Market Profitability of Baguio

Applied Economics
Academic Year 2020 – 2021
First Semester – First Grading

Prepared by:

MENDOZA, Juleane Arielle G.

SUPSUPIN, Marianne Rae L.

Submitted to:

Elijah Robin D. Luna

Subject Teacher
 GLOBE TELECOM

Globe Telecom, Inc. is one of the Philippines' largest telecommunications companies. The business runs
the Philippines' largest mobile network as well as one of the country's major fixed-line and internet
networks.

MARKET STRUCTURE:

Globe Telecom is considered as an oligopoly wherein a market or industry is dominated by a

small group of large sellers. Telecom companies in the Philippines is divided into three
companies namely PLDT, Bayan Tel and Globe telecom.

Products:

Gcash, TM, Sim cards, Postpaid, Prepaid

Past challenges:

The telecom industry’s biggest challenge is not the competition but it would be the high network
spending. Besides the fact that building a cell tower takes a long time, the cost of a one cell tower
is very large. This challenge is not just seen in Globe Telecom but can be seen in every telecom
company as well. Our country lags behind other countries when it comes to this industry. One of
the most challenging part with working in this kind of industry in the Philippines would be that
companies like Globe have issues with the government. The reason why we lag behind other
countries is because of the lack of cell towers in the Philippines. This problem has been going on
for years now, that is why people blame the company for the slow internet or service.

Past Triumphs:
 Besides all the awards that they got the most prominent and eye catching title that they got would
be “the number one mobile brand in the country”. Globe telecom’s triumph includes network and
IT infrastructure modernization, fostering a collaborative and service-oriented culture, and
developing mobile business product innovations. Globe has outpaced the industry in terms of
growth, breaking records in all key product areas, brands, and market sectors, the company
established the Globe brand as a supplier of the Filipino digital lifestyle. Despite fierce
competition from a well-entrenched competitor, the firm is now known as the country's number
one mobile brand and has increased market share over the past half-decade.

Current Challenges:

We all know that the pandemic affected everyone, Globe Telecom is not an exemption. Looking at
their marketing area it is very obvious that their sales went down since consumers had more
important and essential goods and or products they have to buy. Since everyone is locked up in
their own homes people used social media more which affected the sales of their sim cards. Every
company had to think really quickly and act on the sudden spread of the virus so the need for
quick and personalized costumer service is very much in demand. One of the most common
problem that companies had to overcome is the unemployment of workers. Globe telecom’s
workers are considered as frontliners especially the marketing area, they have to travel around and
check the sales of each region. The pandemic limited the capacity of the employees to work more
diligently thus the current decline in sales.

Current triumphs:

The company might have to adjust in a really fast pace but this didn’t stop them from making a
Great marketing strategy. The company knew what the consumers like which is their biggest
advantage. From skits to endorsements Globe telecom did not disappoint. Their latest endorser
Blackpink gained a lot of attention from their younger target, including promos and plans their
sales went sky rocket. They also had skits or commercials that touched the older audience. The
company still remains as the number one mobile brand in the country despite the number of
challenges they had to face.

SWOT
 - Leading mobile service in the Philippines.
Even before the pandemic the company
STRENGTHS
received so many awards because of their
services locally.
- Plans and promos that appeals the
consumer’s taste. There are a lot of new
promos and plans almost every month
because they adjust with what their
consumers prefer.
- Great promos with cheap options. Their
promos not just appeal to the taste of their
consumers but they’re also giving options
to different types of their target audience.
- Creative marketing strategies. Globe
telecom can be seen in every festival and
events in the Philippines. We can identify
the company’s ads such as posters and
billboards in every corner of every
barangay, city and even highways.
- Great Endorsement. The company’s most
recent endorser is the girl group balckpink
and we can’t deny the power and the
influence that the girl group have because
of this the company’s sales sky rocket.

WEAKNESS - Fierce competitions, although the telecom

companies in our country aren’t as many
as other countries we can clearly see the
competitions between the companies.
- Lack of cell towers, this is one of the
problems that every telecom companies
face, our country lacks cell towers
considering the number of users that
needs it.
 - Recycled Plans and Promos. They do
have a lot of promos and plans but some
of which are recycled.

