Jollibee Foods Corporation Analysis

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  • Topic: Jollibee, Tony Tan Caktiong, Greenwich Pizza
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Jollibee Foods Corporation

Jollibee Foods Corporation owned by the Tan family began in 1975 as a basic ice cream parlor and subsequently expanded its menu offering in the form of sandwiches and hamburgers as a result of the increased cost of oil and the President Tony Tan Caktiong (TTC) anticipated ice cream prices to soar. The company culture was developed on the Five F’s: Flavor, Fun, Flexibility, Family atmosphere and Friendliness. The years to follow, Jollibee Foods began to expand domestically opening five stores and proceeded to incorporate as Jollibee Foods Corporation. The family owned Corporation rapidly expanded domestically throughout the Philippines. Jollibee Foods began to diversify its product offerings by acquiring Greenwich Pizza Corporation as well as entering a joint venture with Deli France. The Corporation went public in 1993 which the family maintained the majority of ownership and control of the company.

Jollibee Foods first major challenge was McDonalds entering the company domestic market in 1981. McDonald size and reputation as being one of the major fast food companies was a concern for Jollibee Foods. Although the domestic consumer preferred the taste of Jollibee hamburger the threat to the company’s market share was real. McDonalds began entering into the Philippine market by opening six restaurants within two years. McDonalds began an extensive advertising campaign and proceed to surpass Jollibee’s sales by 1983 which resulted in a 27% share of the market. The response to McDonald’s threat was a new product called the Champ’s, which was larger in size and spicier in taste that appealed to the Philippine consumer. However, in 1983 the political opposition leader Benigno Aquino was assassinated resulting in economic and political uncertainty. Foreign investment in the Philippines slowed as a result, which Jollibee took advantage by capitalizing to broadening their menu to include chicken, spaghetti and peach mango dessert pie for the local markets. Once the political uncertainty was resolved McDonalds began to consider expanding in the Philippine market. However, due to the expansion of Jollibee Foods to 31 stores resulting as a dominant presence in the market, McDonalds reconsidered proceeding with expansion in the Philippine market. The strategy of expanding to become the dominant provider of product offerings (food) during the economical and political uncertainty was critical to defend Jollibee’s domestic market. Jollibee was the first mover in the domestic market in the Philippines that shaped the preferences and expectations of its customers.

Jollibee’s proceeded to expand internationally within the Asian countries from 1986 through 1997 through franchises and joint ventures. The new locations included Singapore, Taiwan, and Indonesia. The challenges of expanding into international markets included poor relations between Jollibee and the local management within the new country. The local partners ran the operation at the international location. The issues ranged from the condition of the facilities, management of the franchise, resentment of operational control, and communication issues with domestic operations resulted in major challenges. TCC entered into another joint Venture with Brunei located in the island of Borneo. The major difference in the joint venture was that the partner was silent which allowed Jollibee to run the operation and maintain operating control. The lesson learned in the first international expansion was the company had to maintain operational control in order to avoid the issues that resulted in conflict with their respective partners and counterparts. The expansion of business in the international markets was based on the flawed strategy of improper selection of franchises and partnerships.

In response to the challenges of the first international expansion, a new approach was necessary to facilitate future International efforts...
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