REPUBLIC OF THE PHILIPPINES

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

FIRM ANALYSIS (MARKET

STRUCTURE ANALYSIS) –
SM INVESTMENTS
CORPORATION

A requirement for the subject Managerial Economics (ECON 40133)

Submitted by:

Dacanay, Andy B.

Manalili, Joel Hans Luis A.

Submitted to:

Prof. Maria Vicenta Magpantay

July 2021

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

I. Name of Firm

SM Investments Corporation

II. Vision, Mission, Goals and Core Values

II.I Vision

To build world-class businesses that are catalysts for development in the

communities we serve.

II.II Mission

We will partner with our host communities to provide a consistently high standard
of service to our customers, look after the welfare of our employees and deliver sustainable
returns to our shareholders, at all times upholding the highest standards of corporate
governance in all our businesses.

II.III Goals

To provide inclusive economic opportunities, to facilitate community

development, to promote environmental responsibility, and to drive advocacy and awareness.

II.IV Core Values

Leadership. Integrity. Hard Work. Innovation. Sustainability. Accountability.

III. Brief History

From the dream of selling a good pair of shoes to every Filipino, SM founder Henry Sy,
Sr. has laid the groundwork and piloted the development and evolution of SM Investments
Corporation (SMIC) into one of the country’s largest holding companies in the Philippines today.

For over six decades, SM has demonstrated its leading presence in retail, banking, and
property development in the Philippines with a rising presence in China, innovating to provide
best-value in products and services across various customers.

Through careful planning and execution, SM takes inspiration from its millions of
stakeholders whose lives are shaped by their aspirations and constant desire for a better quality
of life. As it continues to build on these aspirations, SM fulfills its catalyst role by expanding
through its core businesses, generating employment, energizing business activities and overall
progress in its host communities. SM stands firm in its commitment toward change by promoting
more value and greater convenience, stimulating growth and inspiring millions toward realizing
their lifelong dreams.

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

IV. SWOT – PESTLE Analysis

SM INVESTMENTS SWOT ANALYSIS

SM Investments Strengths 1. SM is the Philippines' most dominant player in

SM Investments Weaknesses
SM Investments Opportunities
SM Investments Threats
retail with over 45 stores
2. 180+ stores nationwide
3. SM Foundation, Inc. running CSR activities
4. Subsidiaries are SM Prime Holdings PSE:
SMPH), SM Development PSE: SMDC) etc.
5. International Toyworld Inc. is a subsidiary of SM
1.Not present in many countries
2. Lack online shipping and e-commerce
1.Disposable income is increasing of the customers
2. Tapping the international market specially
emerging economies
3. Acquisition of smaller retail chains
4. More visibility through advertising and customer
focused services
1.Different FDI policy on country
2.CRM is not in very well in place
3.Labor union relations are not very healthy

SM INVESTMENTS PESTLE ANALYSIS

Political The Sys' formula – showing support for the current

administration's economic policies, focusing on core
businesses, and minimizing exposure on regulated
operations – has been proven effective for the SM
group. The group's financial performance over the
past years proves it. 
Economic With their diverse business portfolio, they contribute
significantly to the country's GDP, therefore
contributing to the country's economic growth.
Social The employment they generate, as well as the

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

outreach initiatives they execute, improve people's

lives in the communities in which it operates.
Technological SMIC recognizes that today’s consumers have
immersed themselves in technology and have
started to utilize the advantages of online shopping.
To serve customers in just a few clicks and scrolls,
SM Retail launched its online shopping platform,
ShopSM, that showcases a variety of items found in
every SM department store: from menswear to
womenswear, shoes to bags and baby essentials to
kids’ wear. It also offers popular toys, select
cosmetics and beauty products, kitchen appliances,
home accessories and even hardware equipment.

Legal  Anti-Workplace Discrimination. The

Company adheres to United Nations Global
Compact Principle 6 and ensures that there
is no discrimination in respect of
employment and occupation. Employees are
selected on the basis of their ability to do the
job and there is no distinction, exclusion or
preference made in terms of age, gender,
sexual orientation, religious affiliation,
parental status. As such, there is no
reported incidence of discrimination in 2020.
 Re-employment Opportunities. SMIC in
compliance with the Philippine labor laws
implemented the mandatory retirement of
our employees at the age of 65 and possible
re-employment as consultant thereafter.
Meanwhile, those who resigned were given
a chance of possible re-employment for any
vacant position that may fit their
qualifications.
Environmental As a responsible property owner and developer,
they make every effort to preserve natural
resources as well as the implementation of their
activities are resilient.

