The critical factor responsible for jollibee success in the philippines

Critical Success Factor- analysing the area in the operation to achieve the goals of the company

Competitors – the company or organization in the same industry that offer the same products and services.

Leadership – a role in the organization which provide information, and coordinating each of the employee to achieve the vision of the company.

Low Cost – offering low prices with the products and services to gain profit.

Mission – it is something to be accomplish and it is the central focus of the company.

Reliability – an instrument use to measure to describe a test.

Shared Values – it is a beliefs that guide employees and management with their decision in the company.

Skills – it is the ability and competence of staff or employee in the organization.

Staff – employee or personnel which plays an important role in the operation.

Supplier – the one who supply and distribute raw materials in the company.

System – a method or a procedure to perform one’s duty.

SWOT Analysis – an analysis of internal and external factors in the company such as strength, weakness, opportunities and threats.

Validity – refers to whether the test or study answer the theory of the test score.

EXECUTIVE SUMMARY

The research proposal is about the Jollibee Food Corporation based in the Philippines. They expanding and developing and has outlets locally and abroad. The main competitors are Mcdonalds, Kentucky Fried Chicken, and Burger King. The researcher will explore and study about the critical success factors responsible for the company’s success. The researcher proposed to study if the low cost operating system establish by the company is the critical success factors or not and what influence them. The study include different concept and theories that will be use to analyse the business competitive strategies like SWOT Analysis, 7-S Framework by Mckinsey, Porter’s five forces and PEST Analysis that are useful tools that will support the research study. The researcher also draw the research design, sampling techniques, data analysis and measuring and collecting data. The researcher discuss some ethical implications at the end of the report and properly appraised the source of materials through Harvard referencing. At the end of the report , the time scale are discussed that outlines the viability of the research.

INTRODUCTION

Fast food chain in the Philippines refers to the foods that are being prepared and served quickly to the customers. It is also known as a Quick Service Restaurant. There are numerous chain of fast food in the Philippines. The Jollibee Food Corporation which sells Hamburger, Fries, Spaghetti, Chicken, and Jolly Hotdog with local taste. The biggest competitors are McDonalds, Kentucky Fried Chicken, Burger King, and Pizza Hut. Jollibee Food Corporation is the number one fast food chain in the Philippines and it also enters the global market. They have outlets in United States of America, Guam, Kuwait, Brunei, Taiwan, Indonesia, Hongkong, China, Saudi Arabia, Dubai and United Arabs Emirates. The company started in the Philippines as an Ice cream parlor and later on develop and expanded as one of the biggest fast food chain in the Philippines competing Mcdonalds. They have the same menu as Mcdonalds but Jollibee Food Corporation serve their products with local taste unlike Mcdonalds which brought American taste in the Philippine market. Jollibee Food Corporation introduced fun atmosphere, friendliness and customer focus and the joy and spirit of family while eating in their restaurants.

Jollibee developed through franchising. It is active in TV commercials, it improve recognition through mascots and logo. It is quite popular in the Philippines because it supports good family ties and family values which is the most adhering qualities of Filipino families. Jollibee also supported different charities in the Philippines and help various civil and non civil organizations.

As of 2009, Jollibee operated 686 stores in the Philippines, 355 are franchised and 331 are company owned stores and 57 stores in international market.

MAIN BODY

A. BACKGROUND TO THE PROBLEM/ISSUE:

The research is about the success factor of Jollibee Food Corporation, a local brand in the Philippines compare to American based fast food chain Mcdonalds, Pizza Hut, Burger King and Kentucky Fried Chicken(KFC). This research analyse the success factors of Jollibee Food Corporation in the Philippines one of which is the low cost operation system of the company compare to their key competitors. The researcher will collect some data about the competitive strategies of Jollibee Food Corporation and how they manage to get in to the top against giant fast food chain companies.

