The Little Bee That Could: Jollibee of the Philippines V. McDonald's

Article excerpt

CASE DESCRIPTION

The primary subject matter of this case concerns the growth of a Filipino fast food chain. It started from a single ice cream store, which later moved into hamburgers, Filipino style. Over the years Jollibee, a multi-national corporation in the restaurant industry, expanded its operation both in the Philippines and in neighboring countries. At the end of 2010 it operated 2316 stores in eight countries including the Philippines, China, Brunei, Vietnam, Spain, Indonesia, Dubai and the United States. It is now facing increased competition and a dilemma as to what direction it should go. A secondary issue examined in this case is Jollibee's unique business strategies. The case is written at a difficulty level of three, appropriate for junior level courses. The case is designed to be taught in one class hour and is expected to require 2-3 hours of outside preparation by students.

CASE SYNOPSIS

The Filipino Company, Jollibee, is imitating McDonald's in some ways but has its own twist on offering unique products that emphasize local spices and local taste preferences. This fast growing restaurant chain has benefited from the increased demand for fast food in Southeast Asia and has developed a unique business strategy. This case examines Jollibee's success and how the company is successfully competing with McDonald's. With its rapid growth, the company is now ready to expand with new concept restaurant to the rest of the world.

INTRODUCTION

Jollibee Foods Corporation (JFC), known distinctively by its red and yellow bumble bee mascot, operates a number of concept restaurants in the Philippines and beyond. From its core business, a McDonald's-like restaurant, Jollibee has expanded into a pizza chain, fast food Chinese restaurants, bakeries, breakfast bars, and a tea house. The company competes well with multinationals in the Philippines, and has begun a large expansion into the international market, including China and the United States. Jollibee, the original flagship brand, together with its additional product concepts, dreams of becoming a global powerhouse in the restaurant industry.

Jolibee's dreams will be challenging given the economic uncertainties that surfaced in 2009 and the 0.6% contraction in the world economy. With sound planning and leadership, however, the company is taking active steps to effectively manage its business. JFC's system-wide sales grew by 9.6% amidst weakened consumer spending in the Philippines and throughout most of the world. In 2009 Jollibee opened 168 new stores worldwide and even more impressively, opened 434 in 2010.

THE PHILIPPINES

The Republic of the Philippines is a country in Southeast Asia consisting of over 7,000 islands. The Philippines was "discovered" by Ferdinand Magellan in 1521, who claimed the islands for Spain. While Magellan met his death soon after arriving in the Philippines, the country was under Spanish control for almost 400 hundred years. The Philippines came under the rule of the United States in 1898 when Admiral Dewey defeated the Spanish and Spain ceded the islands under the Treaty of Paris. While Tagalog, or Filipino, is the official language of the Philippines, English is widely spoken, especially among educated Filipinos. In 1935 the US government decided that the Philippines should become a self-governing commonwealth and the country gained complete independence in 1946. After a number of different political administrations, strongman Ferdinand Marcos ruled the country from 1965 to 1986, maintaining close ties with the United States. With increasing discontent among Filipinos over its government, citizens in the opposition movement organized a "people's revolution" in 1986, and Marcos was forced to leave the country. Political instability ensued for a short time, but democracy quickly took a firm hold in the Philippines. The newly-formed democracy could be described as somewhat fragile, having been forced to endure the stresses of political corruption and attempted coups. …