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Copy of Copy of Lamoiyan Corporation of the Philippines:Challenging Multinational Giants. A Case Analysis.
Transcript of Copy of Copy of Lamoiyan Corporation of the Philippines:Challenging Multinational Giants. A Case Analysis.
Macro Environment Lamoiyan Corporation Threat of New Entrant Threat of Substitution Important
Details (cc) photo by jimmyharris on Flickr Bargaining Power
- The Philippine population exceeded 80 million in 2002, and was expected to grow at 2% annually through 2007.
- The island divided into three geographic areas: The southern island of Mindanao, the central island of the Visayas and the northern and largest island of Luzon, which contained the country’s capital Manila.
- Almost half the population lived in urban areas, and over 10 million resided in Metro Manila, which covered only 245 square miles.
- The national language was Tagalog, with over 80 distinct dialects; English was widely spoken and was the medium of communication in business and higher education.
- Philippines boasted one of the highest literacy rates in the world and in Southeast Asia including Hong kong and Taiwan.
- Political contained an executive, legislative and judicial branch and functioned as a democratic state under President Gloria Macapagal-Arroyo.
- Ms. Macapagal-Arroyo took office in January 2001 after Former President Joseph Estrada was impeached on charges of nepotism and corruption.
- Macapagal-Arroyo, who desired to strengthen competition and liberalize trade, unleashed considerable political uncertainty and recession threat in late 200 but in 2002, the instability, had mostly subsided.
Environment - The 2002 real GDP reached US$77.1 billion, reflecting 8% increase from 2001, and export revenues in 2000 totaled US$35 billion, more than four times the amount in 1990.
- In 2002, Philippines fell 13 places to 61st out of 80 countries in World Economic Forums Global Competitiveness Report, and index based on countries expected five year per capita GDP growth.
- In 2000, GDP was distributed as follows 45% services, 35% industrial, and 20% agricultural. Over 90% of businesses in the Philippines employed fewer than ten people each; in 2002 approximately 11% of the labor force was unemployed.
- Philippine consumers purchased toothpaste three times per month on average, with 72% buying only one package of toothpaste per purchase occasion, 18 % buying two packages and 10% buying three or more.
- The most important purchase considerations for Philippine toothpaste consumers were product cleaning and freshening benefits on teeth, gums, mouth, and breath.
- 80% of survey respondents were product availability, price, taste, user imagery and brand image.
Environment Analysis of Task
Environment Porter’s Five
Forces It will be hard for a new company to enter the toothpaste industry because it is already dominated by Colgate-Palmolive’s “Colgate” and Unilever’s “Close-Up”, even the “Hapee” toothpaste of Lamoiyan find it hard to enter the industry. Also, the barriers to entry is high like for the capital requirement, new companies need to invest large financial resources in order to compete, they will need technologies and machineries to produce toothpaste. It will also be hard for them to differentiate their product since almost all of the toothpaste is same. Colgate-Palmolive, Unilever and Lamoiyan have already found their niche, they are already known in what they do and what they offer. They already have large customer base. This is affected by the ability of your customers to find a different way of doing what you do or what you provide. Threat of Substitution in the Toothpaste industry is low since people need the benefits offered by the toothpaste product of Colgate-Palmolive, Uniliver and Lamoiyan. Even though there are other substitute for the toothpaste like salt and baking powder, it does not affect largely to the market share of the three competing companies. Bargaining Power of Buyers is low because
even though the price of Colgate is high
compared to other toothpaste products,
it still has the large share in the market.
Even though Lamoiyan’s “Hapee” toothpaste
offered its product much lower, its market
share is still behind of Colgate and Close-up. Bargaining Power
of Suppliers Intensity of Rivalry The intensity of Rivalry is very high in
the industry. Lamoiyan has several
strong competitors in the market like
Colgate-Palmolive, Unilever, Procter
and Gamble and Zest-O Corporation.
Another important element affecting
the intensity of rivalry is that the
switching cost in this industry is quite
low as it does not cost anything for a
consumer to buy one brand instead
of another. Opportunities
and Threats Opportunities Possibilities of going public, achieving
deeper channel penetration with
existing products, launching new
products, and expanding
internationally are the opportunities
that Lamoiyan must have. Threaths Competitors have a lot of stores
that offering their products unlike
Hapee toothpaste they only have
selected stores that offered
Hapee toothpaste. Problem Low distribution because
of the company’s limited
product line. Objectives Increase market share
from 2002 (10%) to
2003 (14.1%). 1. We will introduce our new product which is HAPEE SHAMPOO for smooth and silky hair. Tagline: “HAPEE to
have you” Advantages: 1. By introducing our new product
line which is HAPEE shampoo we
can expand our customer based so
that we can easily increase our sales.
2. Product Awareness
Disadvantage: 1. It is costly on the
part of the company. 2. We will introduce
new product of
is HAPEE White for
whitening the teeth
of their customers. Advantage: 1. It will help solve the
problem of the consumers
with regards to Hapee that
it does not clean teeth well. Disadvantage:
1. Low customer belief 3. Increase promotion strategies
such as making memorable slogan,
jingle, commercials, etc. Advantage: 1. Increase brand awareness
and memorability. Disadvantage: 1. It is costly on the part of the company. Owner:
Cecilio Kwok Perdo The company positioned itself as a corporation that produces low-priced and quality products and expanded to producing some water-based toiletries and cleansing products. It started as a factory that supplied aluminum toothpaste tubes for companies like Colgate-Palmolive, Procter & Gamble and Unilever. In the long run, the factory closed because the toothpaste companies decided to switch from aluminum to plastic tubes. Unfortunately, a lot of workers were affected because they became unemployed. Pedro turned this misfortune into opportunity
and thought that if nobody wanted his tubes,
then he might as well fill them up with his own
toothpaste. Pedro created the Lamoiyan
Corporation and built his own brand of
toothpaste. He introduced Hapee Toothpaste
to the Filipino consumers. After a few years in the market,
the company moved away from
using aluminum tubes and turned
to the plastic ones too. Today, Lamoiyan Corp. has
their tubes, closures, and
cartons made by other
packaging companies. Success wasn’t easy for Lamoiyan to achieve.
They’d been through a lot of challenges and
one of these are their competitors. First is that the consumers fear that locally
produced goods were inferior, consumers’
preference for Colgate’s taste and the lack
of awareness of Happee Toothpaste. To
overcome these barriers, Lamoiyan made
a tie-up with a Japanese firm to enhance
the perception of the people that Happee
toothpaste’s quality is good. They also
made a flavor that was comparable to
Colgate’s and they even sponsored the
Philippine Olympic Team. Major competitors are Colgate,
P&G and Unilever. There are
three significant perceptual
barriers to the company’s success. Products offered
by Lamoiyan Corporation Hapee was able to capture a market share of multinational companies resulting to increased bargaining power of suppliers. It's ranked as, number three when it comes to market share in the toothpaste industry. As for the suppliers, they wish to maintain stability in delivering their raw material to the firm without fluctuating the prices. Hapee sure knows how to bargain with suppliers to be able to reduce cost and increase their profit.