The researcher will analyse if the low cost operation system of Jollibee Food Corporation is the critical factor which is responsible for the success of the company. It is important and relevant to study the competitive strategy of the local company in the local market against the American based company that are established globally. The price rivalry usually makes the difference with the fast food chain that offers great quality food and service but different in price. Studying the critical success factor is very important for the organization in order to know which areas they need to focus clearly to attain their business perspectives and goals. Without analysing the areas of which they need to focus to gain success the organization will likely failed to meet their goals and objectives. The critical success factor drives the company’s strategy to win over their competitors. It drives the organization to access their performance and to attain their vision and mission. It is very interesting to study the Jollibee Food Corporation’s CSF because they are number one in the Philippines, and very successful in the market. In order for the organization to survive in the business world, it is essential to determine their potentials and develop strategy to compete with their competitors.

B. RESEARCH QUESTIONS AND OBJECTIVES:

What are the factor’s responsible for Jollibee Food Corporation’s success in the Philippines against Mcdonalds, KFC and Burger King?

It is important to study the factor’s responsible for the great success of Jollibee in the Philippines. To know what are they competitive advantage against their competitors mainly Mcdonalds which is known globally and already established their company around the globe.

2. Is the low cost operating system, responsible for the success of Jollibee Food Corporation?

It is important to explore and study if the low cost operating system of Jollibee is the one responsible for their success or are there any other factors that are responsible for it. The researcher needs to established the relationship of low cost operation to organization’s performance in the market.

Hypothesis:

The low cost operation system of Jollibee Food Corporation is not responsible for the success of the company but there are many other factors contribute to their success.

OBJECTIVES:

Examine the factors that are responsible for the success of Jollibee in the Philippines.

What are the competitive strategy of Jollibee Food Corporation that other fast food chain company doesn’t have?

Study the target group or the consumers of the company based in the Philippines.

Study what is the market situation in the Philippines.

To determine what the customers value in Jollibee Food Corporation

Significance of The Study

Improve the literature regarding the fast food chain in the Philippines and it’s critical success factor.

Fulfil MBA requirements.

Inform the business sector regarding the success factor of Jollibee Food corporation in the Philippines against giant American based food chain.

LITERATURE REVIEW:

The Theories and Concepts in the Research.

1. The critical success factor analysis is a method of analysing the area that needs improvement. It is required to ensure the success of the organization to achieve it’s mission.

It is a key area where satisfactory performance is required for the organization to achieve it’s goals. It is a means of identifying the tasks and requirements needed for success. The critical succes factor method start with a mission vission statement. Develop goals and their success factors.(Austin, 2002)

2. Porter’s five forces- Michael Porter proposed that the organization is being influenced by five forces. These are rivalry, supplier power, power of the buyer, threat of entry, and the threat of substitutes. (Hollensen 2003, 74-79) . Understanding the five forces will provide the organization to develop strategy in order to take advantage to their competitor. (Thurlby, 1998).

It is important to know your competitors in the business industry. To know what product and services they are offering to their customers and what competitive strategy they are doing in order to be successful in the business.

It is also important to know your supplier. The company needs some resources and materials in order to produce goods and products for their consumers. There should be a good relationship between the buyer and the supplier.

The buyer should be given importance because the business depends on how many buyers the company have. They are the asset of the company and they give profit to the organization. They are the one who set the price of your product.

New competitors enter and exit the market. Some stay some will go. Some will be successful and some are not. It is important to know what’s going on to the market. If they are new competitors that are entering, it will affect your company’s profit.

The threat of substitutes, this is important to know what other companies are offering the consumers and find any alternative to your product and services to make it successful.

