Three Entrep Clans in Asia Case Analysis - Arlo Cristobal

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

A case analysis by Arlo Cristobal

Situation Analysis

                The Ralva Siblings and Spouses, Tunku Abdullah and His Royal Brood, and the three generations of family from Ibu Mutiara are three clans in Asia that has proven to have successfully establish and grow their enterprises at an astonishing rate. All of them have kept their businesses in the hands of their family members, despite of their businesses' enormous size.

                The Ralva clan started an ice cream business to while away their time. This small project has then turned to a food business giant in Thailand and other countries. Tunku Abdullah, coming from a royal family, has established several business ventures from extremely diverse businesses. Lastly, Ibu Mutiara and her grandchildren have created a transportation empire under the Blue Bird Group umbrella.

                All three clans operated their businesses arithmetically. First, you have the addition processes where the clans add new business ventures to their conglomerate. The Ralva clan preferred to add businesses that are in line with their restaurant and bakery business, but bounded by their preferred target segment. You also have Tunku Adbullah's Melaware group using a "shotgun approach" in expanding to new industries. And finally, we have the Blue Bird Group going to the extremes of adding businesses that has something to do with land transportation.

               

                Second, there is the process of multiplication. The Blue Bird group leads this arithmetic strategy in terms of the volume of growing their existing businesses. Third is the process of subtraction. Unlike the Ralva clan, Tunku's aggressive approach in acquiring different businesses has resulted to several projects that had to be let go. Last is the process is division. Since their businesses had expanded to overwhelming sizes, the clans have to divide the ownership of responsibilities amongst the new generation.

Problem Analysis

All three clans have different approaches when it comes to the arithmetic processes that govern their family businesses. The Ralva clan has a more concentrated approach. Tunku can be considered the aggressive acquirer. Finally, Ibu Mutiara wants to have everything that has something to do with their core businesses.

Given the enormous success of each clan, it's hard to argue with the way any of them approaches business. Still, nothing is absolute and each also faced several challenges that could have been avoided. Similarly, some of their practices have proven to be very valuable to overlook. There are significant learning that can be acquired from the clans' experiences, both in terms of identifying flaws and putting emphasis on strategies that works.

Alternatives Generation

                The ideal alternative would be to gather the best practices of each clan in each arithmetic process, and then apply all of it at the same time. However, given the unique traits of each clan, and any other business organization, it can be very problematic and difficult to implement. There is no straight line when it comes to business expansion and it is also impossible to avoid bumps along the way.

                The Ralva clan's approach can be considered one of the alternatives. Their addition processes is focused on their restaurant and bakery business, resulting to minimal subtraction. This also translates to a conservative multiplication process. Their conservative approach also impacts the way the family members handle the business, with the youngest generation of family members no longer joining the company. Short term, the advantages of their approach is enormous. Their focus to the core business can translate to significant earnings from that business. However, looking at the long term, as the clan grows; their businesses are left only to a handful of interested parties.

                In contrast to the Ralva clan, the Melaware group is quick to jump in any business opportunity that comes in their way. Their approach can be too aggressive at times, but is effective in growing their conglomerate. The obvious problem in this alternative is in structuring a company that has pieces coming in from different fields. Synergy among businesses is very difficult, but they are ensured that they have enough to pass on to future generations.

                Lastly, we have the Blue Bird model. Everything they do is in line and supported by their core business, which is transportation. The addition process is aggressive, yet controlled. The multiplication process is very rapid. The subtraction process is very flexible because they tend to stay on the safe side. They don't cut-off businesses, but trim the volume down when needed. The division processes is also well planned; there are available opportunities for all and at the same time, the new generation are groomed to take on these roles.

Decision Analysis

                 In paper, the alternative that has the best outputs point out to the Blue Bird Group. They are aggressive, but are always in control of their expansion. They also take computed risks, enabling them to quickly adapt to demand changes.

                The problem with this alternative is their vulnerability to structural and technological change. Though this might be in the long-run, there is a threat of collapse since they are stuck in the transportation industry and everything depends on everything else. This is unlike that Ralva clan's venture, food, which has an inelastic demand. To counter this, they should always be on their toe when it comes to forecasting and innovation. Their strengths can immediately transform to vulnerability with drastic changes in the economy. It might take several decades or even centuries for anything drastic to happen in the realm of land transportation, but they should never be complacent.

