I – Introduction : Presentation and Description of Jolibee
Jollibee Foods Corporation (abreviated JFC) is an important multinational brand of fast food from Philippines. Tony Tan Caktiong and his family opened an ice cream shop in 1975, then in 1978, they took a management consultant, Manuel C. Lumba who decided to focus the business more into burger showing that a more larger market was possible there. Jollibee is a fast food restaurant in the american way but mixing with local filipino food influenced, they specialized in burgers, spaghetti, chicken and some local Filipino dishes. In Philippines, Jollibee work with Coca-Cola where in the rest of the world they serves Pepsi products.
Based is success on asian pride, and a really good offer for customers that have a fast, flexible, good and fun answer to their needs. JFC focus on family values too because it’s an important thing to Filipinos, and also take part in charities and organisations that offer them a great brand image. This success lead JFC to dominate the Filipino’s market with 52% of market share according to Omana in 2005. But the chain is also located in the USA, Hong Kong, Vietnam, Malaysia, Indonesia, Dubai, Saudi Arabia and so on. JFC got many licensed brands too like Greenwich Pizza, Mang Islans, Red Ribbon, Chowking and also Burger King Philippines. Since it’s creation, JFC got 2,510 stores in the world thanks to large retail system that make the company totaling 82,1 billion of pesos in 2011
In the year 2002, Tony Tan Caktiong during 25th year anniversary of Jollibee was elected as Management Man of the Year. In 2004, he was elected Entrepreneur of the Year World by Ernst and Young. In 2009, Jollibee got 686 shops in the Philippines, 355 franchise, 331 company owned stores and 57 shops in the rest of the world.
II – Environemental analysis
1 How is the market ?
Fast food industry market is defined by a fast food cuisine and nominal table
service, limited choice menu, food cook in advance generally kept hot and finished and packed just before order. Possible to eat in the restaurant, or take out.
Fast foods are generally link to a chain or franchises working through supply channels. In this Market McDonald’s is the most famous, leader in every country around the world except in Philippines where JFC is the leader. During the time, JFC expanded in the world through franchises in different countries like U.S.A., Brunei, Hong Kong, Guam, Middle East and so on.
2 Internal/External analysis
– 1 Internal Push
– Ressources :
Finance :
Functional structure, like all the functions such as production, finance, marketing and HR is controlled by chief executive. Being the Leader in Philippines, and expended in the world with 82,1 billion of pesos in 2011, JFC is financialy prepared to integrate foreign market like UK.
People :
Jollibee get really focus on its customer service with many ways to have a better connection with customers and developing personalised relationships : promotions, reductions tickets… JFC will have to continue in this way and adapt all this factors to the UK market to be efficient.
Business Processes / Structure :
JFC is working throug franchise development like most of fast foods, this solution being the most easy and efficient one.
Power and Objectives :
Jollibee always had for goal the satisfaction of its customers and it is a part of company’s success. In this way Jollibee become the most recognized and highly preferred brands in the Philippines. Now, Jollibee would like to expend its market share all around the world and export its culture.
Culture :
Jollibee always defend a familial culture, offering a nice place to be for groups of people. Offering a part of the culture of Philippines by its products often influenced by Filipino traditional cuisine, they also adapt to foreign markets they are trying to enter.
– Marketing Mix :
Product :
Jollibee used to provide meals often adapted for group of people (8-10). So the product strategy is really adapted for familied, group of friends, office mates, colleagues… offering a convivial product, affordable and convenient for most people. In the list of products they offert you can find different types of hamburgers, chicken, french fries, pastas, soft drinks, coffee, salads, desserts, breakfast…
Price :
Jollibee offer good quality/price products, and make lots of discount encouraging people to buy bigger quantities.
Promotion :
Jollibee always retain the interest of its customers and potential customers by posting banners, make promotions, advertisement on TV, internet, the website, on streets, buses…
Place :
Jollibee should find a place in UK and particularly in London where the number of potential customers is the best and try to avoid if possible concurencies, in a commercial street per exemple, and maybe start next to an area where there is the most important number of Filipinos expats. Offering din in service, take away, drive and maybe what Jollibee call “Jollibee On Wheels” a service of Mobile fast food that could move everywhere, to events, concerts and so on.
