STRATEGIC ANALYSIS OF JOLIBEE FOOD CORPORATION

by

Charmaine Cruz
Jenna Mae Dawis
Kenneth John Nieto
Nicole Alysson Vivas
Leslie Joy Vizarra

PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE COURSE

ECON-ELEC1
Economics Elective 1

to

Prof. Ricardo L. Dizon

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

November 2018

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ABSTRACT

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Introduction

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The Industry Profile

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The History of the Company

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Role and Classification of the Products of the Company and Their

Characteristics

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CHAPTER 2

EXTERNAL ANALYSIS

INDUSTRY ANALYSIS

Jollibee Food Corporation operates, develops, and franchises as a

restaurant where customers order and pay at the counter. It is a fast-food and

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quick service establishment which is specialize in American influenced items with

specific tastes of the Fillipino market serving inexpensive foods. As Jollibee

started as a ice cream parlor in 1975 which serves a first Jollibee outlet, its sales

and revenue has been increasing in the following years. The corporation’s going

public on the Philippine Stock Exchange in 1993 serves as the foundation for

brisk development and growth of its retail establishments locally and

internationally. Its four automous regional business units that deals with

administration, human resources, network development, and finance give the

means to the company to focus with operation on a corporate level. In the

Philippines, fast-food restaurants concentrates in specialization of fried chicken,

French fries, burgers, spaghetti, with coca cola as beverage. Jollibee Foods

Corporation has been the largest fast-food industry in the Philippines. It also

owns several fast-food chains including Chowking, Red Ribbon, Mang Inasal,

and Greenwich. It is regulated by the Department of Trade and Industry, Republic

Act 7394 or the Consumer act of the Philippines, and the Department of Health

and Bureau of Food and Drugs. The Filipino-owned Jollibee Foods Corporation

dominated fast-food market by 52% market share.

INTERNAL RIVALRY

As of July 2017, there is now 1,000 Jollibee stores in the Philippines, and

close to 200 outside the country. Globally, the Jollibee Foods Corporation has

expanding its finest, and largest brand Jollibee as well as its other brands

including Chowking, Greenwich, Red Ribbon, and Mang Inasal. JFC now had

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3,555 stores worldwide from one side to the other 12 brands in 17 countries. The

varied food products permitted the organization to initiate contact to diverse

customers. As it also operates nationwide, there are locations in which they face

no other competition. The intensity of rivalry is high when the number of

competitors, the industry growth rate, the product differentiation, and the

strategic stakes is high, the fixed cost, the storage cost, and the exit barriers are

medium, and the switching costs is low. Over all, the intensity of rivalry among

competitors is considered to be medium to high. The fast-food industry is

typically a very profit-making business. In the Philippines, there are already other

fast-food contenders competing with Jollibee like McDonalds, Burger King, KFC,

and Goldilocks.

The Economy

The constantly encountered in the current economic nature is the

unpredictability of competition from foreign competitors as much as the slumping

in the market niche. In addition, the other forms of financial crisis in the country

where it is operating. Consequently, the capability of the economy to grow in

developing countries will have attracted major competitors in the fast-food

industry to start an outlet there. In a like manner for example, Jollibee, the

growing market odds in Indonesia of Chinese food capacitate Jollibee to enter in

to the market introducing the Chowking brand as it is focused on Chinese

cuisine.

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FIVE FORCE ANALYSIS

The threat of new entrants is medium. The barriers economic of scale, and

the brand identification is high, resulting to low. While the learning curve effect,

the product differentiation, the capital requirements, the switching cost, is

medium, resulting to medium. Lastly, the control of distribution channels, the

proprietary knowledge, and the control of access to raw materials is low, resulting

to high.The bargaining power of buyers is medium. Customers purchase

products in small quantities while maintaining the quality of products which is

important to the buyers. The switching cost is medium where the quantity and

quality of information are available to customers. The bargaining power of supplier

is low. The products are available from many supplier and the switching cost is

low but high volume of purchases are important to the sellers. The rivalry among

competing sellers is medium. The concentration of competitors is high and there

are one to two contenders who have great strategies, while industry growth rate is

high as well as the product differentiation. The threat of substitute products is

medium. The threat is high considering other competitors with quick service and

burger industry with similar products and healthier options with low switching cost.

Aside from that, no other competitors have paralled the quality control Jollibee

Foods Corporation offers.

Threat of New Entrants

The threat of new entrants is high when the economic of scale, the product

differentiation, and capital requirements is high, the switching cost, and the cost

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advantage is medium, the ease of access to distribution channels, and the

government policies creating barriers is low. Over all, the threat of new entrants to

the industry is considered to be low to medium. The new entrants to the fast-food

industry would need to face high entry barriers. Apart from having the economies

of scale, the new entrants would also have to compete alongside the high

standards as much as the well situated loyal customer base Jollibee has set in

the industry, and high capital requirements when beginning a fast-food chain with

products that will differ from the rest of the competitors.

(a) Geographical Limitations

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(b) Government Policy

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(c) Capital Requirements

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 (d) Economies of Scale

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(e) High Exit Costs

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(f ) Effect of Competitive Rivalry

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1. Rivalry Among Existing Competitors

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3. Bargaining Powers of Buyers

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4. Bargaining Power of Suppliers

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(a) Contractors

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(b) Labour

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COMPETITIVE ANALYSIS

Assessment of Competitive Position

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 CHAPTER 3

INTERNAL ANALYSIS

Since the beginning in the year 1975, Tony Tan Caktiong and his brothers

managed to keep the constantly increasing and expanding of its food products.

The ice cream parlors were an instant hit between the food loving Filipinos. And

so the Tan brothers decided to began and added quick meals such as

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sandwiches, spaghetti, and burgers to their menu. Subsequently, the Tan brothers

noticed that side orders brings more earnings in the store specifically the burgers

than the ice cream. Following the pulse of their market, they develop a unique

brand with menu catering the best taste buds that would appeal to the Filipinos.

