Category: Industry

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What made the franchise industry of the Philippines successful? According to the PFA or the Philippine Franchise Association, the franchise industry of the Philippines had significantly grown in the last few years, from 50 franchises to more than a thousand franchises today. And according to them, the reason for its rapid growth is because of small franchise business in the Philippines such as food-cart and food-stall businesses.

Popular Small Franchise Businesses
Unlike in the past in which most franchise businesses are large businesses, such as convenient stores and fast-food restaurants, most franchise businesses today are small ones, such as food-cart and food-stall businesses.

Because of its relatively smaller size and far lesser expensive franchising costs, many Filipinos were able to franchise a business for their own, giving them the same opportunity that wealthier Filipinos have had with franchise businesses.

In addition to its lesser expensive franchise cost, small Franchising business Philippines such as food-cart and food-stall businesses became popular in the Philippines because it doesn”t usually require its franchisees to have acquired years of experience in a managerial position or have finished an MBA course, which are usually the case for larger franchise businesses.

According to the PFA, it was because of the simplicity of these small types of franchise businesses that made the franchise industry successful in the Philippine market, particularly in today”s modern trends in which franchise businesses had become a popular trend for many Filipino businessmen and women. This had also led to the significant growth of the franchise industry in the Philippines.

The Franchise Industry of the Philippines
The Philippines had received a number of recognitions due to the rapid growth of the franchise industry in the country.

The rapid growth of the franchise industry, according to the PFA, had led to the creation of thousands of enterprises and generation of hundreds of thousands of jobs, making franchising an important tool in the country”s economic growth, which gave had also given the industry entry to the international market, which led to the recognition of Filipino business concepts world-wide.

According to the PFA, the Philippines was also recognized as the “franchise hub of Asia” when it comes to the development of franchise concepts.

According to many business experts, it was because of these recognitions that made franchising the preferred business method for more and more entrepreneurs, both for old and new entrepreneur.

Pro 1: Eco Cars
If the bailout money works the way it is supposed to and pulls the big three out of the hole, good things could potentially come of it. One proposal is that after being saved the automakers could be pushed to manufacture and sell cars that are both good for the environment and economy.

Con 1: Taxpayer Cash
Perhaps the most obvious con, it is no secret that we will all be helping bail these companies out. Although it is still unknown where the money may or may not come from, taxpayer cash will be included for sure. Bloggers, business leaders, and experts are expressing their frustration about this all over the Internet.

Pro 2: Recession Woes
While most are already feeling the effects of a recession on their wallets and gas tanks, it could be a lot worse if something else big happens. Some experts feel not bailing out the big three could result in a much deeper and more severe recession then we are already in. With thousands of jobs connected to the auto companies and stocks across the board, their downfall could have a large effect on our economy.

Con 2: Bankruptcy
One of the only other options for GM and the rest of the big three is to file bankruptcy under chapter 11. It is true that we have already assisted these companies financially this year and it helped them for few months. For this reason, some economists feel another bailout would just be like bailing out a sinking ship that is going to sink no matter what we do. Bankruptcy however, could be their only salvation, and many experts claim that it could be their best option. Michael Levine of the Wall Street Journal claims, the cost of terminating dealers is only a fraction of what it would cost to rebuild GM to become a company sized and marketed appropriately for its market share. Contracts would have to be bought out. The company would have to shed many of its fixed obligations. Some obligations will be impossible to cut by voluntary agreement. GM will run out of cash and out of time.

Pro 3: Prior Success
As history tends to repeat itself, I think it important to consider the Chrysler bailout of 1979. In the mid 70’s while our country was going through a gas crisis, Chrysler refused to stop making their biggest most gas guzzling luxury cars. This mistake led them to requesting a bailout in late 79. However, to the surprise of the watching country, Chrysler came out with the “K-car” that sold like hot cakes and pulled the company out of a financial crisis. Chrysler then paid off their debt to the government 7 years early, and the government made over $660 million in profit from the bailout when all was said and done. Many people claim that if given another bailout, the auto companies could pull themselves out from near bankruptcy, and the federal government could generate revenue as well.

