Jollibee †fast food the filipino way (case study) Essay

1. Introduction Strategic management is a comprehensive study of how a firm performs during its course, with regard to its predetermined objectives, how they plan to achieve these objectives, and how much resources are expendable for those objectives. The process to determine the strategic management involves considerations of company’s strategic advantages and matching it with existing conditions in business environments. Gerry Johnson and Kevin Scholes (2001) reveal there are three ‘origins’ of strategic management. In their book, Exploring Strategic Management, they mention that a corporate strategic management could rise from: ? Experience of operating corporation’s daily activities ? Regulated designing steps as mentioned above or, ? Novel and innovative ideas that come form evolutionary and complex understanding of the business environment. Concerning the strategic management, this paper discusses the case on Jollibee Food Corp (Jollibee). The company has worldwide reputation as fast-food provider from Philippines. The interesting part when discussing about Jollibee Food Corp lies on the fact that the company was named to be McDonald’s a huge embarrassment, according to the Economist on its February 2006 issue. Moreover, the discussion will address the potential future strategies for Jollibee Fast Food. The report will highlight a through analysis of the organization under review, together with recommendations for future strategies to secure opportunities, or to defend against threats. Furthermore, the analysis of Jollibee Fast Food will also focus upon applying the theory of strategic management. There are six points of discussion about Jollibee Fast Food; they are systematic process of strategic management and decision making, key strategic problems, key strategic opportunities and threats, value, alternative courses of action, and recommendations as to the company’s future course. 2. Analysis of Jollibee Fast Food 2. 1. Key issues of Systematic Process of Strategic Management and Decision Making The development of business involves a series of suitable decision making that drive a company to achieve a designated position in a particular market or industry. Concerning the decision making nature, I found a brief explanation from a research, where the researchers explains that there is no â€Å"pure† decision merely based on intellectual logic or â€Å"purely† based on emotion (Biology Daily, n. d. ). Their remarks suggest that in every kind of the decision making process, there is an appropriate mixture between emotion and reason of the decision makers. This suggestion is in line with nature of storytelling that also composes of mixture between the two factors. Although decision-making process could not merely depend on rational process, I found that it makes sense to assume that too much emotion may cause a decision to be flawed or vague. Under such circumstances, in order to make a sensible decision we must dispassionately consider evidences we have. The theoretical perspectives in strategic management and decision making, as mentioned above, also happened in the case of Jollibee in which the decision to adopt McDonald’s and U. S. fast food chain and to localize their offerings involves both rational and emotional decision making. 2. 1. 1. â€Å"Copy† Strategy. As mentioned above, strategic management involves three broad activities; they are performs during its course, with regard to its predetermined objectives, how they plan to achieve these objectives, and how much resources are expendable for those objectives. Concerning the Jollibee case, during its first stage, the company asserts that from the start, their objective is to copy existing fast-food business practice in order to avoid reinventing new wheel and take benefits of tested experiences. In order to achieve the objective, Tony, the founder of Jollibee, and his brother went to the U. S in 1978 in order to gain knowledge about running a fast-food business. The main role model for Jollibee is undoubtedly McDonald’s that later becomes the company’s main rival not only in the Philippines market but also overseas. The interesting part of Jollibee action is that the company decides to compete with multinational fast-food chain like McDonald’s and Burger King by adopting the so-called ‘symbol of Filipino Pride’. This strategic management is taken since the company realizes they cannot compete with McDonald’s that have strong financial backup and supply chain. 2. 1. 2. Address Local. Preferences In addition to copy the fast-food practice that McDonald’s and other U. S. fast-food chain, Jollibee also address the local preferences when competing with U. S. fast-food chain in Philippines market. For example, from the start in 1978, Jollibee address the Fillipino habits like eating in groups, each person orders separate dishes. By adopting local preferences, Jollibee has extensive number of menu compared to U. S. fast food that offer limited menu. Moreover, like McDonald’s that has Ronald as the mascot, Jollibee also provides their mascot appeared as ‘a human like bee’ two years after the fast-food chain establishment. The success of Jollibee continues running although McDonald’s entered Philippines in 1981 since the U. S. competitor did not localize their offering and their price was higher by 5 to 10 percent than Jollibee. Moreover, in order to attract and serve Filipino, Jollibee practice the local greeting culture by saying Magandang Umaga Po, the local preferences that McDonald’s and other U. S fast food retailers do not adopt and practice. 2. 1. 