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A quick analysis of the industry that Jollibee operates in will bring to light several
important issues that it faces in different areas. The company started in 1975 and
expanded quickly throughout the Phillipines . Upto 1983, Jollibee faced no serious
challengers. The entry of McDonalds into Phillipines changed things, and it was during
this year that Jollibee first invested heavily in advertising.
Increasing globalization
Sourcing beef materials from different countries and locating in foreign markets both
introduce the company to global developments such as exchange rates and tariff and non-
tariff barriers that could potentially change how operations continue in the future.
The migration of large numbers of Fillipino workers to different countries is another
factor to consider and exploit.
Industry profitability
Minimizing the company's operating cost by creating an efficient production is one way
to increase its profitability. This can be done by adopting new technologies that can speed
up the company's operation. These can greatly help the company to capitalize on
economies of scale. The same concept forces other players to innovate and cause changes
in the industry.
. Tony Kitchner came to Jollibee in January 1994 and it may be argued that it appeared
he was fairly successful over his three years. During his time, there was great expansion
and increase in sales. He used a ‘plant the flag ‘strategy to expand Jollibee overseas.
Kitchner built stores in countries that had little or no fast food presence. Kitchner was of
the opinion that by expanding in countries that had little competition from well known
brands, he could build brand recognition, which would increase customer loyalty and
sales. For eg. Jollibee's often found it very difficult to enter a market where McDonald's
already existed. As a late-mover, it was difficult for Jollibee to obtain access to the
distribution channels, suppliers, and store locations which allowed it to become a cost
leader in the Philippines. Total sales, Operating income and net income doubled over the
three year period. The fact that the percentage of inventory held, fell by half is indicative
of improved operational efficiencies. These indicators although a positive sign for
Jollibee as a whole is not indicative of the success of Kitchners strategy. Once must
remember that overseas franchises would continue to pay Jollybees royalties and
franchisee fees irrespective of whether they were incurring profits. In many cases, stores
shut down due to mounting losses and Kitchners unplanned and haphazard strategy
unsupported by proper analysis and research, failed miserably. Kitchner’s idea of
“targeting expats” was aimed at allowing the company to ease its transition into an
unfamiliar market. Although there was the risk of targeting too narrow of a segment,
Jollibee’s success in the niche market would allow it to later appeal to a broader
audience. Although this sounds reasonable, results have shown that a deeper
understanding lifestyle and preferences of the expats was needed.
Jollibee-Marketing Analysis
Jollibee was started as an ice cream parlor and later discovered its
destiny as a hamburger chain in 1978. Jollibee has attained worldwide
admiration in so short a time. Today, it owns Chowking, Greenwich,
Red Ribbon, and Philippine franchise of Deli France. It has become one
of the biggest fast-food chains in the world with more than1,600 stores
worldwide.
Tony Kitchner was hired to build the global Jollibee brand with the dual
goals of positioning Jollibee as an attractive partner, while generating
resources for expansion. In order to become one of the “top 10 fast
food brands in the world,” Kitchner implemented a two-part
international strategy which comprised of “targeting expats” and
“planting the flag.”
Targeting Expats
Recommendation:
“Targeting expats” will only lead Jollibee to become a global brand if:
• Jollibee correctly targets expats who have a need and want for
the product and thus avoid repeating its mistake in the Middle
East.
• The company continues to build its competitive advantage
through learning and by appealing to a broader audience.
Plant the Flag
Recommendation
Market research prior to entering new markets will help in avoiding the
unprofitable ventures as in the Middle East.
In order to compete on the level with multinationals, rather than just
being a first mover, Jollibee would have to take its performance to the
next step and prove that it could continue to build its competitive
advantage.
Internal Conflicts
Recommendation
Management should have recognized that the hostility coming from
Domestic was underscored by a fear that International division would
eclipse their division. Rather than cultivate this fear, Management
should have made it explicit that the International Division’s success
would have reflected on the company as a whole. By simply increasing
communication, Kitchner could have enlisted Domestic’s support in his
endeavors.
Noli Tingzon
The arrival of Noli Tingzon marks a critical juncture for Jollibee, where it
will begin entering the US market. The key to Jollibee’s success in Daly
City will be its ability to find a local partner that can leverage its
organizational advantage, while navigating the challenges of
conducting business in the United States.
Papua New Guinea, Hong Kong, or Daly City?
On the other hand, Daly City represents a market with huge profit
potential. The diversity of the area allows Jollibee to broaden its niche
to include the Asian-Hispanic segment and to do so without having to
make major adjustments to its menu. Although its experience in
Guam is no guarantee of success, it provides a platform from which the
country can build its competitive advantage by learning to adapt its
menu for the tastes of mainstream America.
Recommendation
Given the three alternatives, Jollibee’s most viable option is Daly City
provided that it is able to obtain a partner who can help it overcome
the challenges of operating in the US. Tingzon should only follow
through with the Manila-based businessmen if they are familiar with
the fast food industry in the US; otherwise, the company will need to
find a local partner.
SINGAPORE
Problem- No trust between Jollibee and the local manager
Working with individuals and ideas from cultures different from our
own, is complex and filled with opportunities to misunderstand and
offend everyone involved. It requires time to develop trust and
understanding for all the players involved.
TAIWAN
Problem- Conflict due to lack of trust between partners
Need for Organizational Compatibility as a Criterion for Partner
Selection
Recommendations
Communicate
Impart a vision of customer service to its employees that
includes clear and understandable long-term goals. “Once
employees know the direction the organization plans to take,
they are more likely to get behind the effort”
Empower
Encourage employees to exercise the flexibility and judgment that
customers’ expect. Employees need to be able to answer a customer’s
questions and to make routine decisions.
Provide the resources the staffs require to succeed, including coaching
and training. It is important to
(1) define the working positions required to implement the strategy
and
(2) determine the needs of the human resources involved and the
convenience of training or hiring them.
A flair for negotiation: The talent to analyze differences in a
creative way, to discover shared solutions.
Flexibility: The ability to give different answers and approaches,
depending on the situation involved.
Humbleness: The ability to accept others as equally worthy of
consideration.
Acceptance of risk: Not being afraid to make mistakes.
Ability to reconstruct: The ability to repair deteriorated personal
relationships.
Integrity: Natural honesty and reliability.
Sensitivity: Finding it easy to listen and observe attentively, to
capture subtle data from conversations and non-verbal
communications, and to know when and how problems must be
addressed.
Patience: The ability to perform well in unforeseen and uncomfortable
situations.
Curiosity: A permanent interest in investigating and learning.