number of employees under the company’s care, the
administrators feel that there is no need to have a system in giving out promotions and to
have an established Human Resources unit to supervise employee development, support
and training. The administrators themselves take initiative for providing these things.
Training in sales and marketing are given to its sales agents yearly. The other
benefits that they provide are giving profit-sharing at the end of the year, productivity
pay, meal allowances, and healthcare cards (Medicard). The company also gives out
incentives to deserving employees. It gives out car loans to agents who have reached their
quotas for selling, and it has a housing project for employees that have been with the
company for at least 7 years.(Catabijan)
G. Financial Management
Moving on, to understand the financial situation of St. Matthews Publishing, one
must first understand what the process of transactions is, and how reports are generated
within the accounting period. As such, this study must incorporate the company’s
accounting function, and the company’s finance function.
A company’s accounting function, as has just been mentioned, deals with how the
transacting process occurs. For St. Matthews Publishing, the process begins when the
cash payments or checks are put on record by the cashier. After that, the records pass
from the cashier, to the general accountant, and then to the EDP. The EDP generates the
sales invoices and delivery receipts, creates accounts, and places these accounts in the
company’s books. For all of these, the one who checks the process is Mrs. Catabijan, the
Finance and Administration Manager of the company. She decides what will be reported
in the books, but she is also kept in check by the internal department of the company.
As for the finance function of a company, as was also mentioned earlier, it deals
with the generating of reports. For St. Matthews Publishing, reports are generated by
people within the company in order to look into their profitability during the period stated
within the report. The high-ups within St. Matthews Publishing then use these reports to
check their sales performance, and check how their receivables are aging.
It is also important for any modern company to be highly-computerized, and St.
Matthews is quickly approaching that level. Its first department to be computerized was
its Sales department in order to make it faster to record transactions during the company’s
peak operating seasons. For the Sales department, the company uses the MYOB, or
“Mind Your Own Business”, computer system. As for communicating between the main
office and the company’s agents elsewhere, St. Matthews still mostly depends on phone
connectivity, since the older agents are not really that open to learning new technologies.
As such, the company has focused on training the younger employees at the main office
to use the computers, since they seem more open to trying new things.
The financial statements of St. Matthews Publishing for 2008 also allow one to
observe the company’s financial condition. And, to be able to understand St. Matthews’s
finances, one must look at three qualities: liquidity, profitability, and efficiency. As such,
a financial analysis of the company will be performed in accordance with these three
Liquidity is the ability of a company to be able to pay off its short-term liabilities.
Since this is important for company executives to know, there are many ways to measure
a company’s liquidity. One of these ways is by using the current ratio. This ratio is
obtained by dividing current assets by the company’s current liabilities. And, for St.
Matthews Publishing, the current ratio stands at around 2.98. Another such way to
analyze liquidity is by using the acid-test ratio, or the quick ratio. This is obtained by
dividing all of the company’s easy-to-liquidate assets (cash, short-term investments, and
current receivables) by the company’s current liabilities. This ratio equals 1.91 for St.
Matthews Publishing. Finally, yet another way to analyze liquidity, this time in terms of
inventory, is through the Days’ sales in inventory ratio, which is obtained by first
dividing ending inventory by the cost of goods sold, and then multiplying the quotient by
365. For the company, this ratio is 46.42, and shows the number of days’ sales that can
still be done without obtaining new inventory. Anyway, what can be taken from these 3
methods of analysis is that St. Matthews Publishing is very liquid, meaning that it will
easily be able to pay off its current liabilities.
We now move on to St. Matthews’ profitability. Profitability is the ability of a
company to generate a good return off its invested capital. Like liquidity, there are many
ways to determine this, one being the profit margin ratio, which is calculated by dividing
net income by net sales. For 2008, the ratio for St. Matthews is 0.14, which does not seem
all that high. Also, another way to measure profitability is by using the return on total
assets ratio, which is obtained by dividing net income by the average total assets of the
company. St. Matthews’s return on total assets is at a ratio of 0.35. As such, St. Matthews
has an acceptable, even if not great, profit margin from performing its transactions.
Efficiency is the ability of a company to be productive in using the assets it has at
its disposal. To measure efficiency, we shall use the total asset turnover ratio, which is
gotten by dividing the net sales of the company by its average total assets. For St.
Matthews Publishing, the ratio stands at 2.55. This lends credence to the idea that St.
Matthews is indeed efficient, does indeed know how to make the most out of what it has.
All in all, St. Matthews Publishing’s financial management situation is pretty
stable, with few flaws inherent in the system. As of now, the only real problem it might
encounter is convincing its older sales agents to accept a change to a computerized
accounting system. However, since the Catabijans have close relationships with its
employees, it seems that one need not worry over this too much. As such, the company
looks like it will definitely remain in business for awhile yet.
III. The Industry and its Competitive Environment
A. Industry Definition
Local publishing industry branches out to textbook publishing, newspaper
publishing, magazine publishing, and advertisements (flyers, booklets, classified ads). A
textbook publishing industry, which the group focuses on, engages in producing books
for scholastic purposes; it is a distinct branch of our local publishing industry. Companies
involved in publishing textbooks produce for a captive market in basic education, both
for public and private schools. The textbook publishing industry is the production of
scholarly and literary books, which includes those used in schools like workbooks and
textbooks, and books that focus on fiction, novel, short stories, and collections of poems.
Textbooks are mainly used by the students to enrich their knowledge through
informational books, and also to enhance and assess their skills through workbooks or
B. Background History
The local textbook publishing industry officially began during the American rule.
SerafinMacaraig was the first to establish a publishing firm, and two other firms also rose
after his firm was created. However, publishing industries did not have a great impact
until World War II. It was at this time that more Filipinos ventured into publishing
textbooks. After these periods of foreign rule, one Filipino ventured in publishing books
authored by Filipinos and to be in the context of the school curriculum: It was Ceferino
M. Picache who did this and organized Bookman Inc. The textbooks were written by
educators as supplementary materials in the course.
The nationalization of textbook publishing started 1951 by Economic Coordinator
Salvador Araneta. He initiated the banning of imported textbooks in the Philippines, so
Filipinos may write their own books for the citizens of this country, which benefited all
of us. This nationalization of the industry gave rise to the Philippine Educational
Publishers Association (PEPA) which helped in alleviating the shortage of textbooks in
the Philippines. During this time, the student-book ratio was 4:1, and PEPA aimed to
lower it to 2:1.
C. Major Players and their Influence
There are many major textbook publishing companies in the country. These
companies usually are the dictators of the price of the books. Being known companies,
they hold credibility among the consumers. Thus, they have the capacity to bargain their
products for the consumers’ need. These companies usually have their own printing
press, so their products came to be more expensive. The following are some of the major
players in the industry: Rex Publishing, Phoenix, SIBS, Anvil Inc., and Vibal Publishing.
