JFC case study

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Table of Contents

BACKGROUND OF THE COMPANY

JOLLIBEE FOODS CORPORATION

BACKGROUND

A dominant market

leader

in

the

Philippines,

Jollibee enjoys the lion’s share

of the local market that is

more than all the other

multinational brands

combined.

Jollibee is the largest fast food chain in the Philippines, operating a nationwide network of over 750 stores. The company has also embarked on an aggressive international expansion plan in the USA, Vietnam, Hong Kong, Saudi Arabia, Qatar and Brunei, firmly establishing itself as a growing international QSR player.

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Background of the Company

A company that values family.

Jollibee was founded by Tony Tan and his family with its humble beginnings as an Ice Cream Parlour which later grew into an emerging global brand. At the heart of its success is a family-oriented approach to personnel management, making Jollibee one of the most admired employers in the region with an Employer of the Year Award from the Personnel Management Association of the Philippines, Best Employer in the Philippines Award from Hewitt Associated and a Top 20 Employer in Asia citation from the Asian Wall Street Journal.

Aside from promoting a family oriented work environment,

the brand’s values also reflect on their advertising and

marketing. Jollibee knows their target audience very well:

the traditional family and all communication materials

focus on the importance of family values, making Jollibee

the number one family fast food chain in the Philippines and

a growing international QSR player.

A Well-Loved Brand.

Customer satisfaction has always been key to Jollibee’s success. Never losing sight of its goals, Jollibee has grown to be one of the most recognized and highly preferred brands in the Philippines. Now the market leader among fast food chains in the Philippines, claiming a market share that totals to more than half of the entire industry.

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Great tasting products

and quality systems.

Jollibee’s growth is due to its delicious menu line-up – like its superior-tasting Chickenjoy, mouth-watering Yum burger and Champ hamburger, and deliciously satisfying Jollibee Spaghetti -ably complemented with creative marketing programs, and efficient manufacturing and logistics facilities. It is made possible by well-trained teams that work in a culture of integrity and humility, fun and family-like. Every Jollibee outlet welcomes customers with a clean and warm in-store environment and friendly and efficient service.

And it is this tried and tested formula of delivering great-tasting food, adherence to world class operating standards and the universal appeal of the family values the brand represents that are driving the expansion of Jollibee both locally and in the overseas market.

Widest store network in

the Philippines and an

emerging global player.

Jollibee is the largest fast food chain in the Philippines, operating a nationwide network of more than 750 stores. A dominant market leader in the Philippines, Jollibee enjoys the lion’s share of the local market that is more than all the other multinational brands combined. The company has also embarked on an aggressive international expansion plan, and currently has 80 stores outside the Philippines-USA (26), Vietnam (32), Brunei (11), Jeddah (7), Qatar, Hong Kong, and Kuwait (1 each), firmly establishing itself as a growing international QSR player.

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Values, Mission, Vision

Values

Customer Focus, Excellence, Respect for the

Individual, Teamwork Spirit of Family and Fun,

Humility to Listen and Learn, Honesty and

Integrity, Frugality

Mission

To serve great tasting

food, bringing the joy of

eating to everyone

Vision

We are the best tasting QSR...

The most endearing brand…

that has ever been…

We will lead in product taste

at all times…

We will provide FSC

excellence in every

encounter…

Happiness in every moment…

By year 2020, with over 4,000

stores worldwide, Jollibee is

truly a GLOBAL BRAND. (and

the Filipino will be admired

worldwide)

Organizational Analysis

JFC was founded by Chinese-Filipino Mr. Tony Tan Caktiong (TTC) as the ice-cream parlour at Cubao City in 1975. Gradually, it grew up to a reasonably large fast food chain in Philippines. Further, JFC started scouting avenues for expansion internationally. Thus it opened its franchises in countries like U.S.A., Brunei, Hong Kong, Guam, Middle East, etc.

A fast food restaurant or Rapid Service Eatery (RSE) has the following 3 characteristics. 1. It is characterized by its fast food cuisine and nominal table service.

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Great tasting products

and quality systems.

Jollibee’s growth is due to its delicious menu line-up – like its superior-tasting Chickenjoy, mouth-watering Yumburger and Champ hamburger, and

deliciously satisfying Jollibee Spaghetti-ably complemented with creative marketing programs, and efficient manufacturing and logistics facilities. It is made possible by well-trained teams that work in a culture of integrity and humility, fun and family-like. Every Jollibee outlet welcomes

customers with a clean and warm in-store environment and friendly and efficient service.

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2. It offers limited menu, cooked in bulk in advance, kept hot, finished, packaged to order, and available to take-out, drive-thru, and dine-in.

3. It is usually a part of a chain or franchise operation, which supplies standardized ingredients and/or partially prepared foods and provisions to each restaurant through controlled supply channels.

Ethical Responsibility

Jollibee Foundation is the corporate social responsibility arm of the Jollibee Foods Corporation. It is a nonstock, non-profit organization certified under PCNC (Philippine Council for NGO Certification).

Annually, the JFC Family (Jollibee, Chowking, Greenwich, Red Ribbon, Delifrance, Manong Pepe, Yonghe King and Hongzhuangyan) allocates 1% of its net profits to the Foundation to fund its work in all areas: from community and leadership development, to scholarships and feeding programs, even relief aid during disasters.

As the corporation grew, so did its potential for reaching more people. With this realization, Jollibee Foundation was established in December 2004 to make giving back an organized corporate commitment. Its mission is to invest in people and help them succeed in the way Jollibee knows how. This meant taking the values, the system, the tools, and the years of experience that made Jollibee what it is today and sharing it with the people they most ascribe their successes to the everyday Filipino.

Selected company’s current globalization and environmental sustainability policies

In Global segment, products of global quality with local features and local soul at less than global prices are offered. In local segment, local products with local features at local prices are offered.

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SWOT Analysis

Strengths

a. Jollibee was a regional industry leader that had experienced professionals as chief executives of the organization.

b. Proven past performance made dealings with prospective partners easier.

c. Wide variety of products offered in diverse markets.

Weaknesses

a. Lacked more effective marketing skills as growth revenues decreased.

b. Lack on in-depth planning and research in the expansion to foreign markets.

c. Poor co-ordination between the national and international units.

