Strama-lbc.docx

San Beda University College of Arts and Sciences San Miguel, Mendiola, Manila

A Strategic Management Paper On LBC EXPRESS (LBC Express Holdings, Inc.)

Submitted to: Prof. Jenny De Guia Submitted by: Delos Santos, Kyle C. 4BLM

I.

INTRODUCTION

LBC Express is a company based in the Philippines which offers courier and logistics services. It was initially founded by Carlos Linggoy Araneta in the 1950s as “Luzon Brokerage Corporation” operating as a brokerage. It subsequently changed its name to “LBC Air Cargo, Inc.” and operated both as a brokerage and air cargo agent. Later on, it evolved into an express delivery service, becoming the first Filipino-owned courier company with time-sensitive cargo deliveries in the Philippines and offer customers an alternative to Government-owned and operated postal service. In 1973, LBC Express pioneered 24-hour-door-to-door express delivery and messengerial services in the Philippines, providing greater convenience to existing customers and further expanding its market share. In the early 1980s, LBC Express entered into the domestic remittance business, leveraging the existing branch network of its logistic business as customer contact points for remittance acceptance and fulfillment, growing this business at low marginal cost. It is not long after LBC Express commenced its international money transfer operations in 1987 by establishing relationships with agents and affiliates in the United States and steadily expanding its network elsewhere globally to provide fulfillment services for inbound international remittances. It later leveraged the network of its overseas affiliates to expand its logistics business internationally as well. Today, LBC Express provides courier and freight forwarding services in 22 countries and territories outside of the Philippines and fulfillment services for inbound remittances originating from over 30 countries and territories outside the Philippines, including the United States, Canada, the Asia Pacific region, Europe and the Middle East.

Nature of Business LBC Express is a courier company based in the Philippines. It offers logistics services which can be classified into two: Retail and Corporate. Its Retail services include Courier, Air cargo and Balikbayan boxes. On the other hand, Corporate services include Specialized Corporate Solutions, Freight Forwarding and Supply Chain. Aside from logistics, LBC Express also offers money transfer services to its customers. Its money transfer services can be classified into two: Remittance and Payment Solutions. Under Remittance, customers can choose among Instant Peso Padala, Pesopak Delivery and Corporate Remittance Payout. On the other hand, Payment Solutions include Bills Payment, Cash On Pick-Up/Cash on Delivery, Return and Refunds and Corporate Payroll Disbursement. Number of Employees As of December 31, 2017, LBC Express had, on a consolidated basis, 6,921 fulltime employees, compared to 6,539 full-time employees as of December 31, 2016. It continues to increase its workforce on a regular basis in line with the growth of its business. Under LBC Express’ hiring policy, all branch employees must have at least a college degree while exchange associates and drivers and couriers are generally required to have completed a two-year vocational course or college. Employees of LBC Express in the Philippines are primarily trained in-house.

CHAPTER III: EXTERNAL ANALYSIS

3.1 General Environment 3.1 .1 Political Environment 3.1.1.1 BOC eases rules on duty and tax-free balikbayan boxes The Bureau of Customs eases the guidelines in availing the duty and tax-free privilege of consolidated balikbayan boxes, this after the previous rules were met with criticisms from the overseas Filipino workers (OFW) community for the tedious requirements in availing the P150,000.00 duty and tax exemption privilege.

Customs Memorandum Order (CMO) No. 18- 2018, issued on October 11, 2018, supersedes CMO No. 04-2017 which provides for the guidelines on the availment of the privilege by qualified Filipinos on their consolidated shipment of balikbayan boxes.

Instead of the mandatory copy of Philippine passport, the Bureau now accepts other documents to show proof of Filipino citizenship such as photocopy of (1) pertinent page of the Philippine passport with personal information, picture and signature, or in case of dual Filipino citizen without Philippine passport, photocopy of foreign passport with personal information, picture and signature plus copy of proof of dual Filipino citizenship; (2) permanent resident ID or equivalent document in other countries; (3) Overseas Employment Certificate/OWWA Card; (4) work permit; (5) Unified Government ID issued by the Department of Labor and Employment; (6) any other equivalent document except birth certificate.

In a bid to simplify the rules and regulations on duty and tax-free consolidated balikbayan boxes, Qualified Filipinos availing of the Php 150,000 duty and tax-free privilege are not required to submit the commercial invoices of the goods contained in the balikbayan box. Invoices are to be be submitted only if it is available.

Relevance: The logistics companies in the Philippines will be benefited by such order issued by the Bureau of Customs because there will be an increase in the number of Filipinos who would avail of the duty and tax-free balikbayan boxes, considering that the logistics companies are the ones who primarily offer the exportation and importation of balikbayan boxes. Since there would be an increase in the demand for balikbayan boxes, it being duty and tax-free, there would also be an increase in the supply on the part of logistics businesses in the Philippines.

Reference(s): Evardone, P. (9 November 2018). BOC eases rules on duty and tax-free balikbayan boxes. Retrieved from http://www.pna.gov.ph/articles/1053337.

3.1.1.2 Balikbayan boxes are now at risk of being delayed, torn open, 'thrown into the sea' According to CNN Philippines, Duterte told the Chief of Staff of the Army to open everything and to throw it in the sea if they’re not contented just to avoid any more issues.

Such reckless order that could put at risk balikbayan boxes and the reputation of the Armed Forces of the Philippines. It gives soldiers the authority to “open everything”. Unscrupulous persons could exploit this and start filching from balikbayan boxes and then blame the soldiers.

If your boxes aren’t torn open, their release from the ports could be much delayed due to the more stringent measures Customs now has to take.

According to former Customs Commissioner Ruffy Biazon, an entire shipload of containers was issued an “alert order” just before Customs Commissioner Isidro Lapeña was removed. Congressman Biazon estimated that this would number around 492 containers that would now have to be opened one by one and their contents manually checked.

Relevance: The logistics businesses, considering its main role in exporting and importing balikbayan boxes in and out of the Philippines, could be adversely affected either directly or indirectly by such reckless order made by President Rodrigo Duterte. This could affect the trust and confidence reposed upon logistics businesses by its customers because of the fear that such balikbayan boxes, more specifically its contents, are at the state of being unsafe and undelivered to their recipients.

Reference(s): Robles, R. (12 Novemeber 2018). OPINION: Dear OFWs, your balikbayan boxes are now at risk of being delayed, torn open, 'thrown into the sea'. Retrieved from https://news.abscbn.com/blogs/opinions/11/12/18/opinion-dear-ofws-your-balikbayan-boxes-are-now-atrisk-of-being-delayed-torn-open-thrown-into-the-sea.

