1.

Background of the company

(Jilliene Duque)

 Founded in January 1978, 40 years

ago, by Tony Tan Caktiong
 Tony Tan Caktiong, is a Filipino
entrepreneur. Tan was born to
Chinese immigrant parents from
Fujian.
 Jollibee started as an ice cream
parlor in 1975 which was Magnolia Ice
Cream Parlor in Cubao, Quezon City,
it was considered as Jollibee’s first
outlet.
 The Magnolia outlets operated by the
Tan Caktiong clan began offering hot meals and sandwiches upon request from the
customers which the family found out to be more popular than the franchise's ice
cream.
 In 1978, the family decided to cancel the Magnolia franchise and converted the ice
cream parlors they operated into fast food outlets.
 In 1986, it opened its first store overseas in Taiwan and second store in 1987 which later
closed.
 Jollibee experienced rapid growth. It was able to withstand the entry of McDonald's in
the Philippines in 1981 by focusing on the specific tastes of the Filipino market, which
differed from the American fast food company.
 In 2011, JFC opened 260 new stores, of which 167 were in the Philippines led by Mang
Inasal and Jollibee. This brought the company's total number of stores to 2,001 as of the
end of December 2011. The same year, Jollibee closed Manong Pepe food chain in
favor of Mang Inasal, and sold Déli france to Café France.
 Overseas, Jollibee opened 93 stores, led by Yonghe King in China and Jollibee Vietnam.
 In 2013, Jollibee opened its first stores in Virginia Beach, Virginia, as well as in Houston,
Texas. Both locations were chosen for their strong Filipino presence.
 A location in the Chicago suburb of Skokie, Illinois opened up in July 2016.
 One year later, Jollibee opened its first Florida restaurant on March 18, 2017, located in
Jacksonville. Jollibee expanded into Canada in November 2017 by opening two
restaurants in the Toronto area.

2. Market Structure

(Jilliene Duque)

 Jollibee is a monopolistic competitive type of market in the Philippines because it has a large
number of competitors, it’s products are either heterogeneous/homogeneous. They heavily
advertise their products. Consumers supports Jollibee in their day –to –day lives.
 Jollibee is either a price setter and a price taker.
3. Number of Sellers

(Portia Bogaoan)

Since Jollibee is a fast food chain and fast food chains are patronized by many Filipinos, there
are definitely many buyers in this kind of business. As for the sellers, there are also many fast food
chains present in the Philippines, some of which are, Tokyo Tokyo, KFC, BonChon, etc. Jollibee’s
biggest competitor is Mc Donald’s since both of these companies offer similar product lines.
McDonald’s has Burger Mcdo while Jollibee has Yum Burger. McChicken for McDonald’s and
Chickenjoy for Jollibee. Happy Meal for McDonald’s and Jolly Kiddy Meal for Jollibee.

4. Product Differences

(Portia Bogaoan)

Many fast food chains are present in the Philippines, the food being served in these fast food
chains are similar to what Jollibee is serving. What made Jollibee different from others is that its
products are 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.
5. Price Setting

(Kate Alvarez)

Considering that JFC is a Monopolistic Competitive Firm, it is non-interdependent as to pricing

and quantity decision. This is because the Bargaining Power of Suppliers is low due to:
 Item is readily available from many suppliers
 Switching cost is low
 There is a surge in the availability of supplies
 High volume purchases are important to seller
 Integrated Backward threat
 And many more…

This is also the result of having Bargaining Power of Buyers in a medium level. Causal events
are:
• Buyers purchase the item in small quantities.
• Seller’s brand reputation is important to a buyer.
• A particular seller’s product delivers quality that is important to buyer.

Effectual events therefore include:

• Switching costs are not high (Medium)
• Quantity and quality of information are available to buyer improves
• Buyer have the ability to postpone purchase until later
• Integrate backward threat (Medium)

6. In and out of the Industry

(Kate Alvarez)

Within the industry, JFC is known for their KSF

• Quality Control Know-how
• High Labor Productivity
• Breadth of product line and product selection (Menu)
• A well-known brand
• Courteous, Personalized customer service
• Clever Advertising
• National and International Distribution capabilities
• Short-delivery time
• Supply-chain management
• Overall low-cost
• Convenient Locations

Outside the industry, JFC is still with the radar of the most competent companies, as it also
balances a good rapport with stock exchange transactions. As such JFC is well-known for the
quote “If you can’t beat ‘em, Buy them!”.
 As seen in the picture of the next page, their CEO told their stockholders the good
performance JFC has conducted.

