Jollibees plan expansion in Vietnam market

8. Strategic Control 

That focuses on the dual questions of whether: the strategy is being implemented as planned; and the results produced by the strategy are those intended (Sloman J, 2006). The control of JFC is performed by various stages as well superiors at company. JFC is successful due to the company has good owners, excellence strategy and experiences in marketing product with the line ‘focus on value and product taste, can serve better-tasting and better quality food at more affordable prices’ (JFC, 2009)

IV - Influence of Key Stakeholders

Jollibee in Vietnam have about as much ability to choose its stakeholders as children have to choose their parents, so the best thing company in country can do is to identify their stakeholders. Stakeholders will expect to be recognized when the Jollibee’s effect on them, for better or worse, is direct or immediate. The stakeholders will be divided into main three group of stakeholders: Internal stakeholders, connected stakeholders, External stakeholders (BPP, 2004) which Jollibee affect and is affected while operating in Vietnam.

Figure 1: The mapping stakeholder: the power/interest matrix

Low                                 Power                                        High

• Internal stakeholders (Management and employees)

 Management Managements are involve directly in the organisation’s continuation and growth. Generally, the highest authority is at Shareholder’s Meeting in Jollibee company. Lower than it is the Board of Management and less than it is General Director (Mr. Jojo Subido). Finally, that is director and staff of departments  those who employed by the company’s owners to control all of business activities of company (Sloman J, 2006). They have the ability to determine the form and content of such additional information as well as carry out planning, decision-making and control responsibilities for Jollibee’s development in order to meet company’s own goals.

The board of management at Jollibee Vietnam

Employees: over 500 of Jollibee employees in Vietnam work for company with many reasons, it can be salary, recognition; the demand to develop their potential to fullest extent-skills, talents. Jollibee’s employees have major effect on the success of business as it is they who are responsible for all aspects of work carried out in Jollibee. Employees when motivated, will usually be more productive, produce a better quality product/service, provide ideas for improvement and guarantee that all objectives are met to the best of their ability to make a positive Jollibee’s brand in all over Vietnam market and international one. (BPP, 2004).

• Connected Stakeholders (shareholders, customers, suppliers, financier):

There are several groups of connected stakeholders.

Shareholders/owners: who own Jollibee. Shareholders may receive an annual dividend which is simply a cash payment from company based on profit, moreover, they can benefit from any increase in the share price over the year. Shareholders have the right to vote and intervene for most of the decision for development of Jollibee in certain meeting (Sloman J, 2006). In the other words, shareholders are now being asked to take a more involved interest in a company’s affairs and influence significantly on Jollibee’s development.

Customers: they have significant power over prices and procedures. The main customers of fast-food are office employees, and young families with medium or above average income (VND 5 million/person/month) (CountryReview, 2009). They ultimately determine what is produced, what quality is needed, what is charged and what development is needed, for example, the quality of chicken that supplied from Jollibee. Moreover, Vietnamese people have an interest in information about the continuance of Jollibee, especially when Vietnamese have a long-term involvement with, if Jollibee’s image is blacken by some negative reasons they will turn around to choose McDonald, KFC, BBQ or anything else, as a result Jollibee is lost its sales.

Suppliers: Jollibee's production depends on its suppliers. Raw ingredients for all
of their products are shipped daily to their warehouse for inspection, safe-keeping
and production. The suppliers of these raw ingredients are regulated by Jollibee itself (BPP, 2004). The Chicken now comes with an exclusive supplier (actually a Jollibee controlled based
in mainland China).  If a shortage of raw-material happen which will be a disaster for Jollibee when it cannot continue to keep the process of production then no products in market, beside suppliers deicide the quality of raw material, it will influence to quality and cost of products.

Bankers and Financier: That are also interested in JFC’s overall condition, but from the point of view of the security of any loan they make when company borrows the loan from bank or a certain financier. A bank is keen to minimize the risk of interest not being paid, or of its security being eroded (Sloman J, 2006)

• External stakeholders (government, local authorities etc):

Vietnamese government has a big role to play in the success of business, they interest the profit of Jollibee on tax and to attempt to prevent the unemployment in local. Government does it through the passing of laws and policies. Jollibee must to obey this with other relevant policies under the law for its business activities. Furthermore, local authorities are interested that, since company can bring local employment. They can also affect the local environment for instance by increasing road traffic (Sloman J, 2006).

Jollibee needs to consider carefully the needs from stakeholders to identify the best way to satisfy them in order to make the highest benefit. Besides, to use the positive influence, say, opportunity of support in food industry from government, or discount from suppliers etc for getting the competitive advantage among other competitors both Vietnam market and international one.

