Jollibee Foods Corporation

Introduction
Brief History
Jollibee Foods Corporation (JFC) is a Philippines-based company engaged in the development,
operation and franchising of quick-service restaurants (QSR) under the trade name Jollibee. It all started when
after graduating with a degree in Chemical Engineering, Tony Tan Caktiong decided not to compete with
fellow new yuppies at his time searching for jobs after graduation. Having gained first-hand experience in
managing a family eatery in Davao during his childhood years, he decided to pursue a food business that would
be simple to operate. Thus, he borrowed P200,000 from his father to commence a Magnolia ice cream
franchise beside Coronet Theater in 1975. With his ingenuity and passion to satisfy the cravings of his
customers, the idea of serving American foods such as hamburgers and fries that is quick, tasty and affordable
(Acuna, et al., 2004) became his vision that he never thought would be one of the entrepreneurial successes in
the Philippines.
In 1978, the vision became a reality when Tony and his family decided to incorporate and saw the birth
of Jollibee Foods Corporation. One year after, the company posted P2 Million peso sales. It also marked the
establishment of a first Jollibee franchise in Sta. Cruz, Manila and its first TV advertisement.
Jollibee entered the list of the Top 1000 Corporations in 1981. Since then, the company continues its
unprecedented growth as it enters the Top 500 in 1984, the Top 250 in 1986, and Top 100 in 1987. Meanwhile,
in 1983, JFC launched flagship motto of JFC, known as the Langhap Sarap. The year 1986 signaled the start
of branching out in the international market by putting an international outlet in Taiwan and Brunei
Darussalam. In 1989, the company posted very remarkable sales of P1.3 Billion, while expansion efforts
continued when they acquired 73% share in the Hamburger segment of the fast food industry in 1991. Jollibee
became a public corporation in 1993 with its initial offering of P9.00 per share.
It now has about 1,804 stores worldwide under its aegis with total sales exceeding $1 billion. The
company now wants to go for diversification and expansion to increase its presence in international markets
and compete with global fast food giants like McDonalds and KFC. Under its belt the company has many
famous brands like Chowking, Greenwich, Red Ribbon, and Manong Pepe's. Initially the company went for
expansion by innovating new products like Yumburger and Chickenjoy.
As the fast food industry is highly competitive they face stiff competition from already established
players like McDonalds and KFC along with the street food that is of much significance in some countries. To
face this competition it needs to design a strategy that gives it an edge over the competitors. One of the ways
can be customization of menus so that the services provided by Jollibee attract the customers to its stores.
Jollibee has tried to do this by making the menu to suit tastes of the people living in different parts of the
world, e.g. they targeted the Filipino expatriate population in US which is in big number.
Purpose of the Analyses

This paper contains four analyses namely the PEST, Porters five forces model, EFE, and CPM which
describe and assess or evaluate the current capacity, capability, and competitiveness of Jollibee Foods
Corporation. The aforementioned analyses differ in terms of the factors and areas on which each have focused.
Consequently, these analyses give a clear understanding how Jollibee is doing from a strategic management
process perspective:

In particular, PEST Analysis is a useful tool since it helps spot business or personal opportunities, and it
gives advanced warning of significant threats, reveals the direction of change within the business environment,
helps shape what the company doing, helps avoid starting projects that are likely to fail, and it can help the
company break free of unconscious assumptions when it enters a new country, region, or market; because it
helps develop an objective view of this new environment.
The Porter's Five Forces model is a simple but powerful tool for understanding where power lies in a
business situation. This is useful, will identify both the strength of current competitive position, and the
strength of a position Jollibee is considering moving into.
External Factor Evaluation (EFE) matrix method is used for assessment of current business conditions.
The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that Jollibee is facing.
The Competitive Profile Matrix (CPM) identifies Jollibees key competitors and compares them using
industrys critical success factors. The analysis also reveals companys relative strengths and weaknesses
against its competitors, so the company would know, which areas it should improve and, which areas to
protect.