3.1.1.3 Philippine logistics sector shifting into higher gear

NLEX Harbor Link Segment 10, the latest project of the Department of Public Works and Highways, is the second phase of the NLEX Harbor Link project. It is a 5.7km elevated expressway that will connect Segment 9 at MacArthur Highway in Valenzuela City to C-3 Road/5th Avenue in Caloocan City, extending 2.6-km from C3 in Caloocan to R10 in Navotas City designed to provide direct access between the port area and the northern provinces of Luzon via NLEX. This connector road has been envisioned to primarily cater to cargo trucks from the port area traversing different inland destinations in Central and Northern Luzon. Construction Schedule is from May 2014 to August 2019.

According to President and chief executive officer of NLEX Corp. Rodrigo Franco, about 240,000 to 260,000 vehicles pass by NLEX, 20 percent of which are trucks – and expects them to go through NLEX Harbor Link Segment 10. Instead of just doing one round per day, they could do a number of turnaround trips for 24 hours.

Luzon Cisco Transport Inc. operations manager Rexel Castro said NLEX Harbor Link Segment 10 inspires a positive outlook for the logistics sector, noting that being an alternative route, “it may reduce traffic on the roads where trucks traverse before.”

Relevance: Roads, bridges and expressways, wherever they are being built, is a positive development for the country’s logistics sector. The logistics sector of the country, being one of the sectors who mainly make use of roads and highways as a means of delivery or transfer through their cargo trucks, is greatly affected with much convenience on their part by government road projects such as the NLEX Harbor Link Segment 10. Through this, there could be lesser traffic to the benefit of other industries and businesses and more convenience on logistics industries because of faster and easier deliveries.

Reference(s): Garcia, M. (13 August 2018). Philippine logistics sector shifting into higher gear. Retrieved from

https://www.philstar.com/business/business-as-

usual/2018/08/13/1841961/philippine-logistics-sector-shifting-higher-gear.

3.1.1.4 Investments in logistics to drive 'Build Build Build' The Department of Finance (DOF) has urged corporate giants in the logistics industry to help micro, small and medium enterprises (MSMEs) take advantage of the benefits of state-of-the-art distribution network.

According to Finance Secretary Carlos Dominguez III, the government needs the full support of the private sector in investing in infrastructure projects such as the logistics facility that Fast Logistics has just built for Unilever Philippines in Cabuyao, Laguna. The warehouse was built and fully engineered by Fast Logistics to speed up the sorting and distribution of Unilever products and was designed to accommodate various transport vehicles needed to ensure fast delivery.

Moreover, according to Dominguez III, this great facility is a perfect example of how the private sector could help fill the gaps in our national logistics system. The quicker we are able to deliver the goods, the faster our economy can grow. In the end, the better we will be in bringing down poverty incidence and building a more hopeful future for our people.

The Duterte administration has anchored its strategy of rapid economic expansion on an ambitious Build Build Build infrastructure program to pull down the cost of transporting goods, improve linkages across the archipelago, encourage efficient agriculture and clear the way to inclusive growth.

“We need the enthusiasm of the private sector to make the investments that will make expenditure for new infra worthwhile. We need thousands of small and medium enterprises that will complete the supply chain of larger industries. We need facilities that will help aggregate rural produce and deliver efficiently to the cities,” he said.

He said the Philippines would need “a thousand more facilities” like the one built by Fast Logistics for Unilever and other companies to transform the country into a “truly modern economy.” “The country’s logistics system has fallen behind those of our progressive neighbors in the region. One may speak of an infrastructure gap between our neighbors and us. This is the result of many years of underinvestment in infra as we struggled with working down our foreign debt,” he said.

Relevance: Government projects and works on infrastructure, more specifically roads and highways, are significant for the logistics businesses in the Philippines. These logistics companies are able to carry out their businesses with the use of these infrastructures, particularly using roads and highways for transporting and delivering cargo from one point to another. Now, these companies are urged to invest in infrastructure projects, mainly for purposes of quicker economic growth and development, through faster and easier transportation of goods.

Reference(s): Agcaoili, R. (3 January 2018). Investments in logistics to drive 'Build Build Build'. Retrieved

from

https://www.philstar.com/business/2018/01/03/1773984/investments-

logistics-drive-build-build-build.

3.1.1.5 Truck driver shortages due to increase in number of Overseas Filipino Workers The newly appointed Bureau of Customs (BOC) Commissioner Alberto Lina warned against a possible truck driver shortage following a visit to the Batangas port. According to Lina, we do not have enough truck drivers to relieve the current ones when they get tired, as most of them have gone to the Middle East as overseas Filipino workers where their skills are sought after.

Moreover, Lina added that it would be difficult to replace the ones who have left since a driver needs specific skills to operate trucks. Lina estimated that around 15,000 new drivers are required to make up for the shortfall.

According to the Philippine Statistics Authority, the number of Overseas Filipino Workers (OFWs) who worked abroad at any time during the period April to September 2017 was estimated at 2.3 million. Overseas Contract Workers (OCWs) or those with existing work contracts comprised 97.0 percent of the total OFWs during the period April to September 2017. The rest (3.0%) worked overseas without contracts.

Relevance: The logistics industry cannot exist independently without employing hundreds of truck drivers because the latter are the ones in charge of transporting and delivering goods and cargo from one place to another in order to complete a specific transaction. Without enough truck drivers, cargo cannot be moved off the port and

delivered. Hence, logistics companies cannot gain profit if there are insufficient truck drivers to carry out the deliveries.

Reference(s): Rappler. (25 May 2015). Customs chief Lina warns vs truck driver shortages. Retrieved from

https://www.rappler.com/business/governance/94224-boc-lina-truck-driver-

shortage.

3.1.1.6 Light truck ban on EDSA revised Light trucks will be banned along EDSA for 16 hours based on an amended regulation issued recently by the Metro Manila Council (MMC). The MMC, composed of mayors in the metropolis, is the policy-making body of the Metropolitan Manila Development Authority (MMDA). Approved on April 11, light trucks or those used to deliver goods in supermarkets and malls will be prohibited from traversing EDSA (from Magallanes Avenue in Pasay to North Avenue in Quezon City) from 5 a.m. to 9 p.m. daily, except Sunday and holidays. At present, light trucks are banned along EDSA from 6 a.m. to 10 a.m. and from 5 p.m. to 10 p.m. The MMC also revised the classification of light trucks as those with capacity of 4,500 kilograms and below. The MMDA said it would conduct a campaign to inform truck drivers about the new policy. The truck ban was implemented last year to ease traffic congestion along EDSA and other majors thoroughfares in Metro Manila.

Relevance: The logistics sector, which primarily makes use of cargo trucks for purposes of carrying out its business of delivering articles and cargo from one place to another, is greatly affected by such truck ban. Although the purpose of such truck ban is traffic decongestion, logistics companies own trucks could be banned from passing EDSA.

