Success Story of the Ayalas
Almost all Filipinos probably know the Ayalas. There is the famous Ayala Avenue along Makati. It houses one of the business districts here in the Philippines. Ayala is one of the prominent names in Philippine business.
They own one of the country’s largest banks, Bank of the Philippine Islands. They own one of the country’s top telecommunication networks, Globe Telecom. They own one of the country’s leading real estate developer, Ayala Land. Other businesses of the Ayalas include water distribution business Manila Water Company, information technology business Integrated Microelectronics, Inc., business process outsourcing company Integreon,
These businesses all form the Ayala Group of Companies. The Ayalas, through its private holding company, Mermac Inc. (after Mercedes Macmicking, aunt of Jaime and Fernando) owns roughly 58% of Ayala Corp.
Ayala Corp. owns roughly 35% of Globe, 35.1% of BPI, 46.2% of Manila Water and majority of Ayala Land. With this empire of businesses, the Ayalas are considered as the second richest person in the Philippines according to Forbes, next to retail tycoon Henry Sy.
The Ayalas’ roots can be traced back 170 years ago when Domingo Roxas and Antonio de Ayala shook hands and set up Casa Roxas in March 1834. Since then, the Ayala Group has gone through life-changing events and made landmark business decisions that have allowed it to emerge stronger than before. It has become the Philippines’ oldest commercial house and one of the most profitable diversified conglomerates.
Currently, it is now on the hands of the eight generation of the Zobel de Ayalas, led by brothers Jaime Augusto Zobel de Ayala (also known as JAZA) as the Chief Executive Officer of Ayala Corp. and Fernando Zobel de Ayala as the Chairman of Ayala Land, Inc.
Both brothers were prepared to face the challenges as soon as they got their Bachelor of Arts degrees from the famous Harvard University. Jaime majored in Economics and graduated Cum Laude in 1981. Fernando, on the other hand, graduated a year later and went on to Insead in France, where he graduated with a degree in International Management.
Before joining Ayala Corporation, both brothers went on to work in different companies after graduation. Jaime went through a year of training in 1981 then moved to Purefoods, which was part of the Ayala Group at that time. On the other hand, Fernando joined a similar training program when he came back in 1982. He was assigned to the shopping center division of Ayala Land. At that time, the group was laying out plans to redevelop Greenbelt.
Fernando recalls one of the principles that Joseph McMicking, one of the early leaders of the Ayala Group, lived by: “The principle of it was that you have a far better chance of finding competent management for business if you had the whole market place to look at for the best possible talent, than to have to look from within a family, and find the talent from within, each and every time.”
Globe Telecom, was one of the riskiest investments of the Ayalas. It took a while to take off because of the huge capital investment involved and the growing pains that the fledging telecommunications industry was going through.
“If you look at the numbers it was showing, it could have wiped out a portion of the capital of Ayala. If Globe did not turn profits, we would have negative earnings, and large debts,” JAZA says.
Not all businesses of the Ayala Group maintained their position of strength. Two of their businesses didn’t do well – Azalea, an Internet company, and Burger King, a hamburger chain. Both have been phased out. “So you cannot always succeed. It does fail sometimes, but not in a big way,” JAZA says.
Nevertheless, perseverance paid off as the Ayala Group remains a darling of local and foreign investors and the Ayala brothers, Jaime and Fernando Zobel de Ayala, together with a team of competent managers, are preparing the group for the next leap forward.
Some business lessons from the success story of Ayalas:
Passion for the enterprise is the formula for growth
Blood relations running the enterprise is not a guarantee for growth. At best, it’s coincidental, not essential.
It is one thing to accept change, but it is more entrepreneurial to be the source of change.
Entrepreneurship is key to nation building.
Source: Business Week and Go Negosyo.
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September 6th, 2009 at 9:53 am
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September 6th, 2009 at 12:22 pm
Barack Obama once said that ‘ The future of our economy lies in the imagination of our entrepreneurs.’ Entrepreneurs create goods and services, jobs and also wealth for the nation. Without them, there will be so much lesser goods and services. Some company will just be able to dominate and set high prices and consumers still have to pay for it.
