Jollibee Foods Corporation (A)
From the brief description in the case, ascertain the underlying structure and economics of the fast food industry.
The fast food industry began in California and spread throughout the world. THe major goal was to serve time-constrained customers by providing good-quality food in a clean dining environment and at a low price. Profitability depended on high customer traffic and tight operations management. Store location was critical as it involved large investments and high fixed costs. Also key were strict operations management and tight control on costs. Service also had to always be up to standard. Efficiency was key when it came to labor.
In order to succeed and develop brand recognition, stores needed to franchise to expand quickly and gain economies of scale. Though franchising was necessary, it was important to keep chains consistent and reliable.
On the basis of this understanding from 1 above, how was Jollibee able to build its dominant position in fast food in the Philippines? What sources of competitive advantage was it able to develop against McDonald’s in its home market?
Jollibee had the first mover advantage in the Philippines market as well as a strong understanding of the Philippine consumer. Because they were able to enter the market before McDonald's and gain dominant presence they were able to set the standard that McDonald's was held to. They were also able to gain market share that McDonalds then had to take from Jollibee which is more difficult than gaining market share when you are the only fast food option. Because the founders and workers were all Philippine, they were able to tailor the menu to Philippine tastes. Jollibee burgers beat McDonald's burgers in taste tests every time. This knowledge of Philippines and Philippine culture helped Jollibee gain greater market dominance when the Philippines underwent a period of political instability when one of their leaders was...
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