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

V. Market Analysis

A. Product and Major Competing Product(s) and firms

Products and Services

 Shopping Mall Development

 Retail
 Real Estate Development
 Hotels and Conventions
 Financial Services

SM INVESTMENTS COMPETITION

Competitors 1. Dillard's
2. Home Retail Group
3. Mercuries & Associates

B. Pricing Strategies

The SM Investments Corporation is implementing a financial strategy that is sustainable

for their growth. According to Franklin Gomez (2020), “At SM, we have diverse businesses that
each require their own financial strategy.  The Property and Banking Groups need capital as
they pursue their growth agenda.  The Retail Group on the other hand employs a capital light
model to keep costs variable and enable them to navigate through a competitive and low margin
environment.” This strategy helps them regulate their pricing as well as their finance. It makes
them more adaptable and durable despite the crisis.

C. Non-Price competition strategies

1. Geography (from Manila to Provincial to International) – SM Department Store

expanded aggressively in the 1980’s (Cubao, Harrison Plaza) eventually opening in all
key provincial cities. It also expanded geographically by opening several malls in China.

2. Business model (From Focus to Conglomerate) – Diversification and synergy became

the business model of the SM Group. Henry Sy Sr.’s retail group not only operated SM’s
own stores but expanded acquiring either distribution rights or joint ventures with major
foreign brands like Uniqlo, Forever 21, Ace Hardware, Watsons and many more.
Building malls led to their adjacency of property development (SMDC), complemented
by a separate banking unit (BDO) where both shoppers and tenants can benefit,
hospitality (hotels, SMX), education (Asia Pacific College, NU), and hundreds of affiliates

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

and subsidiaries within the SM Group, many of their parent companies are publicly listed
companies.

3. Channel (From Retail to Omni Channel) – Malls much bigger than department stores
were opened as a new channel including four of the biggest in the world – – SM North
Edsa (in 1985), Megamall (in 1991), MOA (2006), and SM Seaside Cebu (2015), a major
tourism come on. Many of their retail stores now have online ordering and delivery or
pick up counterparts. Mini marts like Alfa Mart is a joint ventures with Indonesia’s Alfa
Mart, differentiating themselves like a convenience stores but at supermarket prices for
some (SM Bonus items) while lower than convenience store prices for most. 

D. Marketing Strategies

1. Product (from Core to Adjacencies) – Henry Sy Sr. started a small shoe store in 1946 at
age 21, then carried more types of shoes in Carriedo in Quiapo. From shoes, he
expanded to thousands of other non-shoe items serving his core ‘masa’ customers,
leading to the creation of the bigger SM Department Store in 1972. From department
store (now rebranded as The SM Store), he went into supermarket applying the same
retail principles managing hundreds of thousands of items to different retail and product
categories, tapping simply from his core to their adjacencies.

2. Market (From Masa to Rich to Corporate) – While more malls were built, premier malls
were established to cater to the richer clients. We now see the likes of Aura and other
malls. Markets outside of SM Malls were tapped for foreign brands (located in other
malls), as well as their Savemore supermarkets (in residential
communities).  Subsequently, corporate markets were tapped by their sister companies
like BDO. 

VI. Type of Corporate Social Responsibility and which from among the Sustainable
Development Goals does it address

Types of Corporate Social Responsibility: 

1. Responsibility to Society in General

2. Responsibility to Employees

3. Responsibility to Consumers

4. Obligation towards the Environment

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

5. Responsibility to Society in General

Sustainable Development Goals:

Provide inclusive economic opportunities

 Job creation 

 Inclusive supply chains 

 Innovative banking products and services 

Facilitate community development 

 Public infrastructure building and rehabilitation 

 Disaster risk reduction 

Promote environmental responsibility 

 Responsible consumption 

 Conservation and preservation of natural environment and

biodiversity 

 Green finance 

Drive advocacy and awareness 

 Signatory to UN Global Compact and UN Arise Philippines 

 Prescribe to the GHG Protocol and CDP

 Partnered with GRI for 1st Sustainability Summit in the country

VII. Conclusion and Learnings

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

We learned that SMIC is a leading Philippine corporation with investments in market-

leading companies such as retail, finance, and real estate. It also invests in ventures that have
the potential to capitalize on high growth opportunities in the developing Philippine economy.
They are a strong proxy for Philippine development, a business enabler, and have a sustainable
culture.

