Background of the Case

Being one of Asias largest restaurant company, Jollibee Foods Corporation

has embarked recently on its continues quest for global endeavor as it conquered to
pursue its American dream. Touted its biggest acquisition to date, Jollibee Foods
announced last October 13 it would buy 40% of U.S. fast casual restaurant chain
Smashburger for nearly $100 million. Jollibee has the option of fully purchasing the
burger
joint
from
2018
to
2026.
Launched in 2007, Smashburger has over 339 corporate and franchised
restaurants operating in 35 states and seven countries. Approximately 60% of
Smashburger is company owned and operated. Smashburger continues to grow at a
rate of 20% annually. While Jollibee Foods, a publicly-traded market leader in the
Philippines, has been actively seeking an investment in a leading U.S. growth brand.
Jollibee Foods Corporation currently operates and franchises a network of over
3,000 restaurants worldwide under the trade names Jollibee, Chowking, Greenwich,
Red Ribbon, Yonghe King, Hong Zhuang Yuan, Mang Inasal, Burger King
Philippines, San Pin Wang, Jinja Bar.
With the pursuit of Jollibee Foods, the discussion centers on the possibilities
of how will Jollibee be able to pull through on its ambition knowing that todays global
competition is so hypercompetitive and unpredictable. Its a tough decision on
whether they will continue with their basic or bring a new strategy to the table in its
dealings with Smashburger.

Viewpoint
Through Jollibee Foods Corporations acquisitions at home and abroad and
as it looks to become a global player, the viewpoint of this case is set to be on them
also specifically their CEO. Solely, the game card will be on Jollibee for this scenario
which they must put their best strategy so the bet of expansion will continue to pay
off for them.

Statement of the Problem

The major problem of this case is:
What should Jollibee Foods Corporation do to be able to carry out its
critical strategy looking to grow in an unfamiliar market such as U.S.
through Smashburgers acquisition?

Objectives
The objectives of this case are the following:
To tap new customer segments and serve the mainstream consumers
To become one of the top 10 quick-service restaurant operators in the
world
To develop innovative consumer experiences, expand distribution, and
capture new sources of monetization

SWOT Matrix
Strengths
1. Confidence to embrace
strong competition
2. Good track record in further
improving food quality
3. Profitable domestic and
international acquisitions are
steadily expanding
4. Suited for the taste of every
Filipino nation anywhere in
the globe

Weaknesses
1. A need to generate half of
its sales abroad
2. Food safety scandals
3. High Employee Turnover
(Operation)
4. Product Development for
New Offering Takes Too Long
5. Limited Menu offered to
customers

Opportunities
1. Regain some momentum on
the companys stocks
2. Familiarization with the U.S.
market and American tastes
3. Adaptation on Products and
Services to Culture and Tradition
4. Can help grow Philippines
Economy per capital
5. Investor optimism over JFCs
future

SO Strategies
Confidence to embrace
strong competition can
attract investor optimism
over JFCs future and
regain some momentum
on
the
companys
stocks
Good track record in
further improving food
quality may help boost
adaptation on products
and services to culture
and tradition
Profitable domestic and
international
acquisitions which are
steadily expanding can
aid familiarization with
the U.S. market and
American taste

Threats
1. Overall market weakness on
concerns of a possible U.S. rate
hike and a slowdown in the
Chinese economy
2. Non-compliance to Sanitary
Standards
3. Stiff competition with
established brands
4. Industrialization
5. Consumers look for a
healthier lifestyle

ST Strategies
Profitable domestic and
international
acquisitions which are
steadily expanding and
confidence to embrace
strong competition can
lessen stiff competition
with established brands
Good track record in
improving food quality
should be maximized
since consumers look
for a healthier lifestyle
JFC is suited for the
taste of every Filipino
nation anywhere in the
globe which is good
enough
for
industrialization
since
we have so many
OFWs anywhere

WO Strategies
Adaptation on Products
and Services to Culture
and Tradition may cover
food safety scandals if
they
have
proper
execution
Investor optimism over
JFCs
future
may
reduce the need to
generate half of it sales
abroad
Familiarization with the
U.S.
market
and
American tastes can
lower the time for
product development for
new
offering
since
Americans
demands
inventive delish foods
which can bring out the
creativity of JFC
WT Strategies
Avoid non-compliance
to Sanitary Standards to
never ever be involved
on food safety scandals.
Improved limited menu
offered to customers by
adding more of healthy
meals since consumers
look for a healthier
lifestyle
Idealize a low turnover
rate not on a high
employee turnover by
fostering
employee
engagement
with
effective
leadership,
personal
interaction,
and mutual respect to
be brave enough to face
stiff competition with
established brands

