International Expansion:jollibee

EXECUTIVE SUMMARY

Jollibee was able to attain a competitive advantage over McDonald’s by doing two things: (1) Retaining tight control over operations management, which allowed it to price below its competitor and (2) Having the flexibility to cater to the tastes of its local consumers. While Tony Kitchner was hired to develop these competitive advantages abroad, his international strategy of “planting the flag” and “targeting expats” was executed haphazardly and resulted in losses for the firm. His eventual dismissal was largely due to his inability to manage intra-firm tensions.

The arrival of Noli Tingzon marks a critical juncture for Jollibee, where it will begin entering the US market. The key to Jollibee’s success in Daly City will be its ability to find a local partner that can leverage its organizational advantage, while navigating the challenges of conducting business in the United States.

I. Creating Competitive Advantages in the Filipino market

Jollibee’s success in its home market developed as a result of its ability to better meet the needs of the Filipino customer. Although its success was mediated by the political and economic crises of 1983, Jollibee was still able to deliver a product that was both cheaper and better tasting than that of McDonald’s. The ability of Jollibee to adopt its menu to local tastes, as well as the “5 Fs” of its operations management are two organizational capabilities that led the company to develop a competitive advantage over McDonald’s.

The ability to push forward the Champ burger highlights another source of competitive advantage that was recognized by Tom Kitchner: flexibility. As one of the “5 Fs,” flexibility was an asset that Jollibee, could leverage more easily than McDonald’s. As a younger company, Jollibee has the ability to adapt its menu items without jeopardizing its brand image. It also has the advantage of having a flatter organizational structure that allows it to respond to changes in the market more quickly. It is important for the company to recognize flexibility as a competitive advantage, since it will become a foundation for Jollibee’s international strategy. Yes but with a lot of difficulties... not much “flexibility” after all..

Tight operations management and the flexibility to adapt to local tastes increases the wedge between customer willingness to pay and supplier opportunity cost. These savings in cost are then passed onto the customer, who is also receiving a product that better meets his or her needs. The ability of Jollibee to continue creating value for its customers by leveraging these activities will be the key success factor for its international expansion. The brand name at home was achieved also through some trade barriers that helped JB a lot!

II. Tony Kitchner’s International Strategy

Tony Kitchner was hired to build the global Jollibee brand with the dual goals of positioning Jollibee as an attractive partner, while generating resources for expansion. In order to become one of the “top 10 fast food brands in the world,” Kitchner implemented a two-part international strategy which comprised of “targeting expats” and “planting the flag.”

Kitchner’s idea of “targeting expats” allows the company to ease its transition