Jollibee Case Study
Jollibee started in 1975 as an ice cream parlor (Barlett, Bemish 2010). It diversified into sandwiches after the company’s president Mr. Tony Tan realized that events triggered by the 1977 oil crisis could double the price of ice cream (Barlett, Bemish 2010). However, the business incorporated a year later with only five stores in Manila. Its name is inspired by the president’s vision of employees working happily and efficiently like bees in a hive (Barlett, Bemish 2010). Today, they have a wide range of products including hot meals and snacks. The company utilized internally generated funds to expand very fast until 1993 when the company went public raising 216 million pesos. The business was mainly run by the Tan family members but the marketing and finance divisions were always managed by professionals who were not family members. (Barlett, Bemish 2010) The mission of Jollibee is extremely simple: to provide an enjoyable eating environment. (Rarick 2011) Jollibee attempts to differentiate itself by maintaining a customer-focused corporate culture, which has led to a large number of loyal customers. (Just Jollibee 2007)
Jollibee faced its first major form of competition in 1981 when McDonalds entered and quickly grabbed a 27% market share compared to Jollibee’s 32%.(Barlett, Bemish 2010) Jollibee capitalized on their only advantage, that the market preferred their spicy tasting burgers to McDonald’s plain beef patty, and with the economic and political crisis in August 1983 when a political opposition leader was assassinated, McDonald slowed its investment and Jollibee took the lead. (Barlett, Bemish 2010) Numerous customers and friends of management thought that Jollibbee would become a franchisee of McDonalds. No one believed that a small company like Jollibee would be able to survive such a large competitor coming into the market. However, Tony Tan set high standards and was determined to meet them. (Mighty 2010) The company’s local success attracted investors abroad who requested for franchise rights. The international franchises faced management conflicts; location and partner were identified as the major drawbacks. Eventually, an experienced outsider, Mr. Tony Kitchner was hired, to create and run an autonomous international division. (Barlett, Bemish 2010) His strategy was targeting expatriates and “planting the flag” i.e. opening as many stores as possible in areas with little or no competition. He also modified the menus and gave Jollibee a new world class look. With time, these modifications, recruitment and the fact that the international stores were losing money put a strain on the international division and Kitchner left Jollibee in February 1997. One of the industries’ most experienced managers Mr. Manolo P. (“Noli”) took over the international division. He reviewed the international strategies for opportunities and identified three growth opportunities that would shape up the company’s future strategy. The Papua New Guinea market, where five million people were served by only 3 poorly managed stores. Jollibee’s strategy would become raising the standard of their fast food stores. Another opportunity existed in Hong Kong where the already existing franchises were doing well. The strategy in Hong Kong would be to expand their base, and sort out the prevailing management issues. Finally, an opportunity existed in Daly City, California, where there was a large Pilipino population and low concentration of fast food competitors. (Barlett, Bemish 2010) Jollibee has been growing steadily since with consolidated sales increasing from 500 million pesos in 1984 to 50 billion pesos in 2010 (jollibee.com). The company now boasts more than 600 stores and over 50 international stores (jollibee.com). This is due to the superior menu line up, creative marketing programs and efficient manufacturing and logistics facilities (jollibee.com). This paper will...
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