- -Adopting the rise of other costumer

service like banking/gcash
OPPORTUNITY
- -Multiple cell towers built in the country.
Through out the years globe has been able
to build a few more cell towers to match
their growing audience.

THREATS - Alternative ways to communicate e.g

using messenger or telegram etc.
- -Mirrored options/ promos as their rival
company. We can see how the rival
companies have the same promos, plans
and even endorsements from glob.

SWOT ANALYSIS

The company has been thriving for decades now and their performance have been stable throughout
the years. The company is planning to turn digital since most of their users are turning digital,
considering their sales from their face to face they they would definitely do good or even better.
Recently the company have been trying to get partnership to other telecom companies in other
countries so that local users can contact users from other telecom companies in other countries.
They’re growing not just to the telecom industry but as well as growing as a whole company, they
have a lot of subsidiary company and even found its way to online banking. After analyzing and
balancing all their strengths and opportunity from their weaknesses and threats. I can see Globe
telecom being more successful in the next 10 years. Considering the years they have been in the
industry they still managed to be on top of it. They have a lot of loyal costumers and they also adjust
to what their costumers want which will gain them more sales. They also find alternative ways to
serve and strategies on how to present it to the public.
 H&M Clothing
The H&M cluster is one of the world’s top fashion companies, with brands being H&M, Weekday,
Monki amongst others.  H&M hopes to inspire fashion globally to dress their individual style. With every
exclusive identity, H&M offer brands amalgamated in their desire for fashion in a cost cost-effective and
maintainable way.

Market Structure
H&M Clothing is a Monopolistic Competition Market, which means that there are many producers
competing against each other but sells products that are differentiated from one another.

Products
H&M sells a wide assortment of products: clothing, jewelry, shoes, handbags, footwear, home
décor, etc.

Past Challenges
H&M, once known for its lightning-fast production and affordable trendy products, H&M is no
longer the fast fashion powerhouse they used to be (2018). It’s no secret they have been struggling
the past two years, losing out competitors such as Zara and ASOS. In Q4 2017, H&M experienced
its lowers level of sales in record since 2005 and in Q1 2018 H&M operating sales fell 62% versus
the year before. The weak profits have caused key investors to sell off stock, resulting in a 20%
plummet in share prices. (Vicky, 2018)

Image Source: Bloomberg

 Some other problems that are existing in H&M are quality problem, price advantage lost and so
on. (Yang & Wang, 2013). To conclude, H&M ever since has been struggling because of their
competitors that results to low sale.

Past Triumph
H&M has become the world’s go-to place from a quick shopping fix, with affordable and
sustainable clothing available to all. H&M got to collaborate with luxurious brands and become a
mainstay in fashion empire, and the most successful collaboration to date Balmain x H&M.
Making the H&M the world’s 2nd largest fashion retailer. It also established itself as the go-to
place and cheap, fast fashion (Lee, 2016). In spite of their struggles, H&M collaboration with
different brands and other fashion business makes them one of the largest fashion retailer.

Current Challenges
H&M’s decision to restructure its stores earlier this year - closing a number of branches in
Europe. Today, H&M and other retailers face a separate challenge – a thunderbolt that no one
could have prepared for, namely the coronavirus outbreak and its ensuant throttling of physical
retail. The nature of the UK’s lockdown is pressuring physical retailers to move their entire
operations online, proving to be the latest threat facing the high street and forcing a lot of
retailers into survival mode, with several big names in fashion already in administration
(Markis, 2020). Moving on to its results, in the first quarter (the three months to the end of
February, just before the pandemic really hit its ops), the group’s net sales fell from SEK54.948
billion (€5.3bn/£4.6bn/$6.3bn) to SEK40.06 billion. They fell 21% in local currencies. Gross
profit fell to SEK19.057 billion from SEK28.034 billion and the gross margin dropped to 47.6%
from 51%. The net loss was SEK1.07 billion — down from a profit of SEK1.928 billion a year
earlier. The second wave of the pandemic resulted in extensive restrictions and at the most, around
1,800 stores were temporarily closed, which adds up to about 36% of its total (Halliday, 2021).
With pandemic we are currently experiencing, H&M also experience a lot of challenges. Some
branches were closed that made their sales fall.