Besides these private corporations, there are some active publishing houses of known
universities like University of the Philippines, Ateneo de Manila University, and
University of Sto. Tomas (De La Salle University stopped its publishing industry).
Usually, these schools publish textbooks to ensure the quality of books their students are
using, and to support scholarship programs within the school.
In the 1998 list of Top Performing Printing and Publishing Firms in the
Philippines, Vibal Publishing House, Inc.ranked 2013 with a gross revenue of
183,880,000 in Philippine pesos. Phoenix Publishing House, Inc. came as the 3123
a gross revenue of P100,230. Anvil Publishing also generated a monthly gross of P14
million as around 20 romance novel titles were produced, with 20,000 copies per title.
D. Current Industry Size
The size of an industry can be determined by several key indicators. Such
indicators include revenues and profits, number of firms, estimated size of its market,
employment generated and the industry’s contribution to GDP. Below are comparative
statistical data for the previous three non-consecutive years that show how the key factors
affecting the size of the publishing industry behave over the years:
The Philippine publishing industry size has been steadily growing if viewed in
terms of the number of establishments associated with it over the years. Below is the
statistical record of the number of firms in operation for 2003, 2005 and 2006:
Year Number of Firms
However, when the industry size is studied through the number of sales it
generates, we observe a fluctuation, as the revenues generated by the publishing industry
have not been consistent in growth nor in decline. A major contributor to the revenues
generated would be the school textbooks that comprise 70 percent of the total output of
the industry. However, despite the high literacy rate of the Philippines’ population, the
publishing industry has not been performing at its best, as book sales, both foreign and
local, account for only 15- 20 percent of National Bookstore’s income. Below is the gross
sales generated by the industry for years 2003, 2005 and 2006:
Year Gross sales
Theprofits, which are total revenues minus total costs incurred during the year,
include salary compensation and operational expenses, among others. Again, we observe
an inconsistent behavior of the statistical information for total profit because the total
revenues, as shown above, fluctuates, therefore causing the costs to adjust accordingly.
This inconsistency in total revenues and total costs explains why the total profits behave
the way they do below:
Percent change (2003-
2005) - 12.9%
Percent change (2005-
When looking at the size of a certain industry, the number of employment
generated can also be an indicator of how small or big an industry is. The more
employment an industry generates, the bigger it is in size because it requires more labor
resources to keep the industry going. A paid employee is a full-time or a part-time
employee receiving pay from the establishment, while unpaid workers are those who do
not. Below is the statistical comparison for the years 2003 and 2005:
Year Total Employment
Paid Employees Unpaid
2003 7,307 7,298 9
2005 5,823 5,796 28
Market size is the number of buyers and sellers in a particular market that would
allow us to project how big or small a particular industry is in that these two are
positively related. The group could not find the figure that represents the estimated size
of the market, but we included, nonetheless, the main markets for the publishing industry.
For the publishing industry, the primary markets are educational institutions and libraries,
which total 8,000 in the entire country. The steady increase in Philippine population also
ensures a larger base in the potential consumers for books as the demand from high
school students increases. Children’s books are also a growing market for the industry.
Even as the demand for published products has been high, the publishing industry
has faced a slow growth, as it has barely grown in the past decade. Because of this, its
contribution to the local economy has declined. Its part in the GDP, from the years 1991
to 1999 has declined from 0.278% in 1991 to 0.218% in 1999. Lack of capital investment
in more sophisticated machines, lack of government incentives and controls, and stiff
competition are just some of the problems the industry has been experiencing. Even with
the advent of automated and digital printing, most of the local printers refuse to adapt to
these new technologies and try to conserve the traditional printing, thereby limiting their
sales to the domestic market alone. These factors play major roles in the fact that the
industry has not been contributing as much to the country’s GDP and has not been
growing in size.
However, the publishing industry not only shares a relationship with the economy
through the GDP it contributes, as it also shares relationships with other industries, the
most obvious of which are educational institutions, the paper supplying industry, and the
printing services industry. The last two are the ones the publishing company approaches
to make hard copies of the books that they are trying to publish. In a sense, they are
complementary of one another and share a positive relationship. As mentioned earlier,
textbooks are the mainstay of the publishing industry. Therefore, schools and publishing
also share a close relationship. The publishing company serves as the supplier to cater the
needs or demands of the schools.
E. Marketing Practices/Strategies/Characteristics of Dominant Players
As the pioneers in the educational side of the publishing industry, the publishing
houses of Vibal, Rex, Phoenix and SIBS have well-established images, a wide range of
products, and perform quality services in the country. (Phoenix Publishing House)(Rex
Book Store, Inc.)(SIBS Publishing House, Inc.)(Vibal Publishing House) After years
of being in the publishing industry, the visibility of these companies only grew higher
after government support in 1972 was given to Filipino-authored textbooks. (Phoenix
Publishing House)The textbooks published by these companies became widely used in
schools from all levels.
The products that these companies provide are educational materials for
preschool, grade school and high school students. (Phoenix Publishing House)(Rex
Book Store, Inc.)(SIBS Publishing House, Inc.)(Vibal Publishing House) Focusing on
textbooks, these educational materials range from textbooks covering the subjects of
Filipino, English, Christian Living Formation, Reading, Writing, Science, and
Mathematics. (Rex Book Store, Inc.)(SIBS Publishing House, Inc.)(Vibal Publishing
House) Prices for these textbooks are affordable for the target market of the companies,
which include both public schools and private schools in the country. It is also because of
the government’s support for the use of these Filipino-authored books and their large-
scale production at a time that they become affordable for textbooks from the top
publishing houses in the country. (Phoenix Publishing House)
Aside from the longstanding legacy that these four companies have had, they have
used certain marketing practices to keep their company’s visibility in line. Face-to-face
marketing practices are usually experienced by the former clients of the companies and
extend to potential clients from nearby educational institutions in their regions or cities. It
expands to the greater public through other marketing practices. (Rex Book Store,
Inc.)(SIBS Publishing House, Inc.)(Vibal Publishing House)
All four companies make use of traditional forms of marketing, such as giving
out, and posting, print ads and posters during events such as seminars and book fairs.