Opportunities

a. The promising nature of international markets and also the available potential due to the migration of Filipinos in certain countries.

b. Being an agricultural country, full integration in sourcing raw materials could be done.

c. For international markets, locating commissaries in the same country through joint ventures could be a potential source of success for the company. Jollibee could facilitate the technology provision while the partner could formulate the appropriate modus operandi to sell in the foreign market.

d. For the local market, an increase in the number of commissaries could easily reduce the transportation costs and the duration of shipments. This would allow the company to concentrate on the quality of products.

Threats

a. Competition from both international companies and other local eateries.

b. Political instability in the country threatened JFC as it could hamper the opportunities to convince international investors and country leaders to allow a JFC entry in their country.

c. Driving Forces

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Competitive and Cooperative strategies

Analysis of Tony Kitchner's Strategy

• First mover advantage - Jollibee was the first to enter the market.

In 1994 Tony Kitchner was hired to head the International Division. He was successful over his three years. He was successful in creating wealth and increasing the presence in countries that had less or no competition. During his time the total number of stores increased 65% to 205 from the end of 1993 to the end of 1996. Moreover, the total sales increased over 94.5% over the same period these increases are dramatic. Very few companies can experience rapid growth like this. He always had the idea to be the first -mover into untapped markets as he believed that although you may incur losses in the initial years, which can be cross subsidized from Philippines operation, the company will be able to restrict the entry of its competitors. But these do not show the whole picture of his strategy implementation. There were instances of shutdown of stores due to mounting losses the chaotic strategy of investments unsupported by proper research failed costly for the company. His strategy of targeting expats had the risk of targeting a narrow segment. The lifestyle, tastes and preferences of the expats was also not considered during international expansion. Marketing Perspective

Jollibee was able to attain a competitive advantage in Philippines by doing following things: • Jollibee was the first to enter the market.

• Retaining tight control over operations management, which

• Allowing it to price below its competitor.

• Having the flexibility to cater to the tastes of its local consumers.

As Jollibee entered international markets, it faced new

challenges. The fast food industry is highly competitive and price wars and marketing innovations are seen frequently. The rivalry is also centred on the key success factors of the

industry, which are good food, good, service and reasonable pricing. Rivals are somewhat equal in capabilities and opportunities, thus making the competition stiffer. Internationally well-established

players like KFC and McDonalds had high brand values that

Jollibee found difficult to compete with. The threat of

substitute products is considerable. Local street food and high-end restaurants form two high-ends of a range of substitutes.

Potential entrants face entry barriers that will hinder them from entering the industry. These are the inability to gain access to technology and specialized know-how, brand preference and

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Jollibee

was able

to attain a

competitiv

e

advantage

in

Philippines

…

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customer loyalty, capital requirements, economies of scale, and strategically situated distribution channels.

Tony Kitchner was hired to build the global Jollibee brand with the dual goals of positioning Jollibee as an attractive partner, while generating resources for expansion. In order to become one of the top 10 fast food brands in the world. Kitchner implemented a two-part international strategy which comprised of targeting expats and planting the flag.

Financial Management Perspective

Jollibee's sales, net income, operating income, and royalties and franchise fees has been increasing rapidly for the period under study. The total number of stores increased 65% to 205 from the end of 1993 to the end of 1996. By 1996, sales had increased to 8.57 billion which translates to a market share of more than 50% among all hamburger fast food chains. Total assets increased over 230% in the same period. Moreover, operating income increased about 114% while net income increased over 100% during the same period. These increases are dramatic. Significantly Inventory decreased from about 11.5% in 1992 to just 7.5% in 96. This implies that less of the current assets were tied up inventory. During the same period the trade accounts receivables has increased from 8.4% in 1992 to 12.7% in 1996. Jollibee was able to compensate for this increase by corresponding increase in sales and hence this need not be a cause of concern.

On the other hand, all is not well with the financials of Jollibee. There was 28.9 million pesos of long-term debt outstanding at the end of year 1996. Cost of sales has increased each year with an increase of about 46% from the end of 95 to the end of 96. But during this same period, total sales only increased about 28.7%. This escalation in the cost of sales must be brought under control

Accounts payable and accrued expenses increased by about 156% from 94 to 96. In addition, earnings per share decreased 19% to 0.68 pesos per share from 94 to 96. Jollibee has debt and some financial instability; however, it is not something they can't overcome. They have 24 stores in foreign countries, which account for roughly $9 million in sales. This is an encouraging sign as far as Jollibee is concerned and they will be able to pay off their debts and loans.

One thing they should consider doing is slowing

down expansion. Jollibee should consider opening a

store and giving it time to grow and turn a profit

before it finances the opening of a new store.

Opening new stores requires a lot of financing. They must study markets to determine a location, buy furniture, purchase kitchen appliances, and train new managers and employees. Opening multiple stores at the same time will hurt the bottom line and will increase debt. It took McDonald's 20 years for their international operations to account for 50% of total sales. Also, they must reduce cost of sales. During the period under study the cost of sales has increased at a faster pace than the sales increase, which is not acceptable.

The company has good internal financial resources but a certain code should be maintained in the relationship with the franchisee. Also, the allocation of the financial resources needs 8

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to be done wisely and judiciously. This is where there has to be collaboration between the marketing and finance department. The feasibility (financial) of opening up a new

store needs to be studied before going ahead with the decision.

Operations Management Perspective

From the very beginning Jollibee Foods Corporation had focused on delivering quality food and service at an affordable cost to the customers. This had been possible only due to excellent operational control.

They enjoyed a dominant position in the fast food market in Philippines until McDonalds entered the market. To take on McDonalds, they focused on their main asset, their knowledge of taste and preferences of the local population. This strategy paid off initially but slowly McDonalds caught up. To maintain their market share and counter the growing popularity of McDonalds Big Mac sandwich they came up with their USP, a large hamburger named Champ which contained a wide hamburger patty as against Big Mac which had two small patties.

