Case 3: JOLLIBEE FOODS CORPORATION
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Question 1
Jollibee’s effective policy, backed by economic and political activities in the country, allowed the company to build its leading position in the Philippines’ fast-food industry. Its “Five Fs” viewpoint (friendliness, a fun atmosphere, flavorful food, flexibility in outfitting to customer desires, and a focus on families) recapitulates its strength over its competitors.
McDonald’s company had more money and vastly developed systems, but Jollibee was capable to compete head to head by taking advantage of its most important competitive advantage: Philippine customers preferred Jollibee’s hamburger taste by a wide margin. Takeing on a frontal attack strategy, Jollibee reacted to the impressive operation of Big Mac, Mc Donald’s biggest and best-known sandwich, by launching an even larger burger of its own, referred to as the Champ (Bartlett, Ghoshal, & Birkinshaw, 2003).
Jollibee was able to seizure the economic and political disaster in the year 1983 to its advantage. While McDonald’s cut down its investments in the the Philippines, Jollibee profited from the Filipinos’ enthusiastic display of national pride. The company not allowing fortune to sit on its lap, it took full advantage of the opportunity to expand its market by proliferating its core menu with taste-tested provisions of chicken, spaghetti, and a exceptional peach-mango dessert pie, all refurbished to the local customers’ tastes. After three years, Jollibee had opened 31 stores and had already conquered the market.
Question 2
Tony Kitchner’s success as the first head of the Jollibee’s international division (ID) is, largely, a failure because of the entrance strategy that he used, and the type of business he built.
Kitchner trailed the sprinkler approach, launching the company in many countries simultaneously, for the reason that he had faith in first-mover advantage in the fast-food business. He initiated speedy expansion in these nations with the hope that by growing the number of stores, the company could build brand alertness which in turn would definitely impact sales positively. Conversely, his expectation did not come into existence easily because only after realizing a certain level of sales may possibly most franchisees have afforded the marketing and advertising needed to build brand awareness. The other encounter is resource constrictions, especially in the accessibility of ID staff to support numerous simultaneous start-ups. Regardless of the problems faced through this method, Kitchner still pressed on with his rapid growth.
Kotler and Keller (2009) affirm that a sprinkler approach is appropriate when first mover approach is critical and when a high level of competitive strength prevails. The main risk, still, is the significant resources needed and the struggle of planning entry policies into many different markets. Kitchner possibly would have been right in selecting the sprinkler approach on account of the first-mover advantage in the fast-food industry. He was not, on the other hand, able to consider the promptness of the company’s resources to undertake this rapid expansion; henceforth, the strategy brought about disappointment.
Kitchner thought that the international division ought to be distinct from Jollibee Philippines, with a different uniqueness and competences. The superior image generated by the ID erected a gap between them and their Philippines equivalent. The ID intended to do everything contrarily. However, the group disregarded the significance of their Philippine equivalents, and the indispensable role that they will have to participate in the international expansion. The ID, in spite of the expertise of its people, still demands the skills and technical knowledge of the Philippine people. The ID requires access to value-chain undertakings such as R&D and Finance, which are managed by the Philippine operations. The unease between the two groups hindered the valuable product modifications, such as menu modification, essential for the international market to welcome Jollibee. Collaboration between the ID and the Philippine side is important in the international growth. Kitchner could have won the backing of the Philippine side had he improved communication with them, and let them to feel that the achievement of the international division is the achievement of the entire organization (Bartlett & Ghoshal, Transnational Management: Text, Cases, and Readings in Cross-border Management, 2000).
Question 3
Noli Tingzon is confronted with three instantaneous growth opportunities that he knew would shape the development of future strategy.