V - External environment and organizational audit

1. PESTEL analysis of the macro-environment

While operating in Vietnam where there are many factors in the macro-environment that effect the decisions of the managers of Jollibee. Tax changes, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To analyze these factors managers can categorise them using the PESTEL model. This classification distinguishes between Politics, Economy, Society, Technology, Environment and Legal (Att, 2009) basing on it to outline the view of Vietnam that influences business of Jollibee.

Politics: Vietnam is a communist state, with the Communist Party of Vietnam playing the central role in the politics of the country. The country has obtained steady economic growth rates in recent years and its government has improved the business environment business through attempting to limit protectionism, new tariffs and taxes or new restrictions on both domestic and foreign enterprises like Jollibee to trade (AsiainInfo, 2007). In the developing process, Vietnam government has chosen key groups of industry to focus the mainly resource with many of different policies to develop them in long term

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Figure 2: Percent of industries which were allocated FDI and subsidy from Vietnam Government

The heavy industry and light one are most supported to grow by Foreign Direct Investment (FDI) and government funds which accounted for over 72% on total Vietnam’s  disbursement whereas the service industry is just 1.55%. Although the total turnover of the fast food industry (service industry) in Vietnam is expected to reach VND500 billion in 2009 but it is not still put on a highly priority in developing plan of Vietnam government.

Economy: The economy of Vietnam is a developing mixed economy. Over the past 20 years, Vietnam has made a shift from a centrally planned economy to a Socialist-oriented market economy. The economic growth of Vietnam in 2009 was not fairly good compared to 2006, 2007 which had been answered by the overall global slowdown. The economy of Vietnam faced many challenges in 2009 and its growth decline. The global financial crisis triggered concerns of a possible economic crisis and put all economies under severe pressure, including Vietnam’s. IMF forecast the Vietnam GDP Growth will just over 6.2 percent by 2010.

Figure 3: Vietnam GDP Growth (IMF estimated 2009)

In addition, the Consumer Price Index (CPI) recently up to 8.31% (IMF) which means there is a raise in overall price of goods in Vietnam plus the inflation threat might happen again due to the government’s stimulus package of 8 billion USD (12% GDP) which is filled on business for saving them in crisis. In a recently report, the world’s crude oil price is forecast to increase again to hover around $60 per barrel in 2009 and around 75 per barrel in 2010 (IMF’s forecast, released July 8, 2009). The rice price tends to increase to reach the average level of $600 per tonne in 2010. In that case, it leads to the forecast scenario that the economic growth rate will be 6.2-7 percent in 2010, while inflation 7.5-8.5 percent. In 2009-2010, high economic growth rates will be maintained, but inflation will increase, which means that comprehensive measures need to be carried out in the monetary policy’s implementation.

Once inflation of Vietnam goes up so it may provoke higher wage demands from employees and raises costs in process of Jollibee which makes a raise in price of end products while penetrating Vietnam market. Moreover, this brings much more concerns for Vietnam economy as well as Vietnamese people in decision-making of spending (Kotler, 2006). In this situation, Vietnamese customers who have low and average income they had to consider more careful before buy something, rein money in their pocket and focusing on necessary purchase instead of spending fast-food services.

Social: population of Vietnam is 86,210,860 (CIA, July 2008 est.) which is ranked thirteen in the world. They have medium or above average income of per capita income $1,024 and is ranked 128 in the world. Besides, most of population in Vietnam is young people with over 69 percent of Vietnam population they account for majority in market.

Figure 2: The distribution of the population according to age (CIA estimated 2009)

Majority Vietnamse people belong to 15-64 years old which bring many advantage for fast-food industry because young people have a trend of receing new things from modern world, they are easy to allow overseas values than elders who usually prefer traditional values. Young peope contributed sinificantly on the modernization of many living quarters prompted quality services in Vietnam. Moreover, in 1990s to 2007, the rate of urbanization was rapid due to the large number of construction and city planning projects all over Vietnam, the Population Reference Bureau also estimated that 20% of Vietnam population lived in urban areas in 2001. Hence, when people started to live in city, there was considerable demand for foodservice outlets. This transform in Vietnam social pace and growing affluence and busy works at offices which made more people to spend an extra buck on a quick meal out rather than spending time to cook at home. A recent survey conducted by Nielsen about trends in the Vietnamese food market showed that the regular customers of the fast food shops are high income earners. Most customers use fast food if they need quick meals, and 84% said they will use fast food services in the next six months.

Technology: there is recently an evolution of technology in the fast food industry is picking up the pace - and making the fast food arena one full of strong franchise opportunities. Technology brings many advantages for both Jollibee and its customers, especially is to push its brand up.

