JOLLIBEE FOOD CORPORAT ION (CASE STUDY SAMPLE)
Statement of the Problem: In order to make certain the growth and advancement of its company, JFC (Jollibee Food Corporation) aims to expand further and delves into opportunities available in foreign markets. What effective investment should JFC make in order to penetrate foreign countries and expand its foreign market share?
Objectives:
open 100 new restaurants within the rrent year in foreign countries
o get 50% of their income from foreign arket after 10 years.
o penetrate Asian countries, primarily hina and India which have big tential market.
Areas of Consideration: >
2009 Significant Financial Data of JFC Liquidity Ratio
Current Assets Current Liabilities
13,936,928,132.00 9,633,836,229.00 8,103,632,109.00
Debt to Equity Ratio
Total Debts Total Stockholders Equity
Long Debt to Equity Ratio
Net Debt to Equity Ratio
144.67%
34.81% 23,281,239,667.00
Total Long Term Debts Total Stockholders Equity
2,437,980,374.00 23,281,239,667.00
Net Debt Net Debt and Equity
4,928,145,889.00 20,105,753,447.00
10.47%
24.51%
Cont...
Areas of Consideration:
> India, being JFC’s primary target market avoids meat, which is a basic ingredient in Jollibee products. > Fast food industry growth is continuously increasing. > Research on the health consequences of too much fast food consumption is also continuously spreading.
Alternative Courses of Actions:
Alternative 1
Invest in specific country’s local food chain with big growth potential. Many Asian countries have established their own local fast food chains competing with the international brands. Some of these have grown building many branches in their own nation and have even penetrated other countries. JFC can invest in these local chains. Mr. Pizza Korea established just in 1990 has a strong growth potential. Pizza Corner of India with more than 50 outlets is also making name in its local market. Also Cafe de Coral in China, one of the largest Chinese Fast Food, has around 540 outlets around the world can be a big investment move for JFC.
ntages (Strength and Opportunities):
hough it has not fully break-through the other Asian country ets, have build a name for itself among fast food chain compani have achieve credibility as it continued to invest and diversify in tries it was able to gain entry. It is also prided with many award ecognitions, to name some: in 2001 one of the "Top 20 Best oyers in Asia”. The Asia Money Magazine adjudged JFC as "Best erational Efficiency" based on the financial rations and agement Man of the Year" - Tony Tan Caktiong by MAP. helps make investment in foreign companies possible.
g so, JFC can enter the local market immediately, and eventually understand the food preferences of the people in that certain r n which will be helpful in the future establishment of its own line l have a preview of the local market, thus, research cost be lessen
dvantages (Weakness and Threat):
building of its reputation in foreign countries is taken aside. opportunity to establish its own line will take a long time. And s there is a rapid growth of demand in fast food products at ent time there are many local companies developed and many west side companies penetrate Asia. Without taking this rtunity, JFC’s competitive advantage, being an already-establish any, may decrease. And in time it has familiarize the market and ed on pushing its own line, other companies has already nated the industry
Alternative Courses of Actions: Alternative 2
Open own food chain line in the desired country, primarily Jollibee Restaurants, Chowking, Greenwich, Red Ribbons, etc.. There are millions of Filipinos who have already migrated to Asian countries (both illegal and legal) as many nations open an entry for employment opportunities. With this, if JFC opens its food chain line, they are assured of ready market which is these migrant Filipinos who, by nature, long for any Philippine packs, like food.
tages (Strength and Opportunities):
ompany is well established in the Philippines and it is safe that around 90% of Filipinos are acquainted with Jollibee. oes as well to those Filipino migrants across Asia. if establish in countries where there are Filipinos, there is ubt that they will utilize what Jollibee has to offer.
since fast food chain industry is growing in Asia. Many fast food s began opening in Asia, like Mcdonalds, Wendy’s, Taco Bells, et ina, it is estimated that the demand will increase by 9% annually lly Indian fast-food industry is estimated to be only $135 million with over 300 million Indians hankering to follow the lifestyles of ern world, the sky is the limit for this sector. Other Asian countr outh Korea and Japan are following the trend.
