Business Strategy ass 1 - Final

The strategic position of Jollibee Food Corporation in Vietnam 25 V.. In this report, I willmention about 5 main parts: firstly, the content of Jollibee Food Corporation businessstrategy

Desert Group

Member:

- Bùi Xuân Cương – Calvin F02E - Leader

- Ninh Toàn Thắng – Tonda F02E

- Nguyễn Ngọc Trung – K.O F02E

- Dương Đăng Bảo – Billy F02F

- Hoang Cong Buu Thien – Jerry F02E

Table of contents

page Coversheet 1-3 Introduction 5

I Context of Jollibee Food Corporation business strategy 5

II Key of stakeholders of the company in Vietnam 9

III External environment and organizational audit 16

IV The strategic position of Jollibee Food Corporation in Vietnam 25

V Strategically explaining the possible considerations for strategic analysis 31

Conclusion 40

Reference 41

Introduction

Jollibee is the 1st brand fast food in Philippine In 1997, Jollibee went to Vietnammarket and established Jollibee Vietnam Since 1997 to now, Jollibee develops fast andbecomes one of biggest fast food brand in Ho Chi Minh City In this report, I willmention about 5 main parts: firstly, the content of Jollibee Food Corporation businessstrategy; secondly, the key stakeholders of Jollibee Vietnam; thirdly, Jollibee’s expansionplan, conduct an external environment and organizational audit of the company; fourthly,strategic position of JFC Vietnam; Finally, strategically explaining the possibleconsiderations for strategic analysis.

The context of Jollibee Food Corporation business strategy includes 9 parts: Vision,Mission, Value, Objectives, Goals, Core competences, Strategic Intent, Strategicarchitecture and Strategic control.

a Vision

Definition of vision is “A vision statement is sometimes called a picture of yourcompany in the future but it’s so much more than that Your vision statement is yourinspiration, the framework for all your strategic planning.” A vision statement may apply

to an entire company or to a single division of that company Whether for all or part of anorganization, the vision statement answers the question, “Where do we want to go?”(sbinfocanada, accessed on 2010) We can see the important of vision with the company The vision of Jollibee “We are the best tasting QSR… The most endearing brand…that has ever been… We will lead in product taste at all times… We will provide FSCexcellence in every encounter… Happiness in every moment … By year 2020, with over4,000 stores worldwide, Jollibee is truly a Global Brand (and the Filipino will be admiredworldwide) (Jollibee, accessed on 2010)

b Mission

Mission is defined that “ a mission describes an organization’s basic function insociety, but originally the term was used to describe specific journeys made to discoversomewhere or something, or to spread knowledge and belief (such as the journeys made

by missionaries to spread religion)” (BPP, 2004, pg 10)

The mission of Jollibee “To serve great tasting food, bringing the joy of eating toeveryone” (Jollibee, accessed on 2010) The mission of Jollibee is very important toserve the customer with the best fast food

c Value

Values – the goals or aims of the organization will have an ideology based on beliefs,values and attitudes (BPP, 2004, pg.26)

Values of Jollibee “ Customer focus – Excellence – Respect for the Individual –Teamwork – Spirit of Family and Fun – Humility to Listen and Learn – Honesty andIntegrity – Frugality” (Jollibee, accessed on 2010)

Objective of Jollibee in mid-term is to transform the Commissary to a Centre ofManufacturing and Logistics Excellence through its people, System and Process(elsalvadorcompite, accessed on 2010)

e Goals

Mintzberg (1997) defines goals as “the intentions behind decisions or actions, thestates of mind that drive individuals or collectives of individuals called organizations to

do what they do” (BPP, 2004, pg.28)