The concept of touch-screen kiosks and self-checkout centre which were performing today with lanes in grocery stores and post offices. They give customers more freedom, ease long lines and, in some cases, cut labor costs in restaurant. It includes colorful, animated touch-screen menus that give customers the option to browse through the entire menu, customize their order, and then pay with cash or a credit card (Techfoods, 2009). Nowadays, software providers now offer systems that can automatically generate the purchase order for the chicken materials by utilizing inventory application software. Other systems can track refrigeration temperature, humidity, and even energy usage - preserving those ever-important perishables (Novation, 2009). These technology tools are becoming a key ingredient in running the whole place at Jollibee in future and other systems in order to cut labor costs, to serve consumers better as well as take the competitive advantage.

Environment: Vietnam’s weather varies from the sub-tropics in the North to the tropics in the South. The humidity is high, with average ranging around 84% a year. Northern Vietnam (from Hue up North) has four seasons with a cold winter and hot summer. The temperature ranges from 5-6C in winter to up to 35C in summer. Temperatures are high all year round. The temperature tends to be warmer and more humid than the South in the middle of the year and cooler during the dry season. Southern Vietnam has a distinct dry season) and wet season. Average temperature ranges from 25-30C (AsianInfo, 2009).

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 the label or packaging must also be announced. These standards were specific including certificate that the company has met food hygiene and safety conditions or a copy of an application to grant such a certificate of MOH, such as any location where food is processed manufactured, stored, sold or served must meet hygiene environmental requirement and Label of product has to be stamped by the company and owning a certificate of tradermark registration. These requirements forced Jollibee when penetrating to the Vietnam market it is going to face many paperwork on bureaucracy to take the certificate as well as the registration, besides increase cost and wage demand to meet those quality standards.

Porter's Five Forces analysis of market structure

The competitive structure of fast-food industry can be analysed using Porter's five forces which developed by Michael E. Porter in 1979. This model attempts to analyse the attractiveness of the industry by considering five forces within a market (Sloman J, 2006)

Figure 3: Diagram of Michael Potter’s five forces.

The threat of new entrants: the cost for the entry is high, this will required heavy investment in marketing strategy and building equipment to establish a franchise. Besides, Vietnam government’s policy is prefer to protect domestic company like Kinhdo so tries to limit the threat from foreign ones protectionist measures may mean a tax is placed on foreign products (Vietnamnet, 2008). This would make it difficult for a foreign firm to enter market. The reputation from existing brands of KFC, BBQ, and Lotteria has a high level of loyalty customers which also make the disadvantage to entice Vietnamese consumer.

Bargain power of customers: The customers of the fast-food restaurants are mainly office workers, students and families they account for about 80% sales, they are big buyers so each one is very important to the Jollibee (GPdaily, 2009). These buyers are loyal with the reputation from brands, so no willing to switch to other providers like KFC, Lotteria which have same positions as Jollibee, that mean they have no much power to force down prices.

Bargain power of suppliers: Jollibee's production depends on its suppliers. Raw ingredients for all of their products are shipped daily with an exclusive supplier actually Jollibee controlled based in mainland China (GPdaily, 2009). Switching to another with big amount of chicken materials and obtain stable of supply for a range fast-food systems is difficult to seek and expensive, so the suppliers are in a strong negotiating position to make their interest. This stronger the power of suppliers in  industry make more difficult it is for Jollibee within that sector to make a profit because suppliers can determine the terms and conditions on which business is conducted. Therefore, the power of supplier is high.

The substitute threat: In Vietnam there are many foods what people favorite in, such as noodles, pho, buffet which can replace the fast-food with the similar price as well satisfying customers (Vietnamnet, 2009). The fast-food is the new experience comes to Hanoi so it is not difficult to replaced by many other established products, the threat from substitute is medium-high.

The rivalry of competitors in industry: In Vietnam market there are a few dominant firms all competing with each other for customers like KFC, Lotteria (Itpc. 2009). Moreover the costs of leaving the fast-food industry are high because of high levels of investment on an extensive range franchise in worldwide, this means that existing firms will fight hard to survive because they cannot easily transfer their resources elsewhere. There may a price war or powerful marketing in the case these firms may react aggressively to exist.

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Figure 3: Porter’s five forces for Jollibee

2. SWOT analysis

To determine what their strategy should be managers must consider the internal strengths and weaknesses of JFC and compare these with the external opportunities and threats. It is processed by SWOT analysis.

Strengths: the growth on sales of Jollibee is result of acquisition for many years. So company was able to broaden its customer base and increase market share. In addition, Jollibee also attributed its strength to capture the Filipino tastes in menu which is favored by children that other competitors cannot as well as have much experience to work in East environment compared with other competitors.