Threats of New

Entrants

Small chicken shop

Are growing

Rivalry

Jollibee Vs

McDonalds

KFC

BURGER KING

Supplier

Power

Strength of

Network

Distribution

Buyer Power

Product cost

Against other

Alternative

Threat of Substitute

Product

Chicken shop are

More likely affordable

Fig. 1 Porter’s 5 Forces Model of JFC

SWOT ANALYSIS it is a techniques of analysing the company’s strength, weaknesses, opportunities and threats. The aim of this is to identify the internal and external factor that influences the company’s objective. The internal factors are the strength and weaknesses, and on the other hand the external factors are the opportunities and threats.(Marketing Teacher)

POSITIVE NEGATIVE

STRENGTH

Low Cost Operation

Local Taste

First Comer’s Advantage

WEAKNESS

It is franchised store so the service delivery vary from store to store

OPPORTUNITIES

Develop high technology to make sure of good quality products.

THREATS

Threat of new entry- small chicken shop

High Rivalry with Mcdonalds

Economic crisis- customer has less money to spend for their meal

Fig. 2 SWOT ANALYSIS MODEL JFC

Jollibee Food Corporation’s Strength are the low cost operation system. They are selling their products in lower price compare to Mcdonalds and with local taste. They

get the advantage of being the first comer, in the market. They enter the market in the Philippines first in 1975, in otherhand Mcdonalds enter the market in 1981.

The opportunities of Jollibee Food Corporation, should develop high technology in the operation system to improve products and services they offer to their customers. Make more innovations so that it will gain advantage against it’s competitors specially Mcdonalds that is American based company and also known worldwide.

The weakness of Jollibee is that it is a franchised store, so the service will vary from store to store. The quality of service depends on the employee of the store and the franchisee.

The threat of Jollibee is the high competition against Mcdonalds, and the threat of new entrants, there are number of small chicken shop that are opening in the Philippines that are cheaper than Jollibee and Mcdonalds. Due to economic crisis in the Philippines, people have less money to spend on their meals.

7-S Framework of Mckinsey- a method of effectively organizing the company through seven factors.

Shared values- it is the core of the company’s goals and what they believe in.

Strategy- it is their method on how to reach their goals.

Structure- it is the way how each division in the company interact with one another.

System- procedure and process that needs to be done

Staff- the employee, or the personnel in the company

Skill- the qualities and competencies of each employee in the organization.

Style- how each leader of one organization interact with their subordinate to establish leadership. (Value Based Management)

STRATEGY

Jollibee Food Corporation’s strategy are providing cheaper products compare to Mcdonald’s. The company also provide products with local taste. The company also has alliances and acquired different fast food companies in the Philippines which are, Greenwich (Pizza- pasta), Red Ribbon (Cakes), DeliFrance ( Sandwiches and drinks), and Chowking ( Chinese Food). (Jollibee The Official Website)

STRUCTURE

The JFC is a franchise company, with 686 outlets in the Philippines and 57 stores in international market. The company are divide into different divisions. From the President of the company, Director, Corporate strategy division, Engineering, Human Resources, Information Management, Procurement, Real Estate, Audit and Commissioner.

(Jollibee The Official Website)

SHARED VALUES

JFC value every Filipino family. It focus mainly in their customers and providing fun atmosphere for every group and family who are eating in their restaurants. They respect every individual who choose to eat in their restaurants.

STAFF

Jollibee provide training to their employees and appraisal whenever they improve their performance in the company. The company provide incentives and bonuses to their staff.

SYSTEM

The franchise fee for Jollibee

P 15- 30 Million (local currency)

$ 266,455- $532, 890 ( US Dollar)

(Start up Biz Hub)

5. PEST- ANALYSIS- (STEEPLE) this is a method of analysing the political, economic, social and technological aspect of one organization in order to create a visible strategy. ( Value Based Management)

Political factors- create a big impact in the business operation. It includes policies governing

tax, legal issues, and employment regulations.

Economic factors- it has a huge effect in business operation if the customers afford to buy your product and the cost of business production, inflation rate and exchange rate.

Social factors- it has tremendous impact in the operation, through the lifestyle that customers create in the society. It includes family, education and religion, age and career.

Technology- it has something to do with the new innovation that has high impact in the business.