Reference(s): Ong, G. (16 April 2018). Light truck ban on EDSA revised. Retrieved from https://www.philstar.com/nation/2018/04/16/1806259/light-truck-ban-edsa-revised.

3.1.2 Economic Environment 3.1.2.1 Trade deficit worsens as exports fall flat The balance of trade remains in the negative in July 2018. An analyst said this is partially due to a weaker peso against the dollar. According to the latest data from the Philippine Statistics Authority (PSA), the trade deficit in July widens to $3.55 billion, 171 percent more than the $1.31 billion trade deficit last year.

This brings the year-to-date trade gap to a total of $22.5 billion, a hefty 72 percent jump from $13.1 billion in the same period last year. This was the result of a disproportionate hike in imports compared to the flat export growth for the month, aggravated by the peso's continued depreciation.

Exports grew by a mere 0.3 percent in July at $5.85 billion from $5.83 billion in the same month last year. "This was due to the increases posted by six out of the top 10 commodities for the month led by exports of miscellaneous manufactured articles (80.2%); bananas (fresh) (60.3%); electronic equipment and parts (43.3%); other mineral products (33.6%); metal components (8.7%); and electronic products (5.2%)," the PSA said in a statement.

The United States was the top destination of Philippine export products, at 16.6 percent. It is followed by Hong Kong, Japan, China, Singapore, Thailand, Germany, Taiwan, Malaysia and South Korea respectively.

However, imports continue to grossly outweigh exports by almost double the amount, at $9.40 billion in July. This is 31.6 percent more than what the country imported in the same month last year, at $7.14 billion. The PSA added that the Philippines has imported more of the nine of the top ten products that it gets from other nations.

Relevance: The logistics sector, being businesses engaged mainly in import and export, is adversely affected by trade deficits and trade surpluses. Every nation monitors, on an ongoing basis, its balance of trade with other countries. This is, in short, the positive or negative difference between the value of a nation’s exports and its imports over a given period. Countries that export a higher value of goods (and in some measures, services) than they import are said to have a trade surplus. On the other hand, nations that import a higher value of goods than they export are said to have a trade deficit, or a trade gap.

Reference(s): CNN Philippines (12 September 2018). Trade deficit worsens as exports fall flat. Retrieved

from

http://cnnphilippines.com/business/2018/09/11/philippine-statistics-

authority-july-2018-exports-imports.html.

Hemisphere Freight (2018). Global Logistics & The US Trade Deficit. Retrieved from https://www.hemisphere-freight.com/wp-content/uploads/2018/07/Global-Logistics-TheTrade-Deficit-HFS-final.pdf.

3.1.2.2 Higher gas prices to greet Filipinos in January 2019 This 2019, there will be a big fuel price rollback but higher pump prices are expected as the increase in the excise tax on petroleum products kicks in. The Department of Energy (DOE) has asked oil industry players to first empty their 2018 oil inventories before applying the higher tax and raising pump prices.

According to Energy Secretary Alfonso Cusi, his agency which is in close coordination with the Department of Finance, Bureau of Customs and Bureau of Internal Revenue has devised a mechanism to closely monitor existing oil inventories following the implementation of the second tranche of Tax Reform for Acceleration and Inclusion (TRAIN) law on Jan. 1.

“We are ready to implement the second tranche of TRAIN, which imposes additional excise taxes on various commodities like petroleum products by New Year,” Cusi said. He added, “We have to ensure the proper implementation of the second tranche of TRAIN because the new collection will be used to support our ‘Build Build Build’ programs, free tuition and medical assistance for our kababayans.”

The second tranche of TRAIN imposes an additional P2.24 per liter of gasoline and diesel, consisting of P2 in excise tax and P0.24 in value-added tax (VAT). With the imposition of the additional excise tax, Cusi said they are stringently looking at the 2018 inventories of oil companies to protect consumers from unjust trading and profiteering.

Cusi stressed “the sale of old stocks, referring to the remaining balance of the inventory” ending Dec. 31 of this year and which is not covered by the second tranche of excise taxes, should not include the additional tax.

Relevance: The logistics sector, which primarily makes use of cargo trucks and motorcycles for purposes of carrying out its business of delivering articles and cargo from one place to another, is greatly affected by the increase in the prices of fuel which might increase the operations expenses of the said companies.

Reference(s): Cervantes, D. (29 December 2018). Higher gas prices to greet Filipinos in January 2019. Retrieved

from

https://www.philstar.com/headlines/2018/12/29/1880677/higher-gas-

prices-greet-filipinos-january-2019.

3.1.2.3 Japan International Cooperation Agency (JICA) to help Philippines ease traffic congestion in Metro Manila The economic cost of transportation in Metro Manila has risen to P3.5 billion pesos a day, and the situation can get worse to P5.4 billion a day by 2035 if interventions will not be made.

Thus, the Metropolitan Manila Development Authority (MMDA) and the Japan International Cooperation Agency (JICA) are working together to identify and analyze traffic bottlenecks, develop a 5-year action plan that contains sustainable solutions on traffic management, and capacity enhancement under the Project for Comprehensive Traffic Management Plan for Metro Manila.

Economic cost of transportation, referring to vehicle operating cost and time cost spent by drivers and passengers along the road network in Metro Manila, was assessed under JICA's Follow Up Survey on the Roadmap for Transport Infrastructure Development for Greater Capital Region (2017). The Updated Transport Roadmap is under review by the Philippine Government.

According to JICA Chief Representative Yoshio Wada, aside from investments in infrastructure building, JICA is also supporting the Philippines ease traffic congestion to help make urban areas like Metro Manila and surrounding areas more livable, and encourage investments into the Philippines. Transportation, among other things, is an element that can help the Philippines sustain its growth and economic gains.

Relevance: Traffic congestion-related delays are the biggest pain point in the logistics and freight industry. Logistics businesses, being engaged in delivering cargo through trucks and motorcycles, are greatly affected by the unending traffic in the Philippines. More traffic means more fuel and more fuel means more expenses for the companies to bear. Moreover, customers are also greatly inconvenienced by the delays caused by traffic congestion. On the other hand, the lesser the traffic means faster and easier deliveries for the companies to make.

Reference(s): Japan International Cooperation Agency. (20 September 2018). JICA to help Philippines ease

traffic

congestion

in

Metro

Manila.

Retrieved

from

https://www.jica.go.jp/philippine/english/office/topics/news/180920.html.

3.1.3 Social Environment 3.1.3.1 Grab Philippines ventures into food delivery, financial services Ride-hailing service provider Grab is expanding its operations in the Philippines to include on-demand food delivery and financial services. According to Grab Philippines country head Brian Cu, GrabFood is the next major step in our move to serve the daily needs of consumers. Food delivery is a natural extension of our transport offerings. Each day, millions of people in Southeast Asia rely on ride-hailing services to bring them from place to place, as well as food delivery services to save time from travelling around in congested cities to satisfy their cravings.

