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The History Of Jollibee Dates Back To 1

By clo0tie21 Nov 18, 2014 1395 Words
The history of Jollibee dates back to 1975, when a Filipino entrepreneur Tony Tan Caktiong (Tony) set up a two-outlet ice cream parlor business in the city of Manila. His father used to operate a kitchen in Fujian (China), which was where Tony's association with the food services business began. Though the ice cream parlor business was doing well, Tony wanted to do something bigger in the foods business - in the form of a fast-food outlet chain. His vision was inspired by the global popularity of companies like McDonald's (which incidentally, was planning to enter the Philippines during that time), Wendy's and Burger King (these two already had a presence in the Philippines). Deciding against becoming a McDonald's franchise, Tony established his own chain of seven hamburger outlets in 1978 under the name Jollibee. In 1979, Tony and his brother went to the US to study the fast-food business. They spent a couple of weeks looking at the kind of equipment used, the retail outlets, the food served and various other things.

Tony decided to copy almost each and every aspect of US fast-food majors, particularly McDonald's.  He said, "From the start, we were willing to copy."The aim was to avoid 'reinventing the wheel' and to benefit from tested business practices. By establishing Jollibee in 1978, Tony pre-empted McDonald's entry into the country. Tony was aware that Jollibee could not compete with McDonald's which had financial muscle and decades of expertise in the business.

Therefore, he decided to differentiate his company by making it a 'symbol of Filipino pride.' Thus, while Jollibee hired US consultants for assistance on the franchising and retailing fronts, it took decisions regarding the products on its own. All the food products were prepared keeping in mind the tastes and flavors prevalent in the country. Since Filipinos liked eating out in groups and ordered different dishes, the menu was quite exhaustive (as compared to the limited menu offered by US fast-food outlets). This strategy worked well and from the very beginning, Jollibee became a huge hit with the customers. In line with the 'copying' theme, Jollibee launched its own mascot (a la Ronald the clown from McDonald's), a human-like bee,3 in 1980... Introduction

In early 2003, message boards on many websites on the World Wide Web were flooded with rather disturbing news about Jollibee Foods Corp. (Jollibee), a fast-food major from the Philippines. The message claimed that the company had misled millions of customers into eating what they believed were burgers containing pure beef. Jollibee was reported to have been using earthworms in its beef patties for many years to get customers 'addicted' to certain so-called chemical elements in earthworms. The company strongly denied the above allegations through a statement released on its website. It showed in detail its manufacturing facilities on its website and stated that the allegation was a hoax. The incident soon died a natural death - however, it seemed to have brought Jollibee in the 'big league' of global fast-food majors who had been accused of such practices in the past. Not that it needed any such dubious claims to fame - the company had been earning laurels from the global corporate world for many years now; In 2001, The Far Eastern Economic Review1 (FEER) named it the top corporation in the Philippines and the sixth leading corporation in Asia.

Jollibee had also won recognition for its contribution to the economy of the Philippines and the success of its strategies by the Asian Business Review, leading management consultants Hewitt Associates, and many Filipino corporate bodies. Jollibee also had the distinction of being one of the very few companies that had been able to give multinational fast-food giants such as McDonald's and Burger King a run for their money. While Jollibee had a market share of over 60%, its closest rival, McDonald's had less than half of that.

Including its pizza and pasta outfit (Greenwich Pizza), its Chinese quick-service restaurant chain (Chowking) and its bakery products chain (Delifrance), Jollibee had well over 902 outlets across the world by the end of 2001 (Refer Exhibit I). The company did not seem to be content with ruling the fast-food market in the Philippines (Refer Exhibit II); it was aggressively expanding on a global scale as well. By 2002, Jollibee had over 31 outlets abroad. Some of the countries it had expanded into were the US, Hong Kong, Vietnam, Indonesia and Brunei. The story of the evolution of a small ice cream parlor into a fast-food giant with a net income of P 1.05 billion2for the year 2002 (Refer Exhibits III and IV for financial statements) has been closely-followed for years by many companies, corporate leaders, business analysts and strategists.

Issues:
» Understand how an entrepreneur with a clear vision and mission can achieve a leadership position in the face of competition from MNCs

» Understand how innovative operational and differentiation strategies can transform a small local company into a market leader in spite of stiff competition "The Jollibee story is an inspiring saga of corporate vision, commitment to quality and customer service, and state-of-the-art strategic marketing." - An article on Philippine Marketing Association's website, www.pma.philonline.com. "If McDonald's is the Goliath of fast-food, Jollibee is its Filipino David. The Philippines is a huge embarrassment to McDonald's." - The Economist, February 28th, 2002.

"Jollibee has grown to be so well loved that every time a new store is opened, especially overseas, Filipinos form long queues to the store without fail. It is not just a place where they feel at home; it is a stronghold of heritage, a monument of Filipino victory." - www.jollibee.com.ph

The Recipe for Success
Jollibee attributed its growth over the years to its efforts towards establishing a superior manufacturing and logistics framework; to the extra attention paid to the menu; to its marketing efforts; to Tony's strong leadership; and to its focused approach towards globalization. According to an article in the Asian Business Review, Jollibee also owed its success to its constant attention to three crucial issues: innovation, testing and piloting... Operational Excellence

On the operational front, Jollibee's quest for excellence reflected right from the stage of construction of new outlets. The company used pre-fabricated material to construct stores, thus saving a substantial amount of time and money.

Jollibee had two commissaries located in Pasig City and Mandaue City. While the Pasig commissary catered to the Luzon area, the Mandaue commissary looked after the needs of the Visayas-Mindanao area. These two commissaries handled activities such as raw material and ingredient planning, warehousing, manufacturing of processed foods, distribution and logistics...

Serving The Customers
At Jollibee, customer service was given a lot of importance. In fact, customer service was one of the key result areas (KRAs) on which employees were evaluated at the company. The importance given to this issue was also reflected in the company's corporate mission and vision statements (Refer Table I for Jollibee's values, mission and vision statements). The company advertised extensively through the print as well as the electronic media. While the national-level campaigns were handled centrally, local promotions were managed and implemented by individual stores...

Serving The Employees
At Jollibee, employees received extensive training so that they could learn the corporate values of integrity and humility. The company reportedly had a 'family-like' atmosphere at work, which gave the employees a sense of belonging and togetherness. Not surprisingly, Jollibee was ranked 16th in Asia and 1st in the Philippines in a 'best employers' survey conducted by Hewitt Associates, The Asian Wall Street Journal and FEER in September 2001. Claro F Certeza, Jollibee's Vice President (Corporate Affairs), said, "The high engagement scores garnered by Jollibee could well be a reflection of the symbolic relationship between management and employees where performance is seen as something that would ultimately rebound to everybody's growth and societal improvement..." Serving The Franchises

Almost half of Jollibee's stores in the Philippines were franchised. The company gave special attention to the selection of franchising partners. According to company sources, all prospective partners were evaluated on their standing the community, their leadership and people-handling skills, their willingness to devote time to the management of the restaurant, and their successful completion of the training program [much before the outlets became operational, franchises were given training under a Basic Operations Training Program (BOTP)]. Jollibee's franchising partners had to invest between P15 and P30 million, depending on the size of the store and the facilities provided...

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