Goals of Jollibee are: lead in product taste at all time; provide FSC excellence in everyencounter and make customers happy in every moment Moreover, Jollibee will become acentre of supply chain excellence that ensures the dominance of Jollibee FoodsCorporation in Asia (Elsalvadorcompite, accessed on 2010)

reason why Jollibee stores all over the country are viewed as wholesome place to dinnerwith the family Moreover, Jollibee’s product has cheaper price, compare with competitorsuch as KFC and Mc Donald This means that Jollibee’s product has more advantagesthan KFC and Mc Donald (Jollibee, accessed on 2010)

g Strategic Intent

Definition of Strategic Intent is strategic intent is the immediate point of view of along term future that company would like to create It is the intent of the strategies thatcompany may evolve (alagse, accessed on 2010)

Strategic Intent of Jollibee is to achieve its long-term goal to be the country’s QuickService Restaurant (QSR), will expand market coverage by acquiring foreign enterprises(Jollibee, accessed on 2010)

(BPP Professional Education, 2004, pg.56)

Strategic Apex – owner, board of directors It ensures that the organization follows itsmission and serves the needs of its owners (BPP, 2004, pg.57) Jollibee Food Corporationwas established by Tony Tan Since 1978 to now, with mission is to serve great tastingfood, bringing the joy of eating to everyone (according to scenario), Jollibee developsincessantly and creates new products such as chicken joy; Jolly Spaghetti; Jolly Hotdog;Burgers; etc (Pldonline, accessed on 2010)

Middle Line – people in this area administer the work done It coverts the wishes ofthe strategic apex into work of the operating core (BPP, 2004, pg.57) In 1981, Jollibeehad only 10 stores but now, Jollibee has 1,686 stores nationwide and 50 restaurants with

600 stores in 5 countries (Jollibee, accessed on 2010) In Vietnam, Jollibee has 11restaurants with 10 restaurants in Hochiminh City and 1 restaurant in Dong Nai (Saigon-gpdaily, accessed on 2010)

Operating Core – People directly involved in production, perhaps the primaryactivities of the value chain (BPP, 2004, pg.57) Jollibee company in Vietnam has over

500 employees with mainly employees to be Vietnamese With Vietnamese employees,Jollibee company can be easy approach cultural, traditional as also taste of Vietnamese Technostructure – administrators and planners standardize work (BPP, 2004, pg.57).One of factors helps Jollibee successful to be labor Jollibee always cares to trainemployees because recipe for success of Jollibee is made by well-trained teams that work

in a culture of integrity and humility, fun and family-like (Jollibee, accessed on 2010).Beside, Jollibee also update technology to create healthy and safety products, etc soemployees must be trained to use machine

Support Staff – ancillary services such as public relations, legal counsel, or thecafeteria do not plan or standardize production (BPP, 2004, pg.57) Jollibee supportsstaffs to complete their responsibility by award

i Strategic Control

Strategic Control is defined that: "Strategic control focuses on the dual questions ofwhether: the strategy is being implemented as planned; and the results produced by thestrategy are those intended." (strategic control, accessed on 2010) The control ofJollibee is performed by various stages as well superiors at company Jollibee issuccessful due to the company has good owners, excellence strategy and experiences inmarketing product with the line ‘focus on value and product taste, can serve better-tastingand better quality food at more affordable prices’ (Jollibee, accessed on 2010)

II Identify the key stakeholders of company in Vietnam

a List of stakeholders

Stakeholders are individuals or groups who have an interest in how the enterpriseperforms because it affects them in some way – that is they have a stake in theorganization (BPP Professional Education, 2004, pg.37)

Inside, key stakeholders are the most important people with company Because keystakeholders have influence over what happens to you; others say it's the people who holdthe budget, the ones who make the final decisions, the ones who are affected by yourdecisions, the people who have to implement decisions, the people who are going to buythe product/service, etc (Impactfactory, accessed on 2010)

List of stakeholder includes internal stakeholders, connected stakeholder and external

stakeholder Inside, internal stakeholders include employees and Management; connectedstakeholder such as shareholders, suppliers, financier and customers; externalstakeholders involve local authorities and government, and so on

