MBA Jollibee's Global Expansion Strategy
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Jollibee Foods Corporation is a Philippine based quick service restaurant company that began in 1975 and has since expanded to over 1,000 stores internationally through acquisitions and organic growth, with a vision of becoming a truly global brand by 2020. The company has pursued a strategy of targeting areas with large Filipino populations initially and is now focusing on high growth markets in countries like China, Indonesia, and Vietnam. Jollibee faces challenges in expanding globally such as competing with well-established international brands and adapting operations and menus to local tastes and regulations in new markets.
MBA Jollibee's Global Expansion Strategy
- 1. JOLLIBEE FOODS CORPORATION Global Strategy
- 2. Overview: Emerging Market Financial Infrastructure Uncertain High High Risk Regulation Growth Market Inefficiencies
- 3. Philippines Export led economy Member of ASEAN High economic growth Large consumer market Privatization initiatives by government
- 4. Vision We are the best tasting Quick Service Restaurant(QSR) The most endearing brand… that has ever been… We will lead in product taste at all times… We will provide excellent customer service in every encounter… Happiness in every moment… By year 2020, with over 4,000 stores worldwide, Jollibee is truly a GLOBAL BRAND (and the Philippines will be admired worldwide)
- 5. Jollibee Foods Corporation Began in 1975 as an ice-cream parlour Headquartered in Pasig City, Philippines Revenue in 2011: PHP 63 Billion (USD 1.47 Billion) Employs 40,000 people worldwide Philippines, Thailand, Singapore, Indonesia, Hong Kong, United States and China
- 6. Growth
- 7. Growth 2011 - Purchased Chowking stores -Purchased 54% share of BK Titans, Inc. (Philippines), - Obtained 50% of San Pin Wang in China * 2001 stores in Philippines and 468 stores in foreign countries
- 8. International Operations Philippines, USA, Hong Kong, Vietnam, Saudi Arabia, UAE,
- 9. Financial Growth PHP 70.00 • Revenue growth of 9%-18% PHP 60.00 Gross between 2006 and 2011 revenue • Income growth of -3%-20% PHP 50.00 PHP (Billion)* between 2006 and 2011 PHP 40.00 PHP 30.00 PHP 20.00 PHP 10.00 PHP 0.00 2006 2007 2008 2009 2010 2011 Year *1 US$ = 42.7 PHP(Philippine Peso)
- 10. Global Expansion Strategy Target Expats Initial International Strategy Plant the Flag
- 11. Global Expansion Strategy Large Filipino population New International Strategy High growth fast food market
- 12. Analysis of Strategy Limited markets to target Retainnon-Filipino customer base through improving quality, consistency and standardization Generic menu Emphasis on research to provide localized food menu Avoid excessive localization Stick to its segment of Quick Service Restaurants (QSR)
- 13. Globalization Challenges Filipino companies have little exposure to competition with foreigners Expansion through M&A: Talent management and best practices difficult to streamline Higher labour costs, lower margins Competition from well established global firms with deep pockets Limited Markets with overseas Filipino communities
- 14. 2012 and beyond Expansion into rapidly growing fast-food market: China, Indonesia, Vietnam, Middle- East Improve operational efficiency and adjust to local tastes Revenue split: International/Domestic Current 20:80 Target 50:50
- 15. 2012 and beyond Strategy, Factor Related Demand Country Structure, Endowment Industries Conditions Rivalry High Foreign Many global Anti-trust Saudi Labor Needs for social competitors are legislation, Low Arabia Dependency, spaces entering the entry barrier Duty Free market Natural resources Still strong Most domestic and good location Most companies Malaysia demand for local- firms operate to be attractive to are small scale oriented products within the country foreign investors High quality Openness to Sophisticated Open and Singapor inputs from foreign consumers, vigorous e outside i.e. HR, companies diversity competition IT, Capital Skilled work force Fast food in agriculture, Agricultural Australia Westernized taste competition is Good business
- 16. Discussion
Editor's Notes
- #3: Financial infrastructure: Banks, unified currency, stock market (liquidity in debt and equity markets) High risk: Political instability, domestic infrastructure problems, volatile currency, limited equity opportunities. Uncertain regulation: No strict standards in accounting and market regulation Market inefficiencies: Many large companies are state-run oligopolies or private, inefficient labour market
- #4: Badly affected in 2008 and 2009 by economic crisis, growth slowed to 3.8% and 1.1% in 2008 and 2009, 7.6% in 2010, around 6% between 2004-07 ASEAN: Association of Southeast Asian Nations, strong relations with neighbours, access to the markets 60% of population below age 65 Poor business friendly environment, complicated tax structure, unpredictable regulation and large state owned enterprisesFig1: Market capitalization of Philippines stock exchange,Fig 2: Economic growth
- #11: Expand into countries with large expat Filipino population Niche and narrow market segment, so marketing necessary to attract non-filipino population Strategy failed : 1) Jollibee failed to target filipino population which actually needed the product. 2) Failed to use competitive edge to attract broader audience. 3) Plant the flag reflected empire building, and entering markets without strategic opportunities
- #12: Expand into markets with heavy concentration of overseas filipinos Target markets with high growth in fast food market. Acquire local brands and expand them Target for 2017: 50% revenues from overseas operations
- #14: Philippines government followed heavy protectionist policies to protect local companies from foreign competition Higher labour costs and strict labour laws in developed countries will squeeze Jollibee’s margins Jollibee’s strategy of expansion is driven by national pride and to exploit overseas filipino market. This will soon saturate the expansion options