Conestoga in the Philippines
Background
The Republic of the Philippines is an archipelagic country in Southeast Asia. It consists of about 7,641 islands that broadly categorized under three main geographical divisions from north to south. The capital city of the Philippines is Manila, and the most populous city is Quezon City. The Philippines is the world’s fifth-largest island country with an area of 300,000 km2 as of 2015. It had a population of at least 100 million as of January 2018, and it is the eighth-most populated country in Asia and the 12th-most populated country in the world. The Commission of Higher Education (CHED) lists 2,180 higher education institutions, 607 of which are public and 1,573 private. Classes start in June and end in March.
The majority of colleges and universities follow a semester calendar from June to October and November to March. There are several foreign schools with study programs. The Philippines is a founding member of the United Nations, World Trade Organization, Association of Southeast Asian Nations, the Asia-Pacific Economic Cooperation forum, and the East Asia Summit. It also hosts the headquarters of the Asian Development Bank. The Philippines is considered an emerging market and a newly industrialized country, with an economy transitioning from based on agriculture to services and manufacturing
The Philippines Foreign exchange
The Philippine Peso is the currency of the Philippines. The currency code for Pesos is PHP, and the currency symbol is ₱. The Philippine official exchange rate ₱2 against the U.S. dollar from 1946–62, devalued to ₱3.90/$ in 1962, and devalued again to ₱6.43/$ in 1970. Black market exchange rates during these periods, however, were nearly always higher than official rates. Several depreciations followed, with the peso trading at ₱18/$ in 1984 from the dirty float at ₱11.25/$ in 1983 and ₱21/$ in 1986. In the early 1990s, the Peso depreciated again to ₱28/$. Due to the 1997 Asian financial crisis, the Peso depreciated from ₱26/$ in July 1997 to ₱46.50/$ in 1998 and to about ₱50/$ in 2001.
Black market exchange rates, as seen in the past, are now nonexistent since official exchange rates now reflect underlying supply and demand rather than political considerations. In September 2018, the value of the Philippine Peso dropped from ₱54 to a dollar. This is the lowest it has been in almost 13 years due to an ongoing rout against emerging market currencies and a stubbornly high local inflation rate. On the foreign exchange market, the Peso ended the trading session at ₱54.13. It has since recovered to ₱52 as of November 2018.
On March 2, 2012, the PSE (Philippine Stock Exchange) Composite hit 5,000 marks the highest record close. However, on December 12, 2012, almost ten months after, it neared the 5,800 targets closing in 6,000 near the end of the year. On January 7, 2013, the PSE Composite got to a record at 6,000 marks. In March, it again broke another record by ending the trading day at 6,847.47 after Fitch Group upgraded the Philippines for the first time to investment-grade status. On May 10, 2013, it achieved its 29th record close for the year closing at 7,262.38, surpassing the previous record of 7,215.35 on May 3. On May 15, 2013, the PSE hit its 30th all-time high of 7403.65 and ending the day at 7,392.2.
However, the tapering by the Federal Reserve in the United States caused the PSE to end at 5,889.83. On April 6, 2015, the PSE Composite the 8,000 marks and closes on another record by completing the trading day at 8,053.74. In 4 days, it broke another record by ending the trading day at 8,127.48On January 26, 2018, PSEi breached through 9000 for the first time, stopping at 9,041.20, up by 42.03 points, or 0.47%.
As the Philippines ‘ currency seems to stabilize in the market, investors are now able to invest in different sectors in the country. It will become more attractive to deposit money in Philippine, as demand for the Peso increases foreign investors will have a higher market for its products. If the Philippines have long-term improvements in labour market relations and higher productivity, foreign investors’ products will be more attractive and competitive internationally.
When exports from Philippine become cheaper and more competitive to international buyers, the market for already existing foreign firms also widens. The reduction of the purchasing power of citizens abroad may lead the locals to opt to use goods from the existing international firms as it is cheaper than importing.
