Jollibee began as an ice cream parlor in 1975 and has evolved into a major fast food corporation in the Philippines and numerous other countries in Asia. The company still continues to pursue international expansion and has been successful with 24 stores brining in over 9 million US $ in Europe. There have been many ups and downs in the process of international expansion both inside Jollibee and from outside forces. Due to goals that were a little too heady set and attempted to be achieved by Tony Kitchner, it is now up to Noil Tinzon to pick up the pieces and determine what the best strategy is to be used for international expansion. The three entry options he has to weigh are expansion into New Guinea, adding an additional store in Hong Kong and expansion into California. His decision will shape the international division at Jollibee. Question 1
Jollibee was able to build its dominant position in fast food in the Philippines for a number of reasons. The company had its roots in the food industry in the Philippines early on with the ice cream business, so the entry barrier into fast food was very low. It was a smooth transition from being ice cream only to fast food after the oil crisis in 1977. This transition was also aided by using a recipe that was developed in the Philippines and was appealing to the markets that were serviced by Jollibee’s. This would eventually be a contributing factor in the competitive advantage Jollibee held over McDonald’s in it’s the Philippins. Jollibee also built itself around the solid foundation of the “Five F’s”. Friendliness, flavorful food, fun atmosphere, flexibility and focus on families summed up Jollibee’s philosophy and allowed for Jollibee to become a recognizable brand throughout the Philippines. The operations and marketing strategies employed by the company can be credited with establishing a dominant position through the previously mentioned actions. Once the Jollibee brand was established, growth was necessary to continue the company’s success. The company was able to finance their growth completely in house. They did not incur any debt or accrue any interest in the process of growing. When we look at the Philippine’s culture on spending, they save then spend and don’t particularly like to incur debt or pay interest. Jollibee reflected the Filipino mentality. The Tan family continued to be in control of Jollibee’s destiny and provided stability through the growth process. This stability assisted in the company’s continuing success especially in 1981 when McDonald’s entered the Philippines. When McDonald’s entered the market, Jollibee was faced with its largest threat. It was a David vs Goliath situation in terms of resources and experience. Fortunately for Jollibee, it was better in tune with the local culture. Jollibee’s home grown recipe for its burger was preferred to McDonald’s burger in market research conducted in the Philippines. By being established in the Philippines prior to McDonald’s entry into the marker, Jollibee had set the bar for competitors that were coming into the fast food market in the Philippines. The expectations of consumers were set by Jollibee and McDonald’s failed to match the expectations set by Jollibee. Even though McDonald’s had the cheaper prices and more intense international presence, consumers still chose Jollibee based on personal preference. They were willing to pay more for a Jollibee burger that was spicier than pay less for a burger they viewed as inferior at McDonald’s. Jollibee also had luck on its side. The political and economic crises in 1983 slowed McDonald’s expansion in the Philippines. When this happened Jollibee went for it all and expanded its core menu to include offerings tailor made for local consumers. Once the dust had settled from the political and economic crisis, Jollibee had expanded to 31 stores, thus having an even more dominant position in the fast food market in the...
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