Assessment #2 Creation of Original Case Study

Direction: Create your own case study analysis applying the Porters Five
Forces to your modular or online class. Be sure to indicate: the place/location
where you conducted your study in; the geographic region your strategy will
deal, whether the power of the force is high/medium/low, whether the force
presents a threat or opportunity-briefly explain why. Turn in your answer/output
in our Google class using the required format as given in unit 1 requirements.
Use the space below for your draft.

The Jollibee Foods Corporation Case Study

Jollibee is a global Filipino fast-food restaurant chain operated by Jollibee Foods

Corporation (JFC). JFC had about 1,200 Jollibee outlets worldwide as of April 2018,
with a presence in Southeast Asia, the Middle East, East Asia (Hong Kong, Macao),
North America, and Europe.
In 1975, a Magnolia ice cream parlor was opened by Tony Tan Caktiong and his
family in Cubao, Quezo City. Upon request from clients, the outlet later started selling
hot meals and sandwiches. The family decided to turn the ice cream parlor into a fast
food restaurant, which became the first Jollibee outlet in 1978, when food goods
became more popular than ice cream. Management advisor Manuel C. Lumba advised
the family on the plan transition. Jollibee was originally called Jolibe, but changed its
name to Jollibee.
In January 1978, Jollibee Foods Corporation was founded as the company that
would operate the fast food chain. There were seven branches in Metro Manila by the
end of the year. In 1979, Jollibee's first franchised outlet opened in Santa Cruz, Manila.
Rapid development witnessed by Jollibee. By concentrating on the unique tastes
of the Filipino market, which differed from the American fast food business, it was able
to withstand McDonald's entrance into the Philippines in 1981. The first overseas
Jollibee store opened in Taiwan in 1986, which is now closed. Jollibee continued to
grow and set up stores both within the country and abroad. Mr. Tan Caktiong is now a
billionaire, the son of poor Chinese immigrants.

 This is a Jollibee Company case study conducted in the Philippines.

 Jollibee Food Corporation's marketing strategy is attractive and highly
commercialized using multiple media like TV, radio, newspaper, and more, they
need to invest millions of their budget to stay on top of their customers' minds,
particularly among the Filipinos.

Threat of new market players

The challenge of new entrants represents how the threat to existing market players is
imposed by new market players. If the market is profitable and barriers to joining the
industry are low, more players will be attracted and, thus, the probability of new entrants
will be high.
Here are some factors that reduce the threat to Jollibee Foods Company from new
entrants:

 Entry to the industry requires considerable expenditure of capital and resources.

If product differentiation is high, this force often loses strength and clients attach
high importance to the specific experience.
 If the current regulatory structure imposes such challenges on new companies
interested in entering the market, Jollibee Foods Corporation will face the small
threat of new entrants. In this scenario, it would be important for new entrants to
comply with stringent, time-consuming regulatory criteria that will deter such
players from entering the market.
 If psychological switching costs are high for customers and existing brands have
built a loyal customer base, the risk would be low.
 When access to the distribution networks is limited, new entrants would be
discouraged.

Jollibee Foods Corporation will pose a significant challenge to new entrants if

 Current regulations support new players' entry.

 Due to poor / no brand loyalty, customers can switch brands easily.
 Initial capital investment is high.
 For new players, building a distribution network is fast.
 It is not a discouraging factor to retaliate from the current market participants.

How Jollibee Foods Corporation can tackle the Threat of New Entrants?

 By focusing on client relationship management, Jollibee Foods Company will

build brand loyalty. Psychological switching costs will be raised.
 To expand access to the target market, it can establish long-term contractual
relationships with distributors.
 In order to create a strong base for differentiation, Jollibee Foods Corporation
can also invest in research and development activities, gain valuable
consumer data and implement innovative products/services.