Once Jollibee Food Corporation was well established in Philippines, TTC's decision to expand overseas was a good bet. But due to their inexperience and wrong choice of partners they suffered losses in their initial foreign ventures. In Singapore there were too many partners thus hindering smooth operation. In Taiwan there were disputes over management of local operations. In a franchise arrangement standardization of operations is the most essential factor. But in this case the local partner was objecting to the presence of company employees.

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Product Design

PRODUCT DESIGN

Great products are the keys to success. To maximize the potential of success, many companies focus only on few products. However, most products have a limited and even predictable life cycle. This is the reason why companies constantly look for new product design, develop, and take to market. Despite of constant effort to introduce viable new products, many of it do not succeed.

Products may often refer to tangible goods, it also refers to offerings by service organizations. The objective of product decision is to develop and implement a product strategy that meets the demand of the marketplace with a competitive advantage.

Product Life Cycle

Products are born. They live and die. A product undergoes different phases from introduction, growth, maturity and lastly decline. It may be a matter of days, months or decades. In order for a product to be successful, product strategies must be based on its position in its life cycle. Introductory phase. Products in this stage are still being “fine-tuned” for the market. Unusual expenditures such as for research, product development, process modification and enhancement, and supplier development arises.

Growth phase. Products in this stage has begun to stabilize, and effective forecasting of capacity requirements is necessary.

Maturity phase. In this phase, products have its competitors. High volume, innovative production may be appropriate.

Decline phase. Products in this phase is considered ‘dying’. Product line could be sold or their production is terminated.

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Jollibee Product Life Cycle

1978-1992 Introductory Phase

Customers of Tony in Magnolia Ice Cream parlour suggested to add some hot snacks in the menu. The idea brought Tony to close the ice cream parlour and establish Jollibee which will serve hot hamburgers to customers. Later the menu expands to reach more market.

1979 - Jolly Spaghetti was introduced 1980 - Chickenjoy and French Fries 1982 - Palabok

1984 - Champ Hamburger

1985- Breakfast joys and Chunky Chicken Sandwich 1988 - Jolly Twirls

1990 - Jolly Hotdog and Peach Mango Pie 1991- Pancake and Jolly meals

1992 - Fruit flavoured ice creams

At present, Jollibee still introduces new products like the ‘Sweet n’ Spicy Burger Steak’ however it is more of a competitive strategy against the ‘Italian Chicken Fillet’ of McDonalds.

1993 - 2000 Growth Stage

During these years, product design begun to stabilize. Jollibee added capacity through adding more store around Philippines

1994 - 148 local stores 1995 - 168 local stores 1996 - 208 local stores 1998 - 300 local stores 2000 - 400 local stores

2001 - Present Maturity Phase

Competitors like McDonalds and KFC also begun to establish popularity and demand in the Philippines. At the beginning of the new millennium, McDonalds market share slowly increases from 14% to 20%. However, Jollibee was able to secure additional market share of 10% from previous numbers (1992) of 50% (end of 2013)

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Product Design

Product Development

Quality Function Development (QFD) a process for determining customer requirements (customer “wants”) and translating them into the attributes (the “how’s”) that each area can understand and act on. QFD is used early in the design process to help determine what will satisfy the customer and where to deploy quality efforts.

One of the QFD tools is the house of quality. It is used in defining the relationship between customer desires and product. To build a house of quality, we need to follow seven basic steps: · Identify customers’ wants

· Identify how the goods/service will satisfy customer wants

· Relate customer wants with product how’s. · Identify relationships between the firm’s

how’s

· Develop importance ratings · Evaluate competing products

· Determine the desirable technical attributes, your performance, and the competitor’s performance against these attributes.

·

· Organizing for product development

· Product development are charged with the responsibility of moving from market requirements for a product to achieving a product success. This is usually composed of representative from marketing, purchasing, quality assurance, and often field service personnel. They need to ensure product success such as marketability, manufacturability and serviceability. They are organized in different ways such as: · The traditional U.S. approach. An approach wherein the organization is subdivided

into distinct departments (e.g. R&D, Engineering, Manufacturing Engineering, and Product department)

· Assign a product manager to “champion” the product through the product development system and related organizations

· The use of teams such as product development teams, design for manufacturability teams, and value engineering teams.

· The Japanese approach wherein they bypass the team issue by not subdividing organizations into different departments.

· Aside from organizing teams, other considerations are also important to the design of a product. They are as follows:

· Robust design. A design that can be produced to requirements even with unfavourable conditions in the production process.

· Modular design. A design in which parts or components of a product are subdivided into modules that are easily interchanged or replaced.

· Computer aided design (CAD) and Computer Aided Manufacturing (CAM). CAD is the use of computers to interactively design products and prepare engineering

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documentation. On the other hand, CAM refers to the use of specialized computer programs to direct and control manufacturing equipment.

· Virtual Reality Technology. This is a visual form of communication in which images substitute for reality and typically allow the user to respond interactively

· Value Analysis. A review of successful products that takes place during the production process.

· Sustainability and Life Cycle Assessment. This is use to evaluate product options. · After developing the product, next question would be, when will we produce the

product? This move is known as ‘transition to production’.

· How Jollibee products are designed?

· According to Mr. Tony Tan Caktiong

· "The family members would discuss what new products would like, and without much marketing we bring something out-like spaghetti. But now, there’s a formal structure. There’s a big Research and Development (R&D) department and a marketing department. The marketing gets inputs from customers and the products they like, and then communicate that to R&D. R&D then develops it. We have an internal taste panel that taste the food and comment on it, and when formulation is needed they do it. The next step is a customer panel test. We have the product taste-tested by customers, and if it’s okay, we test the product in a few stores. Before it was easy, but now it takes 3 to 6 months to roll out a new product. Another time-consuming process is training our people on how to prepare and serve the new product."

· How Jollibee products are made?

· Jollibee like other fast food chains use modular design in creating products. Branches cooks are trained to make products according to a standard recipe. Similar ingredients were also provided by the Jollibee corporation to ensure one quality.

· (Fries were fried under 175 C for 2-3 minutes)

· (A standard weight for fries depending on customer order)

· (After products are made, they are stored on a heated landing pad until they are served to customer)

· Product Development Continuum

· Often, the first company into production may have its product adopted for use in a variety of applications that will generate sales for years. It may become the “standard”. Competition based on time or developing product faster than the competitors is so important, a number of strategy is used.