Weaknesses: company still relies on a few groups of officer, students and families it leaves the company exposed to the dangers of losing their custom. Carrying materials from abroad (China) to location which increasing cost on transportation, then raise the price of product on market. Moreover, the inconsistent on service delivery from store to store make the JFC’s image in customers may be not homogeneous which distracts building a strong brand of Jollibee.

Threats: there is a concern in people because many fast foods are fried (which facilitates quick preparation), high in fat and sodium, and low in fiber, vitamins, and some minerals. The protest can be increased. Strong competition from competitors.

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

Recommend, in the short-term current strengths must be exploited to continue to increase market share in existing markets through acquisition and Filipino taste strategy should also continue. In long term, company should use its strength to adapt with the demand increase in future, company must diversify new product which suitable with Vietnamese consumers to get competitive advantage.

3. Cultural analysis

The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides one such approach for looking at and changing your organization's culture. It can expose cultural assumptions and practices, and set to work aligning organizational elements with one another, and with JFC’s strategy.

Figure 4: The Cultural Web (Mindtools.com, 2009)

Six elements of culture at JFC can be identified. As for stories, the past events and people talked about inside and outside the company. The success of Jollibee to beat dominant others like McDonald in nationwide which the company chooses to immortalize says a great deal about what it values, and perceives as great behavior (JFC, 2009). Second, rituals and routines, the daily behavior and actions of people that signal acceptable behavior at JFC, this determines what is expected to happen in given situations, and what is valued by management. Besides, the visual representations of the company including ‘Happy Bee’ logo of Jollibee that are considered as symbols, and the formal or informal dress that employees wearing in JFC’s restaurant in Vietnam.

Organizational structure, this includes both the structure defined by the JFC chart, and the unwritten lines of power and influence that indicate whose contributions are most valued. Control systems, the ways that the organization is controlled, these include financial systems, quality systems, and rewards that company in Vietnam to do (JFC, 2009). Finally, the power structures, it is the pockets of real power in the company. This involves two key senior executives, a whole group of executives, or even a department. The key is that these people have the greatest amount of influence on decisions, operations, and strategic direction for Jollibee.  

4. Critical Success Factors (CSF’s)

CSFs are the essential areas of activity that must be performed well if you are to achieve the mission, objectives or goals for JFC. They are the areas that are absolutely essential to its success. By identifying and communicating these CSFs, it can help ensure the JFC is well-focused and avoid wasting effort and resources on less important areas (Mindtools, 2008).

In order to identify possible CSFs, JFC examined the mission and objectives and see which areas of the business need attention so that they can be achieved. It starts by brainstorming what the Critical Success Factors that make JFC get its objectives.

JFC has made a list of CSFs, then to consider what is absolutely essential and so identify the truly Critical Success Factors. One CSF that we identify from the candidate list is "Sustain successful relationships with local suppliers." This is absolutely essential to ensure freshness and to source new products. Another CSF is to attract new customers. Without new customers, the store will be unable to expand to increase market share. A third CSF is financing for expansion. The store's objectives cannot be met without the funds to invest in expanding the sully management system.

5. Value chain analysis

To analyze the specific activities through which firms can create a competitive advantage, it is useful to JFC as a chain of value-creating activities. The goal of these activities is to create value that exceeds the cost of providing the product or service, thus generating a profit margin.

(BPP, 2004)

Inbound logistics, Jollibee has a stable inventory management that receiving and warehousing of raw materials, and their distribution to manufacturing as they are required. This system is integrated with the restaurant’s POS and can accurately predict what is in on-hand inventory, as well as forecasting the size of the next supply order. Once per week or even per month, all data is automatically sent to both the supplier and the restaurant. All of chicken materials were refrigerated in the stock (GPdaily, 2008). This helps to restrict mistakes in production process as well the redundant on inventory system of JFC. About operations which the forte of operation is predicated upon the ability to provide palatable dish within a minimum time period from the moment an order is placed by consumer. Jollibee having lots of different equipment and stations for preparing a wide variety of food, including a very large grill where workers could cook lots of burgers simultaneously, a fryer where they made fries for operation of fast-food (GPdaily, 2008). Besides, collecting motorbike to serve consumer’s order at home which consider as outbound logistic of JFC, this is suitable to transport infrastructure in Vietnam.

The primary value chain activities of JFC also facilitated by support ones. Technology Development, it includes research and development, process automation, and other technology development used to support the value-chain activities (BPP, 2004) in order to build the well weapon to compete to KFC and Lotteria. Support activities often are viewed as "overhead", but JFC successfully have used them to develop a competitive advantage, for example, to develop a cost advantage through innovative management of information systems.

