Jollibee is a fast food chain that is based in Manila, Philippines. Inspired by Tony’s chef dad back in 1977, the home style hamburger quickly became an instant hit among the Filipino’s market. Today, Jollibee is a family of a total of 750 stores across worldwide in countries like Vietnam, Qatar, Saudi Arabia and more. (Jollibee. com. ph,2013) Now, based on the article, Jollibee is considering to expanding into three different countries and they are Papua New Guinea, Hong Kong, and California. However, these three opportunities come with complications and challenges that Jollibee has yet to attain on the strategies of entering these markets.
Papua New Guinea In Papua New Guinea, there is five million worth of market share but only undertaken by a few competitors like Stargate Food Bar and Tropical Lunch Haus (Lonelyplanet. com, 2013). Jollibee’s only concern was to raise their standards of food quality to take over the Australian chain market which adds into their competitive advantage to demote the future competitors from coming in. Moreover, the would-be franchisee had already agreed to help Tingzon negotiate the terms with a local petroleum retailer to open Jollibee stores in their service stations.
Adding on, the franchisee also promised that if Jollibee had any future expansions plan, he would support all the capital cost needed. (Bartlett, C. & Beamish, P, 2011) Hong Kong For Hong Kong, the proposition to Jollibee was to set up another store due to the overpowering success from their first store back in 1996. With that said, the main contribution to the revenue still came from the Filipino expatriates and domestic workers that was located nearby the store. Also, the mere fact was that Chinese customers is still the main targeted market, Jollibee was only able to acquire one-third of its total revenue.
Despite the strategic location nearby the Central district, the traffic flow of pedestrians was unstable during the weekdays. Following, Jollibee had been facing issues of hiring locals to manage their daily stores activities. This was a result of language barriers and incompatibility of communications between the employees and the customers. Another obvious challenge was the brand recognition of Jollibee among the people in Hong Kong was still weak as compared to other brands like McDonalds.
Shadowing, Shih, owner of the second franchiser, also commented that the menu provided to the customers were too inflexible and engaging. (Bartlett, C. & Beamish, P, 2011) California On the other hand, Jollibee is planning to expand its operations to California after doing extremely well in Guam. The overwhelming response has led Jollibee to consider opening a store every quarter in Daly City, a city filled with an excessive community of Filipinos with low attention of fast food chain opponents.
The demographics of the targeted area are suitable for cultivating others like Asian-American and Hispanic-American consumer will help Jollibee in the future for expansion progress. On the downside, the major issue that Jollibee is concerned about would be to manage and regulate operations from 12 hours by plane distance. (Bartlett, C. & Beamish, P, 2011) Recommendation After analyzing the current conditions and aspects of each country, California is the ideal option for Jollibee to go through with the expanding of operations. Firstly, the integration and foundation of the business operation is already present with the success in Guam.
Furthermore, Daly City has a great concentration of over a million Filipinos currently living in which will ultimately provide Jollibee with the traffic of consumers and size of orders. Also, there is a low percentage of food chain companies available in the particular city. This satisfies Jollibee’s criteria in opening a store which are location, traffic of pedestrians and presence of competitors. One alternative to respond to the issue of managing its operation from a far distance would be Jollibee building its own manufacturing plant with the adoption of transnational mentalities.
Transnational strategy focuses on coordinating its cooperation and interdependence to the headquarters and transnationally situated subsidiaries or retail openings (Businessdictionary. com, 2013). This way, Jollibee can simultaneously enjoy effective globalization efficiency and responding to local needs through the interdependent network of worldwide operations. The idea of expansion in Papua New Guinea is potentially worth considering but based on their past experience of partnerships with outsiders in Singapore and Taiwan, trust issues may arise between these two
parties and history may repeat itself. Although the franchisee has agreed to bear all financial cost for the entire expansion plants, Jollibee would be having low control over its operations in the future. Hong Kong lacks a lot of advantage for Jollibee to continue its expansion due to several reasons mentioned above like the language barriers and staffing problems with the locals. Ideally, the general population of Chinese in Hong Kong does not speak fluent English hence, Jollibee had already faced problems when hiring employee to work as a crew member.
These issues create a huge hurdle for Jollibee to continue its operation there. Following, the idea of customization their menu to satisfy the local needs may be too expensive and extensive for Jollibee to further investigate. Conclusion In a nutshell, after a serious extensive research on the analyzing of the three countries, California would be the ideal option for Jollibee to implement its expansion plan. From the research, the data in the case study has shown clearly that Hong Kong is the last choice for Jollibee to consider for expansion.
On the other hand, Papua New Guinea overall projects good investment features but is not enough to outweigh the prospects of California. The implication may be present in California but it is an issue that can be attainable through the use of transnational strategy which will lead to efficient globalization. References List Bartlett, C. & Beamish, P. , (2011). Transnational Management. 6th Edn. , McGrawHill, New York. BusinessDictionary. com. 2013. What is transnational strategy? definition and meaning. [online] Available at: http://www. businessdictionary.
com/definition/transnational-strategy. html [Accessed: 28 Sep 2013]. HubPages. 2013. Managerial Functions. [online] Available at: http://jacobkuttyta. hubpages. com/hub/Managerial-Functions [Accessed: 28 Sep 2013]. Jollibee. com. ph. 2013. About Us | Jollibee Foods Corporation. [online] Available at: http://www. jollibee. com. ph/about-us [Accessed: 26 september 2013]. Lonelyplanet. com. 2013. Fast Food restaurants in Papua New Guinea – Lonely Planet. [online] Available at: http://www. lonelyplanet. com/papua-new-guinea/restaurants/fast-food [Accessed: 28 Sep 2013].
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