Jollibee Foods Corporation: International Expansion
Jollibee Foods Corporation: International Expansion
Synopsis / Executive Summary
Jollibee was and, to a certain extent, remains a family company. In 1975 Jollibee was an ice-cream parlor owned and operated by Tony Tan Caktiong, and in anticipation of higher ice cream costs, diversified their offering with Filipino home-style sandwiches, based on a unique family recipe. A year after, Jollibee opened five successful restaurants in the Manila, and the family business was incorporated as Jollibee Foods Corporation (JFC).
JFC continued to be successful, increasing their menu board and significantly increasing number of physical restaurants in the Philippines; by 1993 Jollibee had 124 stores. The growth was all financed internally and heavily relied on franchise agreements to open new restaurants, circa two-thirds were franchises. Franchising enabled restaurants to stake out new territories and rapidly acquiring market share on considerably less upfront capital investment.
The Tan Family members occupied key positions in operating functions, supplementing their expertise with external marketing and finance resources. Even after an Initial Public Offering in 1993, raising 216million Philippine Pesos, the Tan Family retained majority ownership and control.
Their “Five F’s philosophy” (Friendliness, flavourful food, fun atmosphere, flexibility in catering to customers’ needs and focus on families) positioned Jollibee as the leading fast food restaurant chain in the Philippines and contributed to 85% of the JFC revenues (after diversification in the mid 90’s – 1994 Jollibee Food Corporation bought Greenwich Pizza Corporation and 1995, Deli France). Jollibee was the pride and joy of Philippines and the Tan Family wanted to take Jollibee global, having set their hearts on America.
The organisation now faces the dilemma between entering an potentially emerging market Papa New Guinea, a highly competitive market United States of America and expansion plans in Hong Kong.
The case study details also many challenges JFC leadership faced domestically and internationally, during initial attempts in international expansion. In addition to many failed attempts, key challenges include conflict between internal divisions and with franchisees or joint-venture partners, a weak brand that had no competitive advantage, threating foreign competition from McDonalds in the Philippines, and an international strategy that did not have the right self-regulation leaving the company in the face of financial instability.
Here within, are actionable leadership initiatives in response to the identifiable challenges found in the case. Which are critical to success of the strategic recommendation for international expansion.
FINDINGS
Internal