Figure 1: The power/interest matrix

Low Power HighA

Public authority

BShareholdercustomersC

SupplierVietnamese Government

DCorporate financeBank

- Internal stakeholders (Management and employees)

There are two groups of Internal stakeholders

Firstly, about Management, Managements are people who have impact directly for thecontinuation and growth of organization And in the Jollibee company, the Shareholders

of Meeting are people who have highest authority Next, it is the Board of Managementand then is General Director (Mr.Joji Subido), lower than General Director is Director.Lastly, it is Staff of department Inside, the Director and the Staff of departments arepeople who employed for the owners of company to operate and control all businessactivities of company

Secondly, about Employees In Vietnam, employees of Jollibee company have over

500, they work for company with many reasons such as salary, awards, bonus or theywant to develop and improve about skills and talents of them, or recognition, so on Thefact, employees in Jollibee company have major effect on the success of businessactivities of company, they are people who have responsibility with all aspects of workcarried out in company

- Connected Stakeholders (shareholders or owners, suppliers and customers):

There are three groups of connected stakeholders

Interest

High

Low

Firstly, about the Shareholders or owners, they are people who own Jollibee.Shareholders may receive an annual dividend which simply is a cash payment fromcompany based on profit, besides, from any increase in the share price over the year, theycan have benefit Shareholders have the right to vote and intervene for most of thedecision for development of company in a meeting Overall, shareholders are now beingasked to take a more involved interest in a work of company and influence significantlyfor development of company.

Secondly, about Supplier, production of Jollibee company depends on its suppliers.Raw ingredients for all of their products are shipped daily to their warehouse for safe-keeping, inspection and production The suppliers of these raw ingredients are adjusted

by Jollibee itself The Chicken now comes with an exclusive supplier, actually, theJollibee controlled based in China mainland

Thirdly, about Customers, they have important power over procedures and prices Theoffice employees, and young families with medium or above average income ( 3.5million VND/person/month) are the main customers They ultimately determine whatproduct is, what quality is needed, what development is needed and what is charged, forexample, the quality of chicken that supplied from Jollibee company

- External stakeholders (Vietnamese government):

About government, Vietnamese government has a big role with Jollibee company tooperate the success of business activities, they interest the profit of Jollibee on tax and totry to prevent the unemployment in the local Vietnamese Government does it through thepassing of laws and policies The Jollibee company must follow this laws and policies,besides, the company also must follow other relevant policies under the law for itsbusiness activities

b Stakeholder Mapping of Jollibee Vietnam

Stakeholder analysis is the identification of a project's key stakeholders, an assessment

of their interests, and the ways in which these interests affect project riskiness andviability It is linked to both institutional appraisal and social analysis: drawing on the

information deriving from these approaches, but also contributing to the combining ofsuch data in a single framework (euforic, accessed on 2010).

Stakeholders analysis is important for the development of knowledge andunderstanding about other organisations in the firm’s environment (BPP, 2004, pg 17).The first step is to list all stakeholders, and then position them on a stakeholder map asfollow:

Key players Keep

Satisfied

Keepinformed

MinimalEffortInternal

v

c Stakeholder Analysis

Managers They need money and benefits.

And they want to job securityand high salary

Refusal to relocate andresignation

Employees

Shareholders They want to increase wealth

and dividends and yield

Election of directors andreplace management

Customers They want to buy high product

with suitable price

Revenue is derived fromcustomers Company can besued if products don’t be good.Suppliers They want to receive profitable

sales, and a long termrelationship

They will affect supplying ofcompany Moreover, they canrefusal of credit

Bankers They want to have security of

loan

They can denial of credit Inaddition, they can increasehigher interest charges

Government It expects to receive Jollibee’s

contribution to charity and tax

Laws and regulars affect tocompany if they increase tax.Interest/ pressure

III External environment and organizational audit

a PESTEL analysis of the macro-environment

Politics: Government policies: Government policies have the indirect effect to theprofit of the organization through the law which not allow for any restaurants to openafter 11pm.Trading policies: Some suppliers or the enterprises can’t change their decisionwhich is signed in the agreement Pressure groups: The organization must control the

quality of products which depend on the orders of National institute of hygiene andepidemiology Funding, grants and initiatives: The government guarantees equal rightstrading between organizations in fast food market This rule makes the balance betweenthe old organizations and new ones.