Threat of Substitute Products

For Jollibee Foods Corporation and other emerging players, the availability of
alternative goods or services makes the business environment difficult. High
replacement risk suggests that consumers may use other industries' alternative
products/services to meet their needs. The severity of this hazard to Jollibee Foods
Corporation is determined by numerous factors.
The Threat of Substitute Products or services increases when;
 A cheaper alternative product/service from another industry is available.
 The psychological switching costs are low for moving from industry to substitute
goods.
 The replacement product provides the same or even better quality and efficiency
as the product sold by Jollibee Foods Company.
However, this threat is substantially low for Jollibee Foods Corporation when;
 The switching cost of the replacement product is high (due to high
psychological costs or higher economic costs)
 Customers may not derive from the substitute product the same utility (in
terms of quality and performance) as they derive from the product of Jollibee
Foods Company.
How Jollibee Foods Corporation can tackle the Threat of Substitute Products
or services?
 Jollibee Foods Company will reduce the danger of alternative goods or services
by specifically highlighting how the product/service provided is better than the
alternatives available.
 By providing a better experience and high value for money, it can provide
consumers with compelling reasons.
 By working on loyalty, it can increase switching costs.
 Finally, it will enhance efficiency, increase value for money and create a strong
foundation for differentiation to deter consumers from using the replacement
product.

Power of Customers

The bargaining power of customers reflects the strain exerted by clients on business
entities to procure high-quality goods with outstanding customer service at competitive
prices. This indicator of progress affects the ability of the Jollibee Foods Company to
achieve business goals. Powerful bargaining power reduces profitability and makes it
more competitive for the industry. Whereas, when buyer power is small, Jollibee Foods
Company makes the market less competitive and improves profitability and growth
opportunities.
There are some factors that increase the bargaining power of buyers:

 A more oriented client base strengthens their bargaining power against Jollibee
Foods Corporation
 If there are few in number, buying power will also be high, whereas there are too
many sellers (business organisations).
  Low switching costs (economic and psychological) also improve the bargaining
power of the buyers.
 In the case of corporate clients, their willingness to reverse integration enhances
their market position. Backward integration reflects the willingness of the
consumers to manufacture the goods themselves rather than purchase them
from Jollibee Foods Company.
 The price sensitivity of customers, high industry knowledge and the procurement
of standardised goods in large quantities often improve the negotiating power of
buyers.

Lower consumer concentration (means that the customer base is geographically

dispersed), the inability of consumers to integrate backwards, low price awareness,
lower business knowledge, high switching costs and small volume purchases of
personalized goods are some of the factors that minimize buyers' bargaining power.
How Jollibee Foods Corporation can tackle the Bargaining Power of Buyers?
By growing and diversifying their client base, Jollibee Foods Corporation will handle the
bargaining power of buyers. This can be achieved by launching new products, targeting
new segments of the market and implementing strategies for product diversification. In
this respect, marketing and promotional campaigns may also be beneficial. Building
loyalty by integrating creativity and delivering outstanding customer service will increase
the cost of switching, effectively reducing their bargaining power. To improve its
competitive position in the market, Jollibee Foods Corporation can adopt these
strategies.

Power of Suppliers

In the Porter 5 force model, the bargaining power of suppliers represents the leverage
exerted by suppliers on business entities by implementing various strategies, such as
limiting the supply of goods, reducing quality or increasing costs. It costs the buyers—
when suppliers have good bargaining power (business organisations). In addition, high
supplier negotiating power can increase market competitiveness and lower Jollibee
Foods Corporation's profit and growth potential. Similarly, due to high profitability and
growth potential, poor supplier power can make the industry more attractive.
Bargaining power of suppliers will be high for Jollibee Foods Corporation if:

 Suppliers have centered on a particular area and their concentration is higher

than that of their customers.
 This force is especially powerful when consumers have a high cost of moving
from one supplier to another (for example, due to contractual relationships).
 If suppliers are few and demand for their product offered is strong, it strengthens
the position of suppliers against Jollibee Foods Corporation.
 The forward integration of suppliers weakens the role of Jollibee Foods
Corporation as they also become competitors in that area.
  If Jollibee Foods Company is not well educated, does not have sufficient
business intelligence and lacks price sensitivity, the stance of the suppliers
against the organisation is immediately enhanced.
 Other factors that raise the negotiating power of the suppliers include Jollibee
Foods Corporation's high product differentiation provided by suppliers, making
only a small proportion of the total sales of suppliers and unavailability of the
replacement goods.