1) Papua New Guinea: Bettering the Standard
The unmet needs of the under-developed market in Papua New Guinea represent huge potential market for Jollibee. With only three straight competitors, the company could effortlessly capture the market by offering a high quality of service and menu. The country’s market, nevertheless, may not be able to sustain the target critical mass of twenty stores for new players (Wirtz, 2005). Even though the franchisee highlighted that he is willing to put together more stores if necessary and would give all the capital so that Jollibee would gamble no equity in the venture, the low productivity exhibited by the market should warn the ID that it is not thus far the right time to add a store in the country. In spite of the franchisee’s willingness to take the chances, the international division’s verdict should still be in line with the business’s thrust which is to go unhurriedly, ensuring that each store is cost-effective so that it would make money for the franchisee, as well as for the corporation.”
2) Hong Kong: Expanding the Base
Tingzon has to determine whether adding a fourth store in the Hong Kong market was viable, given Hong Kong risks managerial glitches. Even if he were to sanction the store, he still requires to determine whether to adopt the menu variations that might compromise quality control.
After frustration from the rapid expansion policy introduced by Kitchner, Jollibee’s CEO articulated that the company desired to go slower, ensuring that each store was profitable – this ought to also be the thrust of international development with the supervision of Tingzon. With experiences from the past, the company must first ensure that it is able to settle the issues in the existing stores before contemplating of adding a new one.
The following truths have to be well-thought-out by the company in its Hong Kong tasks:
· Chinese want to work for Chinese;
· Chinese consumers are hesitant to interconnect with non-Chinese crews for fear of being misinterpreted; and
· a hale and hearty lifestyle is embedded in the Chinese culture.
These concerns, to some level, are difficult to work out because they are culture tied. The company cannot modify these facts, but it can modify its strategies to exist and thrive in this type of market.
If Jollibee wants to prosper in Hong Kong market, it has to change its marketing practices. Kotler and Keller (2009) indicated that successful global marketers revolutionize their conservative marketing practices. Administration style has to match up the country’s culture so as to attract potential administrators and crews to the company. Product adaptation is similarly important. Jollibee has to modify its products to match local conditions or favorites. The company cannot push its cholesterol-packed merchandises into a health-mindful market.
The proposed extension to a fourth store in Hong Kong offers an opportunity for increased prominence and brand acknowledgement among locals, but this would only be a viable option once the company has settled the existing culture-bound concerns faced by the prevailing stores in Hong Kong.
3) California: Supporting the Settlers
California presents the most comfortable area for global expansion for Jollibee since it is easier to adjust to their language, laws and beliefs – Kotler and Keller (2009) would refers this to as psychic proximity. With its Guam involvement, the company is now equipped to enter the mainland. The flavor of Jollibee products charmed to Americans in Guam; this info makes the expansion easier as the menu, without modifications, will just be transferred from the Philippines to California. The firm, however, should not only depend on this information solitary, it needs to carry out a market research to well understand the needs and desires of the prospective market. Furthermore, Jollibee needs to get associates who are well-informed of the ins and outs of American market set-ups. It has to evaluate the capability of the prospective Manila-based partners; if they are not acquainted with the fast-food industry undertakings in the U.S., it would be safer for Jollibee to get a more proficient local partner.
Being the origin of fast food, California offers a large likely market for Jollibee, but at the same time the place also has a good number of fast-food chains which are possible threats to the admission of Jollibee in the California market. What the firm can do is to unleash intensive marketing and advertising campaigns to announce its products in the location. As a market contender, it can wage guerilla warfare by providing selective price cuts and powerful promotional blitzes.
References
Bartlett, C. A., & Ghoshal, S. (2000). Transnational Management: Text, Cases, and Readings in Cross-border Management. Irwin/McGraw Hill.
Bartlett, C. A., Ghoshal, S., & Birkinshaw, J. M. (2003). Transnational Management: Text, Cases, and Readings in Cross-border Management. McGraw-Hill.
Wirtz, J. (2005). Services Marketing in Asia: A Case Book. Pearson/Prentice Hall.
Kotler, Philip and Keller, Kevin Lane (2009). Marketing Management, 13th Ed. New Jersey: Pearson Education, Inc.