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BUS488: Strategy Assignment 2 – Individual Assignment 1 July 2011 Presentation PREPARED BY Question 1 Analyzing Jollibee’s internal environment requires evaluating the firm’s portfolio of resources and capabilities. And these key factors lead to the development of Jollibee’s core competencies or its competitive advantage. To analyze its internal environment, I’ll be applying the RCCI (Resources, Capabilities, and Core Competencies) model as this model is the most suitable for this industry. Tangible Resources:- Financial Resources Base on the data given from 1998-2004, Jollibee has shown profitability, its net income margin improve significantly from 1. 3 billion pesos to 1. 6 billion pesos in 2004. This is partly due to the introduction of more varieties to their existing menu and acquisitions of other fast-food chains which has contributed to the growth. • To allow the firm to general more internal funds, Jollibee was listed on the Philippines Stock Exchange. This helps to lay the groundwork for internationalization as well as the expansion of chains domestically.
Organizational Resources • In order for the business to operate and coordinate more efficiently in the domestic network, Jollibee decentralize the organization into 4 regional business units (RBUs) according to major geographical markets. This structure allows timely decision making and ensured a more manageable business size and span of control. • Employees to the firm also play a key role in contributing to the success of Jollibee and the management recognizes that maintaining high standards in the service industry underlie the key factor to success.
Therefore, trainings programs were structured on the basis of the defined high standard requirements and all employees are required to attend the comprehensive training to meet the company standards. The trainings programs can result in several benefits. It equips the employees with better skills and knowledge as well as aligning them with the company goals. Physical Resources • Physical assets such as production equipments, storage facilities, distribution centers and employees form the physical resources of Jollibee. Technological Resources Jollibee invest on state-of-the-art technology on their operations systems to constantly train their managers to amidst competition. • The iconic bright red and yellow “Jolly Bee” and the mascot (a blond spaghetti-haired girl name Hetti) for Jollibee has become the trademark logo across nationwide. Intangible Resources:- Human Resources • Knowledgeable employees, trusting work environment, strong leadership managerial, and Jollibee recognizes the employees efforts by offering them high compensation and benefits to reward and retain their employees.
Other than that, career advancement also existed for employees to pursue a career path within the organization. • To provide assistance to the RBUs, a support Centre was form to provide corporate-level direction. Reputational Resources • From the survey conducted by the De LaSalle University (DLSU), majority of the customers have good and positive perceptions of Jollibee product and reliability – 94% of their customers perceived Jollibee as an “affordable and/or cheap” and 72% cited “Accessibility of its outlets”. In the Philippines, Jollibee has a very high awareness and the brand has established a high top-of-mind recall in consumers’ mind. Till date, Jollibee is not only a household brand; it had also become an international brand that is well recognized by Forbes and Asian Business. R-C-CC Model [pic] In summary, there are 3 Temporary Competitive Advantage, 1 Competitive Parity and 1 Sustainable Competitive Advantage. The analysis helps the management of Jollibee determine the strategic value of the firm’s capabilities. Value Chain Analysis
Using the value chain analysis helps Jollibee to understand parts of its operations that create value and those that do not. It is segmented into primary and support activities. Primary Activities Marketing One of the key components of Jollibee value chain is its marketing and advertising strategy. At Jollibee, they understand consumers’ psychographics and behaviours where marketing strategies were developed to suit the Filipino culture, taste bud and lifestyle. And in its advertising campaigns, Jollibee have been able to position itself as a brand with strong family values and a destination for family to dine in at the fast-food chain.
This is one of the emotional attributes Filipinos look for in Jollibee, with 78% attributed Jollibee as a place for family togetherness. Source: DLSU student research project, 2004. Service Jollibee recognize the fact that providing “Faster services” underlie a consumer selection of a fast-food restaurant. In the study conducted by DLSU, “Faster services” was cited as 78%. To response to consumers needs and enhance the experience of the consumers, Jollibee has committed to deliver excellent service. I. e. Service must be fast and courteous etc. Support Activities Human Resource Management
Jollibee has well communicated to employees on the culture of sharing and family values through its own Corporation’s values. In order to maintain the product value and service, all employees’ performance is reviewed base on achieving the objectives which the organization has set. Employees with good performance will be rewarded and there is an opportunity for the employees to advance to a greater height. With good incentives, it will motivate and encourage the employees to strive harder and advance together with the organization. Question 2 The key success factors underlying the success of Jollibee are as follows:- . Being able to penetrate the local market with varieties of food catering to the Filipino’s taste buds through its understanding and insights of the Filipinos. 2. Not only does Jollibee offer high quality food, they have also been able to price its food at a reasonable priced. 3. To keep up with the competitions, Jollibee use technology to improve its operational efficiency in its restaurants. 4. Superior performance recognitions by international players – Win the 2004 World Entrepreneur of The Year award. And not only that, Jollibee was ranked by Forbes and Asian Business among Asia’s top companies.
