Management 5: Business Policy andStrategy Case Analysis (Quest for growth takes Jollibee Foods beyond Asia) BSA IV BACKGROUND OF THE CASE From swallowing up a congee maker in China to taking a bite of a Vietnamese pho chain's ownership, Jollibee Foods' rise as one of Asia's leading fast-food companies has been helped by acquisitions at home and abroad. Touted friends advised Tan Caktiong to just sell Jollibee and open a McDonald's franchise instead. Baysa said. Jollibee Foods has to serve the mainstream consumers. "To have a big presence in the U. Chief Financial Officer Ysmael Baysa announced that Jollibee Foods aims to become one of the top 10 quick-service restaurant operators in the world.pizza chain Greenwich. when his company had just 10 outlets and was threatened by the entry of McDonald's into the Philippines. almost everyone knows about Jollibee. The list is currently dominated by Western companies like McDonald's and KFC owner Yum! Brands. acquisition: It had to be "a brand that is already doing well.S. Jollibee Foods announced on Oct. Chinese-Filipino restaurant Chowking. more significant. The fresh push for global expansion helped the company's stock regain some of its momentum. Its 40% stake in Smashburger will give the Philippine company only a limited say in its affairs. As of the first half of 2015. product offering and growing the store network of brands it has acquired. Investors cheered the news.S. From the very start. With little information disclosed about Smashburgers' financial performance and business model.S. going beyond the Filipino market and serving the mainstream consumers in the $100 billion U. Tan Caktiong has embraced competition. along with a franchising scheme. allowed the company to accelerate expansion. In 1981." Sarreal said. Jollibee has seen its share price rise by 21-fold from its initial public offering price of 9 pesos ($0. A third of those were Jollibee burger restaurants -. Jollibee Foods is also used to acquiring a majority stake when investing in other fast-food companies so that it can control management and operations. In China.S. At a forum last October. Baysa said in June that Jollibee Foods would like to achieve its global ambitions in the next seven years. Tan Caktiong.as its biggest acquisition to date. fast-food companies.001 outlets across its nearly dozen brands. Soon after its initial public offering in 1993. mostly in Philippine communities.which dwarf the Philippine company in terms of sales and store count. Tan Caktiong said he had only one major condition for a U.S. The company has made at least six domestic acquisitions -. 184 of which are company-owned while 155 are franchised. store openings have not been as brisk as in the Philippines and China. In June last year. which contribute around 12% of its systemwide sales. Jollibee's chubby red-and-yellow bee mascot is such a familiar icon to Filipinos that Japanese clothing brand Uniqlo used it to market its shirts in the Philippines. the Red Ribbon bakery chain. adding that this experience is something the Philippine company can bring to the table in its dealings with Smashburger. Burger King Philippines and the Mang Inasal grilled chicken chain -.S. fast casual restaurant chain Smashburger for nearly $100 million. is reportedly in the black and now boasts 339 outlets. with shares of Jollibee Foods rising 1% that day. analysts in Manila are finding it difficult to say whether Jollibee Foods made a wise investment. 13 it would buy 40% of U. for his part." he added. Jollibee Foods has 87 stores in the U. It has been written about in the news and is a regular topic at Tan Caktiong's speaking engagements." Smashburger seems to fit the bill. investment. shrugging off the nearly 2% slump in the benchmark Philippine Stock Exchange index...are all profitable and steadily expanding. He obviously did not listen.19). To achieve its ambition." Tan Caktiong said when the company announced the deal. "Jollibee Foods has a good track record in further improving food quality. Jollibee Foods had a total of 3. Jollibee Foods went on an acquisition spree that. Though they provide 5% of the company's systemwide sales. . burger market. is prepared to take on U. including the scouting of the U. Many Filipino children have memories of celebrating their birthdays at a Jollibee restaurant. "This acquisition will make Jollibee Foods' presence in the U. Jollibee has the option of fully purchasing the burger joint from 2018 to 2026. including those from franchised outlets.S. The company. founded in Colorado in 2007. the company has more than 400 outlets. Chairman Tony Tan Caktiong said Jollibee had already achieved its goal of becoming Asia's largest fast-food chain by market value and was now setting its sights on an American acquisition. Tan Caktiong stepped down as CEO in 2014 but.S. Jollibee Foods will need to generate half of its sales abroad. remained active in the company. Since going public in 1993. while Filipino expats living in countries without Jollibee say they long for a Yum burger or Chickenjoy.880 in the Philippines and 131 abroad. In the Philippines. and its acquisition of Smashburger Master.S.VIEWPOINT Jollibee Foods management will be used as the viewpoint. SWOT MATRIX STRENGTHS WEAKNESSES -Understanding Consumer Tastes -Dependence on filipino expatriates -Affordable Prices -Weak international . particularly in the U. and To establish the Jollibee Foods brand name in the U.?” OBJECTIVES To determine the stability of operations of Jollibee Foods outside the Philippines. STATEMENT OF THE PROBLEM Based on the given article about the expansion of Jollibee Foods in the U.S. the statement of the problem: “How can the management of Jollibee Foods prolong its operations outside the Philippines.S. To determine whether the purchased of Smashburger will help Jollibee Foods maintain its operations in the U.S. understanding of the consumer tastes. With these opportunities.. and social medias. -Because of Jollibee Foods -Since Filipino expatriates good operations management.. it can also lessen the weakness of international promotional campaign. means a new product will be added to the local menu of Jollibee Foods and it will also be a good advertising scheme of Jollibee Foods.