January 2008 Manila: The analysis of the value chain can be split into 4 broad
dimensions namely -
P O T FIN. These are -
Product,
Organization,
Technology and
FINance.
This article tackles an instance of the 'Organization' dimension of the value chain and how it would lead to reduced
costs hence greater profits, increased market share, better product development and how all these lead to better
value for consumers. The story is weaved around a live example of
coopetition (competition + cooperation)
as an emerging new form of organizational structure in the golf industry in the Philippines.
As known, in a congested market place, a price war never creates economic value for the supply side, though we may
say that it does in fair measures for the demand side. In the Philippines many golf directors and managers, who are
the decision makers in a golf club, have opted to cooperate instead of undermining each other's profits by a raging
price war.

As a result of this, an industry structure was visualized, the history of which is beyond the scope of this article,
as a result of increased influx of golf tourists, especially Koreans, to the Philippines. The structure is called
GMAP (Golf Managers Association of the Philippines). To attract the incoming guests, the clubs, in a bid to
attract the most number of people, were indulging in predatory pricing, at times bordering around break-even. As a
result of this, the tourists were faced with two dilemmas: firstly, the feeling that they could have got a better
deal; secondly the additional cost of dealing with multiple parties. As observed, no one gains and in a broader
sense the perception of the country and the sport suffers along with the reduced foreign exchange being pumped into
the economy.
The dynamics of this organization is such that when an offer from a contracting agent arrives, it is put on the
table, in the open, for all the members to quote. This is sliced among all the members based on the requirements
of the guests and the capabilities of the member courses. This is mutually agreed and the members then present this
to their individual boards to take a decision. If a member prefers to opt out due to some constraints, the others
are distributed the slice as per their capacity.
This has implications not only on the bottom lines of the participating clubs, but in a broader sense creates value
not only for the visiting tourists but also for the image of the sport and the country in macro perspective. The
tourists gain because they will be able to play in multiple golf courses without the hassle of dealing with multiple
parties. They take back the pleasant perception of an organized and professionally run golf industry in the
Philippines and thus recommend fellow countrymen. It's no wonder that Koreans are thronging the archipelago in
plane-fulls! The supply side i.e. the golf courses also gain because the damage to their bottom line has been saved
and they are assured of a continuing patronage.
This mechanism also acts like a check on erring GMAP members by way of isolating them from further transactions
till they agree to maintain the rules and the decorum of the forum. It also acts like a good feedback loop because
the client complaints are taken seriously and the members each act like pseudo policemen for each other. Hence they
compete with the intention of cooperation. It's no wonder who will have the last laugh...the entire value chain!
About the Author:
Yash Makharia is writing his final thesis on the serious side of
golf i.e. golf as an industry and its investment aspects, at the Asian Institute of Management in the Philippines.
The views as expressed in this article are entirely his. GOLFnTours.com is grateful to Yash for his kind
contributions and sincerely hopes that his valuable insight into golf in the Philippines will greatly benefit not
only golfers at large but those who may have an interest in golf as an investment.