They also take the opportunity to promote the latest editions of their books in the
seminars and workshops that the companies give out to teachers and administrators as
part of the benefit for their regular clients. Vibal, for example, has year-round teacher
training workshops as part of their Corporate Social Responsibility (CSR) program which
also doubles as a venue for them to promote the new textbooks, other products and
projects of the company. (Phoenix Publishing House)(Rex Book Store, Inc.)(SIBS
Publishing House, Inc.)(Vibal Publishing House)
Unlike smaller publishing houses like St. Matthew’s Publishing, the publishing
houses of Vibal, Rex, Phoenix and SIBS have their own main websites. These websites
make it easier for their customers and potential clients to check out their products and
keep up-to-date with their latest books and other educational materials. These are made
possible by on-site functions such as Rex’s Book Preview and the online catalogs of the
companies. (Phoenix Publishing House)(Rex Book Store, Inc.)(SIBS Publishing
House, Inc.)(Vibal Publishing House)
Distributions of books by these publishing houses have been systematized over
the years. After years of expansion, they have setup offices in different part of the
country. Their main offices are found here in Manila and their Visayas and Mindanao
offices are located in Cebu and Davao. Establishing these offices has made it easier for
the companies to distribute their textbooks to their customers around the country.
(Phoenix Publishing House)(Rex Book Store, Inc.)(SIBS Publishing House,
Inc.)(Vibal Publishing House)
F. Operating Practices/Strategies/Characteristics of Dominant Players
Vibal Publishing invests in high-quality software and machines that are imported
from abroad to produce their books. It has its own printing division in the company
which allows them to produce books at their convenience. It uses the latest printing press
machine, namely the Goss Magnum four-color press that allows fast printing and this has
doubled the production of book per day. The company is able to keep a close watch on
the efficient use of materials used for printing and therefore effectively maintain its
equipment since they also own their own printing machines.
The company uses the latest Macintosh computers with the appropriate desktop
publishing software, including a Color Management System (CMS) to ensure color
quality of their output. At this specific point in the process of book production, the
company greatly interacts with their clients through proofreading, editing, layout,
scanning, and color separation to ensure quality of the production.
Another department of Vibal Publishing would be the binding and finishing facilities
of the company. Recently, the company has installed a new in-line finishing machine
called Kolbus Perfect Binding Line 2009 Model. This machine complements the printer
of the same company’s printing press. By the end of this process, the books would be
ready for boxing and distribution around to its clients.
According to SIBS’ company profile, quality has been the hallmark of its books.
And on that note, SIBS Publishing takes pride in having this particular set of publishing
goals that help them in producing quality books. Among these goals would be producing
quality books that will educate not only the student but help the teachers as well. SIBS
achieves this by conducting extensive research and observation on what the needs of the
students and teachers are to be able to produce a good learning environment just through
every reading material SIBS provides.
Besides the research on the needs of its consumers, SIBS is able to produce
quality books by employing the latest technology available in printing. SIBS operates its
own printing press as well, which allows the company to print their products at their
strict standards, producing only quality materials. SIBS has among its employees a
creative pool of artists that conceptualize and design the layout of every book the
The business has expanded to several local branches nationwide to better cater to
its clients. The company values its customers and has, in fact, created a customer care
service program which helps bridge the customers to the company and be more
knowledgeable on matters such as: book production, product research and development,
seminar organization, order processing, delivery, and after-sales services.
To better reach out to its clients, SIBS opened its Cebu branch in the year 1999,
while in the years 2003-2005, it opened a branch in Mandaluyong as well. The company
now has its home branch in Quezon City, Philippines.
Experience in the sheer number of years has been the propelling factor of the
Phoenix Publishing House in the textbook publishing industry. The company combines,
effectively, old and new techniques and technology that is truly a mark of their
knowledge of the business.
One of the values of the Phoenix Publishing House company would be giving the
Filipino authors a chance. Therefore, one of the assets of this company would be the pool
of talents that Phoenix Publishing has which are the minds behind every successful
reading material Phoenix Books produces. The company avoids hiring outside sources to
do the job since the visionaries of this business purposely wanted the Filipinos to be the
ones to prosper.
Along with the brilliant minds that Phoenix has employed, the company makes
use of the newest designing software that helps create the images in their text books.
After the designing process, the soft copy would be printed in the company’s very own
printing press. These books are then passed through quality control department to make
sure that the books produced are at par with the set standards of the company.
To ensure customer satisfaction, the company has a process before releasing the
books ordered by its clients, wherein the clients would be asked to thoroughly inspect the
books first before signing the sales invoice of the transaction. In effect, this process
allows the clients to receive only the quality materials and also speeds up the changing of
For more than five decades of experience in the textbook publishing business,
Rex has mastered the formula for a successful publishing business. The company is a
pioneer in book publishing and continues to set standards as a visionary in the field. The
company has maintained its success by effective management of the company and at the
same time taking pride of the Filipino work force.
Rex hires home-grown talents that are responsible for creating the quality books
the company is known for, and together with the talents would be the hardware materials
of the company, such as printers that are imported from abroad. Rex has several of its
own printing presses in some of its branches, while other branches just serve as offices
for its employees.
From its humble beginnings in Azcarraga Street, in Morayta, Rex Book Store has
continuously expanded. As of the moment, Rex has ten branches all over the Philippines.
These are strategically located in the following key areas: Cebu (1986), Shaw (1989),
Makati and Davao (1991), Iloilo (1993), Cubao (1994), Cagayan de Oro and Urdaneta
(1997), Legaspi City (1998), Rockwell and Cavite (1999), General Santos City (2000),
Cabanatuan and Pampanga (2001), and Tacloban (2002). The strategic locations of these
branches allow for the effective interaction of Rex with its clientele.
G. Human Resource Practices/Strategies
The dominant companies in the industry usually have their own human resources
department. This department is responsible for accepting, training, and providing their
employees due compensation.
The average educational attainments of employees for dominant companies are
college degrees. Their degrees depend on what specific job they are applying for, and
who among the applicants gets accepted is within the discretion of the company’s human
Dominant companies train their employees through seminars that they conduct for
new entrants in their company and whenever there is a new technology or system that
they plan to adapt. These seminars are also conducted by the HR department with the aid
of the other departments, which may be connected with the innovation. Since in the
publishing business, there is not much innovation but software and machines that
companies use if they print their own books, which most do.
Compensations for employees are what other companies do as well – monthly salaries
plus periodical bonuses. Again, the compensation depends on the company. For the
publishing houses of Rex, Vibal, Sibs and Phoenix that we are focusing on, their
members enjoy the benefit of being secured insurance plans by their employers. Since all
the employees are regular, they all get equal compensation. The only ones that we can
consider as casual employees are the authors, and for them, the only compensation they
get are the royalties that the company gives them.