3. Market Expansion Another decision that is noteworthy in the case of Jollibee is their globalization strategy. The company’s first overseas outlet was in Brunei in 1987. The decision to expand worldwide was because the company saw opportunities in foreign markets although their market expansion strategy slowed down due to economic recession in 1997. The decision to adopt dual strategy to expand internally (Philippines market) while keeping their eyes open to international market amidst global economic recession highlight that the company employs both rational and emotional decision. The situation occurs since Jollibee believe that the recession would go away while market opportunities would grow at a breakneck speed afterwards. In addition to initial overseas outlet in Brunei, the company immediately presents other overseas outlets in Indonesia, Hong Kong, and the U. S. The decision was based on the fact that the three countries have significant number of Filipino working there. In the U. S. for example, Jollibee first exists in Daly City, California, whwre 25% of the city population was Filipino descent. 2. 2. Key strategic problems and issues which have arisen and why they have arisen Jollibee has a great reputation in managing its outlets throughout Philippine and neighboring countries. In its home markets, Jollibee is practically the leader in the fast-food industry, outperforming McDonalds by far. The company also gained success in foreign Asian markets, especially ones with significant population of Filipino nationals. Nevertheless, the company is currently facing the challenge of maintaining corporate growth and surviving within the increasingly competitive industry and facing various crises. 2. 2. 1. Core Issue The company is currently planning to expand its business to the United States and perhaps even the European countries. Management believes that such undertaking is necessary to ensure growth for corporate international business. However, analysts stated that this undertaking might not be as successful as Jollibee’s management predicted. This is due to the fact that competition in the global fast-food industry is much more intense compare to the Philippine markets and the Asian market. The company will have to face competitors in their homeland, which is a scenario that receives significant critics because Jollibee is known to be profitable because it took advantage of its knowledge and insights of Philippine people’s tastes and preferences. Such advantage will not be present in the US or European market. In short, to successfully perform the internationalization strategy, Jollibee cannot rely on existing strategies. New strategies that appeal to US consumers must first be discovered. This is the main issue faced by the company today. 2. 2. 2. Technical Obstacles Besides this main problem that will obstruct Jollibee’s expansion strategy, there are others. In entering the US markets, Jollibee is also facing technical problems like procuring suitable real-state and designing the right retail format. Because of the different construction style in US and different consumer preferences, management of the company is forced to build outlets which are actually different than their original plan. 2. 2. 3. Attracting New Customers The company is also having problems in attracting customers. The original strategy of the company is to appeal to Filipinos who are working or living within the targeted country. However, the amount of Filipino nationals who live in the United State is far from sufficient to generate Jollibee’s targeted revenue. Management is dealing with this problem by adding new products that suited local customers. Nevertheless, some of these new products are very different than the original offering of Jollibee and Jollibee is inexperienced in providing such products to the market. Furthermore, this strategy threatens to eliminate Jollibee’s original trademark. The company needs to discover a way to increase the appeal of Jollibee’s original offerings to local customers. 2. 3. Attracting Good Employees Besides having trouble getting customers, Jollibee is also having problems attracting good employees to work in its outlets. Being a new brand in the market with no locally reputable achievements, the company is struggling to attract good people to work in the company. The problem deserves quite an attention because the company is also inexperienced in facing this problem. In its previous markets, the company simply has to pick and choose between abundant applicants. The company needs to revaluate its human resource management programs and discover strategies to attract good employees. 2. 4. Key strategic opportunities and threats Strategic management is the art of designing the business to reach the highest possible success level. The core questions addressed by a good strategic management process are: 1. ‘what are our business objectives? ’ 2. ‘how are we going to achieve those objectives? ’ 3. ‘what resources are needed to achieve such objectives? ’. (‘What is’, 2007) In the case of Jollibee, the company already has a good design of vision and mission statement and the values in achieving those objectives. Corporate values include: â€Å"customer firsts†, â€Å"excellence through teamwork†, â€Å"frugality†,† spirit of family and fun†, â€Å"humility to listen and lead†, â€Å"honesty and integrity†. Corporate mission is to â€Å"bring great taste and happiness to everyone†. Corporate vision includes: â€Å"being the most dominant and best-tasting service restaurant†, â€Å"reaching every Filipino†, â€Å"provide great product taste at all times†, etc. The company is planning to achieve this objectives by attaining the 3B, which are† boosting the standards of fast food industry†, â€Å"build brand satisfaction†, and â€Å"broaden the reach to customers†. These statements represent the first component of strategic management. However, Jollibee must work to evaluate the second and third component mentioned above. In facing existing challenges and to achieve corporate objectives, Jollibee must search into its organizations for competitive advantages and develop the valuable edges to help the company gain more share of the market. These advantages must be cross referenced to the conditions in Jollibee’s foreign markets to discover the appropriate corporate strategy to apply in the foreign markets. The core strategic advantages of the company are: †¢ Innovation. In its home market and the market it has been operating in since its inception, the company was known