Action Analysis

                There is no short-term way to measure success in this arena. Everything has to be based on historical strengths and stability. The only tool that can be used is forecasting, but even that is limited when talking about generations of clans taking over businesses. The key success factor for this case would be the longevity and overall growth of a clan's empire. 

Three Entrepreneurial Clans in Asia - Case Analysis by Jenny Liquete

Jenny Liquete

Three Entrepreneurial Clans in Asia:

The Addition, Multiplication, Subtraction and Division

 of Family Conglomerates

Situation Analysis

The three entrepreneurial clans, Raiva siblings and their spouses, Tunku Abdullah and his royal brood of Malaysia, and the three lineage of Indonesia’s Ibu Mutiara, have all undergone the arithmetic of family conglomerates. In each process, the clans had their own pros and cons.

Addition 

The Raiva clan has established several businesses on the food and baking industry. It is focused in consistent expansion that is within their area of expertise (ex. food, bakery products, food additives, and cooking classes). Their addition of consistent product lines and innovation in frozen dough distribution promotes cost efficiency.

Completely different from the Raiva clan, the Melewar group has multiple and incoherent industries – from construction and renting construction, blending and bottling beverages, defense,  computers, tour and travel, insurance, transport, investment, communications, fruits and vegetables, education, rattan and wood, granite to property and infrastructure development – highway and television broadcasting. This clan used a shotgun approach in seizing opportunities which damaged the company in terms of cost and loss of focus. Its expansion and diversification into multiple industries placed the company into confusion and lower profitability. The vision of the corporation can no longer be seen and the diversity and complexity of the businesses required immense capital. It foregoes the cost cutting strategy of economies of scale. For example, the computer manufacturing did not fit their business and it required a lot of R&D and capital. The corporation lost lots of money because of this.

The range and consistency of the industries of the Blue Bird clan are in the middle of the other two clans. It has taxi as its core business. Other services include service buses, non-passenger transport services, fire truck assembly plant, natural gas fuel (Gas Biru), petroleum and CNG pumping stations (Jass Alam), resorts, freight center, and clutch and brake manufacturer. Like the second clan, it went overboard on its expansion and disposed businesses that are not aligned to its business focus such as the fire truck assembly plant and agribusiness venture.

Multiplication 

                Similar in their approach to the addition process, the Raiva clan multiplied and expanded its service branches and bakery shops by heavily focusing on its core restaurant and bakery operations.

                The Melewar group started multiplying when the diverse businesses were classified into common industry groups under separate siblings. The first generation expanded its business by adding more new ventures while the second generation used acquisitions and had natural growth.

                Among the three clans, the Blue Bird clan multiplied the greatest. The two key factors of this expansion is its nature of requiring only one or two people for every vehicle acquired and the vehicle is a cash cow to acquire other vehicles.

Subtraction

                Because of the Raiva clan’s heavy focus on maintaining its main business (food and baking), there were only very minimal eliminations on the businesses. They eliminate to promote cost efficiency and effectiveness of the business. The matriarch is also very strict when it comes to expansion and limited public offerings for their business.                

                The Melewar group, on the other hand, had several failed businesses (computer manufacturing and agricultural products) that were eventually eliminated. They ventured into these businesses even if these are already outside their area of expertise and are difficult to manage.

                Similar to the Melewar group, the Blue Bird group ventured into agriculture business which is out of their expertise and was eliminated later on. The nature of Blue Bird group also required them to replace the old machines and equipment into new ones.

Division

                The Raiva clan divided its business among its family members according to function, product line, and geographic location. It has also opened itself to non-family members by hiring professionals to fill in the middle management positions.

                The Melewar group eventually divided its enterprises into industry groupings. This is advantageous for the clan because the siblings came from different marriages. The patriarch also designed the division in such a way that the children control 80% of their respective groups which will come handy when friction rises.

                 The Blue Bird group has been divided across all of its family members – from children to grandchildren. The children were also sent top MBA schools abroad to groom them to manage the different product lines.