POLITICAL

Political issues affect the economy in the Philippines, political alliances and employment regulation have a great impact in the operation of fast food chain

ECONOMIC

Due to economic crisis in the Philippines, some family cannot afford to buy their meal in Jollibee.

There is a problem with the inflation rate in the country

SOCIAL

Jollibee has partnership with Department of Social Welfare helping children in the Philippines. The company provide financial assistance with different charities in the Philippines

TECHNOLOGY

JFC has a network of distribution facilities to supply to their stores nationwide.

Fig. 3 PEST ANALYSIS of Jollibee Food Corporation

METHODOLOGY:

RESEARCH DESIGN

The researcher will make use of exploratory research design to gather information and knowledge about the company’s background, history and other useful information for the research. I will make use of the internet, and other published materials such as published articles, newspaper, and journals to gather further information.

The researcher will also use of primary research design like survey questionnaire to gather quantitative data. The survey will be divided into two parts. The first parts will be the questions regarding the objective of the research and the last part will be an open ended questions regarding the demographics such as age, sex, location, career and income.

The researcher will also make use of qualitative research method in order to establish the relationship of one variable to another and correlates with the theories.

SAMPLE DESIGN

The researcher will make use of non-probability sampling, in other words the respondents are not randomly selected. The sample will be approximately 150-200 respondents. The subject or respondents are those who are willing to take part in the research or to answer the survey questions. The focus of the research will be the customer’s of Jollibee Food Corporation in the Philippines. The researcher will use the internet to gather information through uploading survey questionnaires in Facebook, My space and Friendster websites.

DATA GATHERING

Data collection will be through online. Due to the location of the researcher and the location of the market in the Philippines online surveys will be useful and will generate faster response. The respondents will be ask to fill out the survey questionnaires. The questionnaires will have five responses. (Strongly disagree, disagree, neutral, agree and strongly agree.) The first part of the survey will focus mainly on the objectives of the research. The last part will be an open ended questions and the respondents personal data

like age, income, status, career and their location and race. Survey will be use as it is more cheap and flexible to use for the research. Through online survey the researcher can reach the Filipino respondents who value the Jollibee Food Corporation. The researcher will use flow charts and diagrams to present data.

DATA ANALYSIS

In order to measure the responses with the survey, the responses for the survey will be code

like (1) for strongly disagree, (2) for disagree, (3) for neutral or neither agree or disagree, (4) for agree and (5) for strongly agree. After that the likert data will be analyse through descriptive statistics. It is an ordinal scale which measure the level of agree and disagree and it has five responses. Therefore we will use the non parametric test .The researcher will then summarize the responses and present it to charts and graphs. Through responses with the survey, the researcher will use the code for each responses to measure the mode or in other words the most frequent responses by the samples and the median as well to measure the central tendency.

After that, inferential statistics will be use to test the hypothesis. Kruskal Wallis Test will be use, it is one way analysis of variance by William Kruskal and W. Allen Wallis. (Wikipedia).Kruskal Wallis test works by substituting the data set. It will then calculate the sum and the H is calculated as well. H is already given in the formula representing the variance in a group. The chance of getting the probability of a true null hypothesis, when H is evenly distributed in chi square measure of frequency, the degree of freedom minus one is calculated. (Handbook of Biological Statistics, 2009)

The formula for Kruskal Wallis test:

H = 12 ( Tg)2

________ ( Î£ __________ ) __ 3 (N + 1)

N (N+1) ng

After using Kruskal Wallis Test, the researcher needs to measure the level of agree and disagree responses through chai square test. The chi square test formula:

______________________

over all total

Where ef = expected frequency

[ ( O – E ) – ½]²

x² ____________

RELIABILITY AND VALIDITY

The survey questionnaire will be test by sample respondents to test the validity of the survey . The questions will be scrutinize and enhance to clarify certain areas of concern. Through test run of the survey questionnaire, the researcher can detect any errors that will affect the validity and reliability of the survey questionnaire. The questionnaire will be enhanced and edited accordingly based on their comments and suggestions of those who will participate in the test run.

