The external environment of Jollibee is as follow: Political During the political instability in the 1980s, global players like Macdonald was affected and their expansion process were hold back in view of the turmoil. Jollibee on the other hand was able to fully concentrate on the market where it continued with its strategic plans (tailored distinct preferences in the local market) for expansion despite the instability.
Opportunities and Threats for Jollibee are as follow:
Opportunities
- With a large population of overseas Filipino workers in certain countries, there is a potential for Jollibee to expand internationally, i. e. USA, Hong Kong, Vietnam, Indonesia etc.
- For international markets, locating commissaries in the same country through joint ventures could be a potential source of success for the company. Jollibee could provide the technology while the partner deals with appropriate techniques to sell in the foreign market.
- For the local market, an increase in the number of commissaries could potentially decrease the transportation costs and the duration of shipments. Allowing the company to focus on the quality of goods.
- Highly motivated and well-trained employees.
Threats
- Entrants of global players pose competitions in the fast-food industry.
- Increase in crude prices increases transportation costs and the prices of transported materials and products.
- Political instability in the country threatens Jollibee as it hinders the opportunities to convince international investors and country leaders to allow Jollibee entry in their country.
- Vulnerable to general market trends and currency risk.
Jollibee has adopted the current strategies to keep its company profitable: Integrated Cost Leadership or Differentiation strategy Although it was apparent that the competition between McDonald and Jollibee were stiff during the political turmoil in the 1980s, the uproar has in turn contributed to the success of Jollibee where the company still stands tall and survived in the local market when the country was back on track. Jollibee marketing strategy is differentiating its taste from McDonald and reaching out to only local customers with a wide spectrum of varieties.
For example, through the identification of consumers taste and preferences, existing products are improved and re-launched, giving consumers a new line of products. Unlike McDonald, their menu remains unchanged for a long period of time and choice of products are limited. We also analyzed that one of the primary reasons underlying the success is their main focus on bringing families togetherness. Centering on the theme of “family”, they have been able to differentiate their brand position uniquely in its advertising approach, emphasizing on traditional values of family, and dominating the kid’s market by promoting its Jolly Kiddie meals etc.
Apart from adopting the Differentiation strategy, we also observed that Jollibee used the cost leadership strategy targeting at customers at a very broad base level (mass market). While trying to maintain its competitive advantage on their levels of differentiation, Jollibee is constantly on the look out for innovative ways to keep their cost low relative to competitors in the fast-food industry.
As a local company which knows local need and wants well, the company developed its low cost operation systems with local taste. As a result of this, the company enjoyed substantial economies of scale, operations, procurement and distribution etc. With all these savings on economies of scales, it made it possible for the company to maintain the cost of the products at a reasonable level.
To continue gaining competitive advantage in the fast-food industry, Jollibee could look at the following strategic actions to guide against and compete better in the future: Channel its marketing efforts to non-Filipinos While Jollibee has successfully built a brand amongst the local, the firm should extend its reach to the non-Filipino making it a brand that is fanciful by every segment and tapping on this niche segment to generate additional source of income for the company.
This can be done by studying and analyzing the non-Filipino market and build its competitive advantage through learning and by appealing to a broader audience. Internationalization – Focus on markets with few competitors As competitions arise, market players often want to be seen and heard. Going internationalization is the most common approach adopted by McDonalds, Pizza Hut, KFC and Burger King etc. To avoid making a loss in the new market, conducting market research on the specific market is crucial.
For Jollibee to compete on the level with multinationals, the firm would have to bring its success in Philippines to the overseas market to continue building a competitive edge. Acquisitions Pursue a strategy of diversification as a hedge against both competition and downturns in specific markets niches. To reach out to other segments, Jollibee can acquire a portfolio of other fast-food operations to meet the growing demand of consumer preferences. Staff Empowerment Give staffs at all levels the empowerment to make independent decision their jurisdictions.
To encourage staffs to exercise the flexibility; they must be well trained and taught in handling different situations. By doing so, staffs will be motivated to grow with the company and they are the resources in contributing to the competitive advantage of the company.
REFERENCES
- Business Strategy In Asia, A casebook by Kulwant Singh, Nitin Pangarkar, Loizos Heracleous – Third Edition – Case study on Jollibee Foods Corporation
- http://www. docshare. com/doc/122235/Jollibee-Foods-Corporation-Strategic-Manageme
- http://www. scribd. com/doc/36991796/1628 4. http://www. docstoc. com/docs/14423409/Jollibee
