GROUP INC. BUSINESS CASE ANALYSIS PRESENTED BY: ARCE, PRINCESS MAE ATTABAN, RAMSYS BUCAG, YISHAY NYKA BUL-IGEN, LUCKY DARYL CARDAMA, JAN MARY DASAYON, CAROLYN LAGASCA, JESSA KAMILLE MARTINEZ, KHENNY PARANA, MYCAH GISELLE ORGANIZATIONAL OVERVIEW 2GO Group, Inc. (2GO) operates the country’s largest integrated supply chain enterprise, providing logistics and transport services nationwide. With over 150 years of shipping and logistics experience, we create synergies through our three primary segments: shipping, logistics and distribution. 2GO Sea Solutions is the freight segment providing reliable, point-to-point containerized and rolling cargo solutions for business clients and travel-hotel accommodation for passengers through our ROPAX vessels. 2GO Logistics provides order fulfilment solutions to various verticals through our warehousing, inventory management, crossdock and transport capabilities. 2GO Express delivers first and last mile multimodal forwarding solutions to corporate and retail clients. Special Containers and Value Added Services (SCVASI) handles cargo and projects that require specialized solutions such as cold chain, isotainer, flexibags, break bulk and oversized equipment. ScanAsia offers go-to-market solutions that monitor, manage and replenish inventory from distribution centers to retailer shelves ensuring stock availability in almost 7,000 doors nationwide. MISSION Integrating our capabilities and expertise across the 2GO Group, we make it our everyday mission to: Deliver all goods on time, consistently, and in their best condition Transport our passengers reliably, comfortably, and safely Deliver competitive returns for our shareholders and uphold the highest standards of corporate governance Look after the welfare of our employees and create a fulfilling environment of growth and shared achievement Provide our service providers with mutually beneficial long-term partnerships Be a responsible corporate citizen looking after the environment and the community VISION To go where our clients want to go as their first choice for logistics in the Philippines GROUP INC. CORE VALUES Customer First We develop deep and strong relationships that make a positive difference in our customers’ and stakeholders’ lives. Good Corporate Citizenship We are good citizens in our communities and we look after the environment. Accountability We hold ourselves accountable in all our dealings and transactions. We do this by delivering on our commitments. Respect for People We care for our people, encourage their development and reward their performance. Quality and Excellence We provide the highest standards for products and delightful service that together deliver premium value to our customers. Honesty and Integrity We uphold the highest standards of honesty and integrity in all our actions. Teamwork and Collaboration We enjoy working together in order to meet the needs of our customers and to help the company win. Innovation We constantly adapt to the changing needs of our customers and continuously innovate the way we work. CAPITALS UTILIZED Natural Capital This covers the natural resources utilized by the company within the scope of its operations. The air they breathe and the water they consume are some examples covered. Also, the land and sea used as a means of transportation and the fuel used to operate equipment are included in the natural capital recognized in the company. Human Capital Human capital included and valued in the company are the employees, shareholders and the owner. They devote their time and effort in providing services to the company, to the customers and to the people who are interested in the company based on their skills and capabilities. This also involves their determination to deliver the best attributions that the company can offer. Financial Capital This covers the different financial resources pooled in to operate the company which includes the initial capital and investment of parties interested in the company. Manufactured Capital Manufactured Capital are those created from raw materials. In the company, the buildings where their offices are located, the warehouses where they dropped off transported goods and the ships used for transporting are some that are included. This also involves different equipment used within the company’s day-today operation like computers and many more. Intellectual Capital Intellectual involves different permits and licenses needed to operate the company as well as the licenses required from drivers of trucks and ships concerned with transporting of goods which were acquired from different institutions. Social and Relationship This concerns the interaction in between transactions with those people involved in the operation of the company which is more on the emphasis on its interpersonal relationship. Maintaining social and relationship to customers is evident in creating long lasting partnership towards the