to be highly innovative. The company developed from an ice cream parlor to a chain of the most successful fast-food counters in Philippine. Today, the company has not lost its touch in innovation. New products are developed and designed as the company perform its daily operations and generated new menus and methods of preparing food. †¢ Sensitivity toward all customer segments In my personal opinion, Jollibee is successful because of its main weapon, sensitivity toward customer preferences. The company took notice of the different segments of customers that come into the outlets and find the best possible way to satisfy their needs. Creating a variety of meals instead of the standard and non-variative products which is considered to be the character of fast-food outlets, designing children’s meals, creating a special program to address the take-away segment are just some example of how the company address the needs of its customers †¢ Preserving Quality of Operations The company uses the newest technologies to enhance its operations. The manufacturing process within the outlets is constantly improved by benchmarking programs and adopting new processes and technologies. This should be identified as a weapon of corporate growth and entry into foreign markets. †¢ Good relationship with Franchisers The company treats is partners and franchisers like family in accordance to Philippine customs. Inputs are regarded and the company truly work together with franchisers to develop the quality of outlets’ operations. †¢ Leadership Some analyst believed that most of the current success of the company is the result of one man’s hard work. Without the leadership qualities and the boldness to spot a good strategy and actually go through with the idea, Jollibee would not be what it is today. There is little doubt in stakeholders’ minds that corporate survival and growth for all the years are directly related to Tony’s presence as corporate leader and mentor. Identifying these strengths and cross referencing them to the challenges faced by the company in its internationalization plan, we should be able to conclude the following strategic opportunities: †¢ The company possesses notable chances to succeed in international markets because of its qualities. However, because the international markets have much more intense competitive environment, the company must always try to develop the quality of its operations in all aspects. Preserving the present quality of operations and active innovation, and also enhance them to a new level will allow the company to be among the top players of the international fast-food industry. †¢ Facing new environments, all companies must go through a stage of adaptation. Adoption of local characteristics is generally necessary in order to get the first customers into the outlets. The company, who has a reputation of being innovative and sensitive toward customer preferences, should see this as an opportunity to create new products, new programs, new packages or other new and appealing strategies that will attract customers into Jollibee’s outlets. †¢ In managing the human resource, the company should rely on its proven qualities for leadership and managing good relationship with partners. If the company is having trouble in initially attracting good employees into the outlets, the company should consider using Filipino employees. By training them to meet the highest standard of the industry and giving them the best employment deal in the market, Jollibee will set an example to the general workforce in the market. The present condition of the company however, also has strategic threats that must be paid attention to. Some of them are: †¢ Letting go previous formats and being creative Research indicated that previously successful companies generally have problems adapting to new conditions and developments. This is caused by the illusion that they have discovered the recipe for success and refuse to change along with the environment. Jollibee must educate its managers and employees not to fall into this mind trap and understand the reality that the corporate profit will diminish and corporate existence will be threatened if all components of the organizations failed to change along with the environment. New strategies that will strengthen corporate competitive advantages are required, especially in this internationalization program. †¢ Dependency toward single leadership. In Jollibee, most of the bold and innovative strategies are led by a single leader which is a dangerous culture when the company intends to go international. The principles of globalization stated that business internationalization means that the company also has what it takes to perform localization of business operations. In a localization concept, local leaders must have the authority and freedom to act in response to conditional changes (Beck, 1999). Having privately owned and franchise outlets overseas will make it necessary for delegation of leadership. †¢ Losing corporate characteristics Other strategic threat is losing corporate characteristics and be called a copycat or business imitator. Unlike the previous years of Jollibee when the company must perform serious benchmarking to mimic McDonalds, today the company is recognized for its own brand and characteristic. Corporate strategy must be aimed at increasing the appeal of existing offerings and not blindly mimicking local competitors to gain more customers. Such a plan is not viable in the long term. 2. 