Jolli Bee Case study Essay

In 1975 Jollibee Food Corporation began as an ice slash parlor and was run by the Chinese-Filipino Tan family. After the oil crisis in 1977 Tony Tan Caktiong (TTC) expected the ice cream prices to soar. The consequence of this incident was, that the family modify into a home-style Filipino hamburger, which was quickly desired by the customers. As a result of the stupendous success the family opened five stores in Manila, where the family incorporated as Jollibee Foods Corporation. When McDonalds engraveed the Philippine marketplace in 1981 Jollibee had to organization his early serious challenge.With already 11 in their back Jollibee was unblinking and confident. Moreoer Philippine customers preferred the spicy taste of their hamburgers. Nevertheless McDonalds, who dog-tired a lot of money in denote, quickly exceeded Jollibees gross revenue per store. The company was named after TTCs vision where employees work efficiently and cheerfully, comparable bees.Through a well-de veloped operations perplexity Jollibee was able to offer a consistent and efficient service and quality food. Consequently the family expanded chop-chop throughout the Philippines financing all growth internally until 1993. At the destination of 1993 the Jollibee Foods Corporation had a total of 124 stores with a total sales mickle of 3.386 millions of pesos (see Exhibit 1). YearTotal Sales(millions of pesos)Total Stores at the dying 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 retained the legal age ownership and kept on controlling Jollibee. BACKGROUNDAfter the colossal success against McDonalds people started approaching TTC for privilege rights. Thats why Jollibee s first gearly began to enter the unknown markets with investments in Singapore. With the help of friends Jollibee started a fusion with a local manager and five Philippine-Chinese investors. Soon the relationship amongst Jollibee and the local manager started to worsen. Therefore the franchise agreement was revoked and shut conquer in 1986.Jollibee kept on moving offshore and started joint ventures in Taiwan and Brunei as well as an own store in Indonesia in the late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 e really market besides Brunei. Nevertheless Jollibee decided to continue entering foreign countries. For that mind in 1994 an International partitioning was prep bed with Tony Kitchner set aparted as Vice-president.He started expanding quickly piece of music he was differentiating the International Division from the Philippine part. Moreover Kitchner tried to create a more formal culture for the division with a system, which had twa in main themes repointing expats and planting the flag. Soon he remarked that the Middle East, Hong Kong, Guam and some other Asian Territories would provide a good market for Jollibee since many Filipinos hold fast going thither.The other strategy said, that a company always has a first mover advantage. So Jollibee started to plant the flag in countries where at that place was no or little competition. Jollibee expanded quickly by 1997 Jollibee had 223 stores (see Exhibit 1). remedy this rapid growth also had the consequences that there was not enough advertising bud read. With the growth of the international business the relation between the International Division and the Philippine organization started to struggle.Thats why in 1996 TTC realized that the Kitchners strategy was costing heavily and decided not to keep on supporting Kitchner. Because of that Kitchner left Jollibee in 1997 while TTC shrank the International Divisions staff from 32 to 14 (Bartlett and Beamish, 2011, p. 48). INTERNAL analysis1 legitimate SituationToday Jollibee is the largest refrain food chain in the Philippines, operating(a) more than 750 stores (Jollibee, 2013). It is in general operating on its domestic home-market where it is a dominant allele market leader. Moreover the company currently has more than 80 stores outdoor(a) the Philippines USA (26), Vietnam (32), Brunei (11), Jeddah (7), Qatar, Hong Kong, and Kuwait (1 severally). Jollibee obviously want to grow fast and fuck off international.For further investments Jollibee has to find out what went wrong during their first long time, where foreign markets couldnt be reached successful. Additionally Jollibee has to question if Jollibee still can be mainly family-run as their company grows truly fast.2 StrengthFinancial home and leadership in local marketAs already mentioned, Jollibee is the boastfulgest fast food chain in the Philippines and owns the leadership in their local market. With over 750 stores worldwide Jollibee has strong financial resources with an operating margin of approximately 7% (net income).Although competitors equivalent McDonalds have two-digit margins (Google finance McDonalds Corporation, 2013) Jollibee commemorates a soundless 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). what is more Jollibees assets seem to be bound semipermanent in property and inventory. Operations trouble capabilityJollibee is a family-run business. Although there was an IPO in 1993 the Tan family still controls the business. Nevertheless they hired outside managers in aras where they werent familiar with and local knowledge was needed, e.g. the international business. 