Problem Analysis

The problem for the Raiva clan is that it is too conservative with its expansion and operations. It is very restricted by the matriarch which limits them to fully expand their business. They are also prevented from taking advantage of the opportunities available to them given their wide expertise in the food and baking industry. Also, it does not have an extensive overview and future plans for its succeeding generations unlike the Melewar group and Blue Bird group. Without a contingency plan, it risks its enterprise to be managed and eventually divided to non-family members.

The problem for the Melewar group is its shotgun approach. It ventures to all the opportunities offered to it even though it is already outside their expertise and difficult to manage. Because of this, it loses focus on its profitable enterprises such as those in construction and services. This shotgun approach is also costly for the group.

The Blue Bird group is balanced between the other two clans. It is not too conservative but it has slightly lost focus on its main business which is transportation.

Alternatives Generation

                Raiva clan can either continue with its conservative approach or expand its business related to food and baking. They can also allow outsiders to join the management team and risk the occurrence that someday, the enterprise will be handed over to an outsider or they can already limit the hiring of outsiders and focus on grooming its family members.

                Melewar clan can continue to pursue various opportunities even though it’s not related to their business because it can be the door to another big business or it can limit itself and focus its resources in its most profitable enterprises which are the construction and service industries.

                Blue Bird group can continue its current operations, venturing into various industries even those not relating to their current business or they can just focus on their main business and expertise which is transportation.

Decision Analysis

Riva clan should be less conservative because it has already established itself in the food and baking industry. It has already mastered these so they should be willing to try to create new products relating to food and baking. In terms of management, they should focus on grooming their family members. They have a lot of potential and these can be greatly taken advantage if they educate and groom their succeeding generations.

Melewar group should limit the use of shotgun approach especially if the business is hard to manage, risky, and out of their expertise because it is very costly for them and they will lose focus on their main business (construction and service). As indicated in the case, the strengths of the second clan are the life experiences and strong connections of Abdullah. He can use these to develop a large empire on the construction and service industry.

Blue Bird group should find other ways to develop its transportation business instead of venturing into unrelated industries. Transportation has a lot of opportunities especially since vehicles can be used as a cashcow. They can also try to venture outsourcing of trucks and other transportations.

Action Analysis

                The three clans should always evaluate if their businesses are aligned with their expertise. They should also evaluate if they prioritize keeping the business within their clan or if they are open to non-family members in driving the growth of their businesses.

Fwd: Three Entrepreneurial Clans in Asia Case Study by Crissy Cruz

Three Entrepreneurial Clans in Asia Case Study by Crissy Cruz

The Case Study of the Three Entrepreneurial Clans in Asia featured 3 Family conglomerates from different Southeast Asian countries.

First there was the Raiva Siblings and Spouses of Thailand who had a restaurant and bakery empire. The Raiva's S&P mainly focused on food related enterprises that would support their core business of managing their restaurants and bakeries. For example they ventured into developing the technology of making and distributing frozen food products in order to reduce wastage and extend the shelf life of their food products. S&P had a They also partnered and operated with well-known international food chains and brands such as Pizza Hut, Swensen's in Thailand and Haage-Dazs Ice Cream.

The Second Family featured is Tunku Abdullah and his Royal Brood from Malaysia. Tunku Abdullah enjoyed the advantages of being a royal and had lots of connections that enabled his family to establish Melewar Corporation as one of the biggest conglomerates in Malaysia. Melewar Corporation has diverse interests that range from property development and construction, tourism, transportation, advertising, marketing and public relations, and TV broadcasting.

Finally, the Third family is Indonesia's Ibu Mutiara Djokosoetono and the rest of his clan. Ibu Mutiara Djokosoetono established the Blue Bird group which initially featured transportation services and later expanded to non-transport services like manufacturing of engines and spare parts of their fleet vehicles in order to stretch their supply chain and resorts that are considered as passenger destinations therefore boosting their transport services business.

The Case Study rationalized the actions of these three conglomerates and discussed them according to theories of Multiplication, Subtraction and Division process in managing their businesses.

All conglomerates practiced addition and multiplying their business ventures in various manners. The Raivas have done it in a more focused and concentrated manner that supports their core business of restaurant and bakery operations. The Melewar group had a "shotgun approach" and grabbed every opportunity that seems viable. They classified their businesses into industry groups, Travel and Tourism, Insurance, Manufacturing, Shipping, Security, Property Development, and TV broadcasting.  For the Blue Bird group of Ibu Mutiara Djokosoetono, it can be noted that their businesses don't really have market focus but instead just a common denominator. All enterprises are related to various modes of transportation and anything that supports its operations and possible expansion.