Areas for Consideration

The Industrial Organization approach to competitive advantage advocates
that external factors are more important than internal factors in a firm achieving
competitive advantage like Jollibee. Hence, its just best enough to look on the
external factors of Jollibee as an area for consideration. The following forces are:
Economic Forces
o Availability of Credit
o Level of disposable income
o Propensity of people to spend
o Inflation rates
o Money market rates
o Consumption patterns
o Unemployment trends
o Value of dollar in world markets
o Foreign countries economic conditions
Social, Cultural, Demographic and Environmental Forces
o Location of service business
o Lifestyles
o Buying habits
o Government regulation
o Social responsibility
o Regional changes in taste and preferences
Political, Governmental and Legal Forces
o Government regulations and deregulations
o Changes in tax laws
o Import-export regulations
o Level of government subsidies
Technological Forces
o Create/invent new product and services
o Food technology innovation
o Effective business marketing

Alternative Courses of Action

Here are the following alternative courses of action lay down that might help
Jollibee Foods Corporation to be able to carry out its critical strategy looking to grow
in an unfamiliar market such as U.S. through Smashburgers acquisition:
ALTERNATIVE 1: Provide substantial marketing and incur other costs
over an extended period of time.
Pros:

This is somehow like co-branding which can be considered a

powerful way of introducing one company's products and
services to the loyalists of another.
It enables one brand to benefit from the "halo of affection" that
belongs to another.
Another benefit is cost savings, something that can't be
overlooked during tough economic times. Examples are two
fast-food restaurant sharing the same building.

Cons:

It tends to have a dilutive effect since it spreads the credit for a

positive experience across two brands where normally there's
only one.
One brand may look weak or secondary over the other.
For brands that are less well known, co-branding may create
confusion.

ALTERNATIVE 2: Align Company Assets with Industry Characteristics

through home field advantage
Pros:

It can boost defense through utilization of the home field

advantage.
It establishes a strong build of confidence among your
competitors.
This will give companies the creativity to rethink on their
business models which can be a chance for improvement and
sustainability.

Cons:

The company may just be left behind for industrialization since it

focuses only on its local market which sometimes result to
globalization pressures.
It can cause a lot of missed opportunities for the company.

The market size will just be limited to the same consumers again
and again.

Recommendation
With all the steps that I have followed answering for this case, I must say that
Jollibee Foods Corporation is a restaurant that every Filipino anywhere in the globe
should be proud of and always support for because the values that it wants to
convey to its customers are also the values of what depicts a real Filipino is --family-oriented, loving and resilient. Its American dream is really a possible one
because it has built up a strong wall of confidence that any established competitors
may have a hard time to overcome them, example of it is McDonalds. So I must
commend that its really time for JFC to embark in the U.S. market and let their
presence be felt to the mainstream consumers, of course through the aid of
Smashburger. While it is true that JFC have built on strength at home and launched
international expansion strategies of their own, they still need to bear some
considerations for them to make it big in the U.S. scene. I highly recommend
Alternative Course of Action 1 which is to provide substantial marketing and incur
other costs over an extended period of time. This ACA falls on the Threat of New
Entrants under Porters Five Forces and I must say that an industrys productive
capacity expands when new competition enters. Although, there are already
established 87 outlets of JFC in US its still not a good number knowing that it
assumes to have a big presence there. Thats why a substantial marketing is still
essential as it can help promote and raise awareness that a Filipino restaurant like
Jollibee is also a good one just like the established brands. Moreover, through
marketing --- its role is to periodically make sure that the marketing plan emphasizes
the countrys strengths in ways that are compatible with shifting market sentiments,
preferences, needs, and priorities of relevant market players which will help to
identify marketing opportunities and new or potential markets. JFC can also engage
on co-branding with Smashburger since the latter is observe to become a global
player also. It may help JFC to benefit from the halo of affection that Smashburger
has.
Thus, JFC must always put in mind the importance of being flexible in
response to market opportunities. This familiar advice is often forgotten by managers
from emerging markets, for whom industry boundaries have traditionally been taken
as a given, in many cases established by government mandate. Liberalization is now
making the structure of many industries much more fluid, and managers exposed to
new kinds of competitors need to realize that they can respond by positioning their
companies in a variety of ways. By better understanding the relationship between
their companys assets and the particular characteristics of their industry, managers
can also anticipate how their strategies may evolve over time. As more and more
companies learn to compete in global markets, we are bound to see a growing
number of aggressive contenders like Jollibee.

Quest for growth takes Jollibee Foods

beyond Asia
(A Case Analysis)

Submitted by:
Angelo Jade M. Dayag
BSA IV-01

Submitted to:
Prof. Daryl Bernardo, MBA