Jolli Bee Case study Essay

In 1975 Jollibee Food Corporation began as an ice cream parlor and was come ab let on by the Chinese-Filipino common topaz family. After the oil crisis in 1977 Tony Tan Caktiong (TTC) expected the ice cream prices to soar. The gist of this incident was, that the family diversified into a home-style Philippine hamburger, which was pronto desired by the customers. As a result of the big supremacy the family opened five terminals in Manila, where the family incorporated as Jollibee Foods Corporation. When McDonalds entered the Philippine market in 1981 Jollibee had to face up his first serious challenge.With already 11 in their rump Jollibee was gay and confident. Moreover Philippine customers preferred the spicy taste of their hamburgers. Nevertheless McDonalds, who spent a lot of bullion in advertising, quickly exceeded Jollibees sales per store. The confederation was named after TTCs vision where employees work economicly and cheerfully, uniform bees.Through a well-de veloped operations charge Jollibee was able to offer a consistent and efficient service and quality food. Consequently the family expanded rapidly throughout the Philippines financing all growth internally until 1993. At the end of 1993 the Jollibee Foods Corporation had a total of 124 stores with a total sales volume of 3.386 millions of pesos (see register 1). YearTotal Sales(millions of pesos)Total Stores at the End of the YearCompany-Owned StoresFranchises1975NA2201980NA743198517428101819901,22965125419911,74499218019922,644112258919933,386124309619944,0441484410619955,1181665511319966,588205841241997(projected)7,77822396134NA = not availableExzhibit Jollibee Philippines Growth 1975 1997 (Bartlett and Beamish, 2011, p. 35). Although Jollibee went public in 1993 the Tan family contain the majority ownership and kept on controlling Jollibee. BACKGROUNDAfter the big success against McDonalds people started approaching TTC for franchise rights. Thats wherefore Jollibee slowly b egan to enter the foreign markets with investments in Singapore. With the foster of friends Jollibee started a partnership with a local manager and five Philippine-Chinese investors. Soon the relationship between Jollibee and the local manager started to worsen. Therefore the franchise agreement was revoked and shutdown in 1986.Jollibee kept on move offshore and started joint ventures in Taiwan and Brunei as well as an own store in Indonesia in the late 1980s. Because of several mistakes Jollibee was unsuccessful in every market besides Brunei. Nevertheless Jollibee clear-cut to continue entering foreign countries. For that reason in 1994 an International Division was created with Tony Kitchner apportioned as Vice-president.He started expanding quickly charm he was differentiating the International Division from the Philippine part. Moreover Kitchner tried to create a much formal culture for the division with a strategy, which had two main themes tar buy the farming expats a nd planting the stick. Soon he remarked that the Middle East, Hong Kong, Guam and another(prenominal) Asian Territories would provide a good market for Jollibee since many Filipinos live at that place.The other strategy said, that a company always has a first mover profit. So Jollibee started to plant the flag in countries where there was no or little competition. Jollibee expanded quickly by 1997 Jollibee had 223 stores (see Exhibit 1). provided this rapid growth also had the consequences that there was not enough advertising budget. With the growth of the multinational trade the relation between the International Division and the Philippine organization started to struggle.Thats why in 1996 TTC complete that the Kitchners strategy was costing heavily and decided not to keep on supporting Kitchner. Because of that Kitchner unexpended Jollibee in 1997 while TTC shrank the International Divisions staff from 32 to 14 (Bartlett and Beamish, 2011, p. 48). INTERNAL analytic th inking1 Current SituationToday Jollibee is the largest fast food reach in the Philippines, operating to a greater extent than 750 stores (Jollibee, 2013). It is mainly operating on its domestic home-market where it is a dominant market leader. Moreover the company presently has more than 80 stores outside the Philippines USA (26), Vietnam (32), Brunei (11), Jeddah (7), Qatar, Hong Kong, and Kuwait (1 each). Jollibee obviously want to grow fast and conk out international.For further investments Jollibee has to find out what went wrong during their first courses, where foreign markets couldnt be reached successful. Additionally Jollibee has to irresolution if Jollibee still can be mainly family-run as their company grows very fast.2 Strength financial situation and leadership in local marketAs already mentioned, Jollibee is the biggest fast food chain in the Philippines and owns the leadership in their local market. With over 750 stores worldwide Jollibee has strong financial re sources with an operating gross profit margin of approximately 7% ( acquit income).Although competitors like McDonalds have two-digit margins (Google finance McDonalds Corporation, 2013) Jollibee shows a silent growth. Their net income nearly tripled between 1992 and 1996. Moreover Jollibee Foods Corp. joined the ranks of Forbes Magazines top 50 Asian companies this year based on financial track records (GMANETWORK, 2013).Furthermore Jollibees assets seem to be bound long-run in property and inventory. Operations management capabilityJollibee is a family-run business. Although there was an IPO in 1993 the Tan family still controls the business. Nevertheless they hired external managers in aras where they werent familiar with and local knowledge was needed, e.g. the international business. some other aspect is, that the share of own stores is relatively high with about 40% while competitors like McDonalds only own 20% of their stores (McDonalds, 2013). Normally own stores deman d a much high investment than franchise stores while having a much higher financial risk of failure. Besides that the company is capable of serving good, fresh and healthy food for low prices. Key to this affordable price is a well-developed operations management.Diversity in result offeringAnother bulky strength of Jollibee Foods Corp. is its diversity in overlaps which is bigger than most of their competitors. Moreover, the acquisition of Greenwich Pizza and the joint venture with Deli France even increased their product margin.Company philosophyThe next big strength of Jollibee Foods Corp. is their company philosophy, which was set after TTCs vision. The questionable Five Fs contain flavorful food, friendliness, fun