Statement of the Problem:

In order to make certain the growth and advancement of its company, JFC (Jollibee Food Corporation) aims to expand further and delves into opportunities available in foreign markets. What effective investment should JFC make in order to penetrate foreign countries and expand its foreign market share?

Objectives: 1) To open 100 new restaurants within the current year in foreign countries 2) To get 50% of their income from foreign market after 10 years. 3) To penetrate Asian countries, primarily China and India which have big potential market.

Areas of Consideration:
> 2009 Significant Financial Data of JFC
Liquidity Ratio Current Assets Current Liabilities Total Debts Total Stockholders Equity Total Long Term Debts Total Stockholders Equity Net Debt Net Debt and Equity 13,936,928,132.00 9,633,836,229.00 8,103,632,109.00 34.81% 23,281,239,667.00 2,437,980,374.00 10.47% 23,281,239,667.00 4,928,145,889.00 20,105,753,447.00 24.51% 144.67%

Debt to Equity Ratio

Long Debt to Equity Ratio

Net Debt to Equity Ratio

Cont...

Areas of Consideration:

> India, being JFCs primary target market avoids meat, which is a basic ingredient in Jollibee products. > Fast food industry growth is continuously increasing. > Research on the health consequences of too much fast food consumption is also continuously spreading.

Alternative Courses of Actions:

Alternative 1

Invest in specific countrys local food chain with big growth potential.
Many Asian countries have established their own local fast food chains competing with the international brands. Some of these have grown building many branches in their own nation and have even penetrated other countries. JFC can invest in these local chains. Mr. Pizza Korea established just in 1990 has a strong growth potential. Pizza Corner of India with more than 50 outlets is also making name in its local market. Also Cafe de Coral in China, one of the largest Chinese Fast Food, has around 540 outlets around the world can be a big investment move for JFC.

Advantages (Strength and Opportunities): JFC, though it has not fully break-through the other Asian country markets, have build a name for itself among fast food chain companies, and have achieve credibility as it continued to invest and diversify in countries it was able to gain entry. It is also prided with many awards and recognitions, to name some: in 2001 one of the "Top 20 Best Employers in Asia. The Asia Money Magazine adjudged JFC as "Best I n Operational Efficiency" based on the financial rations and "Management Man of the Year" - Tony Tan Caktiong by MAP. This helps make investment in foreign companies possible. Doing so, JFC can enter the local market immediately, and eventually can understand the food preferences of the people in that certain r egion which will be helpful in the future establishment of its own lines. It will have a preview of the local market, thus, research cost may be lessen

Disadvantages (Weakness and Threat): The building of its reputation in foreign countries is taken aside. The opportunity to establish its own line will take a long time. And s ince there is a rapid growth of demand in fast food products at present time there are many local companies developed and many more west side companies penetrate Asia. Without taking this opportunity, JFCs competitive advantage, being an already-established c ompany, may decrease. And in time it has familiarize the market and settled on pushing its own line, other companies has already dominated the industry

Alternative Courses of Actions:

Alternative 2

Open own food chain line in the desired country, primarily Jollibee Restaurants, Chowking, Greenwich, Red Ribbons, etc..
There are millions of Filipinos who have already migrated to Asian countries (both illegal and legal) as many nations open an entry for employment opportunities. With this, if JFC opens its food chain line, they are assured of ready market which is these migrant Filipinos who, by nature, long for any Philippine packs, like food.

Advantages (Strength and Opportunities): The Company is well established in the Philippines and it is safe to say that around 90% of Filipinos are acquainted with Jollibee. This goes as well to those Filipino migrants across Asia. Thus, if establish in countries where there are Filipinos, there is no doubt that they will utilize what Jollibee has to offer. Also, since fast food chain industry is growing in Asia. Many fast food chains began opening in Asia, like Mcdonalds, Wendys, Taco Bells, etc. In China, it is estimated that the demand will increase by 9% annually. Initially Indian fast-food industry is estimated to be only $135 million, but with over 300 million Indians hankering to follow the lifestyles of the Western world, the sky is the limit for this sector. Other Asian countries like South Korea and Japan are following the trend.