– Customer analysis
UK with a population of more than 62 000 000 and as much potential customers, represent a interesting market, in fact the consumption of fast food is growing, average revenues of customers is high (developed country). Target customers would be principally the average UK citizen, looking for something fcheap and fast to eat during work breaks, with friends or family. That why Jollibee should go in UK first by going through London and taking advantage of actual Filipinos expats that are quite already convinced customers and can convince others. Also, Jollibee should adapt to the needs of these new customers, trying to convince them with there actual products and offering new products adapted to the market too. And make some adverts, promotion… to show to these customers that these products are adapted to their needs.
– 2 External Pull : Micro Environment, actual position of the firm
The company uses foreign direct investment and franchising to expand its business in the world.Now, JFC used a growth strategy by using a strategy of globalization to offer a standard in the taste of their food all around the world and offer a part of Filipino culture. But mix with a differentiation strategy because it adapts menus and the fast food in general to suit to tastes all around the world. JFC used an horizontal integration by per exemple acquiring Greenwich Pizza in 1994 and made a joint venture with Deli France in 1995 but this is not main focus of the firm, in fact classic JFC stores represent 85% of the company’s revenue. Jollibee also follow a Parenting strategy with a centralized organizational structure : Managers have to report directly to the director even international divisions.
– Porter’s generic strategies :
I. Threat of New Entrants
High
Medium
Low
There are large economies of scale so th threat is
X
Effect of experience is medium so the threat is
X
Medium product differentiation so the threat is
X
Great brand particularity so the threat is
X
Capital needs are medium so the threat is
X
Medium switching cost so the threat is
X
Medium control of distribution channels so the threat is
X
Level of patents and irghts are quite low so the threat is
X
Raw materials’ access is low so the threat is
X
Overall Threat of New Entrants
MEDIUM
II. Bargaining Power of Customers
High
Medium
Low
Buyer usually buy in small volumes and often so the power is
X
Switching costs of buyer are low so the power is
X
Buyers are informed so the power is
X
Many substitutes exists in the market so the power is
X
Differentiations between products of suppliers is high so the power is
X
Benefits relative to cost of products is low so the power is
X
Buyers’ profitability is medium so the power is
X
Buyers require special customization so the power is
X
Overall Bargaining Power of Customers
MEDIUM
III. Bargaining Power of Suppliers
High
Medium
Low
There is not too much suppliers so the power is
X
There is lots of substitute products so the power is
X
Differentiation of supplier’s product and service is low so the power is
X
Switching costs of the buyer are low so the power is
X
Suppliers input are strongly link to the quality of products so the power is X
Input cost link to the cost total of product is medium so the power is
X
Overall Bargaining Power of Suppliers
LOW
IV. Threat of Substitute Products
High
Medium
Low
Profitability of competitors is high so the threat is
X
Level of improvement according to price is high so the threat is X
Buyers switching costs are low so the threat is
X
Overall Threat of Substitute Products
HIGH
V. Competitive Rivalry & Barriers to Exit
High
Medium
Low
A. Intensity of competitive rivalry
There is lots of competitors so the intensity of rivalry is
X
Industry grow a lot so the intensity of rivalry is
X
Fixed Costs are medium so the intensity of rivalry is
X
Storage costs are medium so the intensity of rivalry is
X
Differentiation of the product is high so the intensity of rivalry is
X
Switching costs are medium so the intensity of rivalry is
X
Level of strategic decisions is high so the intensity of rivalry is X
Entry barriers are high in UK because the market is already full so the intensity of rivalry is X
Overall Intensity of Competitive Rivalry
MEDIUM
B. Barriers to exit
High
Medium
Low
Asset specialization is high so barriers to exit are
X
Emotional impact of going out of the business is high so barriers to exit are X
Overall Barriers to Exit
HIGH
– 3 External Pull : Macro Environment
– PESTEL
A company has to be in tune with its environment that why market must be scan to adapt the strategy and make adapted responses to External facts. One of the right thing to do could be making a PESTLE analysis to adapt to factors that can affect the organisation.
Political:
In the political section you can find some things like taxes politic, how stable the government is, laws on foreign echanges, and politic for the welfare of the population. JFC has to take in account the trade regulations and taxation policy when they want to make business outside Europe. The Political situation is stable and favorable for the integration of the company.