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). unremarkably own stores demand a much higher investment than franchise stores while having a much higher financial lay on the line of failure. too that the company is capable of serving good, fresh and healthy food for low prices. Key to this turn overable price is a well-developed operations management.Diversity in merchandise offeringanother(prenominal) huge strength of Jollibee Foods Corp. is its diversity in products which is bigger than most of their competitors. Moreover, the acquisition of Greenwich Pizza and the joint venture with food shop France even additiond their product margin.Company philosophyThe next big strength of Jollibee Foods Corp. is their company philosophy, which was set after TTCs vision. The so-called fiver Fs contain flavorful food, friendliness, fun family and flexibility.Flavorful food As already mentioned, Jollibee places special furiousness on good, healthy and flavorful food. The other four Fs aim to give the customer a ni ce stay and a nice atmosphere with their family where they can join their meal. 34 Weaknesses blowup 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 beginning and maybe they had to show them their operational management skills to fulfill their requirements, e.g. with a training or instruction. Additionally the communication deep down 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. kind of of addressing to people from all walks they try to force themselves to just serve Filipinos. With a well managed marketing addressed to other citizens the demand after Jollibee products could increase and maybe lead to a magnification towards Europe. Moreover they could start promotional campaigns where Jollibee is presented as a global leaf blade.Bias towards friendsJollibee Foods Corp. has a strong bend 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 workAs previously mentioned the product range and taste of Jollibee differs fromcompetitors like Burger King and McDonalds due to its Philippine origin. This is not only a chance, except also a risk at the same 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. other Jollibee runs danger to l ose the competition because of the far bigger marketing budgets 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. But as Tony Kitchner already failed with the Jollimeal, which is modifier for each country this has to be planned exactly. If some issue like that will be utilize 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 run into out for untapped locations with a few(prenominal)er or negligible competition to cede the first movers advantag e or just to commence new customers. Another option is to hire local people to get local knowledge.But in order to stay successful in foreign countries, Jollibee has to at least run 60 restaurants with a upset of minimum 800.000 US-Dollars each. 67 ThreatsCompetitionOne of the biggest threats and problems of Jollibee Foods Corp. is the huge measure of competitors. Moreover, these competitors, e.g. Burger King or McDonalds, have a established brand and are well known OtherAt last there are several other little threats that could get problematic for Jollibee. Since the downturn in economy many people have to eat at home, because they cannot afford the be of going out with the whole family.Another aspects are the acclivity operational costs, e.g. power or labor. With static increasing operational costs the profit decreased so that Jollibee will be forced to establish the food prices. Since people try to live healthier their dining habits could change, so that people could prefer dining than fast food.RECOMMENDATIONSThis analysis makes one thing clear Opening 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 confederation 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 probably like the regular Jollibee menu. However the Chinese market needs high debut costs since the demanded modifications are very high, although the customer acceptance is not guarant eed. 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 too 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 freshly Guinea may be entered on a basis 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 virgin market, the risk for a fast expansion is too high. As Bartlett and Beamish state, the so-called Global learning ability is a key factor for the fast food industry to get successful (Bartlett and Beamish, 2011, p. 12).REFERENCESBartlett, Christpher A., Beamish, Paul W. Transnational Management Text, Cases, and Readings in Cross-Border Management. 6th ed. New York McGraw-Hill Irwin, 2011. Print.McDonalds. Our company. Retrieved Septemb er 14th, 2013, from http//www.aboutmcdonalds.com/mcd/our_company.htmlGoogle Finance McDonalds Corportion (2013, September 13). Retrieved September 14th, 2013, from http//www.google.com/finance?cid=22568Jollibee most 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