Three Entrepreneurial Clans in Asia: The Addition, Multiplication, Subtraction and Division of Family Conglomerates

Three Entrepreneurial Clans in Asia: The Addition, Multiplication,
Subtraction and Division of Family Conglomerates
Summary

                In 1973, a small
ice cream parlour was started in Bangkok by a well-to-do family of two Raiva
sisters, Patara and Suthisada together with their two sisters-in-law Pantipa
and Pornpilai. The four women gave their parlor a name after their initials,
S&P Ice Cream Corner. This is where it all started, a simple menu of ice
cream, sandwiches, and light snacks was added with S&P bakery products
produced by their hired pizza chef. A few years in the business make its company
a household name across Thailand because of their premium services, clean
premises, tasteful decor and delicious food.

By 1996, it had 40 full service branches (food and
bakery products), 50 smaller bakery shops, six fine dining restaurants in
Bangkok, London, Singapore and Taiwan. From the expansion of this food-oriented
conglomerate, it gave birth to nine subsidiary companies headed by all members
of the family: S&P Bakery Products; S&P Franchising Co. Ltd.; S&P
Distribution and Sales Co. Ltd.; S&P Global Co. Ltd.; S&P Minor Foods
Co. Ltd.; H&D Distributors Co. Ltd.; S&P Catering Co. Ltd.; and Seriwat
Foods Co. Ltd.

                Tunku (prince)
Abdullah Ibin Almarhum did not take the “royal route” to entrepreneurship even
if he is from a royal lineage. He attended an electrician’s school in one of
the schools built in Malaysia by the Japanese invaders. He then continued his
studies in Japan and took up Agriculture with the idea that he wanted to grow
his own food. Along with the study of the course is his learning to have strength
of character and courage.

Upon his return to Malaysia, his father sent him to Singapore
to pursue his studies, but since he did not like it there, he ended up entering
a university in England.  After
graduation, he returned back to Malaysia and entered the civil service and was
tapped to start the Malaysian Association of Youth Clubs which taught him to
deal with a lot of people. His business ventures started as early as 1963 when
he put up a construction company under the name of Binaan Nasional Sdn. Bhd.
(BINA). It has been one of Malaysia’s leading construction companies who took
projects for both government and private sectors. At about the same time, he
also set up a company that engaged in blending and bottling beverages for the
lower end market. He also got involved in the selling of defense equipment and
actually sold 15 British patrol boats to the Malaysian Navy.

In 1970, his Travel Agency was born under the name of
Mitra Malaysia Sdn. Bhd. With the diversified companied he had put up, Melewar
Corporation was established. This is the family holding company that unifies,
enhance, and strengthen the many and varied virtues of the different business
groups. In 1974, Melewar Trading Corporation was born followed by Pacific Asia
Leasing Sdn. Bhd, then an investment in an insurance company. 1975 gave rise to
the Melewar Transport Sdn. Bhd which was followed closely by a partnership
venture into advertising, marketing, and communication business. Melewar
Corporation (TMC) Berhad, which is an investment holding company, was formed in
1981. A year after, Kompusat (M) Sdn. Bhd. Which represents the Sinclair house
of computers in Britain was formed followed by Nishio Lease (m) Sdn. Bhd. 1985,
gave rise to the following projects, Central Market Development, Great Value
Holidays, Malaysian Insurance, Alliance Berhad, and Trace Management Services
Sbn. Bhd.
Though many companies were formed, many of these
previous acquisitions were disposed of as well. These included the fruits and
vegetables, granite, transport, rattan and wood, brokering and other companies.

Blue Bird was established in 1972 by Ibu Mutiara
Djokosoetono with an initial fleet of 25 taxis. From this humble beginning,
Blue Bird has been operating 4,000 taxi units, 240 Silver Bird executive cars
and chauffeur-driven luxury sedans under the Golden Bird aegis. It had also
expanded its business regionally thru Bali Taxi and Gamya Taxi. It also
invested in a wide range of service buses for tour groups, office workers, and
airlines under Big Bird.