H. Financial Strategies/Resources/Profitability
Now, taking a look at how the dominant players within the textbook publishing
industry manage their finances, we can get a better understanding of how profitable the
industry is, of how financial strategies within the industry might work at large. Because
of this, this study has included in its sources the financial statements for the years 2007
and 2008 of the four dominant players in textbook publishing, namely SIBS Publishing
House, Inc.,Vibal Publishing House, Inc., Rex Book Store, Inc., and Phoenix Publishing
House, Inc., and the following figures mentioned here come from these financial
Company Total Assets (Php) Total Liabilities (Php) Total Equity (Php)
50,859,798 7,766,265 43,093,533
809,860,967 267,847,427 542,013,540
Rex Book Store,
693,203,701.09 603,980,134.02 89,223,567.07
107,731,110 54,855,183 52,875,927
From what can be seen here, Vibal has the most resources at hand. (Philippine
Securities and Exchange Commission) This means that Vibal has a lot of potential to be
the top corporation in the industry. Having the most resources means Vibal has the most
to work with, meaning that it can explore new ideas or new business strategies that the
other publishing companies cannot follow through with.
However, just because a corporation has a lot of assets, it doesn’t mean that it can
use all of the resources at its disposal. Some, or a lot, of these assets have liabilities
attached to them, so outsiders have actual ownership of these assets. Taking these four
companies’ liabilities amounts into account, Vibal still has the biggest amount of
resources at its disposal alone, which definitely lends credence to the observation that it
has a lot of power in controlling the textbook publishing industry. (Philippine Securities
and Exchange Commission)
By looking at the four companies’ asset and liability counts, one can see that
some companies finance their operations more with liabilities, and some with the equity
that they have on hand. As such, it is important to take a look at the how much of each
company’s operations is financed with liabilities, and how much is financed with equity.
This is where the debt-to-equity ratio comes in, which is basically the total liabilities of a
company divided by its total equity. For SIBS, Vibal, Rex, and Phoenix, their ratios are
0.18, 0.49, 6.77, and 1.04, respectively. (Philippine Securities and Exchange
Commission) It can be seen here that Vibal finances its operations with equity the most,
while Rex finances its operations with liabilities the most. Because of this, even if Rex
makes a lot of money in profits, most of it will go to paying off its debts, instead of going
to future expansion measures for the company. As such, Rex has a high chance of just
stagnating while its competitors grow and capture more of the market. On the other side
of the spectrum, most of Vibal’s profits will most likely go to expansion measures, giving
it the most chance of growing out of the four industry leaders.
Moving on from the debt-equity analysis, it is important to understand just how
profitable these 4 corporations are. If these corporations already profit a lot, then it goes
that there is a big chance of the industry being profitable as a whole. Thus, let’s take a
look at the profits of these companies after income taxes in the year 2008, since doing so
will let us see just how profitable being in the textbook publishing industry can be:
Company After-Tax Profits (Php)
SIBS Publishing House, Inc. 1,951,368
Vibal Publishing House, Inc. 22,415,059
Rex Book Store, Inc. 13,150,618.24
Phoenix Publishing House, Inc. 5,908,386
From here, the profit amounts of the corporations look good enough. However, it
is important to take note of these in terms of the amount of capital that was put in, since
the profitability of a company also depends on how efficient it is in using the resources it
put in. As such, we need to consider just how big the return on investment was for each
Return on investment is an important ratio to consider when looking at just how
profitable a corporation is. The ratio is obtained by dividing the corporation’s net income
by the total book value of its assets, and this ratio leads the observer to figure out just
how big the profit was, considering how much capital was put in. These are the ratios for
the four corporations in 2008: 0.0384 for SIBS, 0.0548 for Phoenix, 0.019 for Rex, and
0.0277 for Vibal. (Philippine Securities and Exchange Commission) From here, it can
be seen that a big net income does not automatically mean a corporation is profitable.
Phoenix is the most profitable, but it only had the 3
largest net income amount. So, Rex
and Vibal still need to use their resources better to profit more. As for the industry itself,
these ratios seem to be in the “low average” levels, so it can be guessed that one can get
money from the textbook industry, but one should not expect to earn a lot in a short
period of time.
As of this time, data on the 4 corporations’ credit policies is not available, the
reason being that the managers or employees that the group contacted within these
corporations could not release information about this type of corporate policy without
approval from upper management. As such, it is useless to speculate on these policies as
of the moment.
I. Growth and Expansion Strategies of Dominant Players
The market of publishing companies is potentially unlimited because anyone can
use published items. Therefore, the question in the minds of the companies is not who to
sell to, but who not to sell to. Because of this, there is a huge variety of market types but
we will first focus on the textbook market.
Companies like Vibal, Rex, Phoenix and SIBS largely market publishing
textbooks. These companies are assured that the market for textbooks will never run out
or dramatically fall because of the need of the education sector for these textbooks.
However, competition among the companies within the industry seeks the need to expand
and grow in order for each company to keep at par with one another.
Aside from expanding by getting more clients, these four companies have
ventured into producing different kinds of educational materials that would make their
company unique from its competitors. E-learning is the new trend among the bigger
companies within the industry. E-learning is “the use of technology to enable people to
learn anytime and anywhere. e-Learning can include training, the delivery of just-in-time
information and guidance from experts” (What is e-learning?) A conversion into being a
multinational company is also where these companies are headed in order for them to
grow and expand, not only in the Philippine setting, but in other countries as well.
IV. The Natural and Global Environment
A. Socio-Cultural Environment
The global textbook industry is experiencing changes in its culture of production and
distribution, taking the following into consideration: merging and standardizing, downsizing by
outsourcing, exporting manufacturing abroad, using cheaper and alternative materials,
developing content and software for new technologies, and allowing greater customization.
Cheaper and alternative materials include textbooks being coverless and the packages being
hole-punched. Content and software development for new technologies include interactive
websites, online and distant courses and hand held content. As for greater customization, course
packs (print or online), shorter guides, digital printing and print-on-demand are other options
being offered by the publishers.
According to Dr. Filomeno Aguilar, it seems like the Filipino culture is not a reading
culture, at least for most people. For those who do read, they seem content to just read, rather
than contribute to the discourse. There is a need to develop the discipline of thinking, arguing,
and writing in a certain way in order to create works that can withstand scrutiny. If we are to
push our country’s ideas forward, we have to take the initiative and effort of publishing and
writing. This is one of the reasons why textbook industry does not really flourish in the country.
Students are only required to buy because the school asks them to or it is needed to pass a course.
It seldom happens that Filipinos buy these products for leisure and self-fulfillment.
Publishers defend their pricing by citing the costs of producing high-quality textbooks,
the demand for materials that meet public-policy educational objectives, and the need to provide
meaningful supplemental materials for an ethnically diverse student population.
In recent years, though, the Philippine textbook industry has been in decline, and this can
be attributed to the new culture brought about by specific developments in the industry. These
new developments include the emergence of e-textbooks, online textbook rentals, online learning
services, alternative formats, custom textbooks, and publisher-direct sales. Philippine publishing
companies have not been able to adapt well to these changes, and so suffer as a result.