We have also learned that their four long-term goals are: to provide inclusive economic
opportunities, to facilitate community development, to promote environmental responsibility, and
to drive advocacy and awareness. Furthermore, their major population centers are in Metro
Manila and, more precisely, in provinces where there are opportunities for growth and strategic
capture, especially in China.

Finally, we discovered that SMIC is committed to developing its retail, property, and
financial services businesses while maintaining or gaining competitive advantage in each of
their respective industries. That is the reason why they will continue to target the Philippines'
mass market by offering basic goods and services such as food, clothing, accommodation, and
financial services.

IX. References

Company Information. (n.d.). PSE Edge. Retrieved July 16, 2021, from

https://edge.pse.com.ph/companyInformation/form.do?cmpy_id=599

Empowering urban communities through farming. (n.d.). SM Investments Corporation.

Retrieved July 16, 2021, from https://www.sminvestments.com/latest_news/empowering-

urban-communities-through-farming/?

fbclid=IwAR2JVxOfEF86TCnPqAPd_lw5mEiX9omU5CbGW98nWVtU_ZAvyBWInK

_H-FY

Financial Strategy. (n.d.). SM Investments Corporation. Retrieved July 16, 2021, from

https://www.sminvestments.com/sustainability/sustainability-leadership/financial-

strategy/

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

Go, J. (2019, February 1). Decoding The 5 Growth Strategies of Henry Sy by Josiah Go. The

Marketing Mentor. https://josiahgo.com/decoding-the-5-growth-strategies-of-henry-sy-

by-josiah-go/

Investments Corporation, S. Inspiring Resilience. Retrieved from

https://smprime.com/sites/default/files/SM-Prime-Integrated-Report%202020.pdf

Investments Corporation, S. Investor Presentation. Retrieved from

https://www.sminvestments.com/wp-content/uploads/2020/10/3M2020-Investor-

Presentation_06112020.pdf

Investments Corporation, S. Sm investments corporation. Retrieved from

https://www.pds.com.ph/wp-content/uploads/2020/07/17-SMIC-ECNs-Info-Memo-

071620_filing.pdf

MBA Skool Team. (2020, April 26). SM Investments SWOT Analysis, Competitors,

Segmentation, Target Market, Positioning & USP. MBA Skool-Study.Learn.Share.

https://www.mbaskool.com/brandguide/lifestyle-and-retail/4915-sm-investments.html

Our Culture and Values. (n.d.). SM Investments Corporation. Retrieved July 16, 2021, from

https://www.sminvestments.com/sustainability/creating-shared-value/our-people/our-

culture-and-values/

Our History. (n.d.). SM Investments Corporation. Retrieved July 16, 2021, from

https://www.sminvestments.com/about-us/our-history/

Paz, C. D. (2017, June 21). Doing business under Duterte? Philippines’ richest family shows

how. Rappler. https://www.rappler.com/business/sm-investments-duterte-henry-sy

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 REPUBLIC OF THE PHILIPPINES
POLYTECHNIC UNIVERSITY OF THE PHILIPPINES
STA. MESA, MANILA
COLLEGE OF ACCOUNTANCY AND FINANCE
DEPARTMENT OF MANAGEMENT ACCOUNTING

SM Foundation opens scholarship online application for SY 2021–2022. (n.d.). Manila Standard.

Retrieved July 16, 2021, from https://www.manilastandard.net/mobile/article/343755?

fbclid=IwAR1-AT1GkiZfnLew2miA53lhJ-

QZVAZ9kjlwWIAB96zmlVvFbCc6vT_Dc7E

SM Investments Corporation. (n.d.). Https://Sminvestments.Com. Retrieved July 16, 2021, from

https://smicweb.smicit.com/company/vision-and-mission

SM Retail: Leading Philippine modern retailing through technology. (n.d.). SM Investments

Corporation. Retrieved July 16, 2021, from https://www.sminvestments.com/stories/sm-

retail-leading-philippine-modern-retailing-through-technology/

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