“With the expansion of GrabFood across the region, we are working with local merchants and delivery partners to deliver the best of Manila’s kitchens to the doorsteps of our consumers,” he said.

GrabFood was launched in Jakarta in 2016 and subsequently beta-tested in Bangkok last year. User research with merchant partners in these cities revealed that they reaped incremental benefits of going online to reach more customers and enjoyed a significant increase in orders through GrabFood, resulting in higher revenue. GrabFood also proved to be a real revenue driver for merchants in these cities.

Grab said it would make significant technology investments in its platform to bring an expanded range of online consumer services this year. Consumers will now be able to order food from restaurants near them through the newly launched GrabFood within the app.

“With no minimum order required, consumers can satisfy their cravings and order from the wide selection of cuisines available, enjoying the convenience of having their favorite food delivered fast, right to their doorsteps,” it said.

Grab’s existing and new delivery partners will enjoy additional income and job opportunities from delivering food orders on top of delivering parcels. Food establishments and restaurants now have their own online storefront to serve an increasingly online and mobile population by leveraging the fleet of delivery partners. “We

are in a position to power this future of smart cities for consumers because of the interconnectedness of each of our service and how they help each other grow. Transport allows us to expand our GrabFood and Grab Financial services. Our GrabPay mobile wallet will be used for both transport and food, two of the most relevant use cases in Southeast Asia,” Cu said.

Relevance: Logistics businesses, particularly those who offer on-demand food delivery, would benefit from the rise of online food trends in the Philippines. Given the convenience that it brings to many, Filipinos would prefer food delivery rather than going outside to eat at restaurants which save their time from transportation.

Reference(s): Amojelar, D. (9 July 2018). Grab Philippines ventures into food delivery, financial services.

Retrieved

from

http://www.manilastandard.net/business/transport-

tourism/270067/grab-philippines-ventures-into-food-delivery-financial-services.html.

3.1.4 Technological Environment 3.1.4.1 Driving the explosive growth of ecommerce in the Philippines The ecommerce sector in Philippines continues to grow together with the rise of technology. According to Google and Temasek’s research, they have forecasted that the Philippines’ ecommerce market is about to reach US$9.7 billion by 2025 (from just US$0.5 billion in 2015), outsizing Malaysia, Singapore, and Vietnam.

However, the country is still impaired from achieving its full potential in ecommerce. One of the reasons is because the Philippines has one of the slowest internet speeds in the Asia Pacific, and low digital payments penetration as a result of consumers being plagued by security concerns, amongst many other challenges.

To accelerate the growth of Philippine ecommerce, the Department of Trade and Industry launched it’s first-ever Philippine E-Commerce Roadmap 2016-2020. The roadmap collectively addresses the country’s blockers to ecommerce success, with hopes for the industry to contribute 25 percent to the Philippines’ GDP by 2020.

Relevance: The rise of ecommerce in the Philippines has an adverse impact on logistics companies. Technology, such as smartphones and gadgets, has become a means of shopping. In the Philippines, a lot of people particularly the youth prefer to shop online rather than to go to actual malls to save time from transportation. More transactions online means more logistics companies will be needed as a means of transporting and/or

delivering goods or any other articles subject of the transaction. This means that there will be a greater demand for logistics services as ecommerce continue to emerge.

Reference(s): Cheong, H. (9 November 2018). Driving the explosive growth of ecommerce in the Philippines.

Retrieved

from

https://www.techinasia.com/driving-explosive-growth-

ecommerce-philippines.

3.1.4.2 The rise of online logistics mobile applications The logistics industry is transforming to reap the benefits of new tech advances. Mobile apps tend to lend themselves particularly well to the logistics industry. Many logistics companies have adopted mobile apps as a means to facilitate monitoring and management of their workflow and business processes.

Implementing mobile apps in the logistics industries has enabled businesses to realize key benefits including visibility into cargo movement, improved flexibility in the delivery process and electronic proof of delivery.

Relevance: Logistics companies will surely benefit from the advantages and convenience caused by having their own mobile applications which can be easily accessible to customers worldwide as compared to traditional logistics. Filipinos nowadays would rather save and spend their time browsing through their mobile phones and gadgets.

However, only a few number of logistics companies in the Philippines have their own mobile applications.

Reference(s): Magaya. (2017). How Mobility and Mobile Apps are Changing the Logistics Industry. Retrieved

from

https://www.magaya.com/News/PostId/170/how-mobility-and-mobile-

apps-are-changing-the-logistics-industry.

3.1.5 Ecological Environment 3.1.5.1 80 percent of air pollution in Metro Manila comes from cars More than 80 percent of the air pollution in Metro Manila came from motor vehicles, a study by the Environmental Management Bureau has shown.

A report from Bernadette Reyes on 24 Oras on Wednesday said air pollution reaches about 250 micrograms per normal cubic meters on EDSA during peak hours, more than double the allowable level of 90 micrograms per ncm set by the World Health Organization.

“It [pollution] worsens because the number of vehicle is increasing; the population is growing; the roads are getting congested and structures are getting higher. These are some factors why air pollution remains on the ground and not dispersing,” explained Rene Pineda, Partnership for Clean Air president.

Relevance: A large number of vehicles, particularly cargo trucks and motorcycles, are being utilized by almost all logistics companies in the Philippines. Hence, these companies are the main contributors to air pollution and traffic congestion as well. Moreover, the harm of air pollution caused various illnesses which later on could lead to death.

Reference(s): GMA News. (14 September 2016). 80 percent of air pollution in Metro Manila comes from cars.

Retrieved

from

https://www.gmanetwork.com/news/news/nation/581417/80-

percent-of-air-pollution-in-metro-manila-comes-from-cars/story/?related.

3.1.5.2 Air pollution deaths 3rd highest in PH Health experts on Wednesday, July 25, urged the government to develop a plan for improving air quality as the country had the 3rd highest number of deaths due to air pollution, according to the World Health Organization (WHO).

A WHO study released in May 2018 said there were about 45.3 deaths per 100,0000 individuals due to outdoor air pollution. China ranked first at 81.5 deaths recorded while Mongolia was second at 48.8 deaths. According to WHO, of the 7 million deaths related to air pollution, 2.2 million were caused by heart disease or stroke. Chronic obstructive pulmonary disease, lung cancer, and pneumonia were other leading causes.

“Air pollution is not just an environmental problem—it is a health menace too,” said Health Care Without Harm Executive Direct Ramon San Pascual.

Relevance: The air pollution caused by motor vehicles as top contributor, many of which are owned or controlled by logistics businesses for purposes of carrying out their deliveries, has become a continuing problem in the Philippines. It caused millions of deaths of Filipinos.