VI - Strategic position for JFC in Vietnam market

1. BCG growth-share matrix

Another consideration to position the JFC is that BCG Growth-Share Matrix which is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share". (Sloman J, 2006)

Figure 4: Diagram of BCG Matrix

(Image from QuickMBA.com, 2009)

The revenue of JFC in worldwide has been raising over years, increase 12% from 2008 to 2009 in June ($27,546,000 and $30,956,000) as well as the profit is raisen rapidly while expanding to Vietnam the market share is low because the largerly franchisee of KFC and Lotteria which have established long time ago, they have a high market share before JFC entered HCM city in 1996 (JFC, 2009). penerate. In this period, JFC growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. This means JFC is standing at ‘question mark’ of BCG matrix (also known as a "problem child"), so JFC has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. In the case the JFC (question mark) does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines.

2. Gap analysis

Gap analysis is a tool that helps a company to compare its actual performance with its potential performance. The goal of gap analysis is to identify the gap between the optimized allocation and integration of the inputs, and the current level of allocation. This helps provide the company with insight into areas which could be improved. The gap analysis process involves determining, documenting and approving the variance between business requirements and current capabilities (Mindtools, 2009)

The company currently has 10 to 12 Jollibee outlets in Vietnam and so far, the stores are doing well. JFC will be good to make a strong presence in the country although the company has yet to come up with how many more branches it plans to open.  Jollibee has poured about $5 million to develop its existing stores in Vietnam (JFC, 2009). It satisfied with the performance of its outlets with a forecast of profitability will be increasing with possible variations of in time to adapt with the revenue of the fast food sector in Vietnam is expected to hit $28 million this year (Nielsen, 2008).Presently, the company is focusing to get the objective of “increase 20% of sales at Vietnam market in the year 2010”. So, new strategies will have to be developed which will close the gap between forecast and target that JFC expects to achieve its target over the planning period. The gap will be filled by penetration strategies and market development strategies.

Figure 5: Strategies to close the Gap

Sales ($)

3. Ansoff product/market matrix

 Ansoff presented a matrix that focused on the firm's present and potential products and markets (customers) to portray alternative corporate growth strategies. By considering ways to grow via existing products and new products, and in existing markets and new markets (Smale, 2009).

Figure 5: Ansoff product/market matrix

(Image from QuickMBA.com, 2009)

JFC working in country brings same fast-food products as worldwide to Vietnam, it is going to Market Development strategy with providing existing products to new Vietnam market. This option includes the pursuit of additional market segments or geographical regions. The development of new markets for the product is a positive strategy when core competencies are related more to the specific product than to its experience with a specific market segment. Because JFC is expanding into a new market, a market development strategy typically has more risk (BPP, 2004). Therefore, at first, from the beginning to invest into this market, it is suggested for the company to make the good plans to develop their existing products in the new market.  Besides, it is necessary for Jollibee to survey about the geography in the new market with the aiming to find the good place to build the stores. Furthermore, Jollibee can use different sales channels, such as online or direct sales if they want to sell through the trade. At last, they can target different groups of people such different age groups, genders or demographic profiles from their normal customers to server customers most perfectly.

VII - Considerations for strategy choice in Vietnam market

1. Strategic Gap, Porter’s generic strategy and GE- McKinsey matrix

JFC simply concentrates on competing head-to-head with competitive rivals this will lead to competitive convergence where all ‘players’ find the environment tough and threatening. It needs to encourage managers to seek out opportunities in the business environment which they call strategic gaps. A strategic gap is an opportunity in the competitive environment that is not being fully exploited by competitors. By using some of the frameworks, managers can begin to identify opportunities to gain competitive advantage in five way, opportunity in substitute industries, opportunity in other strategic in other strategic groups/ spaces, opportunities in the chain of buyers, opportunities for complementary products or services and opportunies in new marketing segments (Sloman J, 2009)

About the opportunities in substitute industries, JFC faces competition from industries that are producing substitutes, but substitution also provides opportunities. In order to identify gaps a realistic assessment has to be made of the relative merits of the products/technologies in the eyes of the customer. In Hanoi, there is many traditional foods which is favoured by consumer for instance Pho, noodles and meat roll but the safe quality in those is low, food poisoning is a serious health issue in Viet Nam (WHO, 2008). This means that JFC needs to design fast-food marketing in exploiting it to counter to traditional food. Establish an advertising focus on the safety on products is necessary.

Opportunities in the chain of buyers, that identifying who is the strategic customer is critically important. It was also noted that this can be confusing, as there may be several people involved in the overall purchase decision. The user is one party but they may not buy the fast-foods product themselves (SlomanJ, 2006). There may be other influencers on the purchase decision too. Importantly, each of these parties may value different aspects of the product or service. Lotteria, KFC target market to young age like students, officer who have enough financial ability to make purchase decision hence their stores near large street and office, university in Hanoi as well Ho Chi Minh city. KFC dominate the Northern market with 48 stores competitive with Lotteria 38 stores (GPdaily, 2009).  JFC have a concentration in customers are children, families and young people. Although children have no capability to buy products but owning big influence on purchase decision from their parent, JFC may shift its view of the market and aim its promotion and selling at children ‘buyers’ with the intention of creating new strategic customers. They use attraction to for children with family by put stores closely supper market, school and making a marketing strategy towards them.