And it was recognized as the number one food company in Asia by Euro money and as the best-managed company in Philippines by Asia money, and was consistently ranked among Asia’s best employers in the Far Eastern Economic Review’s annual survey. 5. Internationalization – Jollibee has successfully build on its success in Philippines to bring the brand out of the domestic networks, targeting area with a substantial number of overseas Filipino to bring the overseas mates closer to home. Question 3 The external environment of Jollibee is as follow:- Political
During the political instability in the 1980s, global players like Macdonald was affected and their expansion process were hold back in view of the turmoil. Jollibee on the other hand was able to fully concentrate on the market where it continued with its strategic plans (tailored distinct preferences in the local market) for expansion despite the instability. When the country political has stabled, Jollibee gained a competitive edge amongst key global players. Economic No case facts given. Sociocultural Changing lifestyle and buying behaviors of consumers can affect the chain of product offerings.
In order to stay competitive in the industry, extensive product offerings are vital for organizations to break away from the clutter. As consumer preferences and tastes changes, new products are constantly development to meet the ever changing needs of the consumers. As a result of this, companies in the fast-food industry are tapping on high differentiation to amidst the competition. In responding to the market sentiments, Jollibee is able to meet the growing demands of its consumer’s preferences by broadening its product range and variety. Technological
High technology plays a vital role in enhancing the operations of a company. For a company to stand out from its rivals, investing on state-of-the art technology is essential. From the company stand point, maximizing output from resources and achieving economies of scale are always the key objectives of a company. Therefore, for the fast-food industry, enhancement of technology is needed to achieve the company objectives. Jollibee should leverage on deploying new technologies to enhance its operations efficiency. Legal No case facts given. Porter’s Five Forces are as follow:-
Threats of new entrants Threats of new entrants to the industry is low because the fast-food industry is saturated with consumers that wants to eat affordable/cheaper food that comes together with a package of good customer service and an atmosphere of Family Togetherness as denoted from the survey conducted by DLSU students. There were clear barriers drawn for new entrants to penetrate into the industry. This was first seen when MacDonald’s entered the Philippine market in 1981, many observers thought Jollibee would be kick out of the industry but the firm proved them wrong.
Rather, the firm took this chance to set benchmark and view this as an opportunity for the company to learn about the key strengths and weakness of Macdonald, and eventually they managed to bring their own chains to world class standards. Bargaining power of suppliers Bargaining of power suppliers is low when the concentration of suppliers relative to the buyers industry is low. Bargaining power of buyers Bargaining power of buyers is high when concentration of buyers relative to suppliers is high. Individual consumers could switch to another product at little, if any, cost. Threat of substitute products Threat of substitute products is low.
Local street foods can become major substitutes for Jollibee; however, Jollibee still stands out from the competition because the service and cleanliness offered by Jollibee is better. And on the part of restaurants, they may not be able to offer and commit to faster service because consumers take longer than usual to have their food served onto their table. Lastly, Jollibee has built a strong brand re-call amongst the locals and it is hard for them to switch to substitutes. I. e. Consumers conceived Jollibee as a fast-food outlet of high-quality and reasonably-priced food products catered specially for the locals.
Rivalry among competing firms Rivalry among competing firms is high with the entrance of key global players like MacDonald’s, KFCs, Wendy’s, Burger King and Pizza Hut. As competition arises, players seek to differentiate themselves and one of the most common methods competitors adopt is to go on price wars and innovations on products range to win each other’s customers. Though the nation had become an attractive market for the said global players, yet despite growing competition, Jollibee managed to maintain its dominant position as the leading fast-food chain in the Philippines with a menu catered specifically to the Filipino’s preferences.