Economy: Economic context: The Vietnam economic has been developing faster andfaster after 1989, this trend influences whole parts of the economic in Vietnam Taxationissues: In November 2008, the government began to issue the new personal income tax.Deflation: from October in 2008 to January in 2009, Vietnam’s economic was followingthe crisis of economic in America; the speed of developing was delayed Interest andexchange rate: To encourage the investment in Vietnam, the government decreased theinterest rate of State bank Partners (franchising) of Jollibee company can borrow moneywith the low interests to invest in business activities

Social: Vietnam is one of high population countries with over 87 million people and

about 67% of young people who like tasting fast-food So that demand for fast-food inVietnam is large Majority Vietnamse people belong to 15-64 years old which bringmany advantage for fast-food industry because young people have a trend of receing newthings from modern world, they are easy to allow overseas values than elders who usuallyprefer traditional values Young peope contributed sinificantly on the modernization ofmany living quarters prompted quality services in Vietnam

(Indexmundi, accessed 2010)

Besides, in modern world, people want time is longer In order to save time, fast-foodbecome close friend and more and more become a food-culture in Vietnam If the brandsare accepted as the famous image by the community, more and more Vietnamese will try

to eat at least one time But it’s also the bad news for Jollibee because the company hasmany big competitions such as McDonald, Loterria, KFC and so on

Technology: Nowadays, growing technologies which allow any organizations is able

to collect the information of stakeholders everywhere through media (email, telephone…)

or internet, so on Besides, technology brings many advantages for Jollibee company,

also customers of company Inside, the concept of touch-screen kiosks and self-checkoutcentre are technologies which were performing today with lanes in grocery stores andpost offices They give customers more freedom, ease long lines and, in some situations,cut labor costs in restaurant It involve colorful, animated touch-screen menus that givecustomers the option to browse through the entire menu, customize their order, and thenpay with cash or a credit card Nowadays, software providers now offer systems that canautomatically generate the purchase order for the chicken materials by utilizing inventoryapplication software Other systems can track refrigeration temperature, humidity andeven energy usage - preserving those ever-important perishables These technology toolsare becoming a key ingredient in running the whole place at Jollibee in the next time and

other systems in order to cut labor costs, service will be better, also have competitiveadvantage with other company

Environment: The climate of Vietnam is tropical monsoon climate with four mainclimate areas Ho Chi Minh City has two mains weather: rain and sunshine Ho ChiMinh City has quantity of rain to be high so that when it rains, many streets in Ho ChiMinh City usually are flooded out, thus it influences to business activities because manycustomers will stay at home

Legal: under Vietnamese law, goods related to food, safety, hygiene, human health

must meet Vietnamese standards which were set by Ministry of Health of Vietnam Any

changes in the quality standards, except for those that relate only to appearance of thelabel or packaging must also be announced These standards were specific includingcertificate that the company has met food hygiene and safety conditions or a copy of anapplication to grant such a certificate of MOH, such as any location where food isprocessed manufactured

b Porter's Five Forces analysis of market structure

Firstly, the threat of new entrants: the cost for the entry is high, this will required heavyinvestment in marketing strategy and building equipment to establish business Moreover,Vietnam government’s policy is prefer to protect domestic company like HaiHa so tries

to limit the threat from foreign ones protectionist measures may mean a tax is placed onforeign products This would make it difficult for a foreign firm to enter market Thefamous brands such as KFC, Lotteria and BBQ has a high level of loyalty customerswhich also make the disadvantage to entice Vietnamese customer