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Product Design

· Internal Development Strategy

· Enhancements. This is the use of organization’s existing product strengths for innovations. It may be a change in size, weight, or features.

· Migrations. This is the use of advantage of a product to another product. · New internally developed products.

· External Development Strategy

· Purchasing Technology by Acquiring a firm. This is the process of acquiring a firm who have already developed technology that fits the need of the firm.

· Joint Venture. The process of establishing joint ownership to pursue new products or markets.

· Alliances. This is a way of having cooperative agreements that allow firms to remain independent, but pursue strategies consistent with their individual missions.

· Defining a Product

· A good or service is defined in terms of its functions- that is what it is to do. The product is designed.

· Ways of defining a product.

1. Engineering Drawing. This the way of defining a product through a drawing. The dimensions, tolerances, materials, and finishes of a component is shown.

2. Bill of material. This is a list of hierarchy of components, their description, and the quantity of each required to make one unit of a product.

· Documents for Production

· Some of these are:

1. Assembly Drawing. An exploded view of the product.

2. Assembly Chart. A graphic means of identifying how components flow into subassemblies and final products.

3. Route Sheet. A listing of the operations necessary to produce a component with the material specified in the bill of material.

4. Work order. An instruction to make a given quantity of a particular item.

5. Engineering Change Notice (ECN). A correction or modification of an engineering drawing or bill of material.

6. 7. Service Design

8. Aside from tangible products, services in banking, finance, insurance, transportation and communications are also designed to meet unique customers’ specifications.

9. A popular technique use is the Process-Chain-Network (PCN) Analysis. PCN is developed by Professor Scott Sampson. It is an analysis that focus on the ways in which

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processes can be designed to optimize interaction between firms and their customers. It analyses process chain or the sequence of steps that accomplish an activity.

10. Through analysing the process chain, we will know the process inefficiencies and the ways to solve it. Some of these solutions are:

1. Limit the options 2. Delay customization 3. Modularization 4. Automation

5. Moment of truth or the moment that exemplifies, enhances, or detracts from the customer’s expectations.

11. Jollibee’s Service Design

12. Jollibee just not make and sell their food but also provide quality services.

13. High customer interaction happens in the counter. First line employees both serve and make collections in this area. Customer’s order should be assembled at the fastest time possible (it usually takes one and half minute to two). Greeting the customer with a smile is must for every employee.

14. Jollibee also does survey to track customer satisfaction to its service and products. They ask customers to answer some questions regarding their customer experience by shading a scannable questionnaire.

15. Jollibee’s growth is due to its delicious menu line-up – like its superior-tasting Chickenjoy, mouth-watering Yumburger and Champ hamburger, and deliciously satisfying Jollibee Spaghetti -ably complemented with creative marketing programs, and efficient manufacturing and logistics facilities. It is made possible by well-trained teams that work in a culture of integrity and humility, fun and family-like. Every Jollibee outlet welcomes customers with a clean and warm in-store environment and friendly and efficient service.

16. And it is this tried and tested formula of delivering great-tasting food, adherence to world class operating standards and the universal appeal of the family values the brand represents that are driving the expansion of Jollibee both locally and in the overseas market.

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Process Design

17. PROCESS DESIGN

18. Four Process Strategies

19. A process or transformation strategy is an organization's approach to transform resources into goods and services. These goods or services are organized around a specific activity or process.

20. Every organization will have one of the four process strategies:

21. Process focus

22. The process focuses on low volume; high variety products are also called job shop. These facilities are process focus in terms of equipment, layout, and supervision.

23. Advantages of this strategy includes: · Greater product flexibility

· More general purpose equipment · Lower initial capital investment

24. Disadvantages, on the other hand, includes:

· High variable cost per unit · More highly trained personnel · More difficult production planning

25. Repetitive focus

26. This falls between the product and process focus. The repetitive process is a product-oriented production process that uses modules. Modules are parts or components of a product previously manufactured or prepared, often in a continuous process. Fast-food firms are an example of repetitive process using modules.

27. Considerations in using this method includes: · More structured than process focused

· Less structured than product focused. Enables quasi-customization

· Using modules (it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model)

28. Product focus

29. Product focus, are high volume, low variety processes; also called continuous processes. Products such as light bulbs, rolls of paper, beer, and bolts are examples of product process. This type of facility requires a high fixed cost, but low costs. The reward is high facility utilization.

30. Advantages:

· Lower variable cost per unit

· Lower but more specialized labor skills

· Easier production planning and control

· Higher equipment utilization

31. Disadvantages:

· Lower product flexibility · More specialized equipment · Higher capital investment 32.

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34. ·

35. Mass Customization Focus

36. Rapid low-cost production that caters to constantly changing unique customer desires. This strategy is very hard to achieve.

37. Production Technology

38. The following help enhance the production of both manufacturing and service industries: 39. Machine Technology. This uses

computer numerical control (CNC) which is machinery with its own computer and memory.

40. AISs & RFID. Automatic Identification System is a system for transforming data into electronic form, for example, bar codes. Radio Frequency Identification is a wireless system in which integrated circuits with antennas send radio waves.

41. Robots. These are flexible machines with the ability to hold, move, or grab items. It functions through electronic impulses that activate motors and switches.

42. Automated Storage and Retrieval Systems (ASRSs). These are computer-controlled warehouses that provide for the automatic placement of parts into and from designated places in a warehouse.

43. Process Control. It is the use of information technology to control a physical process.

44. Automated Guided Vehicles (AGVs). These are electronically guided and controlled cart used to move materials.

45. Flexible Manufacturing Systems (FMSs). These are systems that use electronic signals from a centralized computer to automate production and material flow.

46. Vision Systems. These are systems that use video cameras and computer technology in inspection roles.

47. Computer-Integrated Manufacturing (CIM). This is a manufacturing system in which CAD, FMS, inventory control, warehousing, and shipping are integrated.

48. Process Analysis and Design

Process Analysis and Design is a systematic approach to improve our understanding of the business processes of an organization to assist in the realization of tangible benefits such as cost reduction, process efficiency, and effective human resource allocation.