Another to consider is that opportunities in new market segments, looking for new market segments may provide opportunities but product/service features of JFC may need to change. Presently, KFC, Lotteria and BBQ are towards to urban area with medium income class they forget low-income class who have tight budget but still want to be satisfied by food-fast during busy work in city (Vietnamnet, 2009). With the emphasis is on selling emotional appeal, the alternative may be to provide a standard model as well low service of fast-food that costs less and would appeal to another potential market of low class people.

It is necessary for Jollibee to choose a right generic strategy. The business cannot work well when select one or more approaches, and then fail to achieve them. Michael Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation on generic strategy.

Figure 6: Porter’s Generic strategies (Mindtools, 2009)

        Jollibee must classify the market in Vietnam and in global as two different markets. Expanding to the global where Jollibee must face many number of competitions, they cannot target a wide market, but in Vietnam market there is a few dominant competitors in fast-food industry that had been well-established in long time. When expand business operation in Vietnam, JFC provides fast-food products with a wide broad scope market of Vietnam besides attempting to giving unique products with Filipino taste, happy brand, focusing on children-family value (JFC, 2009). Therefore, the differentiation strategy is the best for company which seeks to provide products or services that offer benefits different from those of competitors and that are widely valued by buyers. The value added by the uniqueness of the product Filipino taste is played an important role to make the differentiation strategy of Jollibee which seeks to provide products or services that offer benefits different from those of competitors and that are widely valued by buyers (QuickMba, 2009). It may allow JFC to charge a premium price for it, the higher price will more than cover the extra costs incurred in offering the unique product like Filipino taste. In the situation, once suppliers increase their prices the JFC still may be able to pass along the costs to its customers who cannot find substitute products easily.

        A form of portfolio analysis was used for classifying product lines or SBUs within a large company is that GE-Mc Kinsey Matrix.

        Figure 7: GE-McKinsey 9-box Matrix (Att, 2009)

From the Vietnam market, Jollibee defined business level strategies bases of the competitive strategy. To defined the position in the future, Jollibee define SBUs focus base on Porter’ five forces. By which, the demand for fast-food in Vietnam market is wide, the rivalry within industry is still high with some dominant firms in market and the profitability as well growth in this industry is potential due to demand increasing. Jollibee have cheap price, Asian meals suitable with Vietnamese people. It is low strength competitive due to when JFC expands market in Vietnam, specific North area, it will face hardly with KFC, Lotteria that were established in long term with loyal brand. Thus the industry attractiveness is high. On other hand, Jollibee account for a small market share compared with KFC and Lotteria, the distribution channel access is not wide, the profit margin relative to competitors is low. Hence the competitive strength of business unit is low.

Jollibee is stepping into “Selectivity/earnings” cells on GE-McKinsey.  In order to strengthen the position, those SBUs at JFC have to focus more on research and development spending, and trying to access the channel distribution in Vietnam.

2. Strategic Method

Jollibee is worldwide brand which a company already has a successful fast-food product. It is desiring to expand Vietnam market as well other ones by many fast-food restaurants to compete with competitors like KFC, Lotteria, it is important to build a powerful distribution system, accessing customers base at local market when expanding. In this situation Jollibee use Alliance to exploit new chances and obtaining more market share from local market. It cooperate with two or more organizations in Vietnam like KinhDo, BaoNgoc to work together at particular fast-foods field, so that each benefits from the strengths of the other, and gains competitive advantage by wide distribution systems and the customers base from these partners (Bnet, 2009). When selecting prospective partners, JFC will be gaining access to more research, more products and more presence in Vietnam by the network from local partners. Strategic alliances also involve the sharing of knowledge and expertise between partners as well as the reduction of risk and costs in areas such as relationships with suppliers and the development of new products and technologies in order to meet its strategic objective (Bnet, 2009).

VIII - Strategic plan for JFC for expanding

1. Mission and objectives

The mission of JFC is to provide happy value as well quality products with satisfied service to Vietnamese customers.

