JOLLIBEE FOODS CORPORATION Jollibee is the largest fast food chain in the Philippines, operating nationwide network of over 750 stores. Jollibee enjoys the lion’s share of the local market that is more than all the other multinational brands when combined being a dominant market leader in the Philippines. Jollibee Foods Corporation (JFC) is a food empire with interest in America fast food chain (burgers, fries, fried chicken, etc.) including pizza chain (Greenwich), and Chinese fast food (Chow King). Jollibee is slowly acquiring these companies. Jollibee used franchising to rapidly expand business and achieve market penetration. Jollibee Foods Corporation also develops high technology in the operation system to improve products and services they offer to their customers. They innovate so that it will gain an advantage against its competitors. It can provide an organization with means to improve its performance and competitive advantage in a competitive market. Some opportunities can be foreseen, such as being able to expand a franchise into a new city. The threat of Jollibee is the high competition against McDonalds. Outside environment can adversely affect its performance or achievement of its goals. Due to economic crisis in the Philippines, people have less money to spend on their meals. After establishment of Jollibee International, it faced conflict with the mainland Jollibee because of the alterations in the menu served internationally. This conflict led to independence between the two parties until Tony Kitchner left the Jollibee International Division. Jollibee many acquire business that is best suited to other countries tradition and culture, with this, JFC can take little steps to slowly introduce their products to foreign markets for them to achieve higher profits for another business expansion and acquisitions. OBJECTIVE: To be able to know how Jollibee Foods Corporation could expand to foreign markets and to acquire new companies and generate funds to open new outlets. S.W.O.T. ANALYSIS: Strengths Adaptability of operations on different scenarios Filipino pride as a fast food corporation Recognized brand Diverse menu list
Jollibee acquired Red Ribbon Bakeshop in 2005 Jollibee dominates the hamburger market despite foreign competitors Jollibee captured the palate of every Filipino with its uniquely flavored burgers, chicken and sweet spaghetti Jollibee uses franchising to rapidly expand its business and market penetration Weaknesses Lack of in-depth planning and research in the expansion to foreign markets Poor coordination between the national and international units International vs. Domestic practice Disunity of employees due to foreign branch autonomy Opportunities JFC provide BOTP (business operational training program) for new applicants franchisee which provide seminars and hands-on exposure to all level of store operation The promising nature of international markets and also the available potential due to the migration of Filipinos in certain countries JFC has a conservative background and accept franchisee in order to drive innovation to lead them and hire equally driven people that helps to successfully fast food industry Being an agricultural country, full integration in sourcing raw materials could be done Acquisition of various fast food restaurants First food company to be registered in the PSE Threats Possibility of the market to refuse the company’s food chain Existing food chains Great challenge with keeping up the demand for the production of product to distribute in all over branches that are franchise-owned Wrong choice of franchise may destroy company’s reputation which will affect brand name McDonald’s as direct competitor Competition from both international and local companies/ entries ACTIONS TAKEN: Tony Kitchner was hired to build the global Jollibee brand with the dual goals of positioning Jollibee as an attractive partner, while generating resources for expansion. In order to become one of the “top 10 fast food brands in the world,” Kitchner implemented a two-part international strategy, which comprised of “targeting expats” and “planting the flag.” Kitchner’s idea of “targeting expats” allows the company to ease its transition into an unfamiliar market. Although
there is the risk of targeting too narrow of a segment, Jollibee’s success in the niche market would allow it generate momentum for the company’s expansion. The concentrated marketing campaign allows the company to generate stable revenues that can be used to support Jollibee’s entry into other segments, while the popularity amongst expats could generate publicity and attract walk-in traffic from non-Filipinos. However, “targeting expats” will only lead Jollibee to become a global brand if: (1) Jollibee correctly targets expats who have a need and want for the product and thus avoid repeating its mistake in the Middle East, and (2) The company continues to build its competitive advantage through learning and by appealing to a broader audience. On the other hand, Kitchner’s decision to “plant the flag” reflected a desire to build an empire under his leadership, rather than a strategically sound decision for the firm. Although Kitchner hoped to leverage Jollibee’s competitive advantage by entering new geographic market, his rapid expansion strategy was unfocused and poorly executed. The unprofitable ventures in the Middle East could have been easily avoided had Kitchner researched the market prior to entering. Kitchner also neglected to consider the large transaction costs associated with establishing markets in new countries. Kitchner’s desire to be first-mover in a number of small, undeveloped markets would not have brought the prestige needed to win the firm better partners. “Planting the flag” only showed that Jollibee knew how to repeat its success. In order to compete on the level with multinationals, Jollibee would have to take its performance to the next step and prove that it could continue to build its competitive advantage. RESULTS: Although Tony Kitchner was hired to bring more structure to the International Division, he failed to build the rapport needed to push forward the division’s initiatives. Kitchner began creating a “world-class company” by stealing employees from domestic operations—a poor first impression that lasted the duration of his career at Jollibee. By setting the stage for competition, Kitchner ensured that his actions, even if they were beneficial for the company, would meet criticism from the domestic side. Kitchner should have recognized that the hostility coming from Domestic was underscored by a fear that their division would be eclipsed by International. Rather than cultivate this fear, Kitchner should have made it explicit that the International Division’s success would have reflected on the company as a whole. By simply increasing communication, Kitchner could have enlisted Domestic’s support in his endeavors. Under the company’s early divisional structure, value-chain activities such as R&D and Finance were controlled by the Philippine operations. The failure to gain access to these resources hindered International’s ability to modify the logo, store layout, and menu—modifications, which were potentially beneficial for Jollibee. Kitchner fostered tension within the organization and it was ultimately this contribution that led to his dismissal.