Disadvantages (Weakness and Threat): JFC reputation as a leading fast food chain in the Philippines is unquestionable, but its reputation is not yet well-established in all Asian countries. Chowking may serve Chinese cuisines that can penetrate China, and/or Taiwan but cooking may vary, even ingredients vary, like noodles and spices used by Chinese. JFC chains, especially Jollibee, cater mostly meats that may not be acceptable in India since Indians avoids meat due to their religious beliefs. Most eat vegetable and love spices, which are rare in typical JFC food.
Every country has its own food preferences; Jollibee may not meet the taste of each country’s local. Additional and material cost may incur in modifying its product or food lines to satisfy the foreign market. Filipino customers will not be enough if JFC aims to have 50% of their income comes from outside the Philippines. Also, it has some bigwig competitors like the aforementioned McDonalds, which remains the number one fast food chain in the world and other US originated company that had already penetrated Asia, not to forget the fast food chains established by each country that surely know what their locals prefer.
Alternative Courses of Actions:
Alternative 3
Invest in country’s local fast food chain and open own food chain in selected areas where there are Filipino migrants. With enough funds for investment, JFC can purchase stocks from local fast food chain in certain Asian country and open restaurant at the same time carrying its own chain of stores.
Advantages (Strength and Opportunities): Investment in foreign-owned food chains will give JFC access to local market and pre-study the nature of people towards eating and their food preferences. Initial establishment of their own food chain stores will introduce their own name in this country. On the process, modification of some foods that were originally made for Filipino taste will be applied base from experience and information gain from those foreign chains where it had invested. An integration of original JFC products and local taste can be made. An entry of other JFC lines can then be open to the market. Again the increasing trend of Asian imitating west lifestyle and of course the convenience and affordability in eating, JFC’s growth potential is big.
Disadvantages (Weakness and Threat): Because of the market trend, local businessmen are getting aggressive to supply fast food chain in their locality. These businessmen have an advantage in their own land since they are more acquainted with the market. International Companies carry its name that is widely celebrated in other areas in the world. It automatically has edge over JFC and achieves credibility even before it enters the Asian market. JFC on the other hand, must still work more to be highly regarded and be at the same foot with these national brands. The adjustment of JFC according to local food taste may lead to lost of its own identity, since they have to adapt local ingredients and materials which can be very different with Jollibee’s o riginal offering.
Conclusion & Recommendation: Alternative 1- Investing in foreign food chain, especially in big companies, may meet the company’s aim to increase and eventually get 50% of their total annual income from foreign market. But this disregards the company’s aim to mark its name in Asian countries as early as the movement of fast food Alternative 2 –isPutting up all Jollibee chain of chain demand still increasing. stores in different Asian countries, (100 in the current year) is highly risky due to the food preference of the locals and competitive environment with international brand leading the industry. The 50% goal is hardly achievable.
Conclusion & Recommendation: With JFC data in 2006, it is financially capable of making investments in foreign countries. I therefore conclude that alternative 3 which is to invest in country’s local fast food chain and open and introduce own food chain in selected areas where there are potential market can be most helpful in solving the problem. This alternative meets the three objectives. The 100 restaurants can be met by investing in a foreign company that has an established reputation in its home country and have already penetrated other countries and then there are the JFC owned restaurants opening in parallel to this investment.
Conclusion & Recommendation: The importance of investing in foreign countries is that this move will assist JFC in understanding the market it wanted to enter. The food preference, which is a main issue in opening a local food chain in a foreign market, can be taken in-depth. It can also learn and manipulate the spending pattern of the natives.
Conclusion & Recommendation: This investment is also a research activity, thus, the cost of R & D can be lessened. Opening more Jollibee stores will not be very difficult then. Opening for franchise and setting up new stores in areas where there are already Jollibee can also be effective in its expansion plan. It is now not a choice between opening its owned stores and investing in foreign stores but integrating both strategies to effectively meet the JFC’s objectives.
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