International Business

Homework No. 01

Provide an answer to the following questions. Indicate the sources of your answer.

1. Identify Filipino owned companies engaged in international business.

2. What are the products and services they offered?
3. What is their current status in the market?

a. SM Prime Holdings
i. SM Prime Holdings, Inc. (SMPH) is one of the largest integrated property
developers in Southeast Asia that offers innovative and sustainable
lifestyle cities with the development of malls, residences, offices, hotels and
convention centers.

ii. Currently, it has 77 malls in and outside Metro Manila and 7 shopping malls
in China, totaling 10.0 million square meters of Gross Floor Area (GFA). In
the Philippines, they have a total of 17,257 tenants and 1,908 tenants in
China. SM Prime goes beyond mall development and management
through its units and subsidiaries. SM Development Corporation (SMDC)
is the residential business component that sells affordable condominium
units. SM Prime’s commercial business units, the Commercial Property
Group (CPG) is engaged in the development and leasing of office buildings
in Metro Manila. Its Hotels and Convention Centers business unit develops
and manages various hotel and convention centers across the country.

b. Emperador Inc.
i. Emperador Inc. (EMP) is a holding company which operates an integrated
business of manufacturing, bottling and distributing distilled spirits and
other alcoholic beverages from the Philippines and Europe. Emperador
Distilled Inc. (EDI) is the Philippines’ largest liquor company and the world’s
largest brandy producer. The consolidated product portfolio is comprised
of domestic and foreign brands led by Emperador Light, Emperador
Deluxe, Andy Player Whisky, Smirnoff Mule, The Bar, The Dalmore and
Jura Scotch single malt whiskies, and Fundador.

ii. It holds its position as the world's largest brandy by volume and it is now
being distributed in 40 countries across Asia, North America, Africa, Middle
East, and Europe. As a global company, Emperador Inc. is now able to
capitalize on its worldwide distribution network catapulting its full range of
brandy and whisky products led by Emperador and Fundador brandy as
well as single malt whisky The Dalmore and Jura plus Whyte & Mackay
and John Barr blended whiskies.

c. Jollibee Foods Corporation

 i. Jollibee is the largest fast-food chain brand in the Philippines, operating a
network of more than 1,400 stores. The Parent Company and its
subsidiaries (collectively referred to as “the Jollibee Group”) and affiliates
are involved primarily in the development, operations and franchising of
quick service restaurants (QSRs) under the trade names “Jollibee”,
“Chowking”, “Greenwich”, “Red Ribbon”, “Yonghe King”, “Hong Zhuang
Yuan”, “Mang Inasal”, “Burger King”, Highlands Coffee”, “PHO24”, “Hard
Rock Café”, “Dunkin’ Donuts”, “Smashburger”, “Tim Ho Wan”, Tortas
Frontera”, and “The Coffee Bean & Tea Leaf®”. Other activities of the
Jollibee Group include manufacturing and property leasing in support of the
QSR systems and other business activities.

ii. Today, that dream has brought us from a single brand into a restaurant
group with 17 well-loved brands and over 5,800 stores in 34 countries.
Through our mission of bringing the joy of eating to everyone, we aim and
continue to work to become one of the top five restaurant companies in the
world. JFC is one of the largest Asian food service companies. JFC also
operates a total of 19 commissaries worldwide: 11 in the Philippines, 2 in
China, 4 in the United States and 2 in Vietnam. It builds and operates its
own commissaries to supply food products to its restaurants.

d. Universal Robina Corporation

i. Universal Robina Corporation (URC) is engaged in an array of food-related
businesses, including the production and distribution of branded consumer
snack foods and beverages; commodities such as sugar and flour; and
agro-industrial businesses mainly hogs, animal feed, and other related
products.

ii. URC is one of the largest branded consumer food and beverage product
companies in the Philippines. URC products are also exported to other
markets like the US, Europe, Japan, Korea, the Middle East, and also in
West African countries like Ghana, and Nigeria through our URC Thailand
office. URC has built three strong regional brands over the years— Jack 'n
Jill for snack foods, C2 Cool and Clean for ready-to-drink tea, and Great
Taste for coffee. These brands are becoming popular across the ASEAN
region.

e. San Miguel Food and Beverage

i. San Miguel Corporation (SMC) today has highly integrated operations with
ownership in market leading businesses and investments in various
sectors, such as beverages, food, packaging, energy, fuel and oil,
infrastructure, property development and leasing, cement, car
distributorship and banking services.
 ii. SMC is one of the Philippines’ largest and most diversified conglomerates,
with revenues equivalent to about 4% of the country’s GDP in 2020. SMC
is one of the nation’s largest employers, with a direct workforce of 45,522
employees as of December 2020. For each job created within the San
Miguel ecosystem, many additional jobs are generated through suppliers,
distributors, retailers, and other business partners. At present, we have
more than 100 major facilities in the Philippines, Southeast Asia, China,
Australia, and New Zealand.

4. Give four reasons why they internationalize.

1) Improving Profit Margins

Improving profit margins is one of the most common reasons for entering
international markets. When growth strategies are used up on the national level,
the next path is often to seek out international growth. Distributing your products
in additional countries increases your customer base. As you offer compelling
solutions and build loyalty across international markets, revenue strengthens and
escalates as well.

2) Competing for New Sales

Closely connected to the goal of improved profit margins is the desire to
increase sales. Even if company operators generally are satisfied with revenue
levels, international expansion can further improve overall revenues. The race to
expand internationally is often about gaining a presence in foreign markets. Being
the first to arrive in a new market can provide significant advantages.