Now, Jollibee is conceived as a fast-food outlet and high quality with rational

priced food products. In response to the rapid growth of their store and inevitable

popularity of their homemade burgers, the Tan brothers formed the Jollibee Foods

Corporation (JFC) in 1978 to fully utilize the possibilities of the hamburger

concept. Although, McDonalds entered the Philippine Market in 1981, the

Jollibee’s management sees this as an opportunity that enable them to evaluate

the American’s operations and introduce their own chain up to a world class

standards. As Tony Tan acquired or recognized better understanding of the

McDonalds business model such as the strengths and weakness in specific

areas, he then knew what would be make this difference in him and his brothers

business.

Management Preference

In consideration that Tony Tan Caktiong is a Filipino of Chinese ancestry,

naturally they would preferred starting a business in a familiar resource location

so his brothers decided to opened in Manila, Philippines. Knowing the Filipino

traits such as people love to eat, enjoy snacks in between meals, and a

comfortable place that of course offered reasonably-priced food products to chat

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 with friends and loved ones . Then, Philippines became the an attractive global

market for fast-food industry. Though there are many competitors like McDonalds,

Wendy’s, Burger King, KFC, and Pizza Hut, Jollibee maintains its dominant

position as the leading fast-food chain in the Phillippines, capturing specifically

the Filipinos taste.

Mission

The mission of the Jollibee Foods Corporation is “To serve great tasting food,

bringing the joy of eating to everyone.”

Vision

The vision of the Jollibee Foods Corporation is “We are the best tasting quick-

service restaurant. The most endearing brand that has ever been. We will lead in

product taste at all times. We will provide FSC excellence in every encounter.

Happiness in every moment. By year 2020, with over 4000 stores worldwide,

Jollibee is truly a global brand. And the Filipino will be admired worldwide.” The

Jollibee Foods Corporation wanted to become the most dominant and the best-

tasting quick service restaurant that is within reach of every Filipino and lead in the

product taste at all times with Happiness in every moment.

Core Values

The core values of Jollibee Foods Corporation are the Customer Focus,

Excellence, Respect for the Individual, Teamwork, Spirit of Family and Fun, Humility

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to Listen and Learn, Honesty and Integrity, and Frugality.

Objectives
The three Bs ensures the attainment of the objective which is to boost the

standards of the fast-food industry, build brand satisfaction, and broaden reach

to customers.

Resource Analysis

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Marketing
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 Financial
Sources of Fund
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Financial Position
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Gross Revenue, Expenses and Net Income

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FINANCIAL RATIOS
OVERALL GROWTH
RATIOS EXPRESSED IN PERCENT 2010 2011 2012
Net Income Growth Rate
% of Net Income to Total Income
% of Expense to Total Income
Income

The ratios shown above signify how ABS-CBN Corporation has been
efficient in year 2012. The Authority manage to increase its net income growth
rate from a decrease of 22 percent to an increase of 174 percent. Percent of Net
Income to Total Income increases by 33.96 pecent in 2012, while percent of
utilization of expenses compared to generated income decreased by 54.63
percent.

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PROFITABILITY
RATIOS EXPRESSED IN PERCENT 2010 2011 2012
Return on Equity 0.04 0.03 0.04
Return on Assets 11.57 8.20 12.57
Operating Ratio 65.27 67.39 63.94

 Return on Equity

The return on equity was also presented in Table above . It further showed

that PPA experienced variation on return on equity. For year 2012 the return on

equity marked 4%. This implies that a one percent Capital that was put in the

business, it earned 4%. This is much higher compared that of the figure during

2010 and 2011 which posted 15.40 and 2.74, respectively.

 Return on Assets

The values in the return on assets of PPA revealed that in 2012, the

highest return was achieved with 12.57 percent, While in 2011 the lowest return

was posted with 8.20%. The return on assets would like to portrayed that for

every one percent increase in the average total assets , the 12.57 percent goes

to PPA net income.

 Operating Ratio

Operating Ratio has posted an increased from 65 percent in 2010 to 67

percent in 2012. This implies that the operating expense has increased in

proportion to total income, this is associated with an increase in expenses

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 in Personnel Service due to the implementation of Salary Standardization

Law. Meanwhile, the corporation’s operating expense was minimized in

proportion to total income during 2012 which posted an overhead to total

income of 63.94 %.

Liquidity

RATIOS EXPRESSED IN PERCENT 2010 2011 2012

Current Ratio 0.87 1.19 1.93
Current Assets to Total Assets 0.74 1.03 1.68

 Current Ratio

The corporation’s current ratio has increased significantly from 0.87

percent in the year 2010 to 1.93% in the year 2012. This only means that during

2012 the ability to pay PPA’s obligations in terms of their currents assets has

increased.

 Current Assets to Total Assets

The ratio above shows the liquidity of the total assets. In which in case of

PPA it posted an increasing liquidity in total assets over the period of 2010-2012

which has the ratio of 0.74 to 1.68y.

Operations

The Port Operation of the Authority depends on the cargoes being

handled by a Port. A more competitive strategy to reduce operational cost and to

further improve the profit margins.PPA should also adopt modern equipment in

term of Cargo Handling Operation in order to attain more efficient port services

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Human Resources

The Human resources recruitment process should be thoroughly executed

to select an employees who are very good in operations, marketing, logistics and

corporate strategy and management. Since PPA is current on the process for

implementation of Rationalization Plan, it should develop a scheme of proper

standard qualification on the recruitment of its Officers, and line employees.

Political Issues

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 CHAPTER 4

RECOMMENDATIONS

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References

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