CASELETS

1. It has been observed that strong countries have great global brands from innovative products.
USA has Apple and Nike among many others. Japan has Sony and Toyota. Korea has
Samsung. Finland has Nokia. Singapore has Singapore Airlines while Taiwan has Acer.

a. What is stopping the Philippines from launching truly innovative global products?

Apple, Nike, Sony, Toyota, Samsung, Nokia and Acer are indeed instrumental
brands which innovated people’s way of living since the birth of modern technology.
However, these brands were born due to the force of high-end manufacturing and
industrialization. To note, the countries which gave birth to these brands are at par with
each other and have a significant difference with that of the Philippines in terms of
industrialization. What really pulls down the Philippines from footing equally with these
countries is the cost of electrification needed to propel manufacturing plants to produce
quality and high-end products.

While the Philippines manufacture its own brand, it suffers the needed global
standards as it fails as to its quality. Even if we manufacture a top-of-the-line products
eligible to be marketed globally, still it will suffer consistent patronage as it will cost more
than the cost of the famous brand we current have due to the sky-high costs of production.

As to the question of lack of investors, we must also be reminded that our

Constitution forbids the ownership of corporations by foreigners by more than 40% of its
capital shares and stocks by virtue of the Filipino First Policy of the Cory Aquino
Administration. This repelled big companies to invest in the Philippines snatching the
opportunity for us to be industrially-known globally. Adding insult to the injury, the Cory
Aquino Administration also forbids, via the Constitution, the use of nuclear power plant
that could have save us from the high cost of electrification as of the moment. All in all,
these contributed to the Philippines’ inability to launch innovative global products.

b. What Philippine made products (or services) do you think will stand the greatest chance
to be a global brand? Please define the criteria observed from world’s strong brands.

With the current situation of the Philippines, we suffer from the roots if we talk
about products to be a global brand. Nevertheless, we are well-known in the service sector
where the Philippines perennially offered globally competitive healthcare workers. To note,
Filipino nurses dominated hospitals around the world and are deemed to be the best
healthcare workers there are.
As observed from the world’s strong brands, they are: (a) with quality; (b) reliable;
and (c) durable.

With quality

As illustrated above, we take pride in molding globally-competitive Filipino nurses

as it is inherent to us Filipinos to exhibit an extraordinary level of empathy as compared
to other nationals. This level of empathy makes Filipino nurses a global brand as they
 deliver and render the necessary work towards patients with a quality that cannot be
garnered from nurses coming from other races.

Reliable

Alongside with quality, a global brand must be reliable where a product or service
must deliver sufficiently to the needs of its consumers or clients. While Filipino nurses
exhibit extraordinary empathy to their clients, they also exhibit the genuineness in the
performance of their duties in the workplace. True that they are motivated by their
remuneration, they are primarily propelled to perform their duties with beneficence and
with non-maleficence.

Durable

A global brand needs to endure all the wear and tear arising from its usage. Same
goes with the services being rendered by Filipino nurses. Having been exposed and
enculturated with the stringent and demanding healthcare delivery system in the
Philippines, Filipino nurses can endure all the hostilities of both administrative and clinical
aspects in the workplace abroad. Nurses, without plight, can work straight shifts and even
overtimes abroad without them compromising the quality and reliability required in the
performance of their duties. Unlike nurses of other race, Filipino nurses can withstand the
workloads assigned to them and performs the same with unbridled devotion.

c. What is the role of government in building global brands and how would having a global
Pinoy brand benefit the government?

While private sectors partake largely in the nation-building of the Philippines, the
government must give credit to where it is due. It must take measure on how to ease and
mitigate the obligations of the private sector in the performance of their business or trade.

As for the facilities needed by the private sector. The government must make
means in order for the capital expenses of businesses to be favorable. While a number of
Filipinos have the capacity to invest in industrialization and technology, they are disgusted
to pursue such out of the unreasonable water and electric payments they ought to pay.
Since the government functions in accordance with the law, it is a must to realign our
laws based on the contemporaneous needs of the country. Before we can have a reliable
source of energy, we must first revise or amend our Constitution so that the use of nuclear
energy be legally possible. Or maybe the government can redeem and takeover the once
government-owned non-profit electric corporations so that the electrification costs in the
country will lower significantly.

As for the tax obligations, our laws must be crafted in such a way that the tax
obligations of business, with a potential to create a global brand, is not a burden or an
obstacle freeing it to reach its full potentials.

As for the government support, the Executive branch and its implementing arms,
may give grants to businesses run by individuals, corporations, partnerships and
cooperatives for them to craft products which may have the potential to be branded and
known globally.