3) Diversifying the Business

The international expansion allows a company to diversify its business in a
couple of key ways. First, you spread the risk of slowing demand across multiple
countries. If one market never gains or loses interest in your offerings, you can
pick up the slack with success in other countries. In addition, you can connect with
suppliers in international markets and take advantage of raw materials and
resources unavailable in domestic markets.

4) Recruiting New Talent

Operating in international markets also gives businesses access to a larger

and more diversified talent pool. Employees who speak different languages and
understand different cultures enhance connections with a broader customer base.
Having an international brand that is well reputed will invite top talent to the
company. Businesses can also structure global work teams in a way that allows
for synergy in building a global brand.

5. Give four risks in internalization.

1) CURRENCY RISK
(also referred to as financial risk) refers to the risk of adverse fluctuations
in exchange rates. Fluctuation is common for exchange rates, or the value of one
currency in terms of another. Currency risk arises because international
transactions are often conducted in more than one national currency. When
Frankfort, Michigan based fruit processor Graceland Fruit, Inc. exports dried
cherries to confectioneries in Japan, it will normally be paid in Japanese yen. When
currencies fluctuate significantly, however, the value of the firm’s assets, earnings,
and operating income can be reduced. The cost of importing parts or components
used in manufacturing finished products can increase dramatically if the value of
the currency in which the imports are denominated rises sharply. Inflation and
other harmful economic conditions experienced in one country may have
immediate consequences for exchange rates due to the growing
interconnectedness of national economies.(Cavusgil, Rammal, & Freeman, 2011,
p.11)

2) CROSS CULTURAL RISK

refers to a situation or event where a cultural miscommuni- cation puts
some human value at stake. Cross-cultural risk is posed by differences in
language, lifestyles, mindsets, customs, and/or religion. Values unique to a culture
tend to be long-lasting and transmitted from one generation to the next. These
values influence the mindset and work style of employees and the shopping
patterns of buyers. Foreign customer characteristics differ significantly from those
of buyers in the home market. Language is a critical dimension of culture. In
addition to facilitating communication, language is a window on people’s value
systems and living conditions. For example, Eskimo languages have various words
for “snow” while the South American Aztecs used the same basic word stem for
snow, ice, and cold. When translating from one language to another, it is often
difficult to find words that convey the same meanings. For example, a one-word
equivalent to aftertaste does not exist in many languages. Such challenges impede
effective communication and cause misunderstandings. Miscommunication due to
cultural differences gives rise to inappropriate business strategies and ineffective
relations with customers. (Cavusgil, Rammal, & Freeman, 2011, p.12)

3) COMMERCIAL RISK
refers to the firm’s potential loss or failure from poorly developed or
executed business strategies, tactics, or procedures. Managers may make poor
choices in such areas as the selection of business partners, timing of market entry,
pricing, creation of product features, and promotional themes. While such failures
also exist in domestic business, the consequences are usually more costly when
they are committed abroad. For example, in domestic business a company may
terminate a poorly performing distributor simply with advance notice. In a foreign
market, however, terminating business partners can prove costly due to
regulations that protect local firms. Marketing inferior or harmful products, falling
short of customer expectations, or failing to provide adequate customer service
 may harm the firm’s reputation and international performance (Cavusgil, Rammal,
& Freeman, 2011, p.12).

4) COUNTRY RISK
(also known as political risk) refers to the potentially adverse effects on
company operations and profitability caused by developments in the political, legal,
and economic environment in a foreign country. Country risk includes the
possibility of foreign government intervention in firms’ business activities. For
example, governments may restrict access to markets, impose bureaucratic
procedures on business transactions, and limit the amount of earned income that
firms can bring home from foreign operations. The degree of government
intervention in commercial activities varies from country to country. For instance,
Singapore and Ireland are characterized by substantial economic freedom—that
is, a fairly liberal economic environment. By contrast, the Chinese and Russian
governments intervene regularly in business affairs. Country risk also includes
laws and regulations that potentially hinder company operations and performance.
Critical legal dimensions include property rights, intellectual property protection,
product liability, and taxation policies. Nations also experience potentially harmful
economic conditions, often due to high inflation, national debt, and unbalanced
international trade (Cavusgil, Rammal, & Freeman, 2011, p.13).

Figure 01. Risks in International Business

References:

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Retrieved January 27, 2022, from https://business.inquirer.net/261558/globalizing-corporate-
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Corporate Profile | SM Prime. (2021, November 10). SM Prime. Retrieved January 27, 2022,
from https://www.smprime.com/corporate-profile

Emperador Brandy. (n.d.). Emperador Brandy. Retrieved January 27, 2022, from
https://www.emperadorbrandy.com/about-us.html

Our Company -. (n.d.). Jollibee. Retrieved January 27, 2022, from

https://www.jollibee.com.ph/our-company/

About. (n.d.). Universal Robina. Retrieved January 27, 2022, from

https://www.urc.com.ph/about-us?ref=menu

San Miguel Corporation. (n.d.). San Miguel Corporation. Retrieved January 27, 2022, from
https://www.sanmiguel.com.ph/page/our-company

Kokemuller, N. (2020, February 5). Why Do Companies Go International? Bizfluent. Retrieved

January 27, 2022, from https://bizfluent.com/facts-5256365-do-companies-go-international.html

Cavusgil, S. T., Rammal, H., & Freeman, S. (2014). International Business: The New Realities
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