Out of the three conglomerates, the S&P group didn't had to prune much of their collection of enterprises since they have been very conservative in their expansion activities and only choosing to add companies that would be beneficial to their original core business. However, the Melewar group's shotgun approach had le them to encounter some failed ventures in computer manufacturing and agriculture. These two businesses required heavy R&D and complicated production process, In order to recover losses the Melewar group decided to let go of these businesses and further sell their TV broadcasting company.  The Blue Bird group also weeded out their agribusiness which is a far-fetched business concept from their transportation related businesses. This only goes to show the importance of venturing into enterprises that are outside of the organization's core competencies and other strengths.

As a conglomerate ran by families, the different companies had their own styles of management that involved immediate family members.  Expanding the business was done not only to ensure further income and growth for the company but also to make sure there is enough to divide among family members. It provides opportunities for everyone to participate, pass on the legacy and perform specific areas of responsibility.

With all these in mind, which among the three families has exercised the best strategies in expanding their businesses. I admire the Raiva's S&P group in sticking to what they do best and building the foundation of their business empire based on the requirements or what compliments their bakery and restaurant business. This shows an example of good personal mastery. The Melewar and the Blue Bird group took a different route and expanded their business with investments in fields not part of the same market. Not all the risks they took paid off and some enterprises had to be cut. Those failures do not merit a conclusion that Raiva's S&P group made better management decisions. I believe that entrepreneurship is about taking risks. Melewar and the Blue Bird Group grabbed opportunities and made the most out of them.  The failures that they encountered were just bumps on the road and what's important was they knew how to let go of the things that operated below their expectations. Again, this is another example of self-mastery. We learn by knowing ourselves and by the mistakes that we have done.

In the Philippines, it is evident among the big conglomerates made up by the Sy's, Gokongwei's and the Tan's that their interests are all diverse but in a way related to one another. It is not imperative for conglomerate to just stick to one core business as long as they are able to manage well their enterprises and are adding to the over all profitability of the group. Diversification can also protect the company in losing a lot of resources once one of the industries collapses. A diversified conglomerate would give them power and control over more markets. In return, these interests will pay off by opening new doors and opportunities for them to grown as a conglomerate and be one step ahead of competition.

SENTREP Case Analysis – Entrep Families in Asia – Lea Olegario

SENTREP Case Analysis – Entrep Families in Asia – Lea Olegario

Situation

The case is a discussion of how three families in Asia – Thai, Malay, and Indonesian – were able to grow their businesses in different ways. Their approaches on business development were varying but all of them became very successful. It will start with one person or a couple of members in the family coming up with a business. Some of the family members will then join and help out in managing the business/es. Each will have a role and may contribute new business ideas or a development to the original.

Problem

The concern is how to develop the business of the families, manage it, and keep the business in the coming years.

Alternatives

Some strategies that the families have done are

1.       Adding similar businesses and change the shops according to the target market. This is especially true for the Thai family involved in the food business.

2.       Adding complementing businesses to the existing business. This was done by both the Thai and the Indonesian families. The Thai family added ingredient-producing businesses for its bakeshops and restaurants. The Indonesian family added spare parts and other businesses related to automobiles to complement and be able to handle on its own the repair of its fleet.

3.       Adding any other business that may work. This was how the Malaysian family worked. Whatever opportunity came their way, the family would venture in it. They sell then other that they can no longer handle.

4.       Multiplication was done by increasing the number of branches in great amount as in the case of the Thai family. The Indonesian family who owns the Blue Bird fleet multiplied in an even increasing manner.

5.       The management of the businesses was divided in different ways, the Thai family divided according to functions, The Malaysian family divided their businesses according to industry, and the Indonesian family into lines of businesses.

Decision

 Although all families were able to accumulate immense wealth due to their businesses, their ways were different. They were doing the same strategies of growing their businesses but the application and the details vary. Of all three, the Thai family seems to have got it together; there are a lot of branches, complementing businesses, independence of each family member on their own business, and involvement of the entire family in growing the food business.