Con 3: Private Jet-setting
Unfortunately, when the CEO’s of the big three traveled to Washington D.C. to request billions from taxpayers early this week, all three CEO’s took private jets with round trip travel costs totaling of over $40,000 per CEO. This ostentatious show of wealth was considered highly disrespectful to the taxpayers about to consider bailing them out and created tons of bad publicity for the potential bailout. If companies are going to get taxpayers money, then we need to know that they are being frugal with it.

Today, it is critical for all businesses to be in compliance with PCI security standards and guidelines, not just in the name of good business, but to protect consumers and avoid significant consequences. Almost every organization that deals with card payments must ensure that it is following the PCI standard for ensuring with the Payment Card Industry compliance. If you go through the current PCI requirements, there are many areas calling for documented PCI policies for a wide variety of I.T. resources that relating to the cardholder data environment. By working with a PCI compliance service provider you can ensure that cardholder account data being processed across your technical environment is protected and thus minimizes the risk to your business. Verifying and authenticating consumer identities before proceeding with a transaction can protect your payment systems from unauthorized access and prevent losses incurred through fraudulent transactions. Consultants in the Payment Card Industry compliance are currently charging organizations high fees for developing PCI policy documentation for purposes of compliance, which is beginning to become a threatening issue for many businesses. To show your compliance as a business, you must possess a secure collection of customer data that is tamper-proof and ready for analysis.

The main benefits of keeping your business PCI compliant is improving organizational security so that you can rest assured that cardholders information is safe from harm. This will help build up your customer base and your overall brand image will be positive, showing your company as a responsible and productive member in the market. Business partners and investors will become confident in your capabilities as a company.

There can be long-term implications because of a non PCI compliant and ultimately a breach in security, like losing your reputation and customer loyalty. The solution is to find a reputable vendor selling PCI policy templates one can use. NSAP IT is the leading provider of on-demand and subscription-based information security and payment card industry compliance management solutions to businesses and government entities throughout the world. Dedicated to building long-term relationships NSAP (IT) put its clients in an excellent position to validate compliance with the PCI DSS and other regulatory standards.

Hybrid cars are one of the excellent fruits of the hard work done in the car industry. These cars utilise more than two distinct power sources. Some of the major power sources include gasoline, or diesel fuels, solar, and hydrogen. This primary power source is coupled with one, or more electric motors.

World is facing a lot ofmany problems due to the increased population. There is a rapid increase in the number of vehicles along the roads. This has given rise to the pollution, and problems related to the increased fuel prices. This problem is addressed by the great minds, by inventing the hybrid cars.

These cars are a revolution in the car industry due to their marvellous features. These cars are environment friendly. They contribute least to the increase in the air pollution. Air pollution is one of the major problems of the present day. Hybrid cars reduce the smog by 90 percent. Thus, the release of the pollutant is greatly reduced.

Hybrid cars are economical with respect to the fuel. World is running out of the natural fuel resources. , Soso the need of the fuel economical vehicles is greatly increased. They are fuel efficient as compare to the traditional cars. They can get up to 60 miles per gallon in the city driving as compare to the typical cars that might travel 15 to 20 miles per gallon. These cars use three times as much fuel for travelling the same distance. The hybrid cars are better than others as a hybrid car battery recharges it as you drive. You do ntnot need to plug in. Moreover, they possess a greater speed as compare to the typical cars.

Hybrid cars possess two engines. One is the electric motor, and the other is the gasoline. When the car stops at the signals, the gasoline engine is automatically shut off and the electric motor is switched on. When more power is required, both engines work simultaneously.

Hybrid cars are based on power split technology. It is based on the gearbox. The electric motor along with the internal combustion engine provides additional power to assist the engine in accelerating, passing, or climbing. In some of the drives, where less power is required, the motor provides the only power source. Thus, the consumption of gasoline is reduced in such cases.

