Bermio, Mharichu A.

HCA – MWF/3:00 – 4:00

October 19, 2022
THC 109

MIDTERMS AS 3

 Chapter 7 Formative Assessment: Research and write a narrative about three (3)
successful family businesses and three (3) failed family businesses in the Philippines.

 Successful Family Businesses

1. Henry Sy (Shoe Mart)

Shoe Mart, or SM for short, is one of the country’s retail behemoths, and far more than just a mall.
It is now a well-loved institution of which many Filipino families hold fond memories. It provides a wide
range of services, including shopping, theatres, locations for date nights, parties and other special
occasions, ice skating, and food courts. SM started modestly and from humble beginnings, despite its
now upmarket reputation. Henry Sy grew up in Jinjang, Xiamen, China, in a low-income household. Due
to the challenges in their home country, they moved to the Philippines in 1936 and opened a tiny
convenience shop in Manila. Shortly after, World War II broke out and ruined the family business. Sy, on
the other hand, continued to pursue his entrepreneurial interests by selling worn military combat boots
and other items to American soldiers. This is where the name “Shoe Mart” originates: it was Manila’s first
shoe store at the time. Despite being unable to find vendors that could make the shoes he wanted, Sy
persisted. Sy, who died in 2019 at the age of 94, was survived by his family. Sy’s legacy lives on today in
his many SM malls and other acquired businesses. As a result, he was one of the world’s wealthiest men.
Today, the fashion industry looks somewhat different to when Henry Sy founded his humble shoe store.
Get a handle on this ever-changing industry with our Fashion Management course.

2. Tony Tan Caktiong (Jollibee Foods)

The cheerful tagline “langhap sarap” – a Jollibee trademark – is well-known among Filipinos. Tony
Tan Caktiong, another Chinese immigrant, is the brains behind this popular food chain. His family
maintained a Chinese restaurant in Manila at the time, which enabled him to finish college. He bought
an ice cream shop in 1975, but owing to low sales, he decided to add other items such as fried chicken,
fries, and burgers. Customers came to the store to buy his products after word spread in his area. Caktiong
was able to expand across the country after embracing the fast-food business model, growing his humble
restaurant into one of the Philippines’ most successful businesses. Furthermore, by establishing a franchise,
he has been able to break into the international market. With over 2,500 outlets in the Philippines and
locations in the United States, China, Saudi Arabia, Vietnam, Singapore, Brunei and the UK, Jollibee is a
fast-food behemoth.

3. Socorro Ramos (National Book Store)

Socorro Ramos began her career in publishing and retail as a salesgirl in a bookshop. With a
capital of PHP200, she and her husband launched National Book Store in Escolta at the age of 19, selling
books and school supplies to children. The Japanese imposed censorship on books and publications at
the time, which included her burgeoning business. She and her husband supplemented their income by
selling other products such as candles and soaps. The Ramoses built a nine-story structure along Avenida,
after the postwar boom brought increased revenue for the company. Ramos adopted a hands-on
approach to running her business, even designing the company’s logo herself. The National Book Store
now has around 3,000 employees. At the age of 98, Socorro Ramos is worth an estimated USD3.1 billion,
making her one of the country’s richest people.

 Failed Family Businesses

1. Polaroid (1937 – 2001)

Founded in 1937, Polaroid is best known for its Polaroid instant film and cameras. Despite its early
success in capturing a market that had few competitors, Polaroid was unable to anticipate the impact
that digital cameras would have on its film business. Falling into the ‘success trap’ by exploiting only their
(historically successful) business activities, Polaroid neglected the need to explore new territory and
enhance their long-term viability. The original Polaroid Corporation was declared bankrupt in 2001 and
its brand and assets were sold off. In May 2017, the brand and intellectual property of the Polaroid
corporation was acquired by the largest shareholder of the Impossible Project, which had originally
started out in 2008 by producing new instant films for Polaroid cameras Impossible Project was renamed
Polaroid Originals in September 2017.
2. KODAK (1889-2012)

At one time the world’s biggest film company, Kodak could not keep up with the digital revolution,
for fear of cannibalizing its strongest product lines. The leader of design, production and marketing of
photographic equipment had a number of opportunities to steer the company in the right direction but
its hesitation to fully embrace the transition to digital led to its demise. For example, Kodak invested billions
of dollars into developing technology for taking pictures using mobile phones and other digital devices.
However, it held back from developing digital cameras for the mass market for fear of eradicating its all-
important film business. Competitors, such as the Japanese firm Canon, grasped this opportunity and has
consequently outlived the giant. Another example is Kodak’s acquisition of a photo sharing site called
Ofoto in 2001. However, instead of pioneering what might have been a predecessor of Instagram, Kodak
used Ofoto to try to get more people to print digital images. Kodak filed for bankruptcy in 2012 and after
exiting most of its product streams, re-emerged in 2013 as a much smaller, consolidated company
focused on serving commercial customers.

3. BLOCKBUSTER (1985 – 2010)

Home movie and video game rental services giant, Blockbuster Video, was founded in 1985 and
arguably one of the most iconic brands in the video rental space. At its peak in 2004, Blockbuster
employed 84,300 people worldwide and had 9,094 stores. Unable to transition towards a digital model,
Blockbuster filed for bankruptcy in 2010. In 2000, Netflix approached Blockbuster with an offer to sell their
company to Blockbuster for US$50 million. The Blockbuster CEO, was not interested in the offer because
he thought it was a "very small niche business" and it was losing money at the time. As of July 2017, Netflix
had 103.95 million subscribers worldwide and a revenue of US$8.8bn.

 Chapter 7 Summative Assessment: Discuss 2 advantages and 2 disadvantages of a

family businesses.

 ADVANTAGES

1. Stability

The leadership of a family business is normally determined by the position of each individual in the
family. As a result, there is generally longevity in leadership, which ensures overall stability within a family-
run business. In many family-owned companies, the business leader will stay in the position for many years,
with life events - such as illness, retirement or death - being the trigger for change at the top.

2. Decreased cost

Economic downturns and other challenging times can be a struggle for many businesses, where
the board of directors needs to work out how to keep the business afloat while still paying staff. In family
firms, however, it will often be the case that family members are willing to contribute financially to keeping
the business afloat during times like these. It may be that this involves taking a temporary pay cut,
contributing some of their own finances, or pausing the payment of dividends while the company gets
back on its feet. For the family behind the business, long-term business success is crucial to their financial
survival, which gives more flexibility where finances are concerned.

 DISADVANTAGES

1. A lack of family interest

In a family business, there can be a great deal of pressure on future generations to keep the
business going, even if they have no real interest in doing so. This can result in a workforce - or worse, a
management - consisting of family members who are apathetic, unenthusiastic and disengaged. In any
other business, it is likely that such an approach would see employees having their contracts terminated.
In a family business, this is more of a challenge.

2. A lack of structure

Family businesses rely firmly on trust - but trust alone may not be the best way. It is still vital to take
rules seriously - both internal rules, and external corporate law.
 REFERENCES:

By; Futurelearn, February (2022)

https://www.futurelearn.com/info/futurelearn-international/most-successful-entrepreneurs-
philippines

By; Family Business, February (2020)

https://blog.vistage.co.uk/advantages-disadvantages-of-a-family-business

By: Frances G. (2019); Enterprise Innovation

https://www.collectivecampus.io/blog/10-companies-that-were-too-slow-to-respond-to-change