On becoming a sustainable company<\/p>\n
When the Asian crisis hit, several major shocks were
\nimmediately felt by companies across Asia. Capital flow to the
\nregion, which continued to increase prior to the crisis,
\nimmediately reversed as investors' confidence in the region
\nplummeted. Sharp devaluation of Asian currencies caused
\nincreasing debt defaults for both foreign debt and accounts
\nreceivables. Ballooning inflation and unemployment lowered
\nconsumer confidence and spending. Labor unrest heightened due to
\nlower wage increases, layoffs, inflation and on-going
\nuncertainty. The impact of the crisis on companies operating in
\nthe region was large and far-reaching.<\/p>\n
Both the timing and magnitude of the crisis was simply
\nunexpected. Many companies were caught off guard. For some, the
\ncrisis simply worsens their already bad condition prior to the
\ncrisis. Some faced ballooning debt burdens that forced them into
\nbankruptcy. Some were acquired by companies with stronger
\nfinancial capacity, mostly foreign firms.<\/p>\n
Not all companies, however, were hit hard by the Asian crisis.
\nSome even benefited from the crisis. Jollibee Foods Corporation,
\nthe franchise holder and operator of the Philippines top fast-
\nfood chain, for example, benefited from the crisis.<\/p>\n
Jollibee was ready for the recession in the Philippines. It
\nhad no dollar-denominated debt; it sold an affordable product;
\nand it had a proven record of defending its turf against global
\nfast-food franchisers like McDonald's. Jollibee ranks frequently
\nfirst in brand-name recall in local Philippine marketing surveys.
\nWith the slump, Philippine consumers were cutting back on upscale
\ndining, which helped Jollibee post further gains. In the first
\nhalf of 1998 alone, Jollibee already reported a 33 percent rise
\nin net profits on sales of 6.7 billion pesos (source: WSJ 1998
\nAsian Economic Survey).<\/p>\n
Companies in Asia responded to the growing crisis in different
\nways. A survey conducted by Andersen Consulting at the onset of
\nthe Asian crisis (1998) shows that most companies in Asia adopted
\ndefensive postures, namely cost-cutting, postponements of new
\ninvestments, portfolio restructuring, and debt restructuring (see
\nFigure 7-2).<\/p>\n
Aligning competitiveness and financial soundness<\/p>\n
To determine the appropriate responses for Asian companies, we
\ndevised a matrix which represents a \"snapshot\" of Asian companies
\ncondition at the onset of the Asian crisis. Using market
\ncompetitiveness and financial soundness as variables, Asian
\ncompanies may fall into one of four cells: Bubble, Aggressive,
\nConservative and Sustainable (see Figure 7-3). The best position
\nis, of course, \"sustainable\" companies, ones that have high
\nglobal competitiveness and high financial soundness. To survive
\nor emerge from the crisis as winners, Asian companies that fall
\ninto the other three categories (bubble, aggressive and
\nconservative) must eventually become a \"sustainable\" company by
\nimproving their competitiveness and\/or fixing their financial
\nproblems.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/on-becoming-a-sustainable-company-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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