Current Triumph
Despite the current challenges they are experiencing. More and more customers started shopping
online during the pandemic, making it clear that they value convenient and inspiring experience
which stores and online interact and strengthen each other. By mid-2021, H&M appeared to be
recovering from the pandemic. The company reported sales jumped 25% from the year before in
 June 2021. And since then, still remain to be the world’s second-largest fashion retailer. (Tun,
2021). As a result, they still continue to give good service to customers resulting for their sales to
go up.

SWOT
- H&M have their own effective selling
Strengths strategies for higher merchandise turnover.
They use fast fashion model that supplies
with the latest fashion trends.
- Global presence, they offer products in
5,076 stores in 74 market across all
continents.
- H&M has a wide variety of products that
attracts the consumers.
- Have efficient supply chain to connect with
suppliers and consumers more effectively.
- Strong online channels with large audience
across numerus platform.
- Individual brand identity, have their own
unique identities
- Community-centered approaches that
provides its consumers with a satisfactory
experience.

- Controversial products, wherein the

Weaknesses customers from boycotted H&M products
from promoting racism.
- Uninspired fashion. The issue with H&M’s
fast fashion model is the reliance on
fashion trends set by major designer
brands.
- Lack of originality that leads to critics
calling products of the brand unoriginal,
 there is no innovation in the product that
can attract fashionistas.
- Overdependence of outsourcing. The brand
is entirely dependent on these producers
that will cause sales of H&M to drop
instantly.

- Offers a wide variety of products

Opportunities - Focus on emerging markets that can be the
greatest potential for growth.
- Expand through acquisition and mergers.
There are a lot of new emerging markets
that remain untapped by the brand.
- More demand. H&M can cash in on a lot
of opportunity by capitalizing on the higher
demand.
-
- Intense competitors that reduce the
Threats demands of H&M’s products
- Fast-evolving trends so they need to keep
up with their changing nature
- Rising operation costs. Profits for retailers
are decreasing with an increase in the cost
of labor and raw materials
- Global pandemic that interrupts the flow
and reduces their sales and profits.

SWOT ANALYSIS

"More and more customers started shopping online during the pandemic, and they are making it
clear that they value a convenient and inspiring experience in which stores and online interact and
strengthen each other. We are increasing digital investments, accelerating store consolidation, and
making the channels further integrated." (Helmersson, N.D, cited by Tun, 2021) After analyzing and
balancing all their strengths and opportunity from their weaknesses and threats. I can see H&M
being more successful in the next 10 years. Considering the crisis, we are currently experiencing,
they still manage to stay put in their market, though some franchises have been closes due to this
pandemic, but they still manage to have strategies for it continue.
References:
Halliday S. (2021) H&M swings to loss, issues statement to dampen China furore. Retrieve from
https://ww.fashionnetwork.com/news/H-m-swings-to-loss-issues-statement-to-dampen-china-
furore,1291447.html
Lee A. (2016) How H&M Become The World’s 2nd Largest Fashion Retailer. Retrieved from
https://www.referralcandy.com/blog/hm-word-of-mouth-marketing/
Markis M. (2020) How H&M’s recent restructuring is preparing for today’s challenges. Retrieved from
https://www.wundermanthompsoncommerce.com/en/what-we-think/blogs/hm-recent-restructure-
prepares-todays-challenges/
Momin A. (2021) H&M SWOT Analysis: 7 Threats Heenes & Mautriz id Facing. Retrieved from
https://pestleanalysis.com/hm-swot-analysis/
Parker B. (2020) H&M SWOT Analysis – Business Strategy Hub. Retrieved from
https://bstrategyhub.com/hm-swot-analysis/
Tun Z. (2021) H&M: The Secret to Its Success. Retrieved from
https://www.investopedia.com/articles/investing/041216/hm-secret-its-success.asp
Vicky (2018) What Went Wrong with H&M. Retrieved from https://omnilytics.co/blog/what-went-wrong-
with-hm
Wang, J., & Yang, Y. (2013). H&M fast fashion business model in China. Retrieved from
https://www.diva-portal.org/smash/record.jsf?pid=diva2%3A617611&dswid=7995