 Objectives of Jollibee were set as:

• Expanding 10 fast-food stores in North market of Vietnam by 2012
• Promote Filipino specialties as leading taste at all times
• Provide a friendly environment for customers in service to satisfy customer's expectations by 2010
• Increase 20% of number of clients served through superior performance by 2010

JFC carries out this by focusing on value-adding service of developing overall areas in operation including Marketing, Human Resource. Investing more assets and equipments, spending on research and development, recruit highly skilled and creative product development teams who are able to create the differentiation. Using a price policy which is suitable to Vietnam market

2. Environmental analysis

Macro-environment

Vietnam has obtained steady economic growth rates in recent years and its government has improved the business environment business through attempting to limit protectionism, new tariffs and taxes or new restrictions on both domestic and foreign enterprises like JFC to trade. Over the past 20 years, Vietnam has made a shift from a centrally planned economy to a Socialist-oriented market economy. The economic growth of Vietnam in 2009 was not fairly good compared to past years which had been answered by the overall global slowdown (IMF, 2009). In addition, inflation increased, which means that comprehensive measures need to be carried out in the monetary policy’s implementation. Inflation goes up so it may provoke higher wage demands from employees and raises costs in process of JFC which makes a raise in price of service and products.

In social, majority Vietnamse people belong to 15-64 years old. Young peope contributed sinificantly on the modernization of many living quarters prompted quality services in Vietnam. Moreover, in 1990s to 2007, the rate of urbanization was rapid due to the large number of construction and city planning projects all over Vietnam (CIA, 2009). The standard of living of Vietnamese people is improved along with the changing in lifestyle towards the western lifestyle. This is advantage for JFC which is foreign company to adapt Vietnam market.

Micro-environment

When investing on Vietnam market, the cost for the penetrate is high, this will required heavy investment in marketing strategy and building equipment to establish a franchise. The reputation from existing brands of KFC, BBQ, and Lotteria has a high level of loyalty customers which also make the disadvantage to entice Vietnamese consumer. Vietnam buyers are loyal with the reputation from brands, so no willing to switch to other providers like KFC, Lotteria which have same positions as Jollibee, that mean they have no much power to force down prices. Besides, the power of supplier is high because switching to another with big amount of chicken materials and obtain stable of supply for a range fast-food systems is difficult to seek and expensive. This stronger the power of suppliers in  industry make more difficult it is for Jollibee within that sector to make a profit because suppliers can determine the terms and conditions on which business is conducted. The rivalry of competitors in market is also high when there are dominant firms all competing with each other for customers like KFC, Lotteria. Moreover the costs of leaving the fast-food industry are high because of high levels of investment on an extensive range franchise in worldwide, this means that existing firms will fight hard to survive because they cannot easily transfer their resources elsewhere, JFC and competitors need to survive in Vietnam market.

3. Organizational analysis

Presently, JFC was able to broaden its customer base and increase market share. In addition, Jollibee also attributed its strength to capture the Filipino tastes in menu which is favored by children that other competitors cannot as well as have much experience to work in East environment compared with other competitors. However, about weakness of company, it still relies on a few groups of officer, students and families it leaves the company exposed to the dangers of losing their custom. Carrying materials from abroad (China) to location which increasing cost on transportation, then raise the price of product on market (GPdaily, 2009). Moreover, the inconsistent on service delivery from store to store make the JFC’s image in customers may be not homogeneous which distracts building a strong brand of Jollibee. As for opportunities, there may an increasing rapidly in demand of Vietnamese people on fast-food product but there is a concern in people because many fast foods are fried (which facilitates quick preparation), high in fat and sodium, and low in fiber, vitamins, and some minerals. Hence, the threat is that the protest of food can be increased.

Competitive advantages of products and abilities

JFC own a great range of fast food stores through its expansions through acquisition of other popular restaurants in present in the Philippines which was written on the Vision “By year 2020, with over 4,000 stores worldwide” (Scenario). Hence the company in Vietnam has strong resources of brand name, finances, employees, distribution network, marketing capacity, production from parent company. Vietnam Jollibee is an American-style fast-food restaurant-chain with Filipino-influenced dishes specializing in burgers, spaghetti, chicken and some local Filipino dishes. Another important consideration is that adding Filipino specialties to the regular fast food standards, such as spaghetti, pancit palabok, a popular noodle dish This particular taste was what made Jollibee as one of the biggest fast-food chain across the country, because by concentrating its resources on satisfying the Filipino palate. Filipino as a weapon made the differentiation in products of Jollibee before KFC, BBQ and Lotteria. In addition, the competitive advantage also conducted by FSC standard to meet the company’s excellence standards or it will not be served at all; the service must be fast and courteous; and cleanliness, from kitchen to utensils, must always be maintained.

To improve the situation, in the short-term current strengths must be exploited to continue to increase market share in existing markets through acquisition and Filipino taste specialties should also continue. In long term, company should use its strength to adapt with the opportunity of demand increasing in future, JFC must diversify new product which suitable with Vietnamese consumers to get competitive advantage.