Reference(s): Tomacruz, S. (25 July 2018). Air pollution deaths 3rd highest in PH. Retrieved from https://www.rappler.com/nation/208192-air-pollution-deaths-3rd-highest-philippines.

3.1.6 Legal Environment 3.1.6.1 Republic Act No. 10668: Time for a healthy competition For so many decades, our country has adopted a protectionist policy in order to promote the development of our domestic shipping industry. But this approach changed when President Aquino signed into law Republic Act No. 10668 or the “Foreign Ships CoLoading Act,” allowing foreign ships or vessels to freely transport cargoes to its designated port of destination. With the modification, foreign vessels are now allowed to transport cargoes between ports within the country even without a permit from MARINA. However, even though foreign vessels are already allowed to engage in coastwise transport, Section 8 of RA 10668 expressly prohibits foreign vessels from transporting domestic cargo or container van, whether loaded or empty, though it may contain foreign cargo. This restriction may be considered as a protection to our local shipping operators because the carriage of local or domestic cargoes is still exclusive to them.

Private and public stakeholders believe this new law will foster healthy competition in our domestic shipping industry. With the expected additional activities of foreign vessels in our country, it will be deemed necessary for our local shipping operators to improve their equipment and operations in order to cope with their foreign counterparts and be more competitive. Prior to RA 10668, goods coming in and out of the country have to be loaded or unloaded first in Manila before they could be transported to its respective port of destination. But this setup has been changed since importers and exporters now can directly ship their goods to its port of destination. In other words, carriage of these goods by a foreign vessel does not need the services of a local ship owner or operator thus they will not incur additional costs for transhipment anymore. In that way, it will make the shipping costs lower and also help decongest the port of Manila.

Relevance: Logistics performance is at the core of our country’s policies to boost competitiveness, trade integration and enhance efficiency of our shipping industry by lowering trade costs. Based on the 2010, 2012 and 2014 World Bank Logistics Performance Index, the Philippines emerged as one of the low performing countries among selected Asian countries--one of the lowest in 2010 and 2012, with few points ahead of Vietnam and Indonesia,

only a

and the lowest in 2014. The data is

indicative of the need to improve various components in the logistics index, which encompasses freight transportation, warehousing, border clearance and payment systems, among others. By doing so, concerns on high shipping costs and efficiencies in the shipping industry will also be addressed, hence contributing to our economic growth and competitiveness.

Reference(s): The Philippines Star. (2 November 2015). Republic Act No. 10668: Time for a healthy competition.

Retrieved

from

https://www.philstar.com/business/2015/11/02/1517624/republic-act-no-10668-timehealthy-competition.

3.1.6.2 House committee approves Sustainable Transportation System Act The Committee has just approved a subsitute bill called the Sustainable Transportation System Act, which aims to make our public transport system more conducive for our own and the country's health. Among its initiatives is adding a transport system creating bike-friendly communities, reducing greenhouse emissions, and helping the economy by reducing our overall commuting time.

"Sustainable transport is the norm nowadays because of proven public health benefits. Under the bill, we will implement systems that will mitigate the impact of transportation to the environment. We will also aggressively promote walking and cycling which improve the quality of life of commuters and directly address the high incidence of chronic diseases. We want to put people first, not individual motorized vehicles, and protect all road users, including PWDs," said Rep. Cesar Sarmiento, the bill's principal author.

Relevance: The bill has the purpose of promoting sustainable and alternative modes of transportation and other mobility options to improve air quality, increase efficiency, reduce congestion and contribute to positive health impacts in our society. If there would be less traffic congestion with the help of this bill, logistics companies will be more successful in providing fast and easy deliveries without minding the traffic. In short, delays in deliveries would be avoided.

Reference(s): Tulio, J. (13 September 2018). House committee approves Sustainable Transportation System Act. Retrieved from https://www.topgear.com.ph/news/motoring-news/housesustainable-transportation-act-a958-20180913.

EXTERNAL FACTOR EVALUATION Key External Factors

Weight Rating Weighted Score

Opportunities Eased rules on duty and tax-free balikbayan boxes

0.05

1

0.05

More government roads and highways projects, ‘Build

0.12

3

0.36

The rise of ecommerce alongside technology

0.16

4

0.64

Ease of traffic congestion in Manila

0.10

3

0.30

The rise of logistics mobile applications

0.07

2

0.14

0.05

1

0.05

Trade deficit worsens as exports fall flat

0.08

2

0.16

Increase in gas prices for motor vehicles

0.15

4

0.60

Truck ban of MMDA

0.10

3

0.30

Truck driver shortages

0.12

3

0.36

Total

1

Build Build’

Threats Balikbayan boxes at risk of being delayed and torn open

2.96

ANALYSIS: OPPORTUNITIES 1. Eased rules on duty and tax-free balikbayan boxes This factor is given the lowest weight of 0.03 and a rating of 1 inasmuch as it merely allows and indirectly attracts more Overseas Filipino Workers (OFWs) to easily avail balikbayan boxes which in turn would be an opportunity for logistics companies to earn more profit as compared to when such balikbayan boxes are not yet tax-free. The number of Overseas Filipino Workers (OFWs) who worked abroad at any time during the period April to September 2017 was estimated at 2.3 million. Overseas Contract Workers (OCWs) or those with existing work contracts comprised 97.0 percent of the total OFWs during the period April to September 2017. The rest (3.0%) worked overseas without contracts. Considering the growing statistics of OFWs, logistics companies will surely generate revenue because Filipinos traditionally avail of balikbayan boxes from time to time to be delivered to their families and loved ones. 2. More government roads and highways projects, ‘Build Build Build’ This factor is given a weight of 0.12 and a rating of 3 inasmuch as the building of new government roads and highways is greatly beneficial to logistics companies as they are engaged in delivering goods through utilizing cargo trucks that will traverse roads and highways. This will cause convenience on the part of cargo/delivery trucks because new roads mean new shortcuts/routes and lesser traffic as well. New routes mean easier and timely transportation and lesser traffic means lesser expenses for fuel. However, the ‘Build, Build, Build’ program of President Rodrigo Duterte would take years for such

projects to be completely finished. Hence, logistics companies would still have to wait before they could avail of such benefits and convenience. 3. The rise of ecommerce alongside technology This factor is given the highest weight of 0.20 and a rating of 4 for the reason that ecommerce is at its popularity in the Philippines and many online buyers and sellers have emerged with the rise of technology which greatly inures to the benefit of logistics companies because such online buyers and sellers usually complete their transactions by delivering through utilizing logistics services. Hence, logistics companies earn greater profit as the population of online buyers and sellers and the number of online transactions continues to grow alongside technological advancements. 4. Ease of traffic congestion in Manila This factor is given a weight of 0.10 and a rating of 3 inasmuch as there is timely transportation and delivery of goods or cargo from one place to another when there is no traffic congestion. Therefore, this would benefit the logistics industry because they utilize numerous motor vehicles for delivery. Aside from convenience as to time and travel, there would also be lesser expenses for fuel/gas. 5. The rise of logistics mobile applications This factor is given a weight of 0.05 and a rating of 2 inasmuch as many customers would prefer save time through online deliveries and transactions rather than to waste time in traditional logistics. Despite the advantages of easy access and timely transportation, not all logistics companies have their own mobile applications.

