E. M. MAPALAD AND THE MAPALAD BUS LINERS, INC.: THE BUSINESS ENDED DESPITE A TALENTED ENTREPRENEUR

Journal of the International Academy for Case Studies, 2007 by Ruane, Maria Claret M, Rummel, Amy

CASE DESCRIPTION

The primary subject matter of this case is entrepreneurship. Secondary issues examined in the case include strategies involved in family business startup, growth, and decline, including profit-maximizing strategies (revenue maximization in particular), as well as international business environments and their impact on businesses, in general, and family businesses, in particular. This case has a difficulty level of three and up, appropriate for junior level and beyond. The case is designed to be taught in two to three class hours in a management or an entrepreneurship or international business course, and is expected to require about three hours of outside preparation for students, consisting mainly of reading the case and familiarizing themselves with the business implications of a Martial Law regime.

CASE SYNOPSIS

The case is about Eustacio Marino Mapalad, an entrepreneur, and the successful transportation business he created in the Philippines after World War II and operated for more than 50 years. The case traces through the history of his business, from its beginning as a surplus U.S. Army jeep that was leftover from the war to a fleet of thirty five full-sized buses at its peak in 1965-1972. In doing so, the case illustrates an example of how a highly motivated and very talented entrepreneur started his businesses from limited resources, and how his skillful management of these and additional resources and his ability to identify and pursue opportunities made him the number one bus operator in Manila twenty years after he started his business. The case also shows how a drastic change in the political environment adversely affected his businesses and drove this once motivated, dedicated and successful entrepreneur to give up on the business that he created.

This case secondarily provides a glimpse of the transportation industry in the Philippines between 1945 and the 1980s for which no explicit study exists and for which data are generally not available. It also gives a personal account of the political, economic and cultural environments faced by the entrepreneur and how these environments affected a number of his major business decisions.

START OF THE BUSINESS

The Entrepreneur

Eustacio Marino Mapalad first got involved in the public transportation sector in the Philippines in 1937 in his home province of Batangas, located 110 kilometers south of Philippines' capital city of Metro Manila (then one of 50 provinces in the country; at present, one of 79 provinces, National Statistical Coordination Board, latest reports). At the age of 19, he worked as a bus driver for Suva Transportation, which was later bought by the country's number one provincial bus lines, BT Co. (presently, BLTB Co.).1 Six years later, his employment at BT Co., along with everything else, was interrupted by World War II, during which the U.S. and Philippines (then a U.S. colony of commonwealth status) combined their military force to fight against Japanese invasion in the Philippines and the rest of Asia. During the war, Mapalad used his driving experience to drive ambulance vehicles into battlegrounds and transport wounded soldiers to care centers.

The Business Environment

The Philippines ceased as a U.S. colony and gained her political independence in July 1946, following the Japanese surrender in 1945 to U.S.-coordinated military efforts in Asia (under the leadership of General Douglas MacArthur). To help with post-war rehabilitation and reconstruction in Batangas and other parts of the Philippines, the U.S. kept their military base in Batangas open until 1947, after which they relocated to Japan.2 During these two years, the U.S. military base continued to be a major employer in the area, thereby creating and even increasing demand for public transportation. In addition, many roads and bridges were damaged during the war. Many of them could not handle the weight of large vehicles such as passenger buses. Passengers traveled using smaller modes of transportation such as horse-drawn carriages or passenger jeeps (many of which were surplus U.S. Army jeeps able to transport up to 12 passengers at a time). (Here is a little trivia: "j eep" evolved from the initials "G.P.", which stood for "general purpose", one-ton vehicles, invented in 1941 and used by the U.S. Army.)

The Business Strategy

In response to these conditions, Mapalad's brother Hugo bought a U.S. Army jeep, asked Mapalad to fix it (i.e., Mapalad was a mechanic), and employed Mapalad to drive it as a passenger jeep. The route was short (less than 1 km.), the fare was 0.50 Philippine Peso (Php, hereafter, then at par with the U.S. dollar), and most passengers were "shuttled" back and forth of the U.S. military base. In exchange, Hugo paid Mapalad a generous (you might say "brotherly") share of 50% of gross revenue.

Mapalad drove his brother Hugo's passenger jeep for six months until it reached the end of its service life and was then retired. However, while it was operational, this endeavor was profitable to his brother and beneficial for Mapalad, who was able to save 2000 Php, from which he would start his own business. Using 300 Php from his saving, Mapalad purchased his own surplus U.S. Army jeep, fixed it up and drove it for one and a half years until the closure of the U.S. military base in Batangas in 1947. His route was 5 km. between Ibaan and Sabang or 12 km. between Ibaan and Batangas City. The fare was a flat amount (O.SOPhp) charged to each passenger, regardless of the distance.