Hatchasia.Com Case Study
Essay by Mary Jade Jakosalem • January 15, 2018 • Case Study • 1,470 Words (6 Pages) • 1,337 Views
Title of the Case: HatchAsia.Com
- POINT OF VIEW
Mr. Ramon Garcia, Jr. – Vice President and Director for Marketing of HatchAsia
- OBJECTIVE(S)
- To formulate a business strategy to allow the continuation of the company’s operation without incurring losses.
- To re-assess and modify the company's original mission and vision.
- To enable HatchAsia to diversify and expand to other IT related products and services without deferring from the company’s modified mission and vision.
- To establish a risk management strategy for the company to avoid further losses.
- PROBLEM(S)
How will HatchAsia recover from the dotcom crash that had greatly affected the company’s overall business operation without losing its identity?
- AREAS OF CONSIDERATION
- Company Background
HatchAsia (Helping Entrepreneurs Change Asia) was an incubator that provided e-commerce entrepreneurs with an education and incubation experience that substantially reduced the attendant risks of operating a high-tech start-up company at Internet speed. Its objective was to nurse promising e-commerce businesses into fruition, at which point the incubator became a part-owner of what would hopefully become a high-value businessThe scope of the services they provided included (but were not limited to) the following: education and corporate training, management consultancy, office facilities and services, human resources, access to legal services/expertise, and public relations.
HatchAsia was the idea of Ramon Garcia Jr., a young businessman and visionary who also served as the company’s Vice President and Director for Marketing. It is located in Fort Global City. It had a large complex with a floor area of 7000 sq. m. called the HatchAsia Global City Complex.
- Industry Background
The increase in Internet access and the focus of the educational sector on technology training prompted the increase in IT related companies as well as the birth of the incubator industry. An incubator is a type of venture capital company that invests in seed and early-stage businesses and provides money along with connections and expertise in the field in which the new business operates. An incubator company’s goal is to help a start-up company grow from concept to a viable business enterprise.
Incubators were viewed as an increasingly attractive business model for sourcing potential transactions and nurturing future lucrative e-businesses. At the time of the study, there were about 30 incubators in Asia, many of which had been launched by international venture capitalists, head property developers, and family conglomerates. In the Philippines, there were two major incubator companies, HatchAsia and iAyala.
- The Dotcom Crash
After the surge of the technology industry in the United States and other countries such as Philippines, the dotcom “bubble” suddenly burst. The dotcom crash in the 1990s affected both startup and established IT businesses in the whole world. The fast rise of many small and large companies in the Internet business came to a halt as unrealized revenues and funding problems began to trouble investors and venture capitalists. In the Philippines, hopes for many technopreneurs failed as even incubators like HatchAsia were in the doldrums. In short, the dotcoms did not deliver, stocks plummeted and the industry was ailing.
- 1997 Asian Financial Crisis
The Asian financial crisis was a period of financial crisis that gripped much of East Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. Initially affected by the dotcom crash, HatchAsia’s financial situation worsened, dotcoms ready for IPOs (Initial Public Offering) where nowhere to be found. Suddenly, people did not want to invest in dotcom firms and as for incubation businesses like HatchAsia, the stakes became higher but the coffers empty.
- TOWS MATRIX
Strengths: 1. Advantageous connections of the owners to relevant people from various industries. 2. Has an established regional network that combines finance, technology support, education and incubation services. 3. Has a wide and spacious facility located in a strategic location. 4. Has a diversified business strategy that includes service-oriented functions. 5. Has established tie-ups with various IT educational institutions. | Weaknesses: 1. Lack of financial management 2. Incurred a huge amount of net loss during the ‘Dot-com’ Crash. 3. Inconsistent with the company’s original mission and vision. 4. Lack of risk management strategy. | |
Opportunities: 1. The incubation business was viewed as an attractive business model for nurturing e-businesses. 2. There were only two main incubators in the Philippines. 3. Educational sectors focused on technology trainings due to increased internet accessibility. 4. Most technopreneurs are young and has inadequate management experience which propelled the incubator industry. | SO: 1. Expand into e-business. (O1, S1, S2, S3, S4) 2. Emphasis on the incubation service of the company. (O2, O4, S1, S2, S3, S4) 3. Develop IT related products and services. (O3, S1, S2, S3, S4, S5) | WO: 1. Focus on HatchAsia’s educational initiative. (O3, W1, W2, W3, W4) 2. Continue as an innovation hub for start up companies. (O2, O4, W1, W2, W4) |
Threats: 1. The ‘dot-com’ crash during the 1990’s 2. Extreme competition with other IT companies 3. Rivalry with more established IT educational institutions 4. The 1997 Asian Financial Crisis | ST: 1. Expand into the educational sector of IT (T1, T2, T3, S1, S2, S3, S4, S5) 2. Diversify into other IT related products and services (T1, T2, T4, S1, S2, S3, S4) | WT: 1. Develop a new business strategy (T1, T2, T4, W2, W3, W4) 2. Focus on other IT sectors (T1, T2, T3, T4, W1, W2, W3, W4) |
- ALTERNATIVE COURSES OF ACTION
- Diversify into other IT and non IT products and services.
- ADVANTAGE(S)
- Company can gain new investors.
- Can increase the company’s profitability.
- Create new viable partnerships with other business industries.
- DISADVANTAGE(S)
- Risk of entering a new market is high.
- Misaligned business mission and vision.
- Develop new business mission and vision and reformulate the company’s existing business model.
- ADVANTAGE(S)
- Create new business opportunities
- Can attract new investors
- Enable the company to diversify to other products and services.
- Enable the company to re-evaluate the previous errors.
- DISADVANTAGE(S)
- Conflict of interests between existing investors.
- Conduct a feasibility study for every generated idea intended for incubation.
- ADVANTAGE(S)
- Reduce the risk.
- Help the company find profitable ideas.
- DISADVANTAGE(S)
- Costs a lot of time and money.
- CONCLUSION
HatchAsia’s pioneering concept was viewed as something unique and fresh to the rather predictable business setting here in the Philippines. It was highly anticipated and held a lot of potential. Yet, the flourishing IT industry took an unexpected turn during the 1990 “dotcom crash”, affecting a lot of companies including HatchAsia.
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