Entry Mode Strategy for Jollibee Into Australia

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Entry Mode Strategy for Jollibee into Australia

Table of Contents

Executive Summary2
The Jollibee Phenomenon4
Overseas Expansion and Modes of Entries4
Company Analysis5
Values – Mission – Vision5
Distinctive competence8
Foreign Market Analysis9
The Australian Economy9
Legal and Political Environment9
Entry mode selection11
Conclusion and recommendations14
Reference list17

Executive Summary
Jollibee Foods Corporation (JFC) is a highly successful Philippines’ based food services company that operates over 1,700 stores locally and internationally. JFC has developed its international business over three distinct strategies. Its corporate strategy is one of related diversification into the fast food, restaurant and bakery sectors of the food industry. Its international business strategy focuses on establishing market share by acquisition, joint venture and franchising, often by initially targeting high Filipino population centres, and also in differentiation by localizing their menus to suit various cultural tastes in all their overseas markets (Jollibee 2009a). JFC has successfully adopted a transnational strategy being able to combine the benefits of global scale efficiencies in its regional management business model with the benefits of local responsiveness by adapting for local tastes. It depends on an integrated network and teamwork to drive the needs of the marketplace and the need to be competitive (Jollibee 2008). JFC’s early success is built on adopting McDonald’s business model, and tailoring its menu to local tastes. Subsequently, JFC has built an outstanding set of capabilities with many operating at the level of core competencies. Its only potential weakness is its ongoing reliance on founder, Tony Tan Caktiong and his family who continue to be the driving force behind the innovation and culture of the organization (Conde 2005). Brand building has always been a priority for Jollibee, and the company has spent millions appealing to children and families. The result is a level of brand awareness usually reserved for major global competitors like McDonald’s. A mid-90s market study found that nearly 100% of respondents in the Philippines knew the Jollibee brand (Wong 2007). JFC has invested heavily in advanced technology, marketing and relationship management with suppliers, through research and development in order to study consumer trends in tastes both locally and internationally, and in its complex commissary and service operations to speed up efficiency in the value chain (Noda 2007).

Australian’s stable political environment, resilient economy, strong and independent financial sector and an effective and proven regulatory financial system, means the Australia provides a sound opportunity for foreign direct investment and business growth expansion for JFC. However, the threat of competition is high in Australia’s mature fast food market (Austrade 2010b). Following proven success of Jollibee’s expansion into other countries by establishing stores in cities with a high expatriate Filipino community, Australia provides the same opportunity for target marketing. In this report, we will recommend franchising as a low investment and relatively low risk entry mode into the Australian market for the company’s flagship fast-food restaurant, Jollibee. JFC will need to develop a sound plan for its expansion into Australia including franchise contracts that meet Australian legal standards and the ability to market, sell and service franchises in Australia.

The Jollibee Phenomenon
Jollibee Foods Corporation (JFC) is engaged in the development, operation and franchising of restaurants under the brand name Jollibee. Jollibee is one of the Philippines’ phenomenal business success stories: what began as a two-branch ice cream parlour in 1975 offering hot meals and sandwiches became incorporated in 1978 with seven outlets to...
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