Economic:
This can include things like inflation, non-employment, rates of interest rates and money supply. In 2008 and 2009 there was a decrease in UK due to a global slowdown in the economy. There was a recovered in 2010, the slowdown got an impact on the employment and creation of jobs in UK, in fact there was about 2,5 million people non-employed in 2010. Economic situation is not that good but we can see that the fast food industry still grow, in
fact inherent quality of fast foods (cheap and fast) make them face the crisis well. Jollibee will have to offer prices and promotions adapted to this situation.
Socio cultural:
These include things like demographic situation, share of revenues, capacity to consume, mobility… Fo the social situation, Jollibee will have to adapt all his market to UK culture, tastes and habits… even if there is lot’s of Filipinos expats
Technological:
These include things like new discoveries and developments, how fast the technology change, and obsolescence facts. Jollibee will have to adapt is R&D and adverts system to be efficient in the UK market that is technologicaly mor advance than Philippines.
Environmental:
All firms should take in account environmental factors like protection laws, waste disposal and energy consumption. A thing for jollibee could be to prohibit use of plastic and make a preference in paper bag using less packaging as possible.
Legal:
The include things like laws about competition, employment and product safety… Things that a firm has to know to develop or protect the strategy. Jollibee will have to adapt is politic to UK regulations.
– 4 Product life cycle model
Introduction :
Jollibee will have to introduce new products cleverly by proposing adapted products and make the right promotion politic.
Growth :
Jollibee will have during the growth of its new products to continue promote
it to keep this growth and create a “reputation” to the products.
Maturity :
The products being adapted to the market and recognize as a “classic”, the company will have to stay in this position.
Decline :
A way to avoid decline is to make this product desirable by continue promoting a lot on it, or sell it only for a special amount of time, making it rare and desirable (like for some hamburgers in Mc Donalds like the Big Tasty that is sell only in certain times of the year) and avoiding people to get bored of it.
– 5 BCG Matrix
In Philippines, is in the star position, having a High market share being the leader and high market growth because it continue to expend its activity. But going to the UK market, Jollibee wil put itself in the Dogs position and even rapidly in the Question marks if its expension and profit making is efficient, profit that Jollibee if it happen will have to use in creating more stores, making more promotion… to finish in the Stars position.
III – SWOT analysis
The fast food industry is really standardized, they got time constraints but have to provide good quality in a proper environment and at low price too. The place where fast foods are and the management are key factors of the success decides of a business. Majority of fast food chains
Strength :
JFC is a regional industry leader and got lots of professional experience in the market, know how to deal with concurencies and problems. They also proven in the past that they are really effective and know how to deal with possible partners (like Burger King in UK per exemple, JFC directing Burger King in Philippines). JFC got a large choice and variety of products offered
in diverse markets, can adapt theses products easily and got an advantage with Filipinos expats with there original products.
Weakness :
Most of company’s weaknesses come from their operations. Dificulties to create an organisation between world and local divisions. Difficulties to select right franchise partners and adapted locations in the international investments. Also, JFC wanted to kep is Filipino identity in foreign countries, got difficulties to create a good staff of managers and there is too much turnover creating a lack of effective marketing skills. And it seems to that there is a lack on JFC’s planning and research to extend in foreign markets.
Opportunity :
Thanks to Globalization there is a better understanding and more interest in other cultures. There is a big potential thanks to the increasing number of Filipinos expats in certain countries. Also, people are living more and more faster and, fast food are a real answer to their needs. In foreign markets, the possibility to put commissaries in a country using joint ventures is a possible source of success for JFC. JFC could help for the technology provision when the partner will formule the right “modu operandi” to work in the foreign market.
Threats :
But in every market there is still preferences, culture and environment that make a difference from a country to another. So it’s nearly impossible to always propose a standard menu in the world. And off course, the competition in the world is always increasing.
IV – Strategic concerns in UK market
1 – Short term :
Now, the company got a great brand image and financial tools to export in the UK market. Jollibee to export its inherent qualities that made is success in Philippines, will have to find the right skilled employees and learn them
the politic, culture of the company and what attitude to got, per exemple find a great executive chief of the international division in the UK. Find a local supplier to start in right conditions of production, with the right equipment… to avoir all quality products problems. To avoid these problems and have a qualified staff, Jollibee will have to create some formations for employees, offer them the right equipment and so on.