-Good quality of food and services promotional campaigns -Well-trained staffs -Good operations management -Location of business -Responsiveness to competition OPPORTUNITIES STRENGTHOPPORTUNITY -Acquisition of profitable food STRATEGIES chain (Smashburger) -Because of the acquisition of -New product aside from local a profitable food chain.S. . know better of Jollibee Foods. WEAKNESSOPPORTUNITY STRATEGIES THREATS WEAKNESS-THREAT STRATEGIES -Rivalry with other international competitors (InN-Out & Five Guys) STRENGTH-THREAT STRATEGIES -Since there are a lot of Filipino migrants in the U.S. the menu Smashburger. will be one of the first customers of Jollibee since it is very well known to Filipinos. Jollibee Foods will have a new product on -Filipino migrants in the U. affordable prices.S. this way. it will give the Jollibee Foods a much greater strength because of their business location (maybe it will be opened near a subway or within an office district). but they can be of help for the Jollibee in the advertising thru the use of word advertising.S. Jollibee Foods have a very well-trained staffs because they have a good operations management and because Jollibee Foods is responsive to competitions. because since Filipinos knew of Jollibee. good quality of food and services. the Smashburger. they are really the first target market. And because of the acquisition of a profitable food chain in the U. they will be the first customers of Jollibee Foods. their local menu and the Filipino migrants in the U. The weakness of the dependence on Filipino expatriates is not going to be a problem. market and American taste. And Jollibee Foods has a good track record in further improving food quality. the staffs/employees would be of two different cultures that may lead to differences on opinions.-Customers shift to more healthy foods -Higher cost because of international rate than in local its well-trained staffs. market and American taste. Jollibee Foods should be in a place where a lot of people are going. the management should take note of the stable and high earning food chains. market is very huge. Jollibee will familiar itself with the U. people cannot resist the foods that Jollibee offers (burgers and fries). the Smashburger Master since its brand name is already doing well in the course of business in that way.S.S. product offering and growing the store network of brands it has acquired Alternative 2: Jollibee should not operate within the U. a shift of more healthy foods and a high cost because of high standard of living in the U. and its responsiveness to competition can be use to avoid the threats such as the rivalry with other competitors.S.S. they are the target market of the business. U. And there is . for the reason that it is not familiar with the U. Whether there is a shift to more healthy foods..S. International-Domestic Relationship should be considered as well because of cultural differences and issues may arise like in the preference in hiring employees (whether a Filipino or American) ALTERNATIVE COURSE OF ACTION Alternative 1: Continue Jollibee’s operation together with its new acquired business. AREAS OF CONSIDERATION Location of the business should be considered by the management. And as we all know. Cultural Differences should be considered by the management since Jollibee Foods will operate internationally.S. Jollibee will have a difficulty as new entrants because they will compete with established brands like In-N-Out and Five Guys. like near a subway or in an office district. in the U. Competitors should also be considered since Jollibee Foods will operate internationally. product offering and growing the store network of brands it has acquired.S. with the help of course of Smashburger and with the help as well of its Filipino expatriates in the U. Since Smashburger Master is a brand that is already doing well in the U. And that Jollibee Foods has a good track record in further improving food quality. . the Smashburger Master.only little information disclosed about Smashburgers’ financial performance and business model. so it is difficult to say whether Jollibee Foods made a wise investment. RECOMMENDATION I recommend to the management of Jollibee Foods to use alternative 1which is to start their operations together with its new acquired business. market and American taste.S.S.. it will allow Jollibee to familiarize itself with the U. The Jollibee can prolong its operations in the U.S. This experience is something the Philippine company can bring to the table in its dealings with Smashburger. because they can be the means as well for Jollibee to be well-known with the Americans.