THREATS 1. Balikbayan boxes at risk of being delayed and torn open This factor is given the lowest weight of 0.05 and a rating of 1 inasmuch as it poses a threat on the part of the customers and prevents them from availing of logistics services from the corresponding logistics companies. With the presence of risk in the handling of balikbayan boxes, customers would hesitate and/or reluctantly avail of such balikbayan boxes because of the lack of trust and confidence that their belongings and packages are safe and untouched. Hence, there is a possibility of decrease in the number of customers which means lesser profit or gain for the logistics companies. However, despite the presence of risks, customers continue to avail balikbayan boxes from logistics companies because it is of great necessity and convenience to them. 2. Trade deficit worsens as exports fall flat This factor is given a weight of 0.08 and a rating of 2 because a trade deficit means imports continue to grossly outweigh exports of our country. Considering that logistics companies are the ones in charge of our imports and exports, lesser exports means lesser profit for logistics companies because they only have little to deliver or transport. 3. Increase in gas prices for motor vehicles This factor is given the highest weight of 0.15 and a rating of 4 inasmuch as the logistics industry cannot exist independently without paying gas for the utilization of their motor vehicles such as their cargo trucks. Hence, gas plays a major role in the said industry. It affects the expenses of the logistics companies. If there is an increase in the

prices of gasoline, there is also a corresponding increase in the operational expenses of the logistics companies. 4. Truck ban of MMDA This factor is given a weight of 0.10 and a rating of 3 inasmuch as the logistics companies will be affected by the banning of trucks from specific roads and highways. This could lead to delays in deliveries and a corresponding negative feedback from customers. Truck ban policies obstruct the main purpose of logistics companies in carrying out their deliveries to different destinations. Hence, this is a threat because transactions cannot be completed unless alternate routes are provided. 5. Truck drivers shortage This factor is given a weight of 0.12 and a rating of 3 inasmuch as trucks are mainly used by logistics companies in carrying out their businesses. Considering the necessity of utilizing trucks, there is also a necessity in employing truck drivers to do the said jobs. A lesser number of truck drivers would mean lesser deliveries and lesser profit for the logistics companies as well.

PORTER’S FIVE FORCES Potential Entry of New Competitor

Moderate

Bargaining Power of Suppliers

Moderate

Potential Development of Substitute

Strong

Products Bargaining Power of Consumers

Moderate

Rivalry among Competing Firms

Strong

POTENTIAL ENTRY OF NEW COMPETITOR (MODERATE) The rating for potential entry of new competitors is moderate because a lot of big companies continue to venture into logistics businesses until today. The country’s strong domestic economy and the growth of e-commerce have attracted local conglomerates to enter into the logistics’ industry. Pangilinan-led Metro Pacific Investments Corp., Henry Sy’s SM Investments Corp and Dennis Uy’s Chelsea Logistics Holdings Corp. are expanding their business into logistics for future growth. MPIC acquired a number of small logistic firms, while SMIC and Chelsea have taken in the 2GO Group Inc., the country’s largest shipping and logistics company. Aside from the above-mentioned big companies, Ayala Corp. is making its foray into the technology-driven logistics business with the launch of a new company, Entrego Fulfillment Solutions Inc., which commits to offer an integrated suite of services including parceling, document and deliveries. Moreover, M Lhuillier Financial Services Inc. has

diversified into the logistics business through a partnership with QuadX to bring convenience to its customers. Reference(s): Amojelar, D. (3 May 2018). Spurring the growth of the logistics’ industry. Retrieved from http://manilastandard.net/spotlight/264773/spurring-the-growth-of-the-logisticsindustry.html Large Capital Requirement Although there is a large capital requirement before one can venture into logistics business, such is not a barrier when it comes to large companies just like the ones mentioned above. This is all because of the booming popularity of logistics businesses caused mainly by the rise of e-commerce alongside technological advancements. On the other hand, it would be difficult for some entities to venture into logistics if they only have little capital to start with. Product Differentiation As to the product differentiation, generally the services offered by all logistics companies in the Philippines are almost one and the same such as air cargo, money remittance and local and international shipping. However, some logistics companies are now known because they now offer food delivery through mobile applications. An example of such logistics company is Grab. Grab is expanding its operations in the Philippines to include on-demand food delivery and financial services. “GrabFood is the next major step in our move to serve the daily needs of consumers. Food delivery is a natural extension of our transport offerings. Each day, millions of people in Southeast

Asia rely on ride-hailing services to bring them from place to place, as well as food delivery services to save time from travelling around in congested cities to satisfy their cravings,” Grab Philippines country head Brian Cu said.

BARGAINING POWER OF SUPPLIERS (MODERATE) Large Number of Suppliers The companies’ suppliers are numerous but dominant and known firms and companies,

particularly

fuel/diesel/oil,

automobiles,

insurance,

advertising

and

telecommunications companies. Few Substitutes These suppliers also have few substitutes. As to the means of communication between the company and its customers, logistics companies can choose from different telecommunications companies here in the Philippines such as PLDT, Smart, Globe, etc. As to the supplier of oil for the utilization of its motor vehicles, logistics companies can choose from Caltex, Shell, Petron, Phoenix, etc. In short, logistics companies can always change and choose from a number of suppliers whenever they would feel like it. 2GO Express’ major suppliers of oil/diesel/fuel are Petrilliam Blac Corporation and Promethium Marketing Co. As to the supplier of automobiles to be used in transporting goods, logistics companies can choose from Mitsubishi, Foton, Isuzu, Hyundai, Fuso, etc. In this case, LBC’s suppliers of its cargo trucks are Mitsubishi and Fuso.

Cost of Switching Raw Materials The cost of switching raw materials is low because there is not much differences in the prices offered by its suppliers and its corresponding substitutes POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCTS (STRONG) Prices of Substitutes Decrease The services offered by LBC Express have a lot substitutes which could possibly offer the same services at lower or discounted prices. Other logistics companies even offer a lot of promos which strongly attracts customers to switch and try out their services, such as GrabExpress, an on-demand courier service with real-time tracking and notifications which offers a Php100.00-off promo to customers who avail their services for the first time. Customers’ Switching Cost Decrease Switching from one logistics company to another does not really cost much on the part of consumers. When consumers are attracted to the decrease of prices of substitutes, they can easily switch companies with no cost at all on their part.