Having a global Pinoy brand benefits the government economically as it will open
the doors for trade wide open and available to all markets internationally. Currently, it is
the Philippines who knock on the international doors to sell its generic products. The
moment a product with a global brand be innovated by the Philippines, it would be a
limelight in the Philippine trade and economy where international stakeholders would
knock on our doors dying to buy our products.
2. During the 2010 annual stockholders meeting of San Miguel Brewery, it was reported that
while the per capital consumption of beer in Luzon is 40 liters per year, it is only 5 liters
annually in the Visayas and Mindanao region. San Miguel Brewery, already with about 96%
market shares of the total beer industry as of 2010, wanted to expand annual sales from 1.5
billion liters to 2 billion liters by encouraging higher consumption in the Visayas and Mindanao
area via its various beer brands.

a. Investigate why Visayas and Mindanao consumption of beer is lagging far behind its Luzon
counterpart.

Visayas and Mindanao lag far behind in their consumption of beer as compared to
Luzon due to the following reasons: (1) number of consumers; (2) geographical location
of production/bottling plants; (3) marketing strategy; and (4) non-standardized pricing.

Number of consumers

Per capital consumption of 40 liters in Luzon is wholly justified as compared to the

5-liter consumption in Visayas and Mindanao based on the fact that Luzon’s population is
well saturated. Be it noted that most of the people, the would-be consumers, in Visayas
and Mindanao migrate to Luzon for various reasons. Hence, the population is one of the
moving factors of the plummeting consumption of beer in Luzon.

Geographical Location of
Production/Bottling plants

Factories of San Miguel in Luzon greatly outnumbers those in the Visayas and
Mindanao. They have a significant number of production and bottling plants aggregated
in Luzon while they only have a single plant each in Visayas and in Mindanao. This set up
has a direct effect on the accessibility of consumers to San Miguel products considering
the geographical limits in Visayas where they need to import such products from Cebu to
their respective locations for a cost.

Take for example the actual setup in Visayas where the production and bottling
plant in located in Mandaue City, Cebu. Owing to the stringent marketing and sales
procedure of San Miguel, they only assign limited slots of dealership to other adjacent
islands in Visayas. In Samar, there are more or less 3 dealers connected to Cebu plant
and they borne the burden in hauling the products from Cebu to their respective areas.
To note, expenses incurred via shipping lines are significantly high which affects the
consumption of beer in Visayas, such will be discussed the succeeding items.

Marketing Strategy

San Miguel markets their products through dealers, and these dealers are obliged
to distribute the products to end-users. However, this dealership is limited as to the
number per location and is territorial in nature. In Calbayog City alone, there is only a sole
authorized distributor covering the areas from Caglanipao to Sta. Margarita. In this
connection, it has a debilitating effect as to the consumption of beer mainly because such
dealer may not cater all the demands of its territory. As to the question of putting up
 another dealer in Calbayog, that is upon the discretion of the Cebu plant to add or not.
And as to the question of allowing other existing dealers to market in Calbayog, it is of no
moment as it is a breach of San Miguel’s marketing guidelines.

With this being given, we have a better picture of an actual hindrance contributing
to the lower per capital consumption of beer in a particular location in the Visayas alone.
We can infer that such is also happening to other areas in Visayas and in Mindanao.

Non-standardized pricing

The cost of beer in Luzon may be different to the cost in Visayas and in Mindanao
mainly due to the capital expenses incurred by the dealers. As mentioned earlier in the
Geographical Location, Luzon has multiple production/bottling plants which dealers can
access with in a lesser expense as compared to the plants in Visayas and Mindanao where
dealers have to cross seas, for a significant cost, in hauling San Miguel Products to their
respective areas.

While the plant price of all products in all production plants are uniformly equal
nationwide, the selling price of dealers depends upon their expenses and discretion. In
Marketing Strategy, it mentioned that San Miguel allot territorial dealership. Hence, San
Miguel permits monopoly of dealers in their respective areas, and allow dealers to set the
product price at will. Pricing of beer and other San Miguel products surely pulls down the
per capital consumption, adding to it the factor as mentioned in Number of Consumers.

b. How can San Miguel Brewery use its various beer products to encourage higher
consumption among underserved and unserved market in the Visayas and Mindanao area?

San Miguel may base its production and marketing of beer products to the
preferences and demands of a particular location. San Miguel may oblige its dealers to
have a periodical report as to the kind of product saleable and preferred by its consumers.
Moreover, they must open another slot for dealership in areas where there is a high
demand but low supply of beer products.

c. How can San Miguel Brewery use its potential synergy with all its sister companies to
increase beer demand in the Visayas and Mindanao area?

While San Miguel carries several product lines, they must oblige their in-house
marketing and sales representatives to emphasize its beer products, along with other
products, in the course of their marketing activities.

They may offer beer product rebates upon reaching a purchase amount of the
other product line they are selling. To illustrate this more clearly, San Miguel has company
ABC designated to market food products, and company XYZ to market beer products.
Having the authority to intervene between said companies, San Miguel may compel
company ABC to include in its marketing activities the products of company XYZ, vice
versa. It may compel company ABC to give eligibility for rebates or discounts to consumers
when the latter purchases food products. Company ABC, then, may endorse those
consumers to Company XYZ in order for consumers to directly purchase beer products for
a lower price.