Philippines and International Division

Building an organization In 1933, TTC selected Tony Kitchner to start international operations. He asked for the resources and autonomy to create an International Division. 1. The new division needed to be separate from Jollibee’s Philippine side, with a different identity and capabilities. 2. He agreed with TTC that attracting partners with good connections in their markets should be a priority. 3. To project an image of a world-class company and make it to look and act like a multinational, not like a local chain. 4. Kitchner began recruiting experienced internationalists from inside and outside Jollibee.

Adding external professionals for marketing, finance, quality control, and product development helped keep innovative ideas churning. Strategic Thrust Tony Kitchner has a definite objective that increase the pace of international expansion with the objective of making Jollibee one of the world’s top ten fast food brands by 2000. Two main themes formulated: 1. Targeting expats: the hundreds of thousands of expatriate Filipinos working in the Middle East, Hong Kong, Guam, and other Asian territories as a latent market for Jollibee and as a good initial base to support entry.

But after opening stores, he found that this market was limited. 2. Planting the flag: the expectation was that by expanding the number of stores, the franchise could build brand awareness which in turn would positively impact sales. The problem is only after achieving a certain level of sales could most franchisees afford the advertising and promotion. The other challenge was that rapid expansion led to resource constraints. I think he entered new markets without proper market. Operational management Market entry: Kitvhner handed responsibility for the opening to one of the division’s Franchise Services Managers(FSM).

One responsibility in which a franchisee was deeply involved was the key first store. A design manager in the International Division provided support. Oversight and continuing support As operations stabilized and the store manager started to see patterns in sales and operational needs, FSMs allowed stores to report the same data weekly and provide a monthly summary. If FSM saw a decline in sales and managers could not come up with solutions themselves, FSM should coach them to help them generate answers. This open partnership fit with TTC’s view of franchise relations.

But his strategy was not focused. CONTROL is an extremely important issue for success and TK’s division was out of control. International vs. domestic practice After numerous market entry battles, a number of elements of Jollibee’s Philippine business model needed to be modified overseas. They decided that they needed to reposition ourselves to target a more up-market clientele. In particular, they disliked the Philippine store design. So Kitchner developed three new store decors, in changed the red background to orange, and added the slogan.

Kitchner and his staff made numerous other changes to Jollibee’s Philippine business operating model. Customizing for local tastes Such changes provoked grumbling from many in the large domestic business, and nothing triggered more controversy than the experiment with menu items. Managers in the international division believed that menus should be adjusted to local preferences. Since other menu items were seldom removed, these additions generally increased the size of menus abroad. It always came at the cost of some operating efficiency and operating control.

So R&D staff on the Philippine side objected strenuously. Overall, the international division’s modification of menus and products caused considerable tension with the Philippine side of Jollibee. I think Kichner overemphasized the differences in the overseas markets. He would have been wise to incorporate the Jollibee company philosophy into his division to foster the camaraderie that was sorely lacking. The division that arose between the domestic and the international side demonstrate a lack of communication. And launching the International Division should at a more sedate pace.