Transcript
Management 5: Business Policy and Strategy Case Analysis (Quest for growth takes Jolliee !oods eyond Asia"
BSA IV
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From swallowing up a congee maker in China to taking a bite of a Vietnamese pho chain's ownership, Jollibee Foods'' rise as one of Asia's leading fastfood companies has been helped b! ac"uisitions at home and abroad# $outed Foods
as its biggest ac"uisition to date, Jollibee Foods announced on %ct# & it would bu! ()* of +#S# fast casual restaurant chain Smashburger for nearl! &)) million# Jollibee has the option of full! purchasing the burger -oint from .)&/ to .).0# In1estors cheered the news, with shares of Jollibee Foods rising &* that da!, shrugging off the nearl! .* slump in the benchmark 2hilippine Stock 34change inde4# $he fresh push for global e4pansion helped the compan!'s stock regain some of its momentum# Since going public in &55, Jollibee has seen its share price rise b! .&fold from its initial public offering price of 5 pesos 6)#&57# In June last !ear, Chairman $on! $an Caktiong said Jollibee had alread! achie1ed its goal of becoming Asia's largest fastfood chain b! market 1alue and was now setting its sights on an American ac"uisition# At a forum last %ctober, Chief Financial %fficer 8smael Ba!sa announced that Jollibee Foods aims to become one of the top &) "uickser1ice restaurant operators in the world# $he list is currentl! dominated b! 9estern companies like :c;onald's and It had to be ?a brand that is alread! doing well#? Smashburger seems to fit the bill# $he compan!, founded in Colorado in .))@, is reportedl! in the black and now boasts 5 outlets, &/( of which are compan!owned while & are franchised# In the 2hilippines, almost e1er!one knows about Jollibee# It has been written about in the news and is a regular topic at $an Caktiong's speaking engagements# Jollibee's chubb! redand!ellow bee mascot is such a familiar icon to Filipinos that Japanese clothing brand +ni"lo used it to market its shirts in the 2hilippines# :an! Filipino children ha1e memories of celebrating their birthda!s at a Jollibee restaurant, while Filipino e4pats li1ing in countries without Jollibee sa! the! long for a 8um burger or Chicken-o!# As of the first half of .)&, Jollibee Foods had a total of ,))& outlets across its nearl! doen brands# A third of those were Jollibee burger restaurants //) in the 2hilippines and && abroad# In China, the compan! has more than ()) outlets, which contribute around &.* of its s!stemwide sales, including those from franchised outlets# Ba!sa said in June that Jollibee Foods would like to achie1e its global ambitions in the ne4t se1en !ears# ?$o ha1e a big presence in the +#S#, Jollibee Foods has to ser1e the mainstream consumers,? he added# Jollibee Foods has /@ stores in the +#S#, mostl! in 2hilippine communities# $hough the! pro1ide * of the compan!'s s!stemwide sales, store openings ha1e not been as brisk as in the 2hilippines and China# ?$his ac"uisition will make Jollibee Foods' presence in the +#S# more significant, going be!ond the Filipino market and ser1ing the mainstream consumers in the &)) billion +#S# burger market,? $an Caktiong said when the compan! announced the deal# Jollibee Foods is also used to ac"uiring a ma-orit! stake when in1esting in other fastfood companies so that it can control management and operations# Its ()* stake in Smashburger will gi1e the 2hilippine compan! onl! a limited sa! in its affairs# 9ith little information disclosed about Smashburgers' financial performance and business model, anal!sts in :anila are finding it difficult to sa! whether Jollibee Foods made a wise in1estment# $an Caktiong, for his part, is prepared to take on +#S# fastfood companies# From the 1er! start, $an Caktiong has embraced competition# In &5/&, when his compan! had -ust &) outlets and was threatened b! the entr! of :c;onald's into the 2hilippines, friends ad1ised $an Caktiong to -ust sell Jollibee and open a :c;onald's franchise instead# e ob1iousl! did not listen# $an Caktiong stepped down as C3% in .)&( but, remained acti1e in the compan!, including the scouting of the +#S# in1estment# Soon after its initial public offering in &55, Jollibee Foods went on an ac"uisition spree that, along with a franchising scheme, allowed the compan! to accelerate e4pansion# $he compan! has made at least si4 domestic ac"uisitions pia chain Dreenwich, ChineseFilipino restaurant Chowking, the Eed Eibbon baker! chain, Burger
ow can the management of Jollibee Foods prolong its operations outside the 2hilippines, particularl! in the +# S#GH
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$o determine the stabilit! of operations of Jollibee Foods outside the 2hilippines, $o determine whether the purchased of Smashburger will help Jollibee Foods maintain its operations in the +#S, and $o establish the Jollibee Foods brand name in the +#S#
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+nderstanding Consumer $astes
2;ependence on filipino e4patriates
Affordable 2rices
9eak international