5. Value if decisions taken by managers. Jollibee’s success is not without apparent reasons. Management of the company displayed that it has performed its best in all aspects of corporate operations, especially in adhering to customer preferences and maintaining high quality manufacturing processes. In the modernism perspective, Jollibee would be successful in all its business endeavors as long as the company maintains all of the present business credibilities. This is in line with modernism philosophy who believes that human endeavor, logic and technology are the main factors that shape the world (Nichols, 1995). However, reality revealed that the company is not vulnerable from problems and issues, and it must be noted that most of the problems are generated by external factors and not internal. In other words, the company remains credible as it is originated, but the quality of its performance is threatened. This is hardly accord with principles of modernism. On contrary, this is more suitable to the postmodernism perspective. In the postmodern perspective, social, cultural and spiritual factors are significantly influencing occurrences of the world. Postmodernism proponents adopt a more ‘flexible’ or ‘fluid’ view of the world, with appreciation but not worshiping logic and modern technologies (Bertens, 1995). In the light of this discussion between modernism and postmodernism, we discover the reality that the business world is a constantly fluctuating place, where a company might be the indisputable leader today but could be reduced to runner ups the next day. Jollibee is in an important stage of its development, which is expanding to one of the biggest and most challenging markets in the world. This represents the possibility that Jollibee will face more challenges and uncertainties in addition to currently present. In its foreign markets, the company need to reevaluate its operations both internally to refit corporate human resource management and externally to increase the marketing appeal of the company (Castels, 1996). 2. 6. Consideration of alternative courses of action According to case of Jollibee, there are many actions that Jollibee considered to be excellent. However, there are many opportunities for the fast-food chain to improve their service. for instances, concerning the global expansion, currently, the company still believe their recipe to develop the true taste for Filipino since their target customers are Filipino descent. However, since customers in the global markets do not come from Philippines or not wholly Filipino, therefore, the company needs to adopt local taste as well. For instances, when serving American customers, Jollibee needs to incorporate local taste instead of forcing the Filipino taste for American people. 2. 7. Recommendations of Company’s Future In order to provide suitable analysis for a company’s future, we should incorporate suitable business analysis tools so that we can obtain enough information and develop suitable strategy from it. One of business analysis tools that is suitable for Jollibee case is Ansoff Matrix. This analysis tool is basically a marketing tool, publicized by the Harvard Business Review in 1957 (Tutor2U, 2005). The concept elaborates how companies direct their corporate strategy to achieve corporate growth. As each company rely on different competitive advantage for profitability and growth, the Ansoff Matrix simplifies the complicated nature of ‘personal’ corporate competitive advantages by dividing all of them into four large quadrants. In order to alleviate the limitation that the analysis tool has, Bruce D Buskirk, in 1998, add another two quadrants (6 in total) in the Ansoff Matrix. The addition quadrants address the influence of high tech environment in a business (Figure 1). Figure 1 Ansoff Growth Strategy Market (Expanded) Source: Available at http://www.zanthus. com/databank/strategy/business_strategy. asp Concerning the case of Jollibee, the recommendation can be developed into several components as depicted by Ansoff Matrix. But two most important factors for recommendation are Future and New Technology. †¢ Future Concerning product future (product development and diversification), Ansoff matrix suggests that a company needs to promote their product and repositioning the brand. This strategy is the least risky since its does not require massive capitalization to obtain new resources (QucikMBA, 2004). This is important since the positioning of Jollibee is formerly to become the Filipino choice while markets/customers come from diverse culture and nationality. The situation suggests the company need to develop global taste. Remember, McDonald’s success is because they have a wide range of products that address global tastes plus some adjustment to local tastes. †¢ New Technology Considering the benefits of IT for supporting the Jollibee operation, the company needs developing Management Information with following benefits: ? Simplifying the product and the production process? Using customers demands as a guide to enhance products and services ? Reduce cycle time ? Improve quality and precision of products (food and beverage) delivery ? Avoid miscalculation in billing statement To be specific, Jollibee can increase their revenue by simplifying the purchasing process by using corporate e-commerce, for instances, where customers can reserve a place at any Jollibee’s outlets. Similarly, by using e-commerce customer can purchase any Jollibee’s products and have them by home delivery services. The situation highlights that the adoption of technology will give the company with new revenue sources. 3. Conclusion Fast food industry is an interesting business since people need food and therefore the industry grows fast. Concerning issue, this paper discusses the strategic management of Jollibee Food Corp (Jollibee). Moreover, the analysis of Jollibee Fast Food will also focus upon applying the theory of strategic management and address six points; they are systematic process of strategic management and decision making, key strategic problems, key strategic opportunities and threats, value, alternative courses of action, and recommendations as to the company’s future course. Bibliography Beck, U. 1999. ‘What is Globalization’. Cambridge: Polity Press. Bertens, Hans. 1995. ‘The Idea of the Postmodern: A History’. London: Routledge. Biology Daily. Emotion. Retrieved July 3, 2007 from http://www. biologydaily. com/biology/Emotion Castells, M. 1996. ‘The Rise of the Networked Society’. Oxford: Blackwell. Harvey, Neil. Company Strategy. Professional Management Review. 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