Contrarily, the bargaining power of suppliers will be low for Jollibee Foods Corporation
if:
 Suppliers are not targeted.
 Switching expenses are poor,
 Application lacks distinction
 • There are alternative items available
 Jollibee Foods Company is extremely price sensitive and has ample business
awareness.
 There is no danger by suppliers to forward integration.

How Jollibee Foods Corporation can tackle the Bargaining Power of

Suppliers?
By reducing reliance on one or a few suppliers, Jollibee Foods Corporation will improve
its stance against suppliers. It will increase its sensitivity to costs. In addition to
minimizing its bargaining power, establishing long-term contractual partnerships with
suppliers from various regions enables Jollibee Foods Corporation to increase its
productivity in the supply chain. Finally, if product demand is sufficiently high and the
company has the requisite skills and experience, Jollibee Foods Corporation may find
alternative ways of manufacturing the product. To assess its viability, however, it needs
thorough cost-benefit analysis. Brand redesign and product line diversification will also
help the organisation reduce the market control of suppliers.

Industry Rivalry

The rivalry among established companies shows the number of competitors that offer
the Jollibee Foods Corporation tough competition High rivalry shows that Jollibee Foods
Corporation will face intense pressure from the rival companies, which can restrict the
growth potential of each other. In such sectors, profitability is poor as companies
implement competitive tactics against each other for targeting and pricing.
The Rivalry among existing firms will be low for Jollibee Foods Corporation if;

 Only a small number of players in the industry remain.

 The sector is rising at a rapid pace.
 A strong market leader exists
 The goods are highly differentiated, with separate sub-segments targeting each market
player.
 The cost of economic/psychological switching is high for customers.
 The exit barriers are low, which means that companies can easily leave the sector
without incurring tremendous losses.

Similarly, for Jollibee Foods Corporation, there are several factors that increase the rivalry
between existing companies. For example, if market competitors are strategically diverse
and target the same market, the business would face intense rivalry between existing
companies. If customers are not loyal to existing brands, the competition would also be
high and it is easier to draw customers from others due to low switching costs. Competitors
of similar size and with sluggish growth in the market selling undifferentiated goods prefer
to follow aggressive tactics against each other. All these factors make the competition
between existing companies a major strategic concern for Jollibee Foods Corporation.
How Jollibee Foods Corporation can tackle the Rivalry among existing firms?
To reinforce the foundation of distinction, Jollibee Foods Corporation should
concentrate on the implicit needs and desires of its clients. The creation of long-term
customer relationships could increase switching costs. To recognize potential customer
segments, the organisation can also invest in research and development activities. It
can be mutually advantageous to cooperate with rivals in certain situations. The
business will search for this alternative as well.

The implementation in the real-world sense of the Porter five (5) powers model helps
organizations to make wise strategic decisions. The effect and significance of each of
the five powers is based on context. Jollibee Foods Corporation will assess the
attractiveness of the market, make successful entry/exit decisions and analyze the
impact of these forces on their own company and competitors with the use of Five Force
analysis. Moreover, this model's complex analysis will disclose significant details.
Jollibee Foods Company, for instance, will combine the Porter 5 force model with the
PESTEL system to assess the possible future attractiveness of the business. In certain
situations, to evaluate five powers, businesses do not have the information needed. The
research can be performed with the help of assumptions in such a situation.
Consultants primarily use this model as a starting point, and other models are used in
combination to better understand the external world (such as PESTEL and Value
Chain).
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