Dood "ualit! of food and ser1ices
promotional campaigns
9elltrained staffs Dood operations management ocation of business Eesponsi1eness to competition &PP&%*'.*.,S 2Ac"uisition of profitable food chain 6Smashburger7
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2Because of the ac"uisition of ew product aside from local a profitable food chain, the menu Smashburger, Jollibee Foods will ha1e a new product on Filipino migrants in the +#S# their local menu and the Filipino migrants in the +#S# will be one of the first customers of Jollibee since it is 1er! well known to Filipinos# 9ith these opportunities, it will gi1e the Jollibee Foods a much greater strength because of their business location 6ma!be it will be opened near a subwa! or within an office district7, understanding of the consumer tastes, affordable prices, good "ualit! of food and ser1ices# Jollibee Foods ha1e a 1er! welltrained staffs because the! ha1e a good operations management and because Jollibee Foods is responsi1e to competitions#
2Since there are a lot of Filipino migrants in the +#S#, the! will be the first customers of Jollibee Foods# $he weakness of the dependence on Filipino e4patriates is not going to be a problem, because since Filipinos knew of Jollibee, the! are reall! the first target market, but the! can be of help for the Jollibee in the ad1ertising thru the use of word ad1ertising, and social medias, this wa!, it can also lessen the weakness of international promotional campaign# And because of the ac"uisition of a profitable food chain in the +#S#, the Smashburger, means a new product will be added to the local menu of Jollibee Foods and it will also be a good ad1ertising scheme of Jollibee Foods#
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Ei1alr! with other international competitors 6In %ut K Fi1e Du!s7
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2Because of Jollibee Foods 2Since Filipino e4patriates good operations management, know better of Jollibee Foods,
Customers shift to more health! foods igher cost because of international rate than in local
its welltrained staffs, and its responsi1eness to competition can be use to a1oid the threats such as the ri1alr! with other competitors, a shift of more health! foods and a high cost because of high standard of li1ing in the +#S#
the! are the target market of the business# 9hether there is a shift to more health! foods, people cannot resist the foods that Jollibee offers 6burgers and fries7#
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ocation of the business should be considered b! the management# Jollibee Foods should be in a place where a lot of people are going, like near a subwa! or in an office district# Competitors should also be considered since Jollibee Foods will operate internationall!, in the +#S#, the management should take note of the stable and high earning food chains# Cultural ;ifferences should be considered b! the management since Jollibee Foods will operate internationall!, the staffsLemplo!ees would be of two different cultures that ma! lead to differences on opinions# International;omestic Eelationship should be considered as well because of cultural differences and issues ma! arise like in the preference in hiring emplo!ees 6whether a Filipino or American7
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Alternati1e &> Continue JollibeeMs operation together with its new ac"uired business, the Smashburger :aster since its brand name is alread! doing well in the course of business in that wa!, Jollibee will familiar itself with the +#S# market and American taste# And Jollibee Foods has a good track record in further impro1ing food "ualit!, product offering and growing the store network of brands it has ac"uired Alternati1e .> Jollibee should not operate within the +#S# for the reason that it is not familiar with the +#S# market and American taste# And as we all know, +#S# market is 1er! huge, Jollibee will ha1e a difficult! as new entrants because the! will compete with established brands like In%ut and Fi1e Du!s# And there is
onl! little information disclosed about SmashburgersM financial performance and business model, so it is difficult to sa! whether Jollibee Foods made a wise in1estment# %,C&MM,)A*.&
I recommend to the management of Jollibee Foods to use alternati1e &which is to start their operations together with its new ac"uired business, the Smashburger :aster# Since Smashburger :aster is a brand that is alread! doing well in the +#S# it will allow Jollibee to familiarie itself with the +#S# market and American taste# $he Jollibee can prolong its operations in the +#S# with the help of course of Smashburger and with the help as well of its Filipino e4patriates in the +#S#, because the! can be the means as well for Jollibee to be wellknown with the Americans# And that Jollibee Foods has a good track record in further impro1ing food "ualit!, product offering and growing the store network of brands it has ac"uired# $his e4perience is something the 2hilippine compan! can bring to the table in its dealings with Smashburger#