Disadvantages (Weakness and Threat): JFC reputation as a leading fast food chain in the Philippines is unquestionable, but its reputation is not yet well-established in all Asian countries. Chowking may serve Chinese cuisines that can penetrate China, and/or Taiwan but cooking may vary, even ingredients vary, like noodles and spices used by Chinese. JFC chains, especially Jollibee, cater mostly meats that may not be acceptable in India since Indians avoids meat due to their religious beliefs. Most eat vegetable and love spices, which are rare in typical JFC food.

Every country has its own food preferences; Jollibee may not meet the taste of each countrys local. Additional and material cost may incur in modifying its product or food lines to satisfy the foreign market. Filipino customers will not be enough if JFC aims to have 50% of their income comes from outside the Philippines. Also, it has some bigwig competitors like the aforementioned McDonalds, which remains the number one fast food chain in the world and other US originated company that had already penetrated Asia, not to forget the fast food chains established by each country that surely know what their locals prefer.

Alternative Courses of Actions:

Alternative 3

Invest in countrys local fast food chain and open own food chain in selected areas where there are Filipino migrants.
With enough funds for investment, JFC can purchase stocks from local fast food chain in certain Asian country and open restaurant at the same time carrying its own chain of stores.

Advantages (Strength and Opportunities): Investment in foreign-owned food chains will give JFC access to local market and pre-study the nature of people towards eating and their food preferences. Initial establishment of their own food chain stores will introduce their own name in this country. On the process, modification of some foods that were originally made for Filipino taste will be applied base from experience and information gain from those foreign chains where it had invested. An integration of original JFC products and local taste can be made. An entry of other JFC lines can then be open to the market. Again the increasing trend of Asian imitating west lifestyle and of course the convenience and affordability in eating, JFCs growth potential is big.

Disadvantages (Weakness and Threat): Because of the market trend, local businessmen are getting aggressive to supply fast food chain in their locality. These businessmen have an advantage in their own land since they are more acquainted with the market. International Companies carry its name that is widely celebrated in other areas in the world. It automatically has edge over JFC and achieves credibility even before it enters the Asian market. JFC on the other hand, must still work more to be highly regarded and be at the same foot with these national brands. The adjustment of JFC according to local food taste may lead to lost of its own identity, since they have to adapt local ingredients and materials which can be very different with Jollibees o riginal offering.

Conclusion & Recommendation:

Alternative 1- Investing in foreign food chain, especially in big companies, may meet the companys aim to increase and eventually get 50% of their total annual income from foreign market. But this disregards the companys aim to mark its name in Asian countries as early as the movement of fast food chain demand is still increasing. Alternative 2 Putting up all Jollibee chain of stores in different Asian countries, (100 in the current year) is highly risky due to the food preference of the locals and competitive environment with international brand leading the industry. The 50% goal is hardly achievable.

Conclusion & Recommendation:

With JFC data in 2006, it is financially capable of making investments in foreign countries. I therefore conclude that alternative 3 which is to invest in countrys local fast food chain and open and introduce own food chain in selected areas where there are potential market can be most helpful in solving the problem. This alternative meets the three objectives. The 100 restaurants can be met by investing in a foreign company that has an established reputation in its home country and have already penetrated other countries and then there are the JFC owned restaurants opening in parallel to this investment.

Conclusion & Recommendation:

The importance of investing in foreign countries is that this move will assist JFC in understanding the market it wanted to enter. The food preference, which is a main issue in opening a local food chain in a foreign market, can be taken in-depth. It can also learn and manipulate the spending pattern of the natives.

Conclusion & Recommendation:

This investment is also a research activity, thus, the cost of R & D can be lessened. Opening more Jollibee stores will not be very difficult then. Opening for franchise and setting up new stores in areas where there are already Jollibee can also be effective in its expansion plan. It is now not a choice between opening its owned stores and investing in foreign stores but integrating both strategies to effectively meet the JFCs objectives.

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