Global Expansion of Jollibee
Jollibee was founded in 1975 in Cubao, Philippines and the company was incorporated in 1978 (Layug, 2009). Jollibee grew rapidly, offering a menu consisting of mainly Western foods and following a business model that was inspired by McDonald's. One of the main reasons that Jollibee has become such a success both in the Philippines and abroad is that the company has been able to execute this foreign business model to a high degree of excellence. This essay will analyze the success of Jollibee and make direct comparisons to the business models of Jollibee and McDonald's to show that much of the success Jollibee has enjoyed relates to following this foreign business model. The essay will break down Jollibee's strategy into a number of key components to better understand how it has earned its international and domestic success.
History and Mission
Jollibee began expanding shortly after becoming incorporated under that name, and by the 1980s was expanding into nearby international markets such as Taiwan and Brunei. The company has always held an international orientation, has focused on a Western menu, and has undertaken a number of other strategies that mirror those of Western fast food chains. The company has simply adopted the mission of providing Western fast food to Asian audiences. Another mission is to expand the company around the Asia-Pacific region and further into the United States.
From the beginning, Jollibee adopted the McDonald's tactic of appealing to children, so that it could win customers at an age when they are vulnerable and keep them as they progress through life. To this end, the company settled on a name "Jolly Bee" that was later altered to "Jollibee." The company based its bee mascot on a cartoon character. Its menu is also based around foods that children enjoy eating, such as fried chicken, hamburgers and hot dogs (Layug, 2009). The company has leveraged this strategy in order to build its appeal, especially in the domestic market. Its success today can be in part attributed to the foundations in laid with the current generation of young adults. They grew up on Jollibee in the late 1970s and 1980s, and now they are bringing their children to Jollibee as well, fueling good potential success for the future.
Jollibee's early international expansion was focused on markets that ultimately have low growth potential. They used their core strategy to enter these markets and enjoyed some success. This, combined with the perceived saturation of the domestic market, bolstered the company's desire to expand into larger overseas markets with greater growth potential. The two most important of these are the United States and China. The company's strategy for market entry and its operating strategy in these two countries are different from its strategy in the Philippines.
Jollibee has been successful in part because it emulated the strategies and many of the tactics of Western fast food companies, especially McDonalds. Similarities can be found not only on the menu but in the marketing approach, the systems used within the company and within the individual restaurants, and the company's human resources tactics. Where Jollibee has diverged from the McDonalds approach is with respect to its international expansion strategy. Jollibee has avoided direct competition with McDonalds in the U.S. And China both, but this deviation is perhaps not the best strategy for Jollibee to follow.
Operating, Marketing and International Expansion Strategies
There are three key strategies that Jollibee employs that have a direct impact on the company's success -- operating, marketing and international expansion. The operating strategy is based around the standard model of Western fast food chains. When Jollibee began, there were few if any such operations in Asia, let alone the Philippines. That allowed Jollibee to enjoy first-mover advantage in setting up the logistics systems to facilitate not only the fast food business model but the expansion of that model as well. Similar to McDonald's, Jollibee was able to build strong relationships with its suppliers.
The company has continued to use its strong relationships with local suppliers to deliver competitive advantage. It is important for Jollibee to use its buying power to drive volume discounts in order to keep costs to the customers down. In addition, the company has the advantage of being not only a local firm but the first-mover when it comes to developing relationships with suppliers. Maintaining a supply chain advantage over Western rivals that have now entered Jollibee's key markets is important. To that end, Jollibee has worked to build...
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