Jollibee Food Corporation

Jollibee Corporation Foods

Jollibee Food Corporation, headquartered in the Philippines, was started in 1975 as a family owned and operated ice cream parlor. In 1977 the company expanded its operations to include hot sandwiches and other meals in an effort to stem the economic impact related to events that surrounded a global fuel crisis. By the late 1990’s, Jollibee had grown into the largest fast food store in the country and was planning growth in other Asian markets (Jollibee, 2006). While expansion was initially due to local economic conditions; it was sustained and developed by the Tan family’s desire to protect and grow market share nationally, as well as, internationally. Expansion was funded internally and through a public offering in 1993 that generated $8 million in additional capital; the Tan family retained a controlling majority of shares issued (Bartlett, Ghoshal & Birkinshaw, 2004). Even though the company’s expansion was well funded, it was not enough to ensure financial success, management knew it must strategically develop and implement a plan that allowed flexibility in product offerings, marketing opportunities, production efficiency, and prime locations that supported its widening restaurant chain (Jollibee, 2006).

Economic conditions motivated product diversification, but expansion was driven by customer demand for a uniquely flavored hamburger. Expansion came quickly to Jollibee’s do to management’s ability to capitalize on the company’s inner strengths and its philosophy the “Five F’s: friendliness; flavorful food; flexibility in meeting customer demands; fun atmosphere; and a focus on the family (Bartlett et al, 2004). Management knew they had several core competencies in product offerings, quality, and customer service as well as room for market expansion; growth potential for Jollibee appeared to be limitless.

From 1975 until 1993 Jollibee’s expansion was controlled and funded internally with franchises being managed by members of friends of the Tan family. During that time period, Jollibee opened 148 restaurants and was considered a dominate presence in the Philippine fast food market. Between 1985 and 1997, the company entered into a few select partnerships and 50/50 joint ventures expanding their market share to other Asian countries solidifying their commitment to become an international corporation. Unfortunately, two of their early attempts, Singapore and Twain met with dismal failure, which was caused by managerial differences, improper location selection, resentment form the host partner at Jollibee’s management for assigning oversight staff, and the requirement to adhere to the company’s menu and business operations. Limited opportunity was given to the local partners to manage the business or have input into the day-to-day operations as they related to local customs or tastes preferences. On the other hand, the 50/50 joint venture in Brunei with “Shoemart, one of the Philippine’s largest department stores,” was extremely successful and resulted in four additional restaurants being opened. The difference here is that Shoemart was a silent partner and allowed Jollibee to have complete control over the business operations from selecting the restaurant manager, selecting the location, designing the facilities layout, and overseeing the business operations on a day-by-day basis. These early expansion efforts taught Jollibee that they need to cautiously select partners; develop local talent; carefully evaluate the site selected; and develop a better understanding of the local market, economy and culture (Bartlett et al, 2004).

Undaunted by early failures, Jollibee’s President Tong Tan Caktiong’s remained committed to taking the company to an international level. To achieve this goal, in 1994 ton Kitchener was hired to as Jollibee’s vice President for international operations. Kitchener brought fourteen years of international management experience to the corporation and a desire to make the company into a world class company; to do this Jollibee needed to look and act like a multinational corporation not a local food chain. This was achieved by improved franchise agreements that empowered their partners to assist in the design of the restaurant; modify selected menu items to local tastes; share in research and development; allow onsite inspections of facilities to ensure compliance with Jollibee operational standards; assist in business plan development; site selection; and incorporate the “Five F’s” philosophy into the restaurants daily operations. Implementation of this strategy resulted in an increase of 100 restaurants form 1993 to 1994 and the company being recognized as an international force (Bartlett et al, 2004).

Despite the success of recent expansion and the identification of new opportunities, company President Caktiong became less supportive