Compose a good Analysis of Jollibee foods international expansion strategies………..

MEMORANDUM                                                                                                                                                

Institution:

Date: 18th April, 2012.

To:

From:

Subject:    Analysis of Jollibee foods international expansion strategies

Introduction

            This essay presents case analyses Jollibee international expansion strategies The Company has attracted a lot of admiration from the potential investors globally due to its improved performances in the Philippine market despite the entry of McDonald Company. it operates in several countries such Hong Kong, U.S.A, Taiwan, Brunei, Middle East and Indonesia. The new Head of international Division is faced with three options which will shape future international strategies

1. 1.      International strategies

Mr. Kitchner adopted expansion strategies, mainly targeting expats of Filipino origin and planting flag in nations where other fast food firms had not accessed. He targeted peoples of Filipino origins in who provided ready markets for the company products without requiring further modification. The population Filipinos in some Asian countries was not large enough to sustain business operations. In the U.S.A the population was large enough to provide adequate market for the company products and services.

First mover strategy: this was called planting flag and was used in the new markets of Asia and Middle East which did not any presence of fast food companies.  This strategy was successful in the Philippine and Brunei and company benefited from first-mover advantages, influencing tastes and building brand name in new locations. However, this strategy failed succeeds in Hong Kong and Middle East.

Franchising: Kitchner cleverly negotiated franchising agreements which reduced problems of poor choice of partners and management conflicts. It was away of getting resources and expertise from the parent country which were supported by resources from local Franchisee firm. The role of Franchisee varied from country to another with major roles being played during the start up process of site selection and securing of stores.

Oversight and continuing support greatly helped to reduce management conflicts through the tracking of every business activity of the franchise. The home monitored all business performance of their international businesses.

Internationalization of the company: Company’s logos and stores were redesigned to reflect international standards and attract international customers. Goods and services were also tailor made according to customers needs. Advertising and packaging of goods and services was changed to make the appealing to international markets.

Customizing for local tastes:  Mr. Kitchner and his team revised company menus to meet the requirements of specific regional customers. Modification created tensions with parent company who felt that international team was things differently.

Mr.  Kitchner was more concerned with business expansion rather than business returns which lead to loss making. He entered new markets without proper market research leading to production of undesired products. Mr. Kitchner is an ambitious, aggressive and risk taker person who can easily plunge the company into losses and eventual closure.

2.   Investment options to support

Despite the poor performing businesses in Middle East and Asia, Mr. Noli Tingzon was faced with three more tempting investment opportunities that will shape strategic agenda and organization model to be followed by the company.

Popua Guinea: This investment option will require few numbers of stores which local partner is ready to cater for. Competition level is minimal unlike in California and Hong Kong which have competition from renowned companies, an example being McDonalds which have established brand names. The country has lucrative market for fast food products, only three stores serving a population of over 5 million people.

The disadvantage of this venture may arise due to management conflicts between the parent company and would-be franchise. Another likely problem is low returns due to low population and few stores in the country.

In Hong Kong, the company intends to open a fourth store in this location to capitalize on the Filipino customers who will provide ready market for company products. However, these target customers may not provide enough sales to sustain the company. Another likely problem is developing consumer tailored products which is likely to meet resistance from parent company. Staffing problems is inevitable due to poor working relationships between Chinese and Filipinos. Competition from McDonald’s products which are preferred by locals will require extensive brand promotion in whose funding may not be easily provided by the parent company.

California market is the home to fast food products and the company stands to benefits a lot from this market but must be prepared to face stiff competition from McDonalds and others. The company will gain prestige and publicity if it succeeds in this location and has always been TTC belief and parent company is likely provide necessary support.

The region has a population of Filipino origin who are likely to provide market and labour for company products and services in this territory as was in the Guan region of USA. Company products are known to appeal to most residents of the USA hence the company expects to raise more sales and revenues from this venture.

          Conclusion

Mr. Tingzon should pursue California markets because he is likely to receive maximum support from the parent company in and local investors. The region will provide ready market for the products, with over a million Filipino expatriates unlike in Hong Kong and NPG. The company products are appealing to entire American residents unlike in Hong where they have failed to appeal to the local population.

References

Christopher A. Saktlett (2001): Jollibee Foods Corporation; international expansion. Harvard business school. No. 9-399-007, Rev December 17, 2001.

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