PEST Analysis

Political
The operations of Jollibee are affected by the government policies on the regulations of fast food
operation. Currently, the government are controlling the marketing of fast food restaurant because of health
concern such as cardiovascular and cholesterol issue and obesity among the young and children in the country.
Governments also control the license given for open the fast food restaurant and other business regulation need
to follow such as for a franchise business. Good relationship with government in giving mutual benefits such
as employment and tax is a must for the company to succeed in any foreign market. Jollibee should also protect
its workers by ensuring all the hiring, compensation, training or repatriation is according to Philippine Labor
Law as stipulated.

Economics
As a business entity, Jollibee need to face a lot of economic variables outside its company or its macro
environment. Dealing with international sourcing for its material, Jollibee should be aware on the global
supply and currencies exchange. Any upside of currencies will be impacting its cost of purchase. The economic
condition and growth of the country also is an important indicator to the demand of products that Jollibee
offered. As the food priced slightly above normal foods, not many people will have the income range to
consume the products. Moreover, if the economy is bad and income per capita is affected, the demand of
Jollibee products will certainly going down. On the other hand, the good economy also means disposable
income is more and people can spend more on more expensive food at fast food restaurant.

Social
While more people are able financially to eat at more expensive outlet such as fast food restaurant, they
have higher expectation. They want to have quality in services and more conveniences that can differentiate

one restaurant from another. Young urban consumers want technology in their life and facilities such as credit
card payment, wireless internet, cozy and relaxing ambient place, and other attraction for their hangout and
eating. All these needs should also be taken into consideration. There is not much difference between cultural
and the purchase of products in a single country but for different countries cultural sensitivity should be
upheld. So far, Jollibee has shown good efforts in localization of its menu to suit local taste but it should
constantly survey and learn about local culture to better understand and design the best product for them.

Technological
For a fast food restaurant, technology does not give a very high impact on the company and it is not a
significant macro environment variables. However, Jollibee should be looking to competitors innovation and
improve itself in terms of integrating technology in managing its operation. For example in inventory system,
supply chain management system to manage its supply, easy payment and ordering systems for its customers
and wireless internet technology. Implementation of technology can make the management more effective and
cost saving in the long term. This will also make customer happy if cost savings results in price reduction or
promotional campaign discount which will benefits them from time to time.

Porters Five Forces Model

Industry rivalry Jollibee has had to face severe competition within the fast food industry. The source
of rivalry mainly stems from price wars and marketing innovation. Some of its major competitors being
multinational giants like McDonalds and KFC as well as cheap local fast food chains. Accordingly, the fully
Filipino-owned hamburger chain had overtaken American multinationals in their own fast food game. Its
market share in the Philippines is 57 percent while McDonalds occupied 36 percent.

Threat of substitutes It is low to moderate. The substitutes range from local street food to high end
restaurants. However, street food is unhygienic, whereas in restaurants the service was not quick. Hence,
service and cleanliness was an advantage for Jollibee.

Threat of new entrants There exist quite a few barriers for new players intending to enter the
bandwagon. Hence there is a lower threat of these. Entry barriers are:
Inability to gain access to necessary technology and specialised know-how
Brand preferences among the customers for already established names.
Customer loyalty
Capital requirements
Economies of scale
Distribution channels

Bargaining power of buyers The bargaining power of customers was quite high. The customer first
policy of Jollibee shows it all. At the same time although they had other options available like McDonalds and
KFC, the extent of customisation of menu provided by Jollibee attracted customers to its stores.

Bargaining power of suppliers The bargaining power of suppliers was low. Though some raw
materials are imported, the countrys stock of technically skilled people was an advantage. Moreover, Jollibees
policy of training the staff at every location makes it feasible to hire even non-technical staff. Some other
factors include:
Item is readily available from many suppliers.
Switching cost is low.

