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Words: 1875 | Pages: 8
Jollibee Foods Corporation: International Expansion
1.1. What sources of competitive advantage was it able to develop against McDonald's in its home market?
Firstly, Jollibee was the first mover in the sector of burgers in Philippines, shaping customer preferences and expectations, instead of McDonald's or KFC.
Secondly, Jollibee was young, and very small in comparison of McDonald's whose force worldwide is standardization. The burger company serves millions of exactly identical sandwich each year in dozen of countries so that McDonald's customers can find their favourite BigMac taste wherever they go. McDonald's is used to reducing costs by having huge economies of scale. But on new markets, such as Philippines, this strength can turn into a weakness. Indeed, as we said the tastes were not shaped by McDonalds, and the American juggernaut is not flexible enough to adapt to local customer needs.
Jollibee, thanks to its smaller size, its local resources and understanding of the local tastes, took advantage of McDonald's lack of flexibility. The substantial creative menus with unique Filipino recipes and reasonable price brought fantastic consumer feedbacks and a good reputation to the company.
1.2. How was Jollibee able to build its dominant position in fast food in the Philippines?
Back to the oil crisis in 1977, Jollibee handled the difficult situation with smart solutions. At the earlier period, when Jollibee realized that an increase in oil prices has a direct impact on controlling its production cost, the firm decided to change its existing business from ice cream to burgers. This shows that the management was clearly aware of the climate changes and was able to make strategic decisions accordingly. In addition, the company success is mediated by the political and economic crises occurred in 1983. While McDonald's and other foreign investors were slowing down in their investment and business development, Jollibee kept pressing ahead and investing more and was still able to deliver its products with cheaper price and better taste than those of McDonald's. As a result, during the crisis Jollibee intrepidly developed to occupy the market with 31 stores and dominantly created brand awareness against the famous foreign brand like McDonald's.
They financed the growth internally but supplemented their management with professional expertise however! (Marketing and Finance). There is the base of the Jollibee successful structure: awareness of the management and assistance of professionals.
In order to consolidate their business they ran into diversification of their offer by taking Greenwich Pizza Co. over and having a joint venture with DeliFrance.
When McDonald's entered the market, Jollibee management proceeded rationally: