Recommendations for the Jollibee Food Corporation
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Recommendations for the Jollibee Food Corporation
Introduction
Jollibee Food Corporation (JFC), often referred to as simply Jollibee is a multinational business of Filipino origin that runs a chain of fast food restaurants. Most of the restaurants operated by Jollibee are located in Asia. The corporation’s main products include pizzas, burgers, breakfast, brunch, salads, desserts, coffee, and soft drinks (Rarick, Falk & Barczyk, 2012). Unlike other fast food stores across the world, Jollibee also sells rice and noodles. The reason behind this is that the two are the most popular dishes within the Asia market. The corporation’s leadership has in numerous occasions expressed their intentions to expand the scope of their business. In the past, Jollibee has been successful in achieving this by acquiring some of its competitors (Rarick et al., 2012). Most of these acquisitions have taken place in the Asian markets. Some of the fast food brands that have been acquired by Jollibee include Chowking, Red Ribbon, Burger King Philippines, Greenwich Pizza, and Mang Inasal. The expansion program has seen the company currently own over 3000 food stores globally. To further expand its operations, it is necessary that Jollibee puts a number of measures in place.
Recommendations for Jollibee Food Corporation’s Plan to Expand
In order to come up with the best recommendations for Jollibee Food Cooperation’s plan for expansion, it is important to first consider the nature of the industry within which the business operates. It is worth noting that the business is one of the major players in the fast food industry. Competition within the industry is considerably high. McDonalds is one of Jollibee’s main competitors globally. It is worth noting that the decision by Jollibee to expand its operations was initially as a result of the entry of McDonalds into the Philippines market (Rarick et al., 2012). Following the stiff competition experienced in the global fast food markets, a lot of planning is needed for the expansion of the enterprise. To expand successfully, the following recommendations would work for Jollibee.
The Jollibee Food Corporation should consider franchising as an expansion strategy. Through franchising, Jollibee can allow other firms to use their business model as well as brand name for a specified duration. During the time, Jollibee can share profits with the franchisees based on a pre-negotiated ratio. Franchising would help absorb the business from the liability associated with chain stores (Gutierrez & Rodriguez, 2013). At the same time, the company would not have to invest its own resources to widen its global reach. As opposed to direct employees, franchisees tend to be more determined to ensure the success of the business. The reason behind this is that they have also invested in the business. However, Jollibee should take care when franchising to ensure that franchisees maintain high standards. The provision of poor services to customers would not only hurt the franchise but also the Jollibee brand. With bad publicity, all chain stores currently under the company would be affected. The reason behind this is that franchises are often associated with their parent companies.
In order to expand, Jollibee can also engage in mergers and acquisitions. Mergers take place when two businesses combine their operations. Acquisitions on the other hand involve the transfer of ownership of a business from one party to another. Both mergers and acquisitions are effective strategies that the firm can use to expand. Through mergers, the company can combine its resources and operations with another (Gutierrez & Rodriguez, 2013). Preferably, Jollibee should merge with other firms that are strategically located in the markets that it wishes to expand its operations to. Jollibee can also acquire businesses that are in the new area that it wishes to start operating in (Gutierrez & Rodriguez, 2013). The corporation must however be extremely careful when engaging in mergers and acquisitions. The reason behind this is that both processes are capital intensive. In mergers and acquisitions, Jollibee would also be liable for all the activities of the new venture. Different jurisdictions also have varying laws and regulations that govern mergers and acquisitions. The Jollibee Food Corporation should carefully study the laws and regulations of the country where it wishes to perform a merger or acquisition. Countries with rules and regulations that discourage the merging of businesses or their acquisition should be avoided when the two options are being considered. In such a case, Jollibee can consider other options such as franchising.
Jollibee Food Corporation should focus on new markets as opposed to the traditional Asian and American fast food markets. Such new markets include Africa and South America. Many players in the fast food market have failed to take notice of the rapidly growing middle class in the developing nations. Instead, they have continued to focus on Asia, Europe, and North America. The result is that competition within these traditional markets has intensified. Further investments by Jollibee Food Corporation in an attempt to expand its operations in such markets would amount to wastage of resources (Gutierrez & Rodriguez, 2013). The reason behind this is that these markets are saturated which would mean minimal returns on investments. Moving to untapped markets such as Africa and South America would give Jollibee an upper hand in terms of dominating the fast food market (Khanna & Palepu, 2013). With little competition in these areas, the corporation can easily establish itself. The operational costs in these areas will be considerably low. One of the reasons behind this is that the corporation will not need to engage in an aggressive marketing strategy that would be a necessity in other markets. By being one of the pioneer fast food businesses to enter the African and South American markets, Jollibee can establish itself as a dominant player before the entry of its competitors.
In order for the Jollibee Food Corporation to expand its operations, it should seek to develop new products. The corporation can only achieve this after conducting a comprehensive market research in all the new areas it seeks to move into. Market research would help the business identify the needs of the consumers. The company would also become aware of the growing trends in the fast food industry. Research has shown that most consumers today are health conscious (Khanna & Palepu, 2013). They are worried about the health effects that certain foods are likely to have on their health status. Subsequently, the demand for high calorie, sugar, and fat diets has been on the decline. In this case, Jollibee needs to develop new products that are considered to be healthier. Such a move would see the corporation gain competitive advantage over others. As such, chances of its new ventures succeeding would be high.
Expanding a business often comes with additional responsibilities. The new venture has to be assigned a management team. To ensure success, the activities of the new ventures and those of the parent firm have to be synchronized. The reason behind this is to ensure that activities are properly coordinated across the entire corporation (Khanna & Palepu, 2013). There are a number of ways through which synchronization can be achieved. To begin with, regular status meetings can be held between the overall management and the leadership of the new ventures (Gutierrez & Rodriguez, 2013). However, such undertakings would be extremely costly and time consuming. Valuable time would be wasted during travels and sit downs. To deal with this challenge, Jollibee can invest heavily on communication networks and gadgets. This would help ease the flow of information across all levels of the business. More time would also be spent in productive activities such as fulfilling management duties.
In conclusion, it is evident that it is the goal of most businesses to expand its operations. In this case, the Jollibee Food Corporation is seeking to expand the scope of its operations. There are a number of ways through which it can achieve this. One of the expansion strategies that the business can use is franchising. It involves allowing another firm to use the brand name and business model of the corporation. Mergers and acquisitions are also common practice for firms that seek to expand their operations (Gutierrez & Rodriguez, 2013). However, it is worth noting that there are varying laws and regulations governing mergers and acquisitions that tend to differ from one jurisdiction to another. Moving to new markets is also another way through which Jollibee can expand its operations (Khanna & Palepu, 2013). Untapped markets such as Africa and South America have great potential and should no longer be ignored. Market research is important when expanding a business. In this case, it would enable Jollibee decide on the most appropriate products and services to offer in the new markets.
References
Rarick, C., Falk, G., & Barczyk, C. (2012). The little bee that could: Jollibee of the Philippines V. McDonald’s.?Journal of the International Academy for Case Studies,?18(3), 83.
Gutierrez, B. P., & Rodriguez, R. (2013). Diversification strategies of large business groups in the Philippines.?Philippine Management Review,?20(1), 6.
Khanna, T., & Palepu, K. (2013).?Winning in emerging markets: A road map for strategy and execution. Harvard Business Press.