Hybrid cars possess an efficient regenerative braking system. When the brakes are applied, the energy is dissipated. This energy turns on the motor, which functions as the generator. Thus, the otherwise wasted energy is converted into electricity. This energy is stored in the battery, and is available for the electric motor.

Hybrid cars have firm and puffed up tires. They are filled at a higher pressure to smoothen the ride. So due to the texture, they offer a less bumpy, and comfortable ride. The texture of the tires reduce the friction, thus the life of the tire is increased. The other marvellous feature of the car is reduced air drag . For this purpose, these cars utilise the reduced frontal area, and sometimes a stream lined texture. Thus, all the above- mentioned features rank their invention a revolutionary step in the vehicle industry.

If you are an entrepreneur with a small food or beverage company looking to take it to the next level, this article should be of particular interest to you. Your natural inclination may be to seek venture capital or private equity to fund your growth, but that might not be the best path for you to take. We have created a hybrid M&A model designed to bring the appropriate capital resources to you entrepreneurs. It allows the entrepreneur to bring in smart money and to maintain control.

We have taken the experiences of a beverage industry veteran, a food industry veteran and an investment banker and crafted a model that both large industry players and the small business owners are embracing.

I recently connected with two old college mates from the Wharton Business School. We are in what we like to call, the early autumn of our careers after pursuing quite different paths initially. John Blackington is a partner in Growth Partners, a consulting firm that advises food and beverage companies in all aspects of product introduction and market growth. You might say that it has been his life’s work with his initial introduction to the industry as a Coke Route driver during his college summer breaks.

After graduation, Coke hired John as a management trainee in the sales and marketing discipline. John grew his career at Coke and over the next 25 years held various positions in sales, marketing, and business development. John’s entrepreneurial spirit prevailed and he left Coke to consult with early stage food and beverage companies on new product introductions and strategic partnerships.

Steve Hasselbeck is now a food industry consultant after spending 27 years with the various companies that were rolled up into ConAgra. His experience was in managing products and channels. Steve is familiar with almost every functional area within a large food company. He has seen the introduction and the failed introduction of many food industry products.

John’s experience at Coke and Steve’s experience at ConAgra led them to the conclusion that new product introductions were most efficiently and cost effectively the purview of the smaller, nimble, low overhead company and not the food and beverage giants.

Dave Kauppi is now the president of MidMarket Capital, a M&A firm specializing in smaller technology based companies. Dave got the high tech bug early in his business life and pursued a career in high tech sales and marketing. Dave sold or managed in computer services, hardware, software, datacom, computer leasing and of course, a Dot Com. After several experiences of rapid accent followed by an even more rapid decent as technologies and markets changed, Dave decided to pursue an investment banking practice to help technology companies.

Dave, John, and Steve stayed in touch over the years and would share business ideas. In a recent discussion, John was describing the dynamics he saw with new product introductions in the food and beverage industry. He observed that most of the blockbuster products were the result of an entrepreneurial effort from an early stage company bootstrapping its growth in a very cost conscious lean environment.

The big companies, with all their seeming advantages experienced a high failure rate in new product introductions and the losses resulting from this art of capturing the fickle consumer were substantial. When we contacted Steve, he confirmed that this was also his experience. Don’t get us wrong. There were hundreds of failures from the start-ups as well. However, the failure for the edgy little start-up resulted in losses in the $1 – $5 million range. The same result from an industry giant was often in the $100 million to $250 million range.

For every Hansen Natural or Red Bull, there are literally hundreds of companies that either flame out or never reach a critical mass beyond a loyal local market. It seems like the mentality of these smaller business owners is, using the example of the popular TV show, Deal or No Deal, to hold out for the $1 million briefcase. What about that logical contestant that objectively weighs the facts and the odds and cashes out for $280,000?