BARGAINING POWER OF CONSUMERS (MODERATE) Consumers are Not Concentrated Consumers are not concentrated because LBC Express offers different kinds of services such as payments and remittance, international and local shipping of documents and mail, parcels and boxes, air cargo and warehousing. Therefore, consumers can pick or choose from the various services offered by LBC. Products are Undifferentiated Products are undifferentiated because almost all logistics companies in the Philippines offer the same services to its customers. Buyers Can Inexpensively Switch Switching from one logistics company to another does not really cost much on the part of consumers. Indeed, they can inexpensively switch. When consumers are attracted to the decrease of prices, convenience, and good quality of the products offered by other logistics companies, they can easily switch companies with no cost at all on their part. Buyers Have Discretion in Availing Products The buyers certainly have discretion on whether or not they would like to avail the services of a logistics company. They are free to choose when they would want to send cargo and packages to wherever they want for a fee.

RIVALRY AMONG COMPETING FIRMS (STRONG) The overall rivalry of LBC Express among its competitors is high because of the following factors: High Number of Competing Firms LBC Express deals with a high number of competing firms. As mentioned above, the country’s strong domestic economy and the growth of e-commerce have attracted local conglomerates to enter into the logistics’ industry. Examples of LBC Express’ competing firms are GrabExpress, 2GO Express, Xend Business Solutions, JRS Express, Lalamove, DHL Express and many more. It is important to note that most of logistics firms in the Philippines are of similar sizes and capabilities as well. Rivals Sell Similar Products/Services LBC Express’ competitors/rivals offer almost the same services to the same customers. All logistics companies in the Philippines offer courier services. Hence, there is greater competition among the said firms and greater choices for consumers to choose from.

Competitors LBC Express is a company based in the Philippines which offers courier and logistics services. However, not being the only one who offers such services in the Philippines, LBC Express considers the following as its competitors:

GrabExpress is an on-demand, premium delivery service that aims to provide customers in Metro Manila and Cebu City with the convenience of booking deliveries with a few quick clicks. Send items such as documents, parcels, and gifts to business partners or loved ones, and track your delivery in real time. It offers other similar services: GrabExpress Lite and GrabAssistant. GrabExpress is Grab’s premium delivery service, offering on-demand door-to-door deliveries. On the other hand, GrabAssistant is Grab’s concierge service, allowing customers to request for riders to buy items (Pabili) or queue (Papila) in line for them.

Xend Business Solutions Inc. is the No. 1 logistics company primarily serving the eCommerce industry. Providing international and domestic courier services as well as powerful and innovative online shipping tools, Xend has inevitably positioned itself to be at the forefront of the eCommerce industry becoming the official shipping partner of eCommerce marketplaces such as eBay Philippines, Multiply.com and Sulit.com.ph. Pioneering the development of technical innovations to make shipping easy, Xend has become the preferred logistics partner of over 50,000 online merchants and top eCommerce companies such as Zalora.com.ph, Toy Kingdom, MyRegalo.com, McCormick Philippines, National Bookstore, and the ABS-CBN Online Store.

JRS Express is a leading express delivery company in the Philippines. JRS provides express delivery service as well as other value-added logistics services to consumers and businesses through its extensive and reliable nationwide network of 400 branches. JRS has established itself as one of the largest express delivery service providers in the country with over 57 years in the business.

2GO Express is a trusted express courier solutions provider delivering express document, parcel and cargo delivery service, with nationwide reach and catering to over 220 international destinations. It partnered with the world's best courier companies and trusted by the Philippines' top businesses. With over 700 outlets nationwide, 2GO Express provides express delivery service, airline and sea travel ticketing and money remittance service. Banking on its people and expertise, 2GO Express remain focused on their mission – to deliver what matters, when it matters.

Originally known as EasyVan, Lalamove was launched to satisfy a specific logistical need - van hiring. Started in Hong Kong in December 2013, Lalamove now operates in 100+ cities across China and Southeast Asia. Today, Lalamove unceasingly matches 15,000,000 registered customers with a pool of 2,000,000 drivers of vans, trucks and motorcycles. The Lalamove way has revolutionized old van hiring call centers to being so streamlined, customers and drivers match with each other within 12 seconds. Local deliveries are fulfilled at a breakneck 55 minutes, door-to-door. Providing reliable and quick deliveries for customers, Lalamove also optimizes drivers fleet and route to maximize their earning potential.

DHL Express is a division of the German logistics company Deutsche Post DHL providing international courier, parcel, and express mail services. Deutsche Post DHL is the world's largest logistics company operating around the world, particularly in sea and air mail. DHL Express (Philippines) Corporation provides overland transport and air freight services. It offers ocean freight and contract logistics, document shipping, and supply chain management. The company is based in Makati, Philippines. DHL Express (Philippines) Corporation operates as a subsidiary of DHL WorldwideExpress, Inc.

COMPETITIVE PROFILE MATRIX

Critical Weight Success Factor Number of 0.16 Branches Price 0.17 Competitiveness Market Share Innovation to products offered Customer Loyalty Financial Position Advertising and Promotions

Rating

Score

Rating

Score

Rating

Score

3

0.48

4

0.64

2

0.40

3

0.51

2

0.34

4

0.68

0.20

3

0.60

4

0.80

2

0.40

0.08

3

0.24

4

0.32

2

0.16

0.13

4

0.52

3

0.39

2

0.26

0.10

3

0.30

4

0.40

2

0.20

0.16

4

0.64

3

0.48

2

0.32

1

3.29

3.37

2.42

ANALYSIS 1. Number of Branches The number of branches is given a weight of 0.16 because it determines which logistics company customers will prefer as to its accessibility. The more number of branches means greater accessibility and popularity for customers nationwide.

As of 2016, LBC Express has over 1,252 branches in the Philippines. Miguel Angel A. Camahort, the company’s chairman, president and CEO, said the number is a little more than last year’s 72 additional branches it built, bringing its 2017 wholly owned branches to 1,321. LBC Express Holdings Inc. said it will open 80 more branches in the country this year (2018), as the company aims to digitize all of its operations. Hence, LBC got the rating of 3 being 2nd in rank having the highest number of branches. On the other hand, 2GO Express has a total of 1,800 branches nationwide. Hence, 2GO got the rating of 4 being 1st in rank having the highest number of branches. Lastly, JRS provides express delivery service as well as other value-added logistics services to consumers and businesses through its extensive and reliable nationwide network of 400 branches. JRS got the rating of 2 because it has the least number of branches. 2. Price Competitiveness Price competitiveness is given a weight of 0.17 because customers primarily wants cheaper and affordable rates as it would be beneficial to them being able to save money. LBC is given a rating of 4 because it offers a regular pouch for Php85.00 and Peso Pak delivery for Php35.00-Php37.00 for amounts ranging Php100.00-Php200.00. 2GO Express is given a rating of 2 because it offers a regular pouch and QuikCash services for Php120.00 for amounts ranging Php100.00-Php200.00. Lastly, JRS Express is given a rating of 3 because it offers a regular pouch for Php109.00.