Reliability defines as, if the result is remains consistent, and if the result acquired with the result can be replicated under the same methods, it is therefore reliable.(Joppe, 2000). Test re test can be use and the same results can be obtain, it is therefore reliable. On other hand, validity define as if the research study really measure what it wants to measure it is therefore valid. (Joppe, 2000). The research study is said to be valid if the measurement with the data gathered are correct and accurate.

E. REFLECTIONS:

In keeping the integrity of the research, the researcher follow the rules and guidelines to observed ethical regulations. All resources used for the research such as books, journals, articles and other published materials are properly recognized and referenced. The researcher use the Harvard referencing guide to avoid issues of plagiarism. The information that will gather in the survey questionnaire such as personal information of the respondents will not be disclose and will keep it confidential. The personal details of the respondents will be kept anonymous and confidential.

The researcher will avoid to be biased with the survey results or responses. The responses will be collected and summarize accordingly and avoiding wrong interpretations or reporting wrong conclusion on findings.

The researcher develop a survey questionnaire that will be uploaded online in Facebook, Myspace and Friendster and all information that will gather with the survey will be carefully assess and summarize the data that will be collected and test and measure the validity and reliability.

The researcher has a limited knowledge about statistics, with the help of SPSS software downloaded from the internet, it will help me measure precisely the validity and reliability of the responses from the survey and use different statistical method to measure mean, median and mode and the standard deviation.

The method of gathering and collecting information is also limited because the location of the research will be in the Philippines. Only online survey will be use to get 150-200 respondents who are willing to answer the survey questions online. Most of the respondents will be Filipino or those who live in the Philippines who value Jollibee Food Corporation other than its competitors like Mcdonalds.

F. TIME SCALE AND RESOURCES:

The researcher will continuously gather more information about the Jollibee Food Corporation, the company profile, background, issues and make extensive research about the problems through further reading of published articles and journals and books related to the topic. The first and second week of March will spend on working out with gathering further information and knowledge about the research topic. Upon waiting for the result of the grades for Research proposal, I will spend the remaining weeks to go to British Library to access the related materials for my research topic. The survey will be administered and uploaded online on March 25, 2011 after the result of grades will release for the research method assignment to get some ideas and if they are corrections with the proposals written. If the survey questionnaire sample will need to be enhanced or edited before uploading it to the internet. Prior to that a test run will be conducted for the survey questionnaire to test if it is effective and will be understood by the respondents. After uploading the survey to the internet, the researcher will work on the review of the literature until the end of March 2011. The final collection of survey online will be on the 1st week of April. It will then be analyse and summarize on the same week and measure the validity and reliability using statistical methodology. The research should be completed before the 2nd week of April for the deadline of submission of the final dissertation to complete my MBA degree.

Assignment was given (Research Proposal)

January 25, 2011

Deadline for Submission of Research Proposal

February 25, 2011

Visit British Library to Gather Related Information about the Topic.

March 5-12, 2011

Release of Grades for Research Methods Assignment

March 25, 2011

Survey Questionnaire will be Uploaded Online

March 30, 2011

Final Collection of Survey

April 5, 2011

Complete Analysis of Data Collected

April 8, 2011

Complete Final Report

April 15, 2011

Deadline for Submission of Dissertation

To be Posted

Fig. 4 Time Scale of the Research

CONCLUSION:

The fast food chain market in the Philippines are continuously growing and expanding. Competitors keep on entering the market providing the same service and products with Jollibee. But still Jollibee is the number food chain in the country. Technologies and innovation are keep going to provide quality products locally and abroad. The researcher suggest furthermore research about the company’s competitive strategy and other factors affecting the company’s success not only in the Philippines but still growing around the globe. The company continuously acquiring different corporation locally and in the international market. The researcher will continuously study about the other factors contributing to the success of local company against the giant fast food chain that is widely known internationally.

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