Entrepreneurs also create job openings for workers to come and manage operations. Its simply amazing. The operations by the view of the entrepreneur is actually a whole big system. And to the employees, each only filled up a small role of the big system (although this trend is slowly changing, check out this post to see why: http://www.diaslu.com/me-inc-being-the-entrepreneurial-leader-in-you.
And because of such value creation, wealth is being produced. I’ve written an article about the creation of money, check it out at : http://www.diaslu.com/being-a-money-magnet-do-you-love-your-life. Hope you enjoy it!
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Tyrone Reply:
September 7th, 2009 at 2:29 am
The Ayalas are very famous here in the Philippines.
Thanks for your links. I will check them out. I do believe that entrepreneurs make a country successful by providing growth through jobs and services that’s why leaders of each country travel a lot to other countries to meet with business and economic leaders to attract investments from them.
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September 7th, 2009 at 8:36 am
but they also emphasize, that they are not related to the ayalas of makati…
thank you for visiting my blog…
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September 7th, 2009 at 10:48 am
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September 7th, 2009 at 10:13 pm
One of which is the value of foresight. The reason why we have Ayala Ave. is because that big chunk of land in the Makati Central Business District is bought by the Ayalas before any land development projects were built. This means the the skyscrapers you see along Ayala Ave are either Ayala - owned, Ayala - managed, or eventually - bought - from - Ayala Properties Management Group. Since the area is dominantly Ayala-owned, they are able to develop it and get quality - based contractors to build the well-lit underpass and connecting walkways.
For the other offices, they are “renting” under Ayala Properties…it was not even until very recently that i was able to learn Intercontinental Hotel is an Ayala - Managed Hotel so a much lower rate is given to them and even in personal room bookings (added benefits)of some corporate employees.
Another thing i admire in them is their vocal support in adhering to the Philippine culture. They would proudly wear the Philippine terno in international gatherings and they would encourage business owners to be proud taxpayers in different speaking engagements. The Ayalas are one of the top taxpayers in the country. Don Jaime was one of the bold businessmen who directly talked to former President Marcos how mishandled and abusive the martial law has become. JAZA joined the crowd in the rally during Edsa II, while FZA (Fernando) joined the crowd in the burial of former President Cory Aquino.
With all the financial blessings the Ayalas received for many years, they now return to the community the fruits of their labor by being the forefront in CSR (corporate social responsibility) promotion and development. They have also ventured in different youth and education oriented programs through Ayala Foundation.
Lastly, they have always believed in the talent of the Filipinos…making natural - born Filipinos feel ashamed for denouncing relation to the Philippines when they see the love for the Philippines of the Zobels. Once, in a competition for young designers (producing wearable clothing lines from indigenous materials), Bea Zobel asked the organizing committee why only the 1st placer will be representing the Philippines to the international competition in Paris even though there are five top contenders and the international competition guidelines said a country can send as much as ten official delegates. The answer is simple…funding. There are not enough funds to sponsor ten or five candidates, but just enough for one candidate…so only the top placer get to represent the Philippines to Paris. But Bea Zobel liked the creations of the top five candidates and feels the Philippines will not be given due acknowledgement for the creative abundance the Filipinos have. Simply put, the organizers sponsored the representation of the 1st placer, but Bea Zobel raised the needed funds to sponsor the other top four (4) contenders. That year, the Philipines was able to sent five (5) representatives for the International Young Designers Competition in Paris.
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September 8th, 2009 at 10:13 pm
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September 9th, 2009 at 11:18 pm
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September 9th, 2009 at 11:27 pm
@tyron , bro may stories ka rin ba bakit yumaman sila pres. gloria? anu mga business nila? curious lang ako if totoo ung nakakuha sila ng yaman dahil sa stockmarket?
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Tyrone Reply:
September 9th, 2009 at 11:41 pm
It may be possible that their property holdings increased in value because they bought raw lands before and prioritized to use the funds of the government to improve it to industrial lands to increase its value.
But when it comes to their stock holdings, I really doubt it. I am also a stock trader and I trade my own stocks. The stock market did not increase that huge since the fall of Lehman Brothers because of the rampant fear of investors brought about by the current global financial crisis.
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November 7th, 2009 at 7:59 pm
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