Established in 1989, East Orchids was an orchid farm located in the campus grounds of the University of the Philippines in Diliman, Quezon City. The enterprise started as a hobby of Mrs. Prieto before it was organized as a business. At the time of the case, the owners were also evaluating expansion strategies. What are the prospects of East Orchids given that Mrs. Prieto never had any formal training on orchid growing and business management?
Author: Arturo Benedicto M. Ilano
Discipline: Strategic Management
Industry: Orchids – Cut flowers and plants
Issues: Expansion strategies, entrepreneurship
Setting: Philippines, 1992
Level of Difficulty: Undergraduate/MBA
Length: 7 pages
Case Number: 7-1992-21
Teaching Note: 7-1992-21T
*Prepared under the supervision of Rafael A. Rodriguez, Professor, University of the Philippines, as a basis for class discussion. The case is not designed to illustrate effective or ineffective handling of managerial situations. Names, financial data and other figures have been disguised. The University of the Philippines Business Research Foundation Inc. and Angping Foundation supported the writing of this case study.
East Orchids was an orchid farm located in the campus grounds of the University of the Philippines in Diliman, Quezon City. It was formally opened on May 31, 1989 by Mr. and Mrs. Max Prieto. East Orchids sold both cut flowers and plants. As is typical with orchidariums, the farm had a 3,000-square meter canopy enclosure of green netting that shrouded a huge inventory of orchids. Behind the farm was the sprawling Prieto home, a brand new structure that was garnished by the Prietos' two Mercedes Benz automobiles parked in front, along with two golf carts.
Mr. and Mrs. Prieto hailed from Davao, where Mr. Prieto was a former mayor. It was during the time of Mr. Prieto’s tenure that his wife Princess (“Pinsek” to her husband) became interested in orchids.
The decision to grow orchids was very arbitrary, and definitely not for the purpose of starting a business per se. “There was nothing to do at home,” recalled Mrs. Prieto of the time when she and her husband were still in Davao. “Yes, I took care of the kids and fixed the house, but aside from that, there was nothing much for me to do.”
“There were a lot of orchid farms there, and I saw that my friends were into orchids. So I got curious. I mean, why is everybody into them? First I bought a couple and decided, just for fun, to try to take care of them. It's kind of funny, now that I think of it, because I never even liked plants in the first place,” notes Mrs. Prieto.
"I started with just a few orchids. Just a few. But soon, I became obsessed with them. I really don't know why. They just sort of became like my babies. I felt that I just had to take care of them," recalled Mrs. Prieto. “The thing is, I was too lazy to attend seminars on orchid growing. So I just decided to raise the orchids in my style. I asked around and observed, and I ended up sort of like raising my orchids by trial and error.”
At first, Mr. Prieto was not too keen on his wife’s new-found hobby, and would often scold her for spending heavily on what seemed to be a frivolous pastime. But Mrs. Prieto was unfazed. “I knew my husband would refuse to give me money for orchids. So what I did was that I would overprice the kids’ tuition, for example,” laughed Mrs. Prieto, “or overprice the utility bills and the groceries. Then I will pocket what's extra.”
“Once, I went to Hong Kong on a business trip,” reported Mr. Prieto with mock exasperation, “and I was to bring along a suitcase of cash, around P200,000 worth. When I reached Hong Kong, I opened my suitcase and the money wasn't there anymore. Turns out that my wife here got the money and stuffed the suitcase full of books instead.”
Whenever her husband saw her with a new acquisition...