mission and vision of the company. GROUP INC. PROBLEM STATEMENT FINANCIAL ISSUES Quarantine restrictions severely affected the travel and tourism industry as well as passenger movement resulting in losses in revenue. The 2GO Group Inc. suffered an increase in pandemicrelated losses during the course of the previous year. 2Go Group Inc. reported a net loss of P1.8 billion in 2020, which is nearly triple the net loss of P892 million in 2019. The 1.8 billion net loss being reported is a 107 percent increase from 2019. Due to the limits imposed by the quarantine, the entire income of the group was reduced by 35%, coming in at P4.68 billion. The passage segment's revenue dropped by 66% on an annual basis as a direct result of travel restrictions. The revenue generated from shipping dropped by 10%, whereas the revenue generated from logistics and other services fell by 13%. NON-FINANCIAL ISSUES The economic impact of the pandemic also led to the closure of some businesses and widespread unemployment which affected all of 2GO’s business units. With the weak economic environment, revenues were flat. As a consequence, growth opportunities were limited with potential new customers more focused on surviving the new economic reality than undertaking changes in their supply chains. 2GO Express’s courier service operations were temporarily suspended due to the initial lockdown in the first quarter after authorities deemed it as non-essential. PROBLEM RESOLUTION 2020 was a difficult year for all industries. When combined, the financial and non-financial issues led to revenues slowing by 19% to Php 17.4 billion for the group. With that, 2GO innovated and shaped these strategies to lighten up their loss and restore their successful operations: 2GO Sea Solutions business made operational changes that led to significant sustainable gains and adopted slow steaming of vessels, container yard consolidation and branch rationalization as part of its aggressive cost management initiatives. This combined effort slashed fixed and general & administrative costs by a third against the previous year. Implemented a new freight management software system in early 2021 to have more cost-friendly, yet profitable operations. 2GO Express and Shipping Solutions launched 2GO CabinCargo, a service that delivers products utilizing 2GO’s regular scheduled vessels. While deliveries via CabinCargo take longer to arrive, they cost less than airfreight and are reliable. These solutions were quickly developed through creativity and a customer-centric mindset to address the evolving needs of the market. 2GO Express’s delivery and resource allocation utilize new technology to modernize destination mapping and vehicle routing. These changes are geared toward the enhancement of the customer experience which has been a central focus of 2GO. This modernization will also allow 2GO Express to offer more value-adding services in the future. To deal with the limitations caused by the covid19 restrictions, 2GO responded by mitigating the crisis to its roots to avoid greater loss by the company. 2GO’s sidelined vessels were offered for use as quarantine facilities. Two of the company’s vessels were used as quarantine ships where a total of 1,300 Returning Overseas Filipinos were accommodated. Moreover, 2GO Sea Solutions continued operating 100% of its fleet, enabling essential travel and ensuring the unhampered flow of goods and services, especially of much-needed personal protective equipment, relief goods and food items which is a great step to combat the pandemic and continue their normal and profitable operations. CONCLUSION Through this case analysis, we observe how 2GO Group Inc. was seriously affected during the times of pandemic due to the imposition of widespread travel restrictions. Because of this, they suffered sudden and considerable value erosion. Hence, we can also conclude that it's the same among other companies and businesses in the transport industry. This analysis also made us understand and appreciate how they manage to preserve and create value in times when pressing problems are present and arising within and in the external environment of the company. The capacity to understand and recognize issues and problems, be they financial or non-financial through the application of recognition metrics and the strategy and decision-making to implement a solid and concrete solution to each problem while also having backup plans was on point and an accurate way of preserving and maintaining value and reputation. Furthermore, trying out new things, innovating, and continuously adapting to what the market and people demand were great courses of action to create and recover lost value. In conclusion, the inputs and data put together in this case analysis shall be a great reference and source material to integrate for a successful outcome of a business endeavor, especially in the case of the same industries. GROUP INC.