Flow Diagrams

Flow Diagrams are a schematic or drawing of the movement of material, product, or people. These are quick ways to view the big picture and try to make sense of the entire system.

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Process Design

Time-Function Mapping

Time-Function Mapping is a process in a flow diagram with time added on the horizontal axis. This tool is also called process mapping. The nodes indicate the activities and the arrows indicate the flow direction, with time on the horizontal axis. This type of analysis allows users to identify and eliminate waste such as extra steps, duplication, and delay. Time-function mapping adds some rigor and time element

Value-Stream Mapping

Value-Stream Mapping (VSM) is a variation of time-function mapping; however, value-stream mapping takes an expanded look at where value is added (and not added) in the entire production process, including the supply chain. The idea is to start with the customer and understand the production process, but value-stream mapping extends the analysis back to suppliers. Value-stream mapping extends beyond the immediate organization to consumer and suppliers.

Process Charts

Process Charts use symbols, time, and distance to provide an objective and structured way to analyse and record the activities that make up a process. These charts allow focusing on value-added activities. Process charts are designed to provide a much more detailed view of the process, adding items such as value-added time, delay, distance, storage, and so forth.

Service Blueprinting

Service Blueprinting is a tool used in manufacturing products with a high service content. This process focuses on the consumer and the provider's interaction with the consumer. Each process analysis tool has its strengths and variations.

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Process Design of Jollibee

Jollibee has a commissary system which includes production lines for the following: · Frozen Patty Line

· Sauce Line

· Meat Processing Line · Pie-Line

· Dry Blending Line · Bakery Line · Marination Line · Shanghai Line

· Meat and Vegetable Preparation Line

·

· The following are some of the process flow of Jollibee’s production line: ·

· Service Design of Jollibee

· Service design is a form of conceptual design that involves the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between the service provider and its customers. Service design may function as a way to inform changes to an existing service or create a new service entirely. The purpose of service design methodologies is to establish best practices for designing services according to both the needs of customers and the competencies and capabilities of service providers.

· In order for a business to gain competitive advantage through service design, it must develop a service that is user-centered and holistic, meaning the users/customers are the top priority and the service itself must be satisfactory. For example, since Jollibee’s target market is the Filipino families, the foods that it serves have a kick of the Filipino tradition. Sweet Jolly Spaghetti, crispy and juicy fried chicken, palabok, halo-halo sundae and the adobo flakes burger.

· Counter

· (Maximum of 90 seconds) · Greeting the customer

· Receiving and placing of orders · Process payment

· Preparation of Orders

· (Maximum of 1 minute)

· Jollibee employed short-order cooks, who specialized in making food that didn't require a lot of preparation time.

· It has different stations to maximize time

· A very large grill where one person could cook lots of burgers simultaneously · A dressing station where people added the same condiments to every burger

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Process Design

· A fryer where one person made French fries

· A soda fountain and milkshake machine for desserts and beverages, etc. ·

· Here is some information about the food preparation of Jollibee.

· Fries

· Cooking time: 3 minutes

· It is cooked even before the order is placed.

· The fry person ensures that there are enough cooked fries for the customers

· Spaghetti and Palabok

· The pasta is cooked ahead and then reheated when the orders are placed. · Sauces are pre-made.

· Burger

· Cooking time: 6 minutes · Burger patties are pre-cooked.

· Buns are heated and the burger is assembled only when the orders are placed. · Same process goes with the burger steak.

· Chicken

· Different cuts of chicken are breaded. · Cooked even before the orders are placed.

· After the orders are prepared, receipts are given to the customers together with a jolly “thank you”.

· Since Jollibee is a fast-food chain, food must be served quickly. In this part, the help of modules comes in. modules are set of standardized parts that can be used to construct a more complex structure. For example, Jollibee’s burger patty can be considered a module. If you put it between buns and add some dressing, you will have a Yumburger. If you top it off with gravy, you will have burger steak. And so on. Also Jollibee pre-made food bundles to serve its customers faster.

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· Process Strategy Used

· Jollibee uses repetitive focus. This strategy allows services to be designed as standard modular entities. Modular flexibility lets the customers buy meals on a unit-and-match (modular) basis. For example, a variety of burger products is being offered and listed in the menu such as patties, cheeseburger, etc. Thus each food in the menu provides a variety of specifications.

· In addition, a service blueprint is used to provide guidance on how a service will be provided, In Jollibee, every move must be in accordance to the specific job assigned to employees. The service document contains the procedures on how the check-out clerk may entertain its customers, the polite words that he will execute to them, the proper ways how the waiter do its jobs, procedures for janitors in cleaning the table as the customers left. This ensures that the right service is being provided to customers.

· By using this strategy, Jollibee was able to obtain the

cost advantage of the product-focused model.

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Location Decisions

· LOCATION DECISIONS

· Being in the right location is a key ingredient in business success. If a company selects the appropriate location, it may have adequate access to customers, workers, transportation, materials, and so on. Location plays a significant role in a company's profit and overall success. A location strategy is a plan for obtaining the best possible location for a company by identifying company needs and objectives, and searching for locations with offerings that are compatible with these needs and objectives. Generally, this means the firm will attempt to maximize opportunity while minimizing costs and risks.

· There are many factors that affect location decisions some of them are:

· Logistics. Logistics evaluation is the appraisal of the transportation options and costs for the prospective manufacturing and warehousing facilities.

· Labor. Labor analysis determines whether prospective locations can meet a company's labour needs given its short-term and long-term goals.

· Community and site. Community and site evaluation involves examining whether a company and a prospective community and site will be compatible in the long-term. · Trade zones. Companies may want to consider the benefits offered by free-trade zones,

which are closed facilities monitored by customs services where goods can be brought without the usual customs requirements.

· Political risk. Companies considering expanding into other countries must take political risk into consideration when developing a location strategy. Since some countries have unstable political environments, companies must be prepared for turmoil if they plan long-term operations in such countries.

· Governmental regulation. Companies also may face government barriers and heavy restrictions and regulation if they intend to expand into other countries. Therefore, companies must examine governmental—as well as cultural—obstacles in other countries when developing location strategies.