3. Market Shares Market share is given the highest weight of 0.20 because it determines the position of the companies in the logistics industry. 2GO Express is given a rating of 4 because it has the largest market share of 27% in freight and 90% in passage. Reference(s): Yu, M. (10 March 2018). 2GO and LBC: A Comparison. Retrieved from https://perennialinvesting.wordpress.com/2018/03/10/2go-and-lbc-a-comparison/ 4. Innovations to Products Offered Innovations to products offered is given the lowest weight of 0.08 because innovations to products is a lengthy and tedious process. 5. Customer Loyalty Customer loyalty is given a weight of 0.13 because it helps logistics companies maintain their income generation if there is such customer loyalty. If customers are loyal, they will continue to avail the services of that specific company. LBC Express is given a rating of 4 because LBC continues to keep up with customer’s evolving needs. Indeed, LBC has a gained a lot of loyal customers especially from Qatar and UAE because said customers are Overseas Filipino Workers (OFWs) who continues to avail the company’s services to reach their families in the Philippines. In connection with this, LBC is now offering NBI and Document processing that allows Qatar-based

kababayans to authenticate their required government certificates easily while they are completing their job requirements. 2GO Express is given a rating of 3 because its customers are mostly online shoppers. To support this, 2GO Express’ corporate partners are Lazada and Zalora, two of the biggest online stores in the Philippines. This means that all orders will be packaged and delivered by 2GO Express. JRS Express is given a rating of 2 for despite being known for their affordable and cheap prices, said company is not accessible to the many for its limited branches, being only 400 nationwide. Moreover, a lot of customers were frustrated on its issue about a shipment of wildlife and endangered specie which broke the internet. To rebut this issue, JRS Express directed all its branches nationwide to strictly implement inspection on all packages to ensure that shipments of wildlife and endangered species are prohibited. Reference(s): https://www.lbcexpress.com/article/lbc-continues-to-keep-up-with-customer-s-evolvingneeds.html https://express.2go.com.ph/ 6. Financial Position Financial Position is given a weight of 0.10 because financial position reflects the financial health of a company. It is particularly helpful in determining the state of the company's liquidity risk, financial risk, credit risk and business risk.

2Go claims to be the current largest, premier logistics provider in the Philippines and has market shares of 38% in the country’s freight and 90% in the passage businesses. As of September 2017, 2Go Group reported a 15% rise in revenue and a contrasting 84% drop in profits. 2Go stated that the profit reduction was primarily due to bad debts and inventory and related party adjustments totaling ₱207.2 million, and an increase in fuel prices with price variance of ₱420 million. Excluding these adjustments, profits still fell 81%. The company also had a book value of ₱4 billion and ₱3.9 billion in debt. 2Go also had ₱2.1 billion in cash. As of March 3, 2018, 2Go has a current price-book valuation of 11.2x compared to LBC’s 8.8x. On the other hand, LBC Express was recently valued at less than half of 2Go’s ₱44 billion market price. In the same period as 2Go, LBC reported good 16% rise in revenue and 17% rise in profits. LBC also had a book value of ₱2.4 billion and ₱1.19 billion in debt. The company also had ₱3.7 billion in cash. Contrary to 2Go’s market leadership, LBC considered itself having a ‘still relatively small’ market share compared to 2Go and other companies such as DHL and FedEx. Lastly, according to JRS Express’ president Antonio Claparols, the company has a low profit margin. However, according to him, when the profit margin is quite low, or the road is less traveled, service to Filipinos comes first. With partners such as airlines and shipping companies that have trusted the company since time immemorial, JRS Express accomplishes its feat.

Reference(s): Fabonan, E. (27 Aug 2017). JRS Express still goes the extra mile at 55. Retrieved from https://www.philstar.com/other-sections/supplements/2010/08/27/606038/flying-high-50 Yu, M. (10 March 2018). 2GO and LBC: A Comparison. Retrieved from https://perennialinvesting.wordpress.com/2018/03/10/2go-and-lbc-a-comparison/ 7. Advertising and Promotions Advertising and Promotions is given a weight of 0.16 inasmuch as driving market demand is one of the most important factor in business operations. It is the key to selling products through driving its demand and reaching out to customers to be able to increase brand awareness. 2GO Express was given a rating of 4 because of its new advertisements and promotions. It has recently partnered with Locale Magazine and Business Mirror as announced by them, forged in a simple ceremony held last March 22, 2019. Moreover, FedEx and 2GO Express also recently launched their Purple Play Promo wherein customers are encouraged to ship using FedEx Services at 2GO Express Outlets and FedEx Worldwide Service Centers for a chance to win any of the following: a Php100,000 in SM Gift Certificates, a Php50,000 in SM Gift Certificates, an iPad Air, a 32" LED TV or a 1:400 FedEx Model Plane. Moreover, the company is also active and responsive when it comes to its Online Social Networks (OSNs). Meanwhile, LBC Express renewed its partnership last May 22, 2018 with Go Negosyo and ASEAN BAC (Business Advisory Council) Philippines to create programs & initiatives

in support of micro, small, and medium enterprises (MSMEs) and enable & empower them to grow their businesses across the country. In connection therewith, it has previously conducted its Go Negosyo: Mentor Me events last July 23, 2018 to November 30, 2018 and was able to gather 409 guests. Moreover, it previously implemented its Send to USA and Travel Promo, Padama sa Padala Raffle Promo as well as its Kapamilya Holiday Box Promo powered by TFC.tv. The company is also active and responsive in its Online Social Networks (OSNs) posting notices, advertisements, events, etc. in a timely manner. Lastly, JRS Express has no new promotions and advertisements as of the moment. Moreover, the company’s Online Social Networks (OSNs) seem to be outdated and unresponsive to inquiries and claims of customers. Reference(s): https://express.2go.com.ph/news7.asp; https://express.2go.com.ph/news5.asp; http://www.lbcexpressholdings.com/lbc-gonegosyo-together-enabling-empoweringmsmes/; https://www.lbcexpress.com/uae/lbc-promos/lbc-kapamilya-holiday-box-promopowered-by-tfc-tv.html https://www.lbcexpress.com/uae/lbc-promos/win-prizes-when-you-send-a-balikbayanbox-through-lbc.html