As such, textbook publishing companies should follow these plans of action to be better
able to adapt to the recent changes in the textbook publishing culture:
Move to a turnkey digital environment that places priority of digital rather than
analog — Like newspaper and other publishing entities, textbook publishers have
struggled with the simultaneous existence of highly-individual print products and
templatized digital products and production. To date, companies have
championed the print process with which they are familiar (analog), and simply
added digital extensions to that process. This has provided them with digital
products, but not true digital processes. As a result, internal costs are too high and
cannot be lowered without significant changes.
Adopt common, open, and customizable product templates — Ask any textbook
publisher and he or she will tell you that the value of his/her company is in its
brand and content. And yet, extraordinary costs are driven by individual product
(i.e. book) differentiation through unique layouts and cover designs. Like the
newspaper conglomerates, textbook publishers must find greater efficiencies
through less product individualization and smart templatization.
Adopt open models of distribution — Another problem facing the textbook
industry is that each company is trying to own or control their content as well as
the means of production and distribution. This philosophy leads to problems in
figuring out how to control production and distribution well. In order to be
successful, textbook companies need to focus more on partnership and existing
models of distribution. Trying to control the channels of production has not
worked for any company in the overall media industry and will not be a long-term
solution for textbook publishers that thrive.
Become dynamic instead of static in terms of product vision — Current textbook
publisher models are built around the creation of content for print products. These
models are generally two to three-year cycles and view content as static and fairly
immutable. Moving forward, textbook companies will need to reinvent their
processes and concepts of product with a focus on learning materials as dynamic
constructs that can be revised and updated as needed and customized
instantaneously based on consumer demand and community focus.
Build real communities with customers — The current approach of textbook
publishers is to drive textbook sales by focusing on committee adoptions at larger
schools by selling and marketing aggressively and by signing up authors form
those schools. In a nutshell, it’s about influencing individuals and it is an
expensive process. Moving forward, textbook publishers would be well-advised
to start building real community partnerships with educational institutions across
the board. This is not lip service to partnership for the sake of closing a large
adoption, but that textbook publishers form new kinds of partnerships with their
users and communities that provide needed services and information, much like
what successful Web companies (including some newspaper and magazines) are
starting to do.
B. Technological Environment
Overall, the Philippines is generally backward in the technology it uses in the
publishing industry. Only a handful of companies can afford state-of-the-art technology
and have properly educated men to manage these machines. Those companies would be
the more established publishing companies here in the Philippines. The rest settle for
reconditioned equipment from Japan, United States and Germany.
The outdated technology of the publishing industry in the Philippines, such as
manually operated printers and low resolution printers, makes it difficult for foreign
companies to tap the country for outsourcing. The publishers have yet to obtain updated
technology such as color management hardware, computers and direct-to-press digital
printing, digital proofing, and computer-to-plate systems that will keep them at par with
global competitive standards. Despite the excellent authors and graphic artists the
Philippines has, this aged technology causes investors to hesitate about investing in the
country. Hence, not only does the country lose potential business clients, but it also
causes the talents themselves to seek jobs abroad.
Aside from the financial concerns in acquiring new technology, the lack of
trained technicians to handle the machines contributes to the cause of difficulty in having
new machines. The effect of not having new technology would be having a slower
production process. For example, drawing the artwork for the books would take longer
because of the manual process.
However, this does not discount the fact that some companies have already
acquired new printing technologies and design software for their business. It’s just that
these companies are still few and they are not even part of the “textbook publishing
industry” that this study wants to focus on. The ones at the top of the list with the most
advanced technology would be the newspaper publishers.
Other than outdated technology hampering the growth of the industry, a bigger
threat to the publishing industry, not just locally, but globally, would be the digital
revolution. Anything and everything can now be found over the internet and if it’s not
available a website can be created for the purpose of. This causes dwindling subscriptions
for newspapers and magazines, and also affects educational publishers as their
information is now easily provided for over the internet.
The challenge to the print publishing industry would then be the constant
innovation and employing new and creative ways of marketing their products.
Particularly in the Philippine market, publishing companies have created their own
gimmicks to make keep their businesses alive. Examples of these strategies, particularly
for the local textbook publishing industry, would be: giving discounts to bulk orders,
lowering the costs of their products and making books that are appealing not only to the
students but to the teachers as well.
C. Economic Trends
Moving on, this study will include the economics of the publishing industry to
make a proper analysis of it as a whole. And, to start with, the business cycle of the
industry must be known. However, since no data could be found about the industry’s
business cycle, then this study will instead present the business cycle of St. Matthews
Publishing, so that the readers can extrapolate about the industry from there:
First off, the author or teacher will submit the book’s manuscript to the company,
who will then forward it to the illustrator or artist. It is in the latter part where the layout-
making for the book will occur. After this, 1
editing for the book will happen, and will
then be followed by a checking and correction of the design of the book. The edited book
manuscript will then be returned to the author for checking. After the author checks the
edited manuscript, it will then go back to the company, which will edit it again. After
doing so, the book will finally be printed, and then all of the marketing and sales
procedures will follow. (Catabijan)
As for a supply-demand analysis of the textbook publishing industry, in the 6
years prior to March 26, 2005, private publishing companies had printed and distributed
close to 45 million pupils’ texts and teachers’ manuals for elementary and secondary
public schools. Private publishers have been aided by the Book Publishing Industry
Development Act, or RA 8047, back in 1995, as it privatized textbook publishing for
public schools, making it easier for these companies to enter into this particular market.
Now, why so many textbooks? Students in the primary to tertiary levels are
almost always increasing, and this means a constant demand, leading publishers to make
as many textbooks as possible for these new students. Also, with the steady growth of the
Philippine population, this means that more children are being born every year, leading to
more students needing more textbooks in the future. With the students’ parents’ being the
ones with purchasing power in this industry, as they keep on having children, their
demand for textbooks keeps increasing, and so the publishing companies have to keep up
with this demand. However, because prices have increased in recent years without an
equal increase in salaries, the purchasing power of parents has lowered, leading to
parents’ wanting low-cost books, which is the reason why publishing companies have to
lower their manufacturing costs as much as possible. If the prices of books are too high
for a customer’s purchasing power, then the customer will not buy the book, and so the
company will face a loss, instead of making a profit.
However, even with the increase in supply of textbooks for new students,
publishers still cannot keep up with the rising demand for these textbooks. Because of
RA 8047, there are now many textbooks for a single topic, but a lot of students still have
to share textbooks with their classmates. (Buhain) As such, a 1:1 ratio is, even now,
impossible in the Philippines’ educational system.