family and flexibility.flavoursome food As already mentioned, Jollibee places special emphasis on good, healthy and flavorful food. The other intravenous feeding Fs aim to give the customer a small stay and a nice atmosphere with their family where they can joi n their meal. 34 WeaknessesExpansion of business in international marketsAs already mentioned the first moves to foreign markets failed. Due to several mistakes Jollibee had to close their stores after a couple of years. The management made huge errors when they cooperated with local manager, which didnt follow the companys philosophy.Jollibee should have controlled the manager from the blood and maybe they had to show them their operational management skills to fulfill their requirements, e.g. with a training or instruction. Additionally the conference within the organization has to approve so that problems between the two divisions can be minimized.Dependence on FilipinosAnother weakness of Jollibee is their dependence on Filipinos. Instead of addressing to people from all walks they try to force themselves to serious serve Filipinos. With a well managed marketing addressed to other citizens the demand after Jollibee products could increase and maybe lead to a expansion toward s Europe. Moreover they could start promotional campaigns where Jollibee is presented as a global brand. preconception towards friendsJollibee Foods Corp. has a strong bias towards friend and relatives while selecting local franchise partners. This often led to problems. They should select their partners after their attitude to work and capability instead of friendship.EXTERNAL ANALYSIS5 OpportunitiesWiden product rangeAs previously mentioned the product range and taste of Jollibee differs fromcompetitors like Burger King and McDonalds delinquent to its Philippine origin. This is not only a chance, but also a risk at the same(p) time. The special taste gives Jollibee the chance, that customers prefer their food. Also Jollibee should show that they only serve quality food while the price is still affordable.With a well-planned marketing campaign they could reach a competitive advantage. Otherwise Jollibee runs jeopardy to lose the competition because of the far bigger marketing bud gets and brand recognition of the established burger chains, as they face this problem in Hong Kong and California.Furthermore they could widen their product range to address people from other countries. Another option would be to include more local food items to target more mainstream American people. however as Tony Kitchner already failed with the Jollimeal, which is modifier for each country this has to be planned exactly. If something like that will be used again, a better communication to the customers is necessary.Untapped locationsLocation management is a key to success in the fast-food industry, as the number of customers increase with a well-located restaurant. Thats why another opportunity is, that the plant the flag strategy should be reused, but in a slightly smaller scale. Jollibee should watch out for untapped locations with fewer or negligible competition to save the first movers advantage or just to acquire new customers. Another option is to hire local people to g et local knowledge.But in order to stay successful in foreign countries, Jollibee has to at least(prenominal) run 60 restaurants with a turnover of minimum 800.000 US-Dollars each. 67 ThreatsCompetitionOne of the biggest threats and problems of Jollibee Foods Corp. is the huge amount of competitors. Moreover, these competitors, e.g. Burger King or McDonalds, have a established brand and are well cognise OtherAt last there are several other little threats that could get tough for Jollibee. Since the downturn in economy many people have to eat at home, because they cannot afford the cost of going out with the whole family.Another aspects are the rising operational costs, e.g. power or labor. With static increasing operational costs the profit decreased so that Jollibee will be forced to trick out the food prices. Since people try to live healthier their eat habits could change, so that people could prefer dining than fast food.RECOMMENDATIONSThis analysis makes one thing clear Op ening over 150 stores within 10 years is beyond the organizational and financial capabilities of Jollibee. It should grow slower and concentrate on every store opening so that it is able to generate income very quick and be able to pay back debts. Another big question is, if Jollibee is able to address to non-Philippine expats without or with less modifications. The suggestions for this three selected markets are as following Hong Kong and the United States (California) both are huge but highly competed markets.The advantage of California is that there is a big community of immigrants as well as a big community of Philippine expats, who are the main group addressed by Jollibee. Moreover the Americans like fast food and believably like the regular Jollibee menu. However the Chinese market needs high approach costs since the demanded modifications are very high, although the customer acceptance is not guaranteed. As mentioned before, Jollibee should concentrate on few stores. Thats why it would not make any sense to enter both markets, as the financial situation is in like manner bad.Because of a wider range of communities as well as fewer modification costs, Jollibee should try to compete on the U.S. market. Though the market in Papua New Guinea may be entered on a theme as a test, since there are only few fast food companies to compete with. Additionally, the entry costs are low. Although it is not guaranteed that the fast food will be accepted on this saturated market, the risk for a fast expansion is too high. As Bartlett and Beamish state, the so-called worldwide mentality is a key factor for the fast food industry to get successful (Bartlett and Beamish, 2011, p. 12).REFERENCESBartlett, Christpher A., Beamish, capital of Minnesota W. Transnational Management Text, Cases, and Readings in Cross-Border Management. 6th ed. New York McGraw-Hill Irwin, 2011. Print.McDonalds. Our company. Retrieved family 14th, 2013, from http//www.aboutmcdonalds.com/mcd/o ur_company.htmlGoogle Finance McDonalds Corportion (2013, family 13). Retrieved September 14th, 2013, from http//www.google.com/finance?cid=22568Jollibee About us. Retrieved September 14thFrom http//www.jollibee.com.ph/about-usGMANETWORK Jollibee, Ayala Corp., Alliance Global among Forbes Fab 50 Asian firms . Retrieved September 14thFrom http//www.gmanetwork.com/news/story/324133/economy/companies/jollibee-ayala-corp-alliance-global-among-forbes-fab-50-asian-firms