Action Analysis

The Thai family was able to reach a big market, increase profitability by creating complementing businesses, and even provide each member significant contribution in the business in differing ways like handling Finances, handling restaurants, handling bakeshops, etc. The matriarch was also able to hold things together and the family was able to pass the love for the business to the entire family and to the next generation. They involved the help of professionals but still kept the main control of the business within the family.

The other families have some indications that it may actually not survive the next years or that management of this may no longer be with the family later on. For the Malaysian family, this seems to be very evident as the heirs do not seem to be very interested in the businesses. Also, the businesses are so varied that they cannot really study one in-depth to be able to grow each one and develop it. Hence, they resorted to selling some of their businesses. The rest of the family does not seem to be involved in the business. In the same way, the Indonesian family is facing the same thing in that the children of the matriarch are not very much involved. Another thing is that if all children will get involved, there are limited business lines to divide to the children to divide amongst them such that they will not be stepping on each other’s toes. This has to be addressed by the matriarch or else she will always need to be there to look after the business and the family.

The Thai family was able to get the balance in all these and the members even show great enthusiasm to be involved in the business, which is a great indication that the business may still survive the generations to come.

Case Analysis – Three Entrepreneurial Clans in Asia – Joseph Cunanan

The entire case talks about how 3 entrepreneurial clans in Asia managed to grow their business through
addition, subtraction, multiplication and division process within their family conglomerates. I like how
the facts of the case were presented in details in terms of how these 3 clans achieved growth within
their line of businesses and penetrated the market of Thailand, Malaysia & Indonesia.

During the addition process, we can tell that entrepreneurs use different approaches in determining the
necessity to expand their business. For instance, if your existing business can be supported by another
product, then it makes sense for you to pursue this product. This is what S&P Ice Cream Corner did.
They started out as an ice cream parlor which offers limited ice cream menus, then slowly transitioned
to manufacturing bakery products then eventually forwarded to distribution and franchising. On the
other hand, some entrepreneurs add new businesses as opportunities come. The new business or
product offering may have nothing to do with the existing one, but since an opportunity comes to take
on a new endeavour, they end up grabbing it. This is what exactly Melewar group did in their business
expansions. Some companies tend to expand their businesses by finding a common denominator with
their business offerings. For instance, if a company caters to clothing lines, then they can expand to
underwear, kids wear etc. In the Philippines setting, i think the perfect example would be Bench, which
started out in offering clothes for males. Then they eventually added up HerBench for women, Bench
Body for underwear, and Bench Kids for infant and children. With relevance to the case, Blue Bird take
on business expansions to anything that has wheels, like cabs, buses, truck s and trailers to cater both
the passenger and non-passenger needs of transportation in Indonesia.

In terms of the multiplication process, this comes to play if your business venture was so successful,
you can end up multiplying in terms of your number of branches and increase in supply chain. In the
Philippines setting, perfect example would be SM and Jollibee where in they have tremendously grown
in number in terms of the nationwide branches. I think wherever you go in Metro Manila, there is a
Jollibee store around the corner, there are even stores located just few kilometres away from the same
street. In terms of SM, all key major cities in Metro Manila has it, like Makati, Manila, Las Pinas, Bicutan,
etc. The growth in number is supported by the level of success in penetrating the target market. In
terms of the case, S&P and Blue Bird both of them have grown in number in terms of supply chain and
number of units (cabs for instance) to gain a full competitive advantage in the market.

When business owners encounter failure in their new ventures, it is important to consider the option
to let go of this business, rather than let it stay longer for so long which might eventually impact your
other businesses or worse, pull down the entire company. This is what Melawar did when they stopped
operating their technology ventures and I think they did a great job in determining this soon. The lesson
learned in this aspect, is to ensure that before you start up a new line of business, you will be able to
address all challenges n the future, and the key is to determine your current strengths and assets and
measure the feasibility to succeed.

In terms of the division of the company, I must say that all clans were successful in dividing the
ownership and accountability of each family member with their line of businesses. They have considered
factors such as function, interests, location and proximity to handle the business and stay successful in
the future. Not only that they focus on the current state, but they also prepare their young children to
take on the responsibility moving forward.