To help solve this, the former DepEd started bidding for textbooks at its central
office in the year 2000, thus somewhat increasing the supply to overcome the surplus
demand for textbooks by public school students. Also, back in 2005, it created a new
textbook policy with the assistance of the National Book Development Board: First, there
should only be one particular textbook for every subject for every year level from Grades
1-6 and from 1
year of high school. Second, there will be more stringent quality
control over what textbooks are used, so that less money is wasted on error-filled
textbooks. Finally, open competitive bidding will be used to minimize the costs of getting
these textbooks. (Buhain)
Now, market growth is a vital aspect of the industry to keep track off. It is vital
that corporations be able to predict how the market will change, and then make sound
business decisions based on that knowledge. As few studies about the market growth of
the Philippine textbook industry have been published, this study will instead use
documents from the National Statistics Office. For the years 2003, 2005, and 2006, sales
for the publishing industry (of which textbooks comprise 70%) totaled P10,327,768,
P8,990,825, and P10,815,399, respectively. From 2003 to 2005, that entailed a 13%
decrease in sales, while 2005 to 2006 entailed a 17% increase in sales. If one averages
that between the 4 years from 2003 to 2006, which leads to an average of 1% growth per
year, which is not good at all for market growth. Textbook sales also decreased by 12%-
17% from 2007-2008, which further lends credence to this observation. (Buhain) The
student population does indeed increase due to population growth, but due to the recent
economic crisis, this still does not mean that schools will buy more books. Schools might
have their budgets cut, or have to do with the same budgets, so there is not that much
chance for large growth. As such, it can be assumed that sales will hover at around the
same amounts on average in the future.
Also concerning market growth, the one indicator for this that this study has been
able to determine is the presence of incentives for schools, private individuals, and the
like, to buy new books through promotions, discounts, and the like. If more incentives are
given, more would be open to buying these books, thus increasing the market for
The industry has a lot of unexplored potential, though. As of now, many have
been considering better and more expensive paper materials to usher in the production of
colored textbook that has more visual appeal. Other publishing companies are also
considering E-learning or digital printing which is hinged upon higher technological
costs. These are just some of the abilities the industry has to adjust to in a more
demanding market. The industry has the capacity to be flexible and respond to changes
that are ever-constant forces in any industry.
It’s an important lesson learned, though, that just because we have the ability to
shift into a more advanced state of publishing, it does not mean that we necessarily
should. In other words, just because we can, does not mean we should.
For St. Matthew’s publishing, this shift into more advanced publishing is not ideal
such that it may just lower their sales. While they have the ability to be competitive with
their local and foreign counterparts, St. Mathew’s chooses to forego an opportunity to
upgrade if this will compromise their reach to their market nice. Higher production here
will affect their sales severely and cause them to lose their market. If the company
chooses to tap into more expensive and sophisticated methods of production, they will
limit themselves to the upper class market, which is not the most prevalent class in the
Based on this, it could be implied that a possible constraint to meet demands
would be high production costs caused by advanced and more sophisticated technology.
This limits the company’s capability of producing high-quality books at cheaper prices,
which is what the consumers demand. There lies a mismatch in the high cost of
production and the low selling price. For lots of companies in the industry, this is what
holds them back from keeping up with the demands of the technologically-inclined
D. Political or Regulatory Environment
Domestic laws, executive directives and international commitments cover the
legal capabilities of the Philippine publishing industry. These policies and regulations
improve and protect the industry. Listed below are the laws which the country is a
signatory thereof and their respective influences on the book publishing industry:
Republic act no. 8047- Book Publishing Industry Development Act
This act provides for the development of the book publishing industry of the Philippines. This
development comes in the form of the formulation and implementation of a National Book
Policy and National Book Development Plan. The National Book Policy and National Book
Development Plan aim to promote the continuing development of the book publishing industry
to ensure the production of quality books for the educational needs of the country and use for
the export market.
Republic Act No. 8293- Intellectual Property Code of the Philippines
This act states the careful measures in which book publishing firms must take note of in
protecting their intellectual property rights. For the purpose of the publishers, the act covers the
protection of copyrights and other related rights, trademarks, and patents.
Republic Act No. 7165- Creation of the Literacy Coordinating Council
This act provides for the creation of the Literacy Coordinating Council of the Philippines that
aims to eradicate illiteracy in the country. It is in support of non-formal, formal, and indigenous
learning systems and self-studying programs. It recognizes the efforts of the book publishing
industry as a medium in attaining their goal of eradicating illiteracy in the Philippines.
Republic Act No. 7743- Establishment of Public Libraries and Reading Centers
An act providing for the establishment of public libraries and reading centers in cities,
municipalities and barangays throughout the Philippines. It requires the help of the National
Library to provide the standard set of books needed for every library. This act provides an
opportunity for book publishing firms to expand their market to these libraries and reading
Revenue Regulation No. 16-2005- Consolidation of the Value Added Tax Regulations
Under Section 4.109-1 (B) (r) of this regulation, firms of the book publishing industry are
exempt from paying Value Added Tax (VAT) for “the sale, importation, printing or
publications of books… which appear at regular intervals with fixed prices for subscription and
Republic Act No. 9155- Governance of Basic Education Act of 2001
This act declares the policy of the State in the promotion and protection of the right of all
citizens to receive quality basic education. The State calls on to local initiatives, including the
efforts of the book publishing firms, to join in improving the quality of basic education here in
Executive Order 119 or Adoption of the National Book Policy
This order states the recognition of the Philippine government of the National Book Policy
as the policy pertaining to the book publishing industry of the country.
Florence Agreement and the Nairobi Protocol- Agreement on the importation of educational,
scientific and cultural materials
These are mandates that provide for the non-application of custom duties and granting of
necessary licenses and support for importation of books and other educational materials of the
countries that are signatories of the two mandates.
E. Natural Resource Environment
The publishing industry’s use of raw materials requires only a limited number of
natural resources. Thus, only a few natural conditions greatly affect the publishing
industry. One of these few conditions is deforestation. The proliferation of unsustainable
deforestation affects the quantity of wood supplied to firms around the country, which in
turn affects the price of paper, which is an essential material for the publishing industry.
Because paper is the largest imported wood-based product in the Philippines, if
the price of wood increases greatly, chances are that the price of paper will increase and
the quantity supplied would be less. This, in turn, would force the publishing industry to
raise their prices if they want to make profits.
F. Global Environment
We can say that the black-and-white, plain-print type of book will never go away.
It is already what we see in our minds when we think of books. However, as the years go
by, technology has never stopped developing, not even in the publishing industry.
Aside from printing, CD-ROM is the next media where books can be found. A lot
of international companies already publish some of their books in CD’s. This is because,
if they use CD’s, they can input other types of media like sounds, graphics, animations
and others, which a normal book cannot provide. CD-ROM’s can also provide interactive
ways of helping the child learn what they are teaching. This would be very useful,
especially if you want your children to actually enjoy learning and reading books. Also,
since it is in a software format, you can easily search for the information that you are
looking for. Sorting would also be less hassle for users, not to mention that CD-ROM’s
are less expensive to distribute and are easier to access, though this type is already
seldom seen nowadays. ("CD-ROM Publishing")
In other countries, electronic publishing (done by publishing books online) is
already a part of their publishing industries. By doing this, people will have easier access
to their books, and some websites are specifically for this purpose alone. Since publishers
have all the rights to their intellectual property, they can do whatever they want with it,
and what most do is to actually profit from it. One of the biggest advantages of this is that
if the book is available for sale online, it will just be one click away, especially if you
need it immediately. This leads to a large potential for new profit, as books, next to
software, have the largest market online.