· Jollibee Outlets

· Service businesses generally must maintain a number of sites to remain close to customers, the location selected should be close to the targeted segment of the market. The market can also influence the number of new locations, as well as their size and features.

· A simple technique for determining service locations is to establish a set of minimum criteria for opening new outlets. These criteria should be developed so that the locations selected have strong chances of success. For example, a company could assess the potential of prospective locations based on primary criteria such as:

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· The annual per capita income should be more than P250, 000.

· Proximity to Markets

· Since Jollibee is an entity that provides service. It is safe to say that its stores are located close to customers because it is one of the keys to increase sales and promote the business itself.

· To illustrate the proximity of Jollibee to market, the picture above is the Jollibee Pasig Simbahan branch.

· The table below will show us information about the place that surrounds it.

· Given the information, we can conclude that the location of Jollibee-Pasig Simbahan can contribute to increase its sales due to the population or community that surrounds it.

· Proximity to Competitors

· Close proximity with competitors can ignite a head-to-head battle for competitive advantage. However, it's more likely that being near competitors can bring advantages to a business.

· Many experts agree that the best place to locate a business is to be as close to your biggest competitor because your competitors chose their locations based on the ideal demographics of a particular area. In many cases, they've also devoted large portions of their advertising budget toward driving traffic to their locations. So, why spend the money when they've already spent it for you?

· Of course, it's still a good idea to make your own evaluations of a particular property, even if your competitors seem to be thriving in the area. Staying ahead of the game in this regard will help your business grow should you decide.

· That’s why, Jollibee locates itself near its competitors like McDonald’s, or either way because clustering also stimulates sales.

· Jollibee and McDonald's in Lemery, Batangas. The distance between the two is 40 meters.

· Proximity to Suppliers

· Firms locate near their raw materials and suppliers because of perishability, transportation cost or bulk.

· Some Jollibee stores which are far from suppliers located themselves in places where the means of transpiration are accessible in order to minimize transportation cost. · Commissaries

· Jollibee has three commissary system sites: Santolan, Pasig City; Mandaue City, Cebu; and the central site in Canlubang, Laguna. The System, which operates 24/7, manages Jollibee’s total supply chain process.

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· Zenith Foods Corporation, Laguna

· It is located in Carmelray Industrial Park 1, Canlubang, Calamba, Laguna.

· Zenith Foods Corporation, Cebu

· It is located at G. Ouano St, Cabancalan, Mandaue City, Cebu. It is responsible for the supply of Jollibee outlets in Visayas and Mindanao. It is located near ports and airport. Its strategic location makes the transportation of goods easy resulting to the minimization of transportation cost.

· Pasig City Commissary

· It is located in Santolan, Pasig City.

· The common denominator of Jollibee’s commissaries is their location. They are all situated in industrial zones. Industrial zone is a portion of a city that is zoned for industrial use (as opposed to residential or commercial use). Industrial zone may contain ports, warehouses, distribution centers, chemical plants, plastics manufacturers, airports, food and beverage processor etc.

· Jollibee chose to place its three commissaries in industrial zones because these provide advantages such as:

· Tax exemptions (No VAT for land acquisitions and other exemptions depending on the policy of the municipality)

· Low water, natural gas, and telecommunication costs · Import and export documentation

· Access to roads

· International Expansion

· Jollibee outlets outside the Philippines are located in country with large population of Filipinos like in United States, Taiwan, Singapore and Indonesia. Locating near the Filipino community gives them the advantage to increase sales. This is the most beneficial factor of the firm in the international scene. However, location is not the only thing that affects the success of the globalization of Jollibee there are cultural differences, laws, etc.

· Location Evaluation Method

· The place where the stores are to be located is based on the likings of the franchisee or based on the criteria formulated by the management. Commissaries, on the other hand, require the use of models because they involve deliveries and other tasks that are costly. There are four methods that can be used to solve location problems namely:

· Locational cost-profit-volume analysis

· a method of determining the volume of production where a company breaks even with costs and profits. This method takes into account both variable and fixed factors that

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influence the overall production costs. CPV uses a linear formula that recognizes total costs equal to fixed costs plus variable costs.

· Center of Gravity Method

· The center of gravity method is useful for identifying an individual location by considering existing locations, the distances between them, and the volume of products to be shipped. Companies use this method mostly for locating distribution warehouses. To use this technique, companies plot their existing locations on a grid with a coordinate system (the particular coordinate system used does not matter). The idea behind this technique is to identify the relative distances between locations. After the existing locations are placed on the grid, the center of gravity is determined by calculating the X and Y coordinates that would have the lowest transportation costs. · This seeks to compute geographic coordinates for a potential single new facility that

will minimize costs. It’s an approach where the main inputs that it considers are the following:

· Markets

· Volume of goods shipped · Shipping costs

· This method is beneficial because it’s (1) simple to compute, (2) considers existing facilities, (3) and minimizes costs.

· Factor-rating systems

· Factor-rating systems are among the most commonly used techniques for choosing a location, because they analyse diverse factors in an easily comprehensible manner. Factor-rating systems simply consist of a weighted list of the factors a company considers the most important and a range of values for each factor. A company can rate each site with a value from the range based on the costs and benefits offered by the alternative locations, and multiply this value by the appropriate weight. These numbers are then summed to get an overall "factor rating." Then a company can compare the overall ratings of alternative sites. This technique enables a company to choose a location systematically based on the best rating.

· Linear Programming

· Linear programming provides a method for evaluating the cost of prospective locations within a production/distribution network. This technique uses a matrix of production facilities and warehouses that shows the unit shipping costs from a manufacturing location designated by a variable, such as X, to prospective destinations, such as warehouses designated by other variables— E, F, and G —and the total number of goods the prospective manufacturer, X, could produce. Other prospective manufacturing locations and the same information for each are also included in the matrix. After computing the total costs for each prospective location, a company can

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determine which one has lower total costs in terms of the entire production/distribution network.

·

· The most applicable method for Jollibee commissaries is the factor rating method since it is the management that assigns subjective scores for each criterion. They can assign the weight depending on the importance of a certain criterion.