2 – Medium term :
In the Medium term, Jollibee will have to find more stable and permanent solutions to short-term problems. In complement of employees formation and training, a company schedule training programs should be put in place in a way to stabilize skills of the staff. Have to strengthen its quality and keep the quality at the same level. Put in place policies and procedures planned to ensure that short-term problems don’t come back.
3 – Long term :
For the long term, if Jollibee want to be efficient in the UK market it will have to solve all problems deeply and in a permanent way to touch its overall targets. A Long term planning adapt to the situation of the company in social, economic, politic and environmental way and create strategies to face that and reach its goals in the long term. Expenses in asets, equipment, creation of adapted internal policies, a good management plan will have to be put in place, and even if short and medium term plans work well, a long term plan is much more difficult to install and need to be builds on right things made in two other steps to be sure that the company is still efficient and continue to make profit and progress.
4 – Ansoff Matrix :
Here Jollibee would be in the situation of Market Development because Jollibee is looking to install and grow is sell in the UK market by introducing its existing products in this new market. JFC can also attract new market segments by developing adapted products using new distribution networks, using other communications medias.
VI – Conclusion and recommendations
The best option for JFC would be to follow an Implementation Plan by really targeting the foreign market thanks to new products adapted to these new markets and also keep existent products from Philippines to make discoveer new tastes and target particularly Filipinos living and working abroad.
To reduce their costs abroad they could develop and install new depots near to their foreign stores and in this way got less logisitcs, transport… costs and be more efficient.
This could offer too more freshness and quality of products delivered to the international stores. Option of a joint venture with foreign market by putting new depots abroad is also possible, permitting to get ready knowledge concerning some external factors in the targeted country.
In this way, JFC will have to maintain its market dominance by growing its presence in the worlwide market thanks to : a good communication plan, promotions link with introduction of new products and focus on a way to put this products, make them known and install a customer loyalty.
Besides, the transfer of the local taste buds would not be that quick going to international markets. To adapt to these internaional markets the R&D on new markets, possible acquisitions and new products must be develop. For the rest of the business JFC will have to communicate culture of the company that make its sucess using conventions for internal fact and adverts… for external in a way to be sure that interests of the company are achieved.
JFC will have to adapt it’s strategy and structure according to all changes you can find in the macro environment
JFC should try to implement slowly and safely by learning from experiences from different markets and for that before be sure that there is no internal conflicts and that everybody in the company got the same focused vision. In this way create and develop clear instructions for international divionsto
know how it can use ressources.
Appendix :
JFC locations map in the world :
Jollibee, other brands of JFC and its competitors :
Current trends and needed qualities in the Fast Food market :
References/Bibliography
BOOKS
1. Ansoff, H. Igor. (1965). Corporate Strategy, New York, NY: McGraw-Hill. 2. Barney, Jay B. (2002). Gaining and Sustaining Competitive Advantage Second Edition, Upper Saddle River, NJ: Prentice Hall. 3. Zaide, Sonia M. The Philippines A Unique Nation : History of the Republic of the Philippines Second Edition, Cubao, Quezon City: All Nations Publishing. 4. Doole and Lowe. International Marketing Strategy
JOURNALS
1. Bartlett, Christopher A. (2001). Jollibee Foods Corporation (A): International Expansion, Harvard Business School Case. 2. Ernst and Young Global Entrepreneur Of The Year Philippines 2004– Master Entrepreneur Tony Tan Caktiong 3. Khanna, Tarun, and Krishna G. Palepu. (2006). Emerging Giants: Building World-Class Companies in Developing Countries; Harvard Business Review: 2-11.
WEBSITES
1. http://www.ey.com/global/Content.nsf/Philippines/Entrepreneur_of_the_Year-Tony_Tan_Caktiong,on February 25, 2008. 2. Jollibee’s official website (http://www.jollibee.com.ph/, on February 21, 2008)
NEWSPAPERS
1. Lopez, Tony. (2007). "Virtual Reality: McDo vs. Jollibee, Manila Times, August 14, 2007. 2. Jollibee Foods Corporation 2011 annual report (SEC FORM 17-A)” (Press release). 31 December 2011. 3. “Jollibee Foods buys out partner in Greenwich Pizza”. BUSINESS (The Manila Times Internet Edition).