Economic Integration
Economic integration is an arrangement among nations that typically includes the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies. It aims to reduce costs for both consumers and producers and to increase trade between the countries involved in the agreement.
It will be very much easy for Conestoga College to invest in the Philippines because of the existing diplomatic relations between the two countries. Canada and the Philippines marked their 70th year of reliable and friendly bilateral ties in 2019. The national interests of both countries align on many issues, which have resulted in a regular collaboration in the multilateral system, such as ASEAN, United Nations, Asia-Pacific Economic Cooperation, and the World Trade Organization. Ever-increasing people-to-people links between Canada and the Philippines contribute to the growth of both societies.
According to the 2016 census, over 837-thousand people of Philippine origin live in Canada, while a growing number of Filipino citizens visit family and friends in Canada, study at Canadian colleges and universities or immigrate to Canada. A significant number of Canadians visit the Philippines each year for tourism, work, and family visits. The Republic of the Philippine allows foreign investments to the country, as stated in the Foreign Investment Act of 1991. It is the policy of the State to attract, promote and welcome productive investments from foreign individuals, partnerships, corporations, and governments, including the political subdivisions, in activities, which significantly contribute to national industrialization and socio-economic development to the extent that the Constitution and relevant laws allow foreign investment in such business.
There are no restrictions on the size of foreign ownership of export enterprises. In domestic market enterprises, foreigners can invest as much as one hundred percent (100%) equity except in areas included in the negative list. Foreign-owned firms catering mainly to the domestic market shall be encouraged to undertake measures that will gradually increase Filipino participation in their businesses by taking in Filipino partners, electing Filipinos to the board of directors, implementing the transfer of technology to Filipinos, generating more employment for the economy and enhancing skills of Filipino workers.
Market entry options
Market entry is the bringing of products or associated products into the target market. Conestoga College has several market entry options to open one of its campuses in the Philippines, include franchising, licensing, alliances, mergers, and acquisition. The benefits of expanding to the Philippine are as follows; Increased population to the College, decreased competition from the congested market in Canada, longer product lifespan, easier cash-flow management, better risk management, benefiting from currency exchange, access to export financing, enhanced reputation and opportunity to specialize.
Choosing to have a branch in the Philippines is a sustainability strategy for the College, as it wants to achieve economies of scale and enhance revenues through enrolment growth and increased student retention, which can expand with investment in the Philippines. Equity mode of entry is the best for the College to enter the Philippines, and it may have joint ventures or wholly-owned subsidiaries. Joint venture allows organizations to share cost’ risks and profits. The organization can access partner’s assets. The College can use this to start the operations in the foreign land. Second, a wholly-owned subsidiary can set up through acquisition; the College can buy the already existing firm in the Philippines.
Strategy and Structure
The transnational approach is the best way for the College to use in expanding. It takes advantage of the smallness of the world by allowing firms to expand their global footprint in the selling of the products taking into account cultural and societal differences that shape the consumers in a foreign country. Conestoga will consider the traditional and cultural behaviors of students in the Philippine to come up with a structure tailor-made for them.
Human Resource
The polycentric staffing will work well with Conestoga in the Philippines as it will focus heavily on the norms and practices of the Filipinos. Still, the upper management position is held by those from the HQ. Having the country manager from the Philippine encourages the locals to join the College as they link that to the sense of owning it and feel involved in the foreign investment. This staffing approach has a more significant advantage over the others as it lowers the cost of hiring, provides an opportunity for promotion of locals and increases their commitment, and responds better to the host country’s demands for localization of subsidiary operations.
The following training topics are necessary for the newly appointed country manager in charge of the Conestoga in the Philippines.
- Industry-specific regulations
- Creating an inclusive workforce
- Conflict resolution
- Cybersecurity
- Hiring and firing
- Nurturing talent, coaching, and employee retention
- Emergency procedures
- Identifying training needs
- Accessibility requirements
- What it means to manage