Despite all of this, local publishers have yet to venture into this advancement.
Though some have already explored and tried this kind of publishing, not all have
accepted it and it is still something that we need to embed in the Philippine publishing
industry to be able to compete with international publishers.
Another new advancement in the field of publishing is the “print your own book”
program, wherein you forward your original book so that a company can publish it for
you (“How to Publish a Book – The Self-Publishing Book Company”) By using this,
would-be textbook authors can shorten the publishing cycle for companies by removing
the need to find their own artists, and by removing the need for companies to constantly
review a book’s content before printing it. A textbook company may also make use of
this offered program to lessen the hassle of designing and printing, especially if the price
offered is less than what they pay wherever they originally got their books published.
In the Philippines, people take a traditional view on how books are made and how
books should be read. However, as technology advances and as our lifestyles change,
local publishers should also be flexible and be able to adapt the recent changes in their
chosen field. Being in a third world country does not mean that we should aim less and
just settle with whatever we are used to. To be able to compete, publishers must be able
to know their own industry and what advancements will help them be internationally
V. Industry Analysis and Recommendations
A. Industry Life Cycle Analysis
St. Matthew’s has had consistent growth from its starting years until the present
time. In its first years of operation, the business, then only a sole proprietorship,
experienced a high growth rate, which was due to the “catch up effect” that is a natural
tendency for starting-up businesses. Growth could also be seen when St. Matthew’s
transitions from a sole proprietorship to a corporation and its consequent change of
location for its office, due to the lack of space needed to accommodate its growing
number of employees. Seeing as it is easier for a corporation to handle affairs and grow a
large business than in a sole proprietorship, the corporation will become even more
efficient in handling its operations and will again experience growth. Because of the
company’s ability to handle more transactions, its growth rate will significantly increase
in the near future.
B. Porter’s 5 Forces
The bargaining power of suppliers on this company is in the middle, not high and
not low as well. This is mainly because the company supplies its own paper. Thispaper is
the ones required by the Department of Education, and it is a certain type of recycled
paper which is not so cheap as well. Because it does not have their own printing house,
St. Matthews pays printers to print the books for it. This way, it would have a high return
on assets because it would not have to buy costly printers, which would just depreciate
over time. These have positive effects on the company’s economic relationship as it is a
good deal for it to get suppliers for printing separate from the paper.
The bargaining power of customers, on the other hand, is high because the
company has many competitors. Also, lately, a lot of small publishing houses have been
emerging, and this is because it is easy to penetrate this kind of industry. Because of the
large number of competitors, the schools have a lot to choose from. As such, the
company has to work to make schools favor it over bigger companies. One of the actions
that the company took to ensure this is the constant revision of its books, which is done
every three to five years or when it is called for by the Department of Education. This is
to guarantee the customers that their books are up-to-date. This is also in response to their
customers’ feedback that parents don’t like to buy books whose copyrights are for more
than three years. Constant revision is done also to keep up with the standards set by the
different schools that purchase books from them.
As mentioned earlier, this industry is not difficult to penetrate, putting threats of
new entrants in the middle again. It will not be difficult to get in as long as you have
connections. In the case of St. Matthew’s Publishing, it was started by the parents of the
current owners, making it easier for them to get into and maintain the business. Some
people even go into the business and become a one-man team, meaning less overhead
cost and more profit for himself. We put it in mid because it is also not easy to get into
publishing. You will need expertise, talents, and connections to jumpstart your business
in this industry. Though, exiting the industry is also very easy. Liquidating your assets
will be effortless because you can opt to sell it to junk shops. Some of the companies,
however, like the one discussed, choose to donate the unsold books to the unfortunate.
Threat of substitute products is in the middle. What can substitute textbooks
nowadays are electronic books or e-books and photocopies. Since the market is more on
public pre-schools and elementary, these children would still have to develop their motor
skills especially in writing which computer cannot substitute. However, reading would be
more attractive for the kids with colored and moving graphics and this is something a
piece of paper cannot offer. With the advent of technology, these advances cannot be
prevented but the government at the moment cannot afford to supply each school enough
computers for each student. Still, the company promises to have their own version of the
e-books as well but it will not be in less than a decade.
Competitive rivalry in this industry is very high. A lot of companies have already
established their names and schools associate this with superiority and better quality.
They also have a lot more assets to use at their disposal because they are more well-
established. Companies like Vibal, SIBS, Rex and Phoenix are companies that have a lot
of power in controlling the textbook industry in the Philippines because of the number of
resources they have on hand and the liabilities that they have with Vibal having the
biggest amount of resources at its disposal alone. The return on investment ratios of the
four rival companies seem to be in the “low average” levels, so it can be guessed that one
can get money from the textbook industry, but one should not expect to earn a lot in a
short period of time.
C. SWOT Analysis for the Firm
St. Matthews Publishing is not new in the business; it has been twenty years since
this company began. This year from sole proprietorship it expands to a corporation. The
company has a number of strengths. First, the company is not very big and its business
operations are easy to handle. Second, the company has built a fiduciary relationship with
its employees,which enabled the company to produce efficiently; the company notes the
abilities and skills of each employee, and provides them with care and proper
compensation. Third, the customers trust the company for providing excellent materials
for the book, and for its seminars being conducted for free to promote social awareness
for teachers. Fourth, the company has edged out other companies because the prices of
the book are pretty affordable; it really is worth the price because of the quality that the
books promise. Lastly, the company is efficient: maximizing and using resources
properly to cut costs but not cutting the quality of the books it produces.
The company cannot just have strengths, as it also has its weaknesses. Unlike
other major players like Vibal and Phoenix, St. Matthew’s does not have enough
resources and publicity. With regards to resources, St. Matthew’s does not have its own
printing press, and that is why the company prints at around February to April (before
school or classes start). It does not have enough publicity like Vibal and Phoenix, which
are really known to most of the schools. The target market of the company is not that big,
either. The company caters mostly to preschoolers,who are not as many when compared
to other levels, and the books are cheaper compared to those used in high school and
college. Last, St. Matthew’s is heavily dependent on the decisions of the upper
management, thus giving rise to the problem of making the company too centralized.
