Success Story of the Ayalas
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,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.
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.
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