As we discussed the dynamics of this market, we were drawn to a merger and acquisition model commonly used in the technology industry that we felt could also be applied to the food and beverage industry. Cisco Systems, the giant networking company, is a serial acquirer of companies. They do a tremendous amount of R&D and organic product development. They recognize, however, that they cannot possibly capture all the new developments in this rapidly changing field through internal development alone.

Cisco seeks out investments in promising, small, technology companies and this approach has been a key element in their market dominance. They bring what we refer to as smart money to the high tech entrepreneur. They purchase a minority stake in the early stage company with a call option on acquiring the remainder at a later date with an agreed-upon valuation multiple. This structure is a brilliantly elegant method to dramatically enhance the risk reward profile of new product introduction. Here is why:

For the Entrepreneur: (Just substitute in your food or beverage industry giant’s name that is in your category for Cisco below)

1.The involvement of Cisco – resources, market presence, brand, distribution capability is a self fulfilling prophecy to your product’s success.

2.For the same level of dilution that an entrepreneur would get from a VC, angel investor or private equity group, the entrepreneur gets the performance leverage of smart money. See #1.

3.The entrepreneur gets to grow his business with Cisco’s support at a far more rapid pace than he could alone. He is more likely to establish the critical mass needed for market leadership within his industry’s brief window of opportunity.

4.He gets an exit strategy with an established valuation metric while the buyer helps him make his exit much more lucrative.

5.As an old Wharton professor used to ask, What would you rather have, all of a grape or part of a watermelon? That sums it up pretty well. The involvement of Cisco gives the product a much better probability of growing significantly. The entrepreneur will own a meaningful portion of a far bigger asset.

For the Large Company Investor:

1.Create access to a large funnel of developing technology and products.

2.Creates a very nimble, market sensitive, product development or R&D arm.

3.Minor resource allocation to the autonomous operator during his skunk works market proving development stage.

4.Diversify their product development portfolio – because this approach provides for a relatively small investment in a greater number of opportunities fueled by the entrepreneurial spirit, they greatly improve the probability of creating a winner.

5.By investing early and getting an equity position in a small company and favorable valuation metrics on the call option, they pay a fraction of the market price to what they would have to pay if they acquired the company once the product had proven successful.

Dean Foods utilized this model successfully with their investment in White Wave, the producer of the market leading Silk Brand of organic Soy milk products. Dean Foods acquired a 25% equity stake in White Wave in 1999 for $4 million. While allowing this entrepreneurial firm to operate autonomously, they backed them with leverage and a modest level of capital resources. Sales exploded and Dean exercised their call option on the remaining 75% equity in White Way in 2004 for $224 million. Sales for White Way were projected to hit $420 million in 2005.

Given today’s valuation metrics for a company with White Way’s growth rate and profitability, their market cap is about $1.26 Billion, or 3 times trailing 12 months revenue. Dean invested $5million initially, gave them access to their leverage, and exercised their call option for $224 million. Their effective acquisition price totaling $229 million represents an 82% discount to White Wave’s 2005 market cap.

Dean Foods is reaping additional benefits. This acquisition was the catalyst for several additional investments in the specialty/gourmet end of the milk industry. These acquisitions have transformed Dean Foods from a low margin milk producer into a Wall Street standout with a growing stable of high margin, high growth brands.

Dean’s profits have tripled in four years and the stock price has doubled since 2000, far outpacing the food industry average. This success has triggered the aggressive introduction of new products and new channels of distribution. Not bad for a $5 million bet on a new product in 1999. Wait, let’s not forget about our entrepreneur. His total proceeds of $229 million are a fantastic 5- year result for a little company with 1999 sales of under $20 million.

MidMarket Capital has created this model combining the food and beverage industry experience with the investment banking experience to structure these successful transactions. MMC can either represent the small entrepreneurial firm looking for the smart money investment with the appropriate growth partner or the large industry player looking to enhance their new product strategy with this creative approach.

This model has successfully served the technology industry through periods of outstanding growth and market value creation. Many of the same dynamics are present in the food and beverage industry and these same transaction stru7ctures can be similarly employed to create value.