The expansion of Blue Bird was described as backward
integration at first as it organized Restu Ibu, Ziegler Indonesia and Gas Biru.
The first is a bus manufacturing company, second is a fire truck assembly, and
the last is assigned to produce efficient, clean-burning CNG (natural gas
fuel). However, it also has a forward integration by investing in Holiday Inn
Resort in Lombok and the establishment of Ritra Konnas’ Freight Center, which
is a cargo forwarding, warehousing, container depot, repair and service center.
Blue Bird’s diversification focused on passenger and cargo transport, tourist
services, and related supplier / servicing industries.

General Analysis

                There is really no
big problem on this case as it only provides different ways of expanding your
business. However, let me just point out that though problems and risks are inherent
in any business venture you want to pursue, it will be best to know where you
really want to position your company.

Among the three families mentioned in the summary
above, the first family represented by the Raivas showed a more focused of
adding companies as it showed business ventures to be interrelated in one big
food-oriented conglomerate. On the other hand, we have mentioned countless
times that a true entrepreneur is someone who is willing and brave enough to
take risks and experience failure and that is what the second family proved.
The shotgun approach is a true testament to the saying that “opportunity knocks
only once so grab it before its gone”. Though the risk is big, the probability
of earning big is also high. The last family showed also a nice way of
expanding its business by having a forward and backward integration. They do
have a core idea on where they want to take their company but the process they
applied which started from the middle going back then back to the middle going
forward is genius.

                The multiplication
processes of the businesses of the families involved almost show the same
result in with the addition process. The first family, having the core idea of
how and what their business conglomerate would look like have multiplied their
businesses in a more concentrated matter. They have started in a bakery which
is the manufacturing process, followed by their own delivery business,
franchising, retailing and distribution of their own products and so on. The
continuous research and development of new technologies to prolong the life of
their products as well as make it more delicious is also the key that made it a
continuous success. They have maintained their competitive advantage by simply
sticking in to their core business in the beginning.

However, as the second family shows that
multiplication in varied industry is something worth a try; it is definitely
not for the faint hearted. It takes a lot of courage to start up on something
which you don’t really have knowledge at all. Learning the business as it operates
is something that only the risk takers will surely put their hands on.
The backward and forward integration shows us that
multiplying your business is very possible in so many ways, for as long as you
know the ins and outs of the business ventures you are taking. Going backward
and creating the materials you need in operating your business is very helpful
as it minimizes the cost in obtaining them since you can make it on your own.
Then tapping into a market that caters to your end product is a very good idea.
Its somehow reflect the saying that goes “hitting two birds with one stone”.
You were able to generate income in passenger transport and you also generate
income in the places they usually visit. It’s very much a win-win solution.

                The subtraction process
in a well thought company is very much limited compared to a conglomerate of
diversified businesses. Why? Because the company who was able to expand its
business under a core idea have surely made it a point to interrelate their
ventures and ensure end to end process link while the one who only accepts
companies as it goes and who do not have the competent knowledge to run the
business except the idea that it currently generates money will surely have a
hard time interrelating each other and might result in tradeoffs just to
prevent future or big losses as they come into view and that’s what happened in
the second family. There is a saying that goes like this, “don’t bite more than
you can chew”.

                Finally, as an entrepreneur,
don’t be afraid to start up a business for as long as proper study and
evaluation with regard to its viability is made. Risk and failure is part of
the equation, it’s on the way you handle it that separates you from the rest.
As what Steve Jobs said, “stay hungry, stay foolish”. Don’t be satisfied on what
you have, learn to innovate, learn to be unique, learn to be different, and learn
to be creative. There are no rules and no boundaries; it’s only you who decides
it. As what the three entrepreneurial clans in Asia have shown us, it’s not
easy to be successful, it takes a lot of hard work, courage, and determination.

By: John Paul Eugenio