1

Introduction

Universal Robina Corporation (URC) is a wholly owned subsidiary company

of JG Summit Holdings Incorporated. It was established by John Gokongwei Jr. in

1954. John Gokongwei Jr. is a Filipino-Chinese businessman born and raised in

Cebu who entered into trading when he was only 13 years old. URC then, started

as Amasia Trading, importing products from the United States. John Gokongwei

worked his way up from trading into manufacturing. Establishing many companies

along the way, with each company manufacturing a different product. Later on,

John integrated all of his manufacturing companies under one umbrella company

called Universal Robina Corporation which manufactured commodities, hogs and

poultry products, snacks and beverages and plastic and packaging. This is to

minimize costs and to streamline the company’s operations. At present, URC is

one of the leading manufacturing corporations in the country.

This case study shall focus on the success story of Universal Robina

Corporation under John Gokongwei’s leadersip. It will seek to analyze the factors

that went into the success of his company and its lessons and examples for other

businesses to follow. Such analysis will dwell in the history of the company,

strategies that John used and his mindset and traits. It will also pass through one

of the most debatable issue, the acquisition of Sun Cellular by PLDT.

 2

Guide Questions and Answers

1. Trace URC’s success story. What are the factors that contributed to its

success?

URC’s success story is an end note of all the factors brought in by one vision

of its founder, John Gokongwei Jr., to become a Filipino multinational company.

First factor would be that from the very start, John has a gifted hand in business

and a smart mind. Since he was young, he provided for his family through trading

while riding his bike along the streets of Cebu. This gave him the advantage of

experience. Next factor would be his traits, vision and mindset that he enkindled

to himself ‘til the very end.

Third, would be URC’s diversification of products manufactured.

Diversification of products being sold or manufactured is a common play between

big time companies. This helps the company’s finances by not relying its income

solely on one product only, therefore allowing for more room before becoming

bankrupt. This occurred when URC was still Universal Corn Products, when they

only sold and manufactured two products, cornstarch and glucose. John, upon

observation of Nestle and P&G, thought of manufacturing and selling other

products, because his products, were only commodities and can be found

elsewhere. This lead to him, establishing his third company, Consolidated Food

Corporation (CFC) in 1961, which produced the famous Blend 45, coffee and other

products, such as Nips. From then on, URC grew exponentially by establishing
 3

more subsidiary companies, taking risks and opportunities carefully. URC also

broke through Coca-cola’s lead in the beverage market when they launched C2.

In 2005, URC slowly integrated all its subsidiary companies into one

umbrella company to reduce costs and streamline production. This is a

supplementary factor to the already great history of the Universal Robina

Corporation.

2. Analyze the growing market base in Asia. How did he take advantage of it?

Asia at the time was still rising from the ashes of the Second World War,

with this, not all Filipinos back then would be able to afford products, especially

those that were imported. With this, URC, then CFC, to sold more, due to its lower

prices and Filipino taste such as Nips and Blend 45. Additionally, the company had

lower manufacturing and delivery cost therefore gaining more profit.

Farming is also a main industry in the Asian Market especially Philippines.

Philippines then was the leading exporter of rice and other farm produce. This was

also taken advantage of URC, by establishing Robichem, that would manufacture

poultry and hog’s products and later on other products for farming.

All of this does not compare to the fast expansion of the Branded Consumer

Food Group, comprised of BCFG Domestic (including packaging) and

International. This division of URC has made its way to other Asian countries such

as Myanmar, Vietnam, Thailand. It also reached the continent of Australia and

Oceana. This was brought by lower prices offered compared to western products.
 4

3. Based on John Gokongwei’s word of wisdom, how can the Philippines

compete globally?

John Gokongwei’s mindset of creating a Filipino multinational company that

can compete globally. Such idea made him strive in the business world by

venturing into new grounds and taking risks. John Gokongwei knew that

Philippines could compete globally especially that most Filipinos, work abroad and

has the skills to compete in a global market alongside other nationalities. His

mindset also helped other Filipinos direct their focus to dream big and work hard

for it. It gave birth to an ideology that sprang out from a 13-year-old boy who back

then traded along the streets of Cebu while riding a bike.

4. Are there hindrances for the Philippines’ inability to have its own global

brand? Explain?

They say crab mentality is the greatest is the greatest hindrance we will face

towards our success but in reality, it is just a road bump. The greatest hindrance

we will face is our ability of looking for Philosophical answers to a very serious

question. Our mindset of “okay na ito” or “ito kasi tadhana sakin” is what keeps the

Philippines from having its multinational brand. Also, it is our inability to channel

our envy to be better and strive harder instead of pulling others back.

Another hindrance would be our inability to integrate what Filipinos can do.

