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.
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.
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.
Interest of the buyers for differentiated products
Differentiated products are necessary to cater to different segments and to retain the interest of the existing customer share. Retaining the existing market share and expanding market share both require differentiation in terms of variety of food provided in the menu.
Tony Kitchners Strategy- An analysis
. 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 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.
Jollibee was able to attain a competitive advantage in Philipines over McDonald’s by doing following things:
➢ Jollibee was...