There is a surge in the availability

High volume purchases are important to seller
Integrated backward threat

External Factor Environment Matrix

Opportunities

Weight

Rating

Weighted
Score

Increasing population in the Philippines

.02

.02

Offers products competitors dont

.04

.08

Changing consumer tastes

.02

.04

Creation of new and innovative products

.10

.40

Provide quick and convenience to people with busy lifestyles

.03

.06

International expansion of market coverage

.10

.40

Establishing joint ventures with other food corporations

.09

.36

Possible acquisition of existing competitors

.05

.15

Commitment to environmental protection

.04

.08

Serves as home for overseas workers

.05

.15

People are becoming health conscious

.03

.03

Change in consumer preferences and base

.04

.16

Lot of competitors in the industry

.10

.40

Price wars between competitors

.05

.20

Regulation in terms of environment conservation

.03

.06

Tax increase

.03

.06

Consumer issues that might ruin the companys reputation

.05

.15

Increasing cost of materials for production

.03

.09

Possibilities that foreign people will patronize their own

.04

.04

Potential downturns with regards to production

.06

.12

Threats

Total

1.0

3.05

Jollibee

McDonalds

KFC

Critical Success Factor

Weight

Rating

Weighted
Score

Rating

Weighted
Score

Rating

Weighted
Score

Brand Name

0.10

0.40

0.40

0.40

Product Quality

0.09

0.36

0.27

0.27

Public Image

0.12

0.48

0.36

0.24

Market Share

0.10

0.40

0.30

0.20

Price Competitive

0.10

0.30

0.20

0.40

Advertising

0.09

0.36

0.36

0.27

Market Expansion

0.09

0.36

0.18

0.27

Customer service

0.12

0.36

0.36

0.36

0.10

0.30

0.30

0.30

Financial Position

0.09

0.18

0.36

0.27

Total

1.00

Corporate
Responsibility

Social

3.50

3.09

2.98

Competitive Profile Matrix

* Please note that the ratings are based on the performance of each company within the Philippines.
Based on the table shown above, Competitive Profile Matrix shows that the total weighted score of
Jollibee is higher than McDonalds and KFC which means that Jollibee enjoys the strongest competitive
advantage. On the other hand, KFC has net competitive disadvantage because of its lower total weighted score
than Jollibee and McDonalds.

Conclusion
Jollibee is a stronghold of Filipino victory and is well known throughout the Philippines. It is also an
experienced business unit, considering that they have been in the business since 1975, when the company
opened its first ice cream parlor at Cubao. It has efficient manufacturing and logistics facilities and they have a
skilled workforce. Furthermore, Jollibee is known to be the first food service company to be listed in the
Philippines Stock Exchange. The employees also receive extensive training, in order for them to learn the
corporate values of integrity. They also offer new services and products from time to time, like the party
catering and floats.
Jollibee is known to be the largest fast food chain in South East Asia, but their goal is to be known
globally. To support their goal, Jollibee should open more stores internationally. It already has several branches
abroad but unfortunately not all are successful. If they are to open a branch abroad, it should be in places where
most Filipinos are residing. Moreover, Jollibee should introduce meals that supports healthy lifestyle for the
customers. Customers nowadays are not eating right and most fast foods have a problem with health issues. If
Jollibee were to introduce a delicious yet healthy meal, they will not only get healthy customers but a good
review as well. Apart from that, their range of customers can now expand to people who are health conscious.
Lastly, since Jollibee is quite a well-known company in the Philippines, Jollibee should invest in making an
amusement park. The Philippines needs more parks for tourists to visit. This would give Jollibee the
opportunity to advertise their company to travelers since most Filipino companies have little exposure to
foreign competitors.

The threats serve as an indication that some of the opportunities and strengths of Jollibee Food Corp.
might probably be the approaching cause of having more weaknesses that could bring the company to failure,
perhaps. One of the threats that necessitates significant attention is that putting immense considerations to a lot
of competitors who are operating in the same industry. Although Jollibee remains to be the leading fast food
chain in the market, there is a close rivalry between its competitor such like McDonalds, KFC and many more,
not just limited to existing competitors but rise of new and stronger competitors since theres no barrier to
entry, which for certain poses a great threat to the stability of Jollibee in terms of position.
Jollibee has been striving to have a global view of their business thats why it has continued expansion
internationally. Foreign people are served with dishes influenced with Filipino lifestyles but its been a threat
that foreign people would prefer to choose and patronize their own. In this case, it is probable that the demand
will go down for that particular time. On the other hand, Jollibee has maintained its commitment to have a
clean place like home open to all especially Filipinos but issues never fail to contradict the statement. There
was a time that products with regards to meat were questioned. It may be just a gossip but the reputation of
Jollibee lies on every feedback customers say. Nevertheless, all these threats that could even lead to companys
weakness can be hindered if the Jollibee will just proceed to making its serious part towards providing the
services to the extent of customer satisfaction.