Multinational companies innovate and invent new products that would pierce into

the market. Filipinos are smart and innovative people; it is just our ability to promote
 5

them that lacks. An example would be Eduardo San Juan who is considered to be

the inventor of the Lunar Rover used by NASA during Apollo 1 mission to the Moon.

5. Identify Gokongwei’s entrepreneurial traits which made him successful.

John Gokongwei Jr. is a wise and smart man. His experiences since he was

young molded him to become the successful businessman he is now. One of his

best traits is being able to persevere in spite of troubled waters, especially when

lost his father together with the family wealth. He was also a person who does not

settle for less but who dreams big and strives hard to catch his dreams, dreams

that was not only for him, but for others to follow. This can be seen dominantly

when he was still starting his first company Amasia Trading where he wanted

better and higher profit yielding business, which lead to him borrowing a

Php500,000.00 loan to establish his second company UCP.

Another trait was his competitiveness that was supplemented by his keen

observation. Upon observing what Nestle and P&G does to become a high yielding

company, John strived hard to follow the footsteps of these two multinational

companies. This a common play also in the current economic environment. It is to

know your market, know your competition and find ways of getting a foothold of

the larger share of the market.

 6

6. Make a research on the acquisition of Sun Cellular by PLDT. Make your

comments.

Sun Cellular is a mobile phone telecommunications company established

in 2003 by Digital Telecommunications Philippines (Digitel), a previously owned

subsidiary company of JG Summit Holdings Incorporated. At present, Sun Cellular

is under the ownership of Philippine Long Distance Telecommunications (PLDT)

since its acquisition of Digitel in 2011 after an acquisition deal with PLDT

purchasing 51.55% of Digitel’s shares through a share-swap transaction valued at

Php 69.2B. Currently, JG Summit Holdings Inc. owns only 8% minority share of

the ownership of Digitel together with its subsidiary Sun Cellular.

In a span of 7 years, Sun Cellular has pioneered the 24/7 Unlimited Call

and Text Promo. Because of such, Sun Cellular had increased number of

subscribers from 13.5% of the market share in 2009 to 18.2% in 2010. Even with

such, it was still slow growth prior to the PLDT acquisition in 2011. This may be

one of the reason why JG Summit Holdings had to let go of Digitel and its

subsidiary, Sun Cellular.

Since 2003, with the advent of the cellular mobile phones, there had been

a decline of fixed-line line telecommunication subscribers in the country which was

the backbone of Digitel’s income. Another reason for the slow growth was the late

entry of Sun Cellular into the market. At such, in order for Sun Cellular to grow and

for Digitel to continue its benchmark in the telecommunications industry, it signed

the deal with PLDT. Such deal, would benefit both parties as in the market share
 7

with the 18.2% market share of Sun Cellular combined with the 52% already strong

market share of PLDT equates to a 70.2% market share of the total subscribers in

the country taking the majority. Cost-wise, PLDT and Digitel will benefit from the

acquisition with shared costs, thus minimizing the operating costs. Subscribers in

itself will benefit from PLDT’s, Smart Telecommunications wider network coverage.

Technically, Smart can also expand its network capacity if it is able to use Sun’s

3G frequency which could lead to less network congestion and improved wireless

connectivity.

7. Is Gokongwei’s move of selling Sun Cellular a strategic one? With Sun

Cellular being the third telecommunications company in the Telco industry.

The move of JG Summit Holdings Inc. to transfer the majority of the

ownership of Sun Cellular to PLDT was for the company to be able to earn from

its then, subsidiary company, without them handling the operations thus having

less costs for JG Summit especially with Sun Cellular’s slow growth. As we know

off from previous occurrences, John Gokongwei does not settle for slow growth as

what we have seen in his previous moves with Amasia Trading and Universal Corn

Products. This was strategic in an indirect way of making his competitor become

his ally, in order for him to diminish his costs while still earning from his previous

company.
 8

Findings

Through thorough research and analysis, it is found out that the success of

Universal Robina Corporation established by John Gokongwei Jr., is founded on

principle, timing and strategies.

John used his experience and knowledge to know which industry would give

him more room to grow and expand his business. He used his dream to be the

guiding principle for the company. He used a competitive strategy to stay ahead of

his competitors by offering local products and diversifying his product line. He also

used an operational strategy that lessened his costs and streamline his production.

Analysis of both internal and external factors are also a key role for a company’s

growth.

Conclusion and Recommendation

In conclusion success of a company does not rely in only one factor nor not

does it rely in only one strategy. Many factors come into play, especially for a vision

of a multinational company. In many cases there would be hindrances to be

encountered. These hindrances are meant to make the company stronger by

having better strategies and analyzing your competition and the market itself. In

order for a company to prosper and move forward it also needs a mindset, and

such mindset is best partnered with experience. Also, ability to market and produce

locally plays a key role to make a company better. No company is perfect but it

can learn from its past to mold its future.