Question 4 Opportunities and Threats for Jollibee are as follow:- Opportunities 1. With a large population of overseas Filipino workers in certain countries, there is a potential for Jollibee to expand internationally, i. e. USA, Hong Kong, Vietnam, Indonesia etc. 2. For international markets, locating commissaries in the same country through joint ventures could be a potential source of success for the company. Jollibee could provide the technology while the partner deals with appropriate techniques to sell in the foreign market. 3.
For the local market, an increase in the number of commissaries could potentially decrease the transportation costs and the duration of shipments. Allowing the company to focus on the quality of goods. 4. Highly motivated and well-trained employees. Threats 1. Entrants of global players pose competitions in the fast-food industry. 2. Increase in crude prices increases transportation costs and the prices of transported materials and products. 3. Political instability in the country threatens Jollibee as it hinders the opportunities to convince international investors and country leaders to allow Jollibee entry in their country. 4.
Vulnerable to general market trends and currency risk. Question 5 (a) Jollibee has adopted the current strategies to keep its company profitable:- Integrated Cost Leadership or Differentiation strategy Although it was apparent that the competition between McDonald and Jollibee were stiff during the political turmoil in the 1980s, the uproar has in turn contributed to the success of Jollibee where the company still stands tall and survived in the local market when the country was back on track. Jollibee marketing strategy is differentiating its taste from McDonald and reaching out to only local customers with a wide spectrum of varieties.
For example, through the identification of consumers taste and preferences, existing products are improved and re-launched, giving consumers a new line of products. Unlike McDonald, their menu remains unchanged for a long period of time and choice of products are limited. We also analyzed that one of the primary reasons underlying the success is their main focus on bringing families togetherness. Centering on the theme of “family”, they have been able to differentiate their brand position uniquely in its advertising approach, emphasizing on traditional values of family, and dominating the kid’s market by promoting its Jolly Kiddie meals etc.
Apart from adopting the Differentiation strategy, we also observed that Jollibee used the cost leadership strategy targeting at customers at a very broad base level (mass market). While trying to maintain its competitive advantage on their levels of differentiation, Jollibee is constantly on the look out for innovative ways to keep their cost low relative to competitors in the fast-food industry. As a local company which knows local need and wants well, the company developed its low cost operation systems with local taste. As a result of this, the company enjoyed substantial economies of scale, operations, procurement and distribution etc.
With all these savings on economies of scales, it made it possible for the company to maintain the cost of the products at a reasonable level. Question 5 (b) To continue gaining competitive advantage in the fast-food industry, Jollibee could look at the following strategic actions to guide against and compete better in the future:- Channel its marketing efforts to non-Filipinos While Jollibee has successfully built a brand amongst the local, the firm should extend its reach to the non-Filipino making it a brand that is fanciful by every segment and tapping on this niche segment to generate additional source of income for the company.
This can be done by studying and analyzing the non-Filipino market and build its competitive advantage through learning and by appealing to a broader audience. Internationalization – Focus on markets with few competitors As competitions arise, market players often want to be seen and heard. Going internationalization is the most common approach adopted by McDonalds, Pizza Hut, KFC and Burger King etc. To avoid making a loss in the new market, conducting market research on the specific market is crucial.
For Jollibee to compete on the level with multinationals, the firm would have to bring its success in Philippines to the overseas market to continue building a competitive edge. Acquisitions Pursue a strategy of diversification as a hedge against both competition and downturns in specific markets niches. To reach out to other segments, Jollibee can acquire a portfolio of other fast-food operations to meet the growing demand of consumer preferences. Staff Empowerment Give staffs at all levels the empowerment to make independent decision their jurisdictions.
To encourage staffs to exercise the flexibility; they must be well trained and taught in handling different situations. By doing so, staffs will be motivated to grow with the company and they are the resources in contributing to the competitive advantage of the company. REFERENCES 1. Business Strategy In Asia, A casebook by Kulwant Singh, Nitin Pangarkar, Loizos Heracleous – Third Edition – Case study on Jollibee Foods Corporation 2. http://www. docshare. com/doc/122235/Jollibee-Foods-Corporation-Strategic-Manageme 3. http://www. scribd. com/doc/36991796/1628 4. http://www. docstoc. com/docs/14423409/Jollibee [pic]