There are opportunities St. Matthews may engage into in the future, though, as
this company is still growing, so many opportunities are still about to come. The
company may expand into catering the books needed by high school students. Also, ten
years from now with the rise of e-books, the company may begin preparations so it may
go with the trend of school needs and the flow of technology. St. Matthews may also go
to the government sector, especially theDepEd, to ask for assistance in the distribution of
books, since the books are really affordable for the students.
On the other hand, there are also threats that might hinder St. Matthews with the
opportunities it may take. One is technology: the presence of e-books or online books.
This threat aims to remove or phased out textbooks in the market to preserve the
environment better, and to cut the cost the students have to pay. The bigger threats are the
big publishing companies who threaten to remove their shares in the market if the
government will not support them.
D. Key or Critical Success Factors
St. Matthew’s Publishing’s 20-year presence and success in being one of the
competitive players in the textbook publishing industry of the Philippines could be
attributed to the values the company upholds. The company and its staff have a unified
understanding of the company’s commitment in providing quality books for its
customers. In effect, the books they produce have captured a loyal clientele of their own,
thus securing a future for the business in the Philippine market.
The books published by St. Matthew’s Publishing would be the choice of books
by many government-operated public schools around the Philippines. This is because the
company has already specialized in the content of the books needed in the preschool and
the grade school levels. For many years, the company has handled the annual curriculum
for the preschool and grade school levels, and, at the same time, has worked with their
clients in improving their content. Their books achieve a certain level of personalization,
making such books the choice of not just the students, but especially by the teachers of
The marketing strategy of St. Matthew’s Publishing would be straightforward and
no nonsense. The company spends little to none for advertisements and promotions as
compared to its rivals in the industry. Some companies choose to provide package deals
for their clients, such as by buying a certain number of books the company will give
freebies or incentives. These companies deceivingly give these incentives but the
sacrifice would be the quality of their products or a more expensive price tag on their
books. St. Matthew’s rids itself of these marketing practices, and instead focuses on its
commitment of providing quality books to their customers. At the end of the day, the
clients of St, Matthew’s may try purchasing books from other publishing companies, but
then after, their loyalty still remains with St. Matthew’s.
Being a competitive player in the text-book publishing industry is a strategic
position for St. Matthew’s publishing as its target market would be the educational sector.
The government and generally, the whole society today put so much emphasis on the
importance of education. Many laws in the Philippine constitution such as Governance of
Basic Education Act of 2001 and Establishment of Public Libraries and Reading Centers,
underscore on the need of having sufficient amount of educational books available for
use of the public regardless of social standing. The need for these educational materials
would always be present and therefore St. Matthew’s maintains the quality and relevance
of its products aligning to the standards set by its customers and other competitors in the
industry as well.
As has been mentioned earlier, St. Matthews is not as big as the industry leaders,
like Vibal Publishing and Rex Publishing. As such, the firm does not have as much
material resources as its competitors to lean on, thus giving them the advantage in that
area. However, what St. Matthews can count on is its group of loyal employees who had
either already worked with St. Matthews’ parent company in the past, or are relatives of
those who did. This gives St. Matthews’ employees a lot of 1
hand experience in
working in the industry, thus making them more qualified than the typical publishing
company’s employee. This is only further given credence when one looks at the fact that
even if not all of the staff under St. Matthews have degrees, the company is assured that
they have the skills necessary to do their jobs, since the higher-ups in the company base
their recruitment on the skills of the applicant, not on the degree that he or she may, or
may not, have. St. Matthews definitely does not have a shortage of qualified personnel, so
it can count on its employees to lead the way to business success. In addition to their
employees, St. Matthews also knows how to cut down on the costs for its outside
printing. Sure, the company might get printers outside the company to do its books, but
by providing the type of paper that they want used, St. Matthews can lower the cost of
manufacturing its books, thus giving it a bigger profit margin than other companies who
do not follow the same course of action.
St. Matthews does not have its own printers, and so goes to outside printing to
finish the books that it will sell. However, despite this, St. Matthews is indeed developing
the technology at its disposal by computerizing its operations, with the first computerized
department being the Sales department in the main office. By doing so, the employees
can now record transactions faster and easier, making them expend less effort for the
same output. The company is now looking at computerizing communications between the
main office and the company’s sales agents, thus lowering the chance of mistakes
happening in transactions due to miscommunication. Textbook publishing is not really an
industry that needs a high level of technology from participating firms, so St. Matthews is
still successful with its current technologies.
E. Conclusion with Recommendations for the Firm and the Industry
Currently, St. Matthew’s publishing has been relying on other printing companies
for printing the books they publish. One of the company’s prospects would be to venture
into printing in order to minimize the costs of printing their own books and to generate
more income by printing books for other clients as well. The company withholds itself
from venturing into printing for the reason that the books they publish are only seasonal,
which means that they do not really need to have their own printing department for they
don’t print often. The company failed to realize that seldom as printing may be for them,
it is also long term—they may print a few times in a year, but over the company’s life
span, the number of times they print would accumulate and be more. For this reason, the
group recommends that the company should consider venturing into printing to lessen the
costs of printing by printing for itself.
E-books, short for electronic books, are digital equivalents of the conventional
printed books. They tend to be favored by environmentalists because of their efficiency in
conserving resource. Certain politicians in the country are also pushing for e-books to
wipe out conventional printing because of reasons like the e-books’ capability to be
shared, its visual appeal to entice children and their environmental benefits. Aside from
printing, the group recommends that since the company has enough resources to ride with
the technological wave, it should venture into e-books in anticipation for their market’s
acceptance for it in the future.
Stick to target market and keep prices low
St. Matthew’s Publishing has been doing a great job maintaining their dominance
in their chosen target market—kindergarten to grade school public students—because of
their low prices. The reason for why St. Matthew’s should stick to their current market is
because they might turn out to be less profitable should they expand their market to the
high school and college level given the number of competitors in those levels. Keeping
their prices low, like what they are doing now, also assures them of their market since the
spending powers of their target market are not really high. We believe that keeping the
prices low for their unchanged target market would allow St. Matthew’s to continue
being one of the influential players in its field.
Increase Marketing Efforts
The group also recommends that the company should be more dynamic with
marketing its books. Currently, there are companies that share the same market as St.
Matthew’s. In order for their preschool and grade school level books to be more visible to
the public eye, St. Matthew’s can take part in book fairs usually held by educational
institutions, publishing groups and the government. The company would also then be able
to open up to new markets through a more intensified marketing effort. Day care centers,
tutorial centers and even parents with home-schooled children can know about its books.
To address the threat of copyright infringement, the group suggests that the
company be more vigilant of people who make use of the content of its books through
mere photocopying of their pages. A watermark system or any means of marking the
pages of the books to indicate St. Matthew’s ownership over them should be used. In this
way, St. Matthew’s can add more protection to its books aside from having registered for
copyright protection and discourage others from photocopying the content of their books.
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