CASE NUMBER FIVE- JAGUAR AND OTHER SPORTS CAR

CASE NUMBER FIVE - JAGUAR AND OTHER SPORTS CAR

1. CASE NUMBER FIVE JAGUAR AND OTHER SPORTS CAR

2. If ever there is a person that can be called "born entrepreneur," Wellington Soong, is that person. As someone who knows him well described him, "entrepreneurship is in his blood." 2

3. Wellington Soong

4. He was born in Manila in December, 1941. He studied at the De La Salle University for his primary education and high school , He took up BS Business Administration at the University of the Philippines and graduated in 1963. In June of 1960, even while he was still a college student, he helped his father manage the family business which had a taxi fleet of 25 cars.

5. In June of 1960, even while he was still a college student, he helped his father manage the family business which had a taxi fleet of 25 cars. He did this for 10 years up to 1970, when he finally accepted the reality that there was no long term financial viability in the taxi business and even worse, the unavoidable operational problems would just drain the physical and mental well being of the owner and manager. He came out of this experience with a great deal of lessons learned in the management of risks, both avoidable and non-avoidable . 5

6. After closing down the operations of the tax business, Soong, who had a penchant for electronic gadget and systems, decided to get involved in the electronics business. He put up a company called Electro Systems, Inc. which concentrated in offering services like the installation of piped in music in buildings, fire alarm and security systems and building automation projects.

7. Then in 1982 lasting to 1984, Electro Systems, Inc. achieved what it called its "crowning glory' in all of the projects that it implemented or was a part of the team that put it together. Up to the present, Electro Systems continues to do well and as Soong likes to emphasize, it has managed to do that and remain "debt free." Other major projects that the company has been part of as a subcontractor were the SM Sports Arena in the Mall of Asia Complex and the Clark International Airport.

8. In 1968, the entrepreneurial bug hit Soong again. This time, he became interested in the business of sound systems and retail sound products. He had heard of a company in Massachusetts in US by the name of Bose Corporation, a firm that specializes in what was known as the technology of Direct Reflecting Sound. 8

9. Soong succeeded in getting what he wanted and up to the present. this business belongs to his company. Over the years, this has been a very good and successful entrepreneurial endeavor of Soong. Once again, his initiative and his impressive social connections were the key factors in the success of this business. At present, Soong has 12 outlets, mostly in the malls including the IKEA location in the Mall of Asia, In 1978, Soong pursued another entrepreneurial interest. This time, he went into the furniture business, not the regular office or residential furniture, He put up a company that would get into modular office furniture. Once again, using his own initiative, he established contacts with one of the largest furniture companies in the U.S., Steelcase Corporation based in Grand Rapids, Michigan. He was able to convince Steelcase to be the exclusive distributor of its modular office furniture products in the Philippines. 9

10. In February, 1996, he started a new chapter in his entrepreneurial history that required substantial financial resources, a very large chunk of his management time and attention and test of his ability to handle entrepreneurial challenges. Soong was always fascinated with cars, particularly the sporty ones. Among the latter kind, he was very much impressed with Jaguar, a British car that competed with the likes of other European cars, namely Mercedes Benz, BMW, Audi and Volvo. 10

11. For yet another bold initiative, without any intermediary to introduce him, he contacted the regional office of Jaguar in Singapore and talked with the regional manager. He must have impressed the British Regional Manager because after several conversations including a visit by Soong in Singapore, he got the green light from Jaguar UK after only several weeks of discussions/negotiations . 11

12. In October, 1996, Soong and senior officials of Jaguar Uk went to Singapore to sign the exclusive distributorship contract. For him, bagged a very promising business deal. He put up a company called Jaguar Philippines, Inc. with a very small capital base of P2.s million. He figured Jaguar was a very popular brand with a great reputation for quality and design. 12

13. The first year started and finished with flying colors for Soong. Jaguar Singapore gave him a quota of 30 units for that year, a goal that Soong thought was very easy to meet. He was right. The first order by way of LC/TR was for 14 units of Jaguar. When the units arrived, all were sold within a period of 10 days. Soong and his sales team were very happy. 13

