Opening Case: Making a Splash with Splash Corporation

The tale of husband and wife Rolando and Rosalinda Hortaleza is well known in the Philippines. As the story goes, the couple launched a backyard business in 1985 to supplement their entry-level salaries as doctors at a government hospital. From this humble beginning, the Splash Group of Companies was born.

Beyond the Backyard

Like many entrepreneurs, the Hortalezas sought a big success. In 1987, they spotted an opportunity in hair spray, because big hair was the fad in the Philippines at that time. So the couple created a company that offered a high-quality, low-price alternative to imported hair spray. The gambit proved successful, and the Hortalezas earned their first million Philippine pesos in sales that year. Over the years, the company name changed several times, reflecting its growth and evolving strategy. What began as Hortaleza Cosmetics in 1986 became Splash Cosmetics in 1987, Splash Manufacturing Corporation in 1991, and finally Splash Corporation in 2001. Today, Splash Corporation sells more skin-care products than international giants like Johnson and Unilever and local brands. With sales of 4 billion pesos (about US$90 million), Splash Corporation is the number one domestic maker of skin-care products in the Philippines and is fifth among international companies operating in the country. Its the only Filipino-owned company to hold a position among global companies and brands. In twenty years, the small business that the Hortalezas started has become one of the country's 300 largest corporations.

Splash Corporation exports and markets Splash products to almost thirty countries around the world. In Indonesia, unlike the rest of the companys market destinations, Splash entered into a joint venture with an Indonesian company, Parit Padang. By itself, Parit Padang is one of the largest pharmaceutical and health-care distribution companies in Indonesia. The joint venture, called Splash Indonesia PT, began operating in 2000, importing Splash soap and skin-care products every month from Manila. The venture now produces some of its products locally in Indonesia, employing a staff of 40 there in its factory. Splash Indonesia PT has even developed a new product for the local market, the SkinWhite Whitening Bath Soap. This product blends innovative ingredients and technology from the Philippines with a fine Indonesian noodle soap, creating a whitening body soap of a seemingly better quality than other local soaps. In much of Asia, Africa, and the Middle East, there is a culturally-influenced demand for skin brightening products that Splash has tapped into.

Splash recently launched the Splash Nutraceutical Corporation. The term nutraceutical was coined in the 1990s by Dr. Stephen DeFelice, founder of the US-based Foundation for Innovation in Medicine. DeFelice defined the word as any substance that is a food or part of a food and provides medical or health benefits, including the prevention and treatment of disease. In essence, nutraceuticals are a food (or part of a food) that provides medical or health benefits, including the prevention and/or treatment of a disease.

The nutraceuticals market is growing rapidly worldwide, especially in such developed countries where disposable incomes are higher and the challenges of diet-disease links, aging populations, and rising health care costs are more pronounced. Nutraceuticals currently address health concerns like cardiovascular disease, osteoporosis, high blood pressure, diabetes, and gastrointestinal disorders. Worldwide sales of nutraceutical products have grown exponentially and are currently estimated at $80 billion.

The establishment of Splash Nutraceuticals completes the companys mission of becoming a total-wellness company. Fondly called Doc by Splash employees (while his wife is the Doctora), Dr. Rolando Hortaleza considers nutraceuticals a natural extension of the companys personal care line of products. He defines the term wellness as beauty inside and outif you feel good about yourself, you then become more productive. He estimates the market potential of nutraceuticals to be in the billions of pesos.

The Values, Mission, and Vision behind Splash

Corporate Cause: We shall uplift the pride and economic well-being of the societies we serve.

Mission: We are a fast moving consumer goods marketing company that shall be known for strong brand management and making accessible pioneering, quality, innovative products derived from extensive research, to improve the well-being of our consumers. We shall do this through: 1. Leading edge trade and consumer marketing systems. 2. Pursuit of excellence in all other business systems. We shall be generous in sharing the rewards with our employees, business partners, stockholders and our community for the realization of our corporate cause. We shall uplift the pride and well-being of the individuals and societies we serve.

Vision: We are the leading provider of pioneering, innovative and globally competitive consumer goods and services.

Opening Case Exercises

(AACSB: Ethical Reasoning, Multiculturalism, Reflective Thinking, Analytical Skills)

1. Describe Splash Corporations corporate strategy and business strategy.

2. Use the strategy diamond tool (see Chapter 10, Section 4 The Five Elements of Strategy) to summarize Splash Corporations strategy.