·

· FACTOR WEIGHT Region 8 Region 7

· RATING FACTOR

· RATING RATING FACTOR RATING

· Energy Availability 30% 60 18 80 24 · Labor Availability 20% 80 16 80 16 · Transportation Cost20% 90 18 90 18

· Supplies 10% 80 8 70 7

· Infrastructure Cost 10% 70 7 60 6

· Taxes and Regulations 10% 70 7 70 7

· Total 100% 370 74 450 78

·

· For example, as shown in the table, Jollibee must choose to build its commissary in Region 7 since it got the highest factor rating.

· Consequently, Jollibee may also use the transportation model to find the routes of deliveries that will cost them the least.

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· LAYOUT DECISIONS

·

· Layout decisions is defined as the best placement of machines, offices and desks or service centers that could facilitate the flow of materials, people, and information with a specified area.

· Layout decisions are strategic for it determines the long-run efficiency of operations. It must be aligned with other strategy relating to capacity, processes, flexibility and cost. · The objective of layout strategy is to develop an effective and efficient layout that will

meet the firm’s competitive requirements. ·

· In all cases, layout design must consider how to achieve the following: · Higher utilization of space, equipment, and people

· Improved flow of information, materials, and people · Improved employee morale and safer working conditions · Improved customer/client interaction

· Flexibility ·

· Types of Layout ·

· Office Layout

· This type of layout requires the grouping of workers, their equipment and spaces to provide for comfort, safety, and movement of information. It places a great importance on the flow of information. There are two types of office layout: the cellular and open-plan.

· Allstate Insurance uses cellular office layout though it does not have separating walls but wide aisle separates each worker.

· Microsoft offices were usually described as ‘town’ rather than headquarters. Its offices are designed not to just stimulate the creativeness of employees but also to encourage teamwork. However, Microsoft offices do not have fixed desks in other words it uses open-plan layout. They do have movable chairs and tables with touch screen computers. This also helps them to test the flexibility of their products.

· Open Office Layout

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Layout Decisions

· Creates community and builds camaraderie · Stimulates creativity

· Less furniture, less costs · Disadvantages:

· Lack of privacy · Too much noise

· Distractions from colleagues

· Cell office Layout

· Advantages:

· Confidentiality between employees · Focus on each work

· Distinct rankings and motivations · Little gossips

·

· Disadvantages: · Consumes huge space

· Ineffective communications due to walls or wide aisle · Equipment cannot be shared

· Costlier than the open-plan office layout

· Managers use relationship chart to analyse both electronic and conventional communication patterns, separation needs, and other conditions affecting employee effectiveness.

· Retail Layout

· This is based on the idea that sales and profitability vary directly with customer exposure to products. It addresses flow, allocates space, and responds to customer behaviour

· Five ideas that is helpful for determining the overall arrangement of many stores: · Locate the high-draw items around the periphery of the store.

· Use prominent locations for high-impulse and high-margin items.

· Distribute what are known in the trade as “power items” to both sides of an aisle and disperse them.

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· Convey the mission of the store by carefully selecting the position of the lead-off department.

· Some of the types of retail layout are:

· Grid type

· uses the length and width of the area to create clear aisle and facilitate self-service shopping. This is common to grocery stores.

· Free flow pattern

· uses a variety of fixtures to create a relaxed, unbalanced floor layout. It sacrifices selling space to create atmosphere. It also encourages browsing and unplanned purchases. This is common to high-end product stores.

· This two types could be combined to suit to the style of products and shopping behaviour of customers.

· The main objective of retail layout is to maximize profitability per square foot of floor space.

· Aside from the retail layout of the store, the managers also take into consideration the servicescape or the physical surrounding of the store in which the service is delivered and hoe this affects not just the customers but also the employees. Elements such as: a). ambient condition, b). spatial layout and functionality and c). signs, symbols and artefacts are considered.

· For example, is the Walgreens stores located in Chicago. It installed new linear fluorescent fixtures in its stores which resulted to more vivid and vibrant colours in the store. It also reduced the chain’s energy budget. The store also plays music to enlighten the mood of customers and employees.

· Warehouse Layout

· The objective of warehouse layout is to find the optimum trade-off between handling cost and costs associated with warehouse space. This design attempts to minimize total cost by addressing trade-offs between space and material handling.

· Its advantages are:

· Minimizes the resources spent on finding and moving material · Reduces the deterioration and damage to the material itself

· While its disadvantage is it could be costly for it needs wide area and well-maintained tracking software.

· Fixed-Position Layout

· ·

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Layout Decisions

· This addresses the layout requirements of stationary projects or the projects that remains in one place and workers and equipment come to that one work area. This is usually use in companies involved in shipbuilding and aircraft assembly.

· The advantage of this type of layout are: · Material movement is reduced

· Promotes pride and quality because an individual can complete the whole job

· Highly flexible: can accommodate changes in product design, product mix and production volume

· While its disadvantages are:

· May result in increased space and greater work in process · Requires greater skill for personnel

· Personnel and equipment movement is increased

· Requires close control and coordination in production and personnel scheduling

· Process-Oriented Layout

· This layout deals with low-volume, high variety production in which like machines and equipment are grouped together. This is commonly seen in hospitals or clinics. A product or small order is produced by moving it from one department to another in the sequence required for that product.

· A big advantage of process-oriented is its flexibility in equipment and Labor assignments. It is also good for handling the manufacture of parts in small batches and for the production of a wide variety of parts in different sizes or forms.

· The disadvantage of process-oriented layout come from the general-purpose use of the equipment. The general-purpose equipment requires high labour skills and work-in-process inventories are higher because of imbalances in the production work-in-process.

· Work Cell Layout

· This type of layout reorganizes people and machines that would ordinarily be dispersed in various departments into a group so that they can focus on making a single product or a group of related products

· The advantages of work cells are: · Reduced work-in-process inventory · less floor space

· Reduced raw material and finished goods inventories · Reduced direct labour cost

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· Increased equipment and machinery utilization · Reduced investment in machinery and equipment · While its disadvantages are:

· Poorly balanced cells

· Expanded training and scheduling of workers · Increased capital investment

· A work balance chart is also valuable for evaluating the operation times in work cell.

· Repetitive and Product-Oriented Layout

· Repetitive production and continuous production use product layouts.