14. He and the late Enrique Zobel, CEO of the Ayala Group then, personally owned a mid-rise building on Buendia Avenue near EDSA. He was hoping EZ would lease the ground floor to him as it was available. To his surprise, EZ asked him, "why don't you just buy the ground floor? Every floor in the building is a separate condominium and I am willing to sell the ground floor if you are the buyer." Soong almost jumped with joy. He wasted no time to raise the money to buy and own the ground floor unit, It was ideal for a showroom of a luxurious car; the area was 600 square meters and Soong could easily put on display 10 Jaguar cars. The transaction was done quickly and right away, Jaguar Phils . had a beautiful showroom in a great location. 14

15. The Philippine peso within a period of six months lost its value to the US dollar from P25 to P50 to US$ 1.00. This was a major problem for Soong. He had placed an order for 38 Jaguar cars, each one with an average sales price of P3.5 million. Unfortunately for him, the invoice was denominated in U.S. dollars which he had not yet paid as the cars were just being shipped to the Philippines. All of a sudden, the buyers who place an order for a unit which he was happy to pay the amount of P3.5 million, now were presented a price of P7 million, double what they thought they would pay for. As expected, most of the prospective buyers cancelled their orders/reservations and Jaguar Phils . had nearly 38 unsold Jaguar cars. Although there was an immediate problem on hand, Soong was able to manage it, even if it meant additional expense for storage, manpower and others. 15

16. In 2003, a time when the economy had fully recovered, Soong learned that Ford Motor Company, the owner of Jaguar U.K. acquired another car manufacturer in the UK, Land Rover Corporation. To Soong's delight, Jaguar Phils . Inc, became the exclusive distributor of all Land Rover automotive business. vehicles in the Philippines. The future looked even more exciting for Soong and his In 2008, two events took place that had a very important impact on the operations of Jaguar, Phils . The first was the sudden decision important impas company to sell her entire holdings in Jaguar UK and Land Rover. 16

17. The buyer and new owner of Jaguar and Land Rover UK was one of the largest corporate business groups in India. Tata Consulting Inc. was one of the most successful and widely diversified firms in India. Their business operations were not confined in India. They had become global and certainly had made their presence felt in many countries The buyer and new owner of Jaguar and Land Rover UK was one of the largest corporate business groups in India. Tata Consulting Inc. was one of the most successful and widely diversified firms in India. Their business operations were not confined in India. They had become global and certainly had made their presence felt in many countries.

18. Soong knew about Tata Consulting; he knew they were very big in India and many countries in the world. His sense of uncertainty, even insecurity, was that he did not know anyone in that conglomerate. He had become used to his relationships with the Jaguar UK and Land Rover senior officials: friendly and warm. He was not sure it would also be the same with Tata. The other event that Soong felt competition for the high end luxury car market was going to be tougher was the introduction by Toyota Motors of their luxury car Lexus. Toyota was a tough competitor and it seemed their product, Lexus, was just the car that could take away some of the market shares of the other high end car brands. 18

19. In early 2018, Jaguar Philippines had no less than 197 units in its inventory, the great majority of which were stored in warehouses that the company had to rent while the units were not yet sold. Finally, Soong told the owner, Tata Consulting, that for 2018, his company would not buy one unit until the bulk of the 197 units are sold. As expected, the distributor relationship of Jaguar Philippines came to an end after several months. Another party took over the distribution rights to Jaguar and Land Rover. Soong was left with 197 units to dispose in the market. True to form, Soong worked tirelessly to sell as much of the 197 units left in his inventory. Slowly but surely, he was able to sell a good number of them such that at the end of 2018, he had 120 units left. He was confident that in 2019, at 10 cars a month, he would be able to sell all 120 cars. 19

20. Jimmy Yu, a nouveau riche entrepreneur himself, met with Willie Soong and expressed interest in making emene son erin Ferma Corporation. He said that upon studying the financial statements of Ferma , he became interested in investing on yin conditions: one, based on the net worth of Ferma as of December 31, 2018, which was P20 million, he would be willing to put in P60 million, raising the firm's total stockholders' equity to P8O million; the entire amount of P60 million will be used to pay Ferma's total banks' trust receipts loans which should strengthen its working capital level aside from materially lowering its debt leverage ratio; and 2) Soong's share ownership will be diluted from 100% to 25% because of the fresh equity infused by Jimmy Yu. 20

21. Willy Soong, at 79, was a year away from his self-imposed plan to turn over management of the company to his two sons, with him just taking an advisory role. If he accepts the proposal, he knew he would be able to sleep better at night because he would be very Soong to continue his legacy as an successful entrepreneur. close to being debt free but on the other hand, he would not be able 21

22. 22

23. THANK YOU! 23