4. Proposed Strategy

Establishing a proposed strategy that will relate to environmental as well organizational analysis and it supports the mission, objectives beforehand. In order to choose a fit strategy Jollibee should to use SPACE matrix which is a management tool used to analyze company’s performance. It is used to determine what type of a strategy company should undertake. That focuses on strategy formulation especially as related to the competitive position of an organization. This will be applied to the Jollibee in order to analyze the position of JFC and suggests a strategy for that (Maxipedia, 2009).

The SPACE matrix is based on four areas of analysis. Internal strategic dimensions: Financial strength, Competitive advantage. External strategic dimensions:  Environmental stability, Industry strength. The financial strength factors often come from company accounting. These SPACE matrix factors can include turnover, liquidity, working capital, cash flow, and others. Competitive advantage factors include the speed of innovation by the company, market niche position, customer loyalty, product quality, market share, and others. Jollibee is also affected by the environment in which it operates (BPP, 2004). SPACE matrix factors related to business external strategic dimension are overall economic condition, GDP growth, inflation, industry growth potential, and others. These factors can be well analyzed using the Michael Porter's Five Forces model.

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The SPACE matrix for Jollibee is constructed by plotting calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions.

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The SPACE matrix is drawn by graph:

6. Resources needed for plan

In order to carry out this plan successfully, Jollibee needs to indentify which resources will be used in the plan. Firstly material, raw ingredients for all of their products are shipped daily with an exclusive supplier actually Jollibee controlled based in mainland China. Raw ingredients for all of their products are shipped daily to their warehouse for inspection, safe-keeping and production. Material was also collected from farms in Vietnam due to which is less cost than transporting from abroad. In order to calculate accurately how many necessary materials for plan JFC will use a computerized system for planning the requirements of raw materials and components which is called Material Requirement Planning (MRP). The MRP preparing for necessary materials requisitions (Donald W, 2005), it answers those question of what are required, how many are required and when to require.

Second, as for human resource, when expanding business in Vietnam market Jollibee will need more labour, that will be exploited in local labour market of Vietnam. Allocation for human resource and carried out by Gantt Chart. It estimates the amount s of resource requires for the plan as well as illustrating the dates of the terminal elements and summary elements of the plan. Jollibee use Gantt chart also to show current schedule status using percent-complete shadings of its plan (BPP, 2004). Jollibee will need more finance to develop aggressive strategy. Finance is always limited and tightly controlled in Jollibee. Budget allocated to different units represents cost to the organization in order to maximize earnings and minimize costs. The estimate of costs and budget can be based on rough guesswork comparison with similar projects in the past and work out the cost of all activities going on in per week of plan through the figures of labour, materials, components and others for each of task and work departments.

Time is also limited resource, the deadline was imposed with the Critical Path Analysis (CPA) or to ensure all tasks that must be completed as part of a project on time. They act as the basis both for preparation of a schedule, and of resource planning (BPP, 2004). Identifying tasks by that with works completed for the whole project to be completed on time. It also identifies which tasks can be delayed if resource needs to be reallocated to catch up on missed or overrunning tasks. The Gantt Chart is applied too with the plan to monitor time work.

IX - Conclusion

In conclusion, Jollibee is strong brand which is familiar to Asian business market like Vietnam with supplying special Asian tastes. It should employ this to get advantage by other competitors of KFC, Lotteria. However, the business operation has many existing issue need to be improve. Reliance on supply from foreign can have some problems on keeping stability on material of product, the cost on transportation may be high in which it increases the price of products and the inconsistent in service from shop to shop made the brand of JFC was being distracted. Those issues were covered by this report which analyzed what is existing on business activity at JFC and suggesting the approaches that company may follow to improve its performance as well as expanding its business for future through differentiation strategy. With competences that competitors do not obtain in Filipino taste as well various range of products, plus the experience in business in Asian environment as an advantage then the company has opportunity to push the market share up while the demand for fast-food as well the growing urban lifestyle is raising highly in Vietnam.

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X - Recommendations

        Jollibee Vietnam has been obtaining the strength brand of JFC and the experience of working in Asian. Company also attributed its strength to capture the Filipino tastes in menu which is favored by children that other competitors cannot as well as have much experience to work in East environment compared with other competitors. It is suggested to use the differentiation strategy to exploit the Filipino specialties that other competitors cannot provide. It may allow JFC to charge a premium price for that, the higher price will more than cover the extra costs incurred in offering the unique product like Filipino taste. In the situation, JFC still may be able to pass along the costs to its customers who cannot find substitute products easily. The strategy should be carried out by the Alliance method by corporate with other partners in Vietnam to exploit the distribution system as well customer base available in market.

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X - Reference

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