· There are two types of a product-oriented layout are fabrication and assembly line. The fabrication line builds components on a series of machines while an assembly line puts the fabricated parts together at a series of workstations.

· The objective of the product-oriented layout is to minimize imbalance in the fabrication or assembly line.

· The main advantage of this layout are:

· The low variable cost per unit usually associated with high volume, standardized products

· Low material-handling costs

· Reduced work-in-process inventories · Easier training and supervision · Rapid throughput

· The disadvantages of this layout are:

· The high volume required because of the large investment needed to establish the process

· Work stoppage at any one point can tie up the whole operation

· The process flexibility necessary for a variety of products and production rates can be a challenge

· Fast food chains like Jollibee uses this type of layout (Repetitive and Product-Oriented Layout). Jollibee produces high-volume, and low variety of products like burgers, spaghetti, fries, and Chickenjoy.

· Jollibee is the largest fast food chain in the Philippines, operating a nationwide network of more than 750 stores. A dominant market leader in the Philippines, Jollibee enjoys the lion’s share of the local market that is more than all the other multinational brands combined. The company has also embarked on an aggressive international

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Layout Decisions

expansion plan, and currently has 80 stores outside the Philippines-USA (26), Vietnam (32), Brunei (11), Jeddah (7), Qatar, Hong Kong, and Kuwait (1 each), firmly establishing itself as a growing international QSR player.

· A Jollibee chain serves food to hundreds of customers around the area each day. In order to meet these everyday demand, Jollibee invested in specialized equipment like deep fryers for fries and chickens (right) and the grilles for burger patties (left).

· (How Jollibee products were made is further discussed in Product Design) · Finished products are then transferred to these heated pantries.

· The first thing you see as you enter a Jollibee store is the counter. A wide space between the door and counter is provided to facilitate long lines of ordering customers. · Jollibee didn’t just invest in its kitchen for the efficiency of their production. Their

store’s overall layout also facilitates the customer needs after serving the product in the counter. Jollibee provides comfy chairs for alone and group of customers who dine-in. Lighting, cool temperature, wall designs and music were also incorporated to give ambient conditions not just for customers but also the employees.

· Jollibee also caters the need for food of travellers who mostly got stuck in traffic through their Drive-Thrus. Drive-Thrus make use of vacant area outside the store usually excess of parking space is converted into these making each space profitable. · Jollibee’s Layout strategy evidently conforms to its mission providing every customer

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· HUMAN RESOURCES

· A business process is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities with interleaving decision points or with a Process Matrix as a sequence of activities with relevance rules based on the data in the process.

· Business processes must include up-to-date and accurate Information reports to ensure effective action. An example of this is the availability of purchase order status reports for supplier delivery follow-up as described in the section on effectiveness above. There are numerous examples of this in every possible business process.

· Another example from production is the process of analysis of line rejections occurring on the shop floor. This process should include systematic periodical analysis of rejections by reason, and present the results in a suitable information report that pinpoints the major reasons, and trends in these reasons, for management to take corrective actions to control rejections and keep them within acceptable limits. Such a process of analysis and summarization of line rejection events is clearly superior to a process which merely inquire into each individual rejection as it occurs.

· Business process owners and operatives should realize that process improvement often occurs with introduction of appropriate transaction, operational, highlight, exception or M.I.S. reports, provided these are consciously used for day-to-day or periodical decision-making. With this understanding would hopefully come the willingness to invest time and other resources in business process improvement by introduction of useful and relevant reporting systems.

· Staffing Strategies

· The human resource management of a restaurant needs to do Person-Job-Fit in selecting individuals who have relevant qualifications to fill in any job vacancies. Research has demonstrated that complete and unambiguous specification of required competencies reduces the influence of racial and gender stereotypes.

· The Human Resource Department must have staffing strategies that emphasize on the characteristics of the employees, recruitment and selection process. In order to increase the level of customer satisfaction, it is very important for the Human Resource Department to hire employees who are proactive, have good communication skills and are alert. In addition to job specifications, HR Managers and supervisors use job descriptions to select employees and orient them to jobs. In a restaurant, there are two parts of management which are front-of-the-House management and back-of-the-House management. For the effectiveness of the operations and to meet the customer’s satisfaction, restaurants need to have a proactive and efficient front-of-the-House and Back-of-the-House Management. This is because various components of restaurant service quality function differently in terms of improving satisfaction and behavioural

JFC case study

TABLE OF CONTENTS

BACKGROUND OF THE COMPANY

JOLLIBEE FOODS CORPORATION

BACKGROUND

A dominant market

leader

in

the

Philippines,

Jollibee enjoys the lion’s share

of the local market that is

more than all the other

multinational brands

combined.

A company that values family.

Aside from promoting a family oriented work environment,

the brand’s values also reflect on their advertising and

marketing. Jollibee knows their target audience very well:

the traditional family and all communication materials

focus on the importance of family values, making Jollibee

the number one family fast food chain in the Philippines and

a growing international QSR player.

A Well-Loved Brand.

Great tasting products

and quality systems.

Widest store network in

the Philippines and an

emerging global player.

Values

Customer Focus, Excellence, Respect for the

Individual, Teamwork Spirit of Family and Fun,

Humility to Listen and Learn, Honesty and

Integrity, Frugality

Mission

To serve great tasting

food, bringing the joy of

eating to everyone

Vision

We are the best tasting QSR...

The most endearing brand…

that has ever been…

We will lead in product taste

at all times…

We will provide FSC

excellence in every

encounter…

Happiness in every moment…

By year 2020, with over 4,000

stores worldwide, Jollibee is

truly a GLOBAL BRAND. (and

the Filipino will be admired

worldwide)

Great tasting products

and quality systems.

Strengths

Weaknesses

Opportunities

Threats

Analysis of Tony Kitchner's Strategy

Jollibee

was able

to attain a

competitiv

e

advantage

in

Philippines

…

Financial Management Perspective

Operations Management Perspective

PRODUCT DESIGN

Jollibee Product Life Cycle

1978-1992 Introductory Phase

1993 - 2000 Growth Stage

2001 - Present Maturity Phase

·

Organizing for product development

·

How Jollibee products are designed?