Secondly, Bargain power of suppliers: the suppliers have important role with

production of Jollibee Company Raw ingredients for all of their products are shippeddaily with an exclusive supplier Switching to another with big amount of chickenmaterials and achieve stable of supply for a range fast-food systems is difficult to seekand expensive, so the suppliers are in a strong negotiating position to make their interest Thirdly, Bargain power of customers: The main customers of the fast-food restaurantsare office workers, students and families, the sales of restaurants depend on them, about70% sales, so that they are big buyers and have important role to the Jollibee (GPdaily,accessed on 2010) These buyers are loyal with the famous brand, thus, they don’t want

to switch to other providers like KFC, Lotteria which have same positions as Jollibee, itmeans that they have no much power to force down prices

Fourthly, the substitute threat: there are many favorite foods in Vietnam such as

noodles and Pho, it can change by the fast-food with the similar price, also satisfyingcustomers (Vietnamnet, accessed on 2010) The fast-food is the new experience comes toHanoi, thus it is not difficult to replace by many other established products, the threatfrom substitute is medium

Finally, the rivalry of competitors in industry: there are a few dominant firms all

competing with each other for customers like KFC, Lotteria and BBQ in market inVietnam (Itpc, accessed on 2010) Besides, the costs of leaving the fast-food industry arehigh because of high levels of investment on an extensive range franchise in worldwide.And if these companies may react aggressively to exist, they can have a powerfulmarketing or price war

c SWOT analysis

The managers must consider the internal strengths and weaknesses of JFC andcompare these with the external opportunities and threats to determine what strategy ofcompany should be done It is processed using SWOT analysis

Strengths: unique with Filipino taste, strong brand with wide range fast-food chains,Jollibee have much experience to work in East environment

Weaknesses: Strong reliance on a few groups of customer, service delivery is inconsistentfrom store to store, supplying is from abroad

Opportunities: Growing urban lifestyle, Supply of demand increases

Threats: Health concerns from people

Strengths: the Jollibee company achieves the result is the growth of the sales for

increase market share Moreover, the Jollibee company also attributed its strength toattract the Filipino tastes in menu which is favored by children that other competitors cannot have, besides, the company have much experience to work in East environment morethan other competitors.

Weaknesses: the Jollibee only have strong reliance on a few groups of officer, familiesand students, it leaves the company exposed to the dangers of losing their custom.Besides, supplying is from abroad, in China, carrying materials from abroad to locationwhich increasing cost from transporting then increase the price of product on market.Moreover, the service delivery is inconsistent from store to store make the JFC’s image

in customers may be not homogeneous which decreases building a Jollibee company’sstrong brand

Opportunities: eating out is already a part of an everyday lifestyle instead of cooked meals were street food so there will an increasing rapidly in demand ofVietnamese people, it means that customer’s demand for the company’s fast-foodproducts will raise

Threats: everybody cares and worry about many fast foods because preparation of itfacilitates quickly, using fry, high in fat and sodium, and low in fiber, vitamins, and someminerals It is cause of cancer

d Resources planning

Critical success factors (CSFs) are those factors on which the strategy is

fundamentally dependent for its success Main factors make Jollibee success to be: targetgroups customer of market (families, students and offices); unique, specific Filipino tastethat suits with Vietnamese, and so on

e Culture

Organisational culture is the basic assumptions and beliefs that are shared by members

of an organisation that operate unconsciously and define in a basic taken-for-grantedfashion an organisation’s view of it and its environment

Source: (Cabinetoffice, accessed on 2010)

Stories: in 1975 Mr Tony Tan and his family opens a Magnolia Ice cream parlor at

Cubao This is later to become the 1st Jollibee Outlet In 1979, Spaghetti Special isintroduced and the 1st Franchise owned store opens at Ronquillo Sta Cruz In 1981,Jollibee Foods Corporation enters list of Top 1000 Corporations; Jollibee ended the yearwith 10 stores In 1988, Jollibee system wide sales hit P921 million, further leadingmarket share of 31% in the fast food industry and a dominant 57% share in the