Jollibee Foods Corporation-Case Study How was Jollibee able to build its dominant position in fast food in the Philippines? What sources of competitive advantage was it able to develop against McDonald’s in its home market?
Formed in 1957 as a family-owned ice cream business in Philippines, Jollibee grew to become an empire in the fast food industry in the country (Bartlett 1). After overcoming many challenges that were brought about by the oil crisis of 1977, the company diversified its products to making and selling sandwich. By 1978, Jollibee had opened five food stores in different parts of the country. An analysis of the case shows that there were a number of factors that enabled Jollibee to dominate the Philippines fast food market. Firstly, Jollibee was able to establish its dominance in the Philippine fast food market because of low barriers to entry in the Philippine fast food market. Secondly, the company managed to establish dominance in Philippines fast food market by maintaining the preparation of home-style Philippine recopies. Sticking to making Philippine recipes ensured that the company maintained high demand from the locals. thus its success. Thirdly, the success of Jollibee was also attributed to the fact that the company ensured that its growth was financed internally (Bartlett 3). Internal financing ensured that the company avoided the burden associated with debt financing. Jollibee also managed to build a strong empire in Philippines fast food industry by developing an effective management capacity, peculiar political situation, and by adopting the Five F philosophy namely Flavorful Food, Fun, Flexibility, and Families (Bartlett 1). Other factors, that helped Jollibee establish an empire in Philippines, include treating employees with respect and keeping them highly motivated and treating customers with courtesy.
As much as McDonalds was well established and had stable financial footing, Jollibee managed to compete with it favorably by capitalizing on its competitive advantage. Firstly, Jollibee managed to compete effectively with McDonalds by introducing a Philippine hamburger. Secondly, the company also managed to compete effectively with McDonalds by introducing a larger hamburger called the "Champ," which attracted huge demand from the Philippine consumers (Bartlett 2). Thirdly, unlike McDonalds whose operations were badly affected by political and economic crisis, Jollibee was able to turn the political and economic crisis of 1983 to its advantage, thereby enabling it compete favorably with McDonalds. Additionally, Jollibee managed to compete effectively with McDonalds by introducing new items, such as chicken, peach-mango desert and spaghetti in the menu, made to the taste of the Philippine customers. Above all, Jollibee enjoyed huge following because it is a local company. thus a national pride.
How would you evaluate Tony Kitchners effectiveness as the first head of Jollibees international division? Does his broad strategic thrust make sense? How effectively did he develop the organization to implement his priorities?
Tony Kitchner as the head of the international division is a failure. This is because Kitchner not only used a poor entry strategy, but also failed to build an effective international division. The case reveals that Kitchner adopted a sprinkler approach of market entry. According to Kitchner, entering many foreign markets simultaneously would enable the company establish a strong footing in the fast food industry (Bartlett 5). However, his hopes were dashed as the company strangled to achieve the level of success he expected. Again, after entering these foreign markets, Kitchner embarked on rapid expansion by opening up many stores believing that doing so would help enhance the brand awareness of the franchise, thereby helping increase the sales volume. However, all these expectations failed to materialize because Kitchner failed to conduct intensive advertising and promotion of the franchise in the new markets, something, which he ought to have done to be successful. Personally, Kitchners strategic thrust does not make sense, because it is not practical, considering the business nature of the market where the company operates.
Nevertheless, Kitchner managed to develop and organize the international division effectively and efficiently. Kitchner did this by recruiting external professionals in different departments, including finance, marketing, product development and quality control to keep the company innovative and appealing to customers (Bartlett 5).
As Noli Tingzon, how would you deal with the three options described at the end of the case? How would you implement your decision?
When Noli Tingzon was appointed the General Manager of International Division in 1997, he had to three options to consider ensuring immediate business growth. The three options include raising standards in Papua Guinea, expanding the base in Hong Kong and supporting settlers in California (Bartlett 13). Therefore, if I were Noli Tingzon, this is how I would deal with the three options. Firstly, to succeed in raising standards in Papua Guinea, Tingzon should consider striking a franchise agreement with Gil Salvosa because of the less risk and greater benefits associated with making such an agreement. However, to deal effectively with the option of expanding base in Hong Kong, Tingzon should avoid operating a fourth store because the risk of failure far outweighs the benefits. Instead, Tingzon should only consider opening the fourth store in Hong Kong later after understanding the market dynamics. However, because California has a large population of Filipino and Asians, it would be a good idea if Tingzon considered expanding business operation in California. However, before making a full move to expand business in California, it would be advisable that Tingoni consider opening a single store first to see how California residents respond to menu and whether or not the American market can be supported by the Filipinos.
Bartlett, Christopher A. Jollibee Foods Corporation (A): International Expansion. Harvard Business School, 1-23. Print.