Moreover, JFC also also is active in corporate social responsibility. They have such projects
like e Jollibee Group Foundation (JGF) and Busog, Lusog, Talino (BLT) School Feeding Program
covering more than 1,560 schools in 200 towns and cities across the country reaching more than
165,000 pupils since the program started in 2007.

PANACEA TO GUIDE QUESTIONS:

1. Is the chosen company under perfect competition? A monopolist? Under monopolistic

competition? Or an Oligopolistic firm? Describe.

Jollibee Foods Corporation (JFC) is a Monopolistic

Competitive Firm.

JFC is clearly one of the leading companies in the

fast food industry of the Philippines and there are
undoubtedly many firms that are not interdependent as
to price and quantity decisions. This is true even if JFC
seeks to find and depends on competitive pricing.

JFC’s number of buyers is many because domestic

market patronizes fast-food chains. This is tru even some
of the customers choose alternatives (Five Forces
Analysis: Threat of Substitute Products) but still some would prefer their differentiable products.
(Five Forces Analysis: Bargaining Power of Buyers: Medium)

Nevertheless, JFC faces minimal barriers of entry for a business as a hamburger industry and
market. Barriers include government regulations since this is a food industry and it is the national
government’s duty to protect its people, JFC is mandated to follow under the rules of the
government. Examples are the FSC Standards as shown below, and the current issue that the
company must follow the order of the state to declare numerous amounts of their employees as
permanent employees. (Five Forces Analysis: Threat of New Entrants: Medium)

Lastly, it is no doubt that JFC’s products having variations – those differentiable (Chickenjoy,
SpaghettingJabee, and Yumburger), and those non-differentiable (softdrinks, lumpia, and etc.),
leads us to a conclusion that Jollibee Foods Corporation is definitely a Monopolistic Competitive
Firm.

2. Are there many sellers and buyers of the good or service? Give examples of competitors.

There are undoubtedly, many sellers of food services but JFC was able to maintain
dominance in the industry setting of the Philippines, suggesting to us that there are but few firms
have interdependency as to pricing and quantity decision.

There are also definitely many buyers of the food service BUT buyers have the ability to
postpone purchase until later for JFC offers both differentiable and non-differentiable products
giving customers options still.

JFC’s notable competitors include companies handling McDonald’s, Goldilocks, and Pizza
Hut.

3. Are the products unique or with identical products being sold in the market? Are the
products sold in the market with close substitutes? Or are the products differentiated?

Many fast food chains are present in the Philippines, the food being served in these fast
food chains are similar to what Jollibee is serving. What made Jollibee different from others is
that its products are 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.

4. Is the firm a price maker or a price taker? How are the prices set in market? How are they
maximizing their profit?

JFC, industry wise, rely on the actions of other businesses. Strategic dependence occurs in the
fast food industry. JFC has a need to predict the nature and actions of other businesses such as
McDonald's and their other competitors so as to attain success.

JFC’s number of buyers is unspecified because some of the customers choose alternatives
(Five Forces Analysis: Threat of Substitute Products) but still some would prefer their differentiable
products by which we could render JFC passing another principle of Oligopoly. (Five Forces
Analysis: Bargaining Power of Buyers: Medium)
 That being said, JFC is either a price maker due to their bargaining purchase power being
nether and, a price maker because some of the customers choose alternatives (Five Forces
Analysis: Threat of Substitute Products) but still some would prefer their differentiable products at
some point in time.

JFC as their maximization of profit procedures include luring franchising agreements. This is
JFC’s tactic for their long-run average total cost to decline as more people buy franchises from
them. This tactic actually hits two birds with one stone – minimization of cost and expansion of firm
size.

5. Are there barriers to entry? Or firms can freely enter and exit the market?

JFC faces minimal barriers of entry for a business as a hamburger industry and market. Barriers
include government regulations since this is a food industry and it is the national government’s
duty to protect its people, JFC is mandated to follow under the rules of the government.
Examples are the FSC Standards as shown below, and the current issue that the company must
follow the order of the state to declare numerous amounts of their employees as permanent
employees. (Five Forces Analysis: Threat of New Entrants: Medium)

Another barrier of in this industry is the High Economies-of-Scale and not under the
diseconomies of scale because there is no diminishing marginal returns (Economics Principle
for which having too much of one resource and too little of the other can result in a resource
imbalance that decreases production capacity) possible at this moment of time. JFC prevents
the entry of newer businesses through their luring franchising agreements. This is JFC’s tactic for
their long-run average total cost to decline as more people buy franchises from them. This
tactic actually hits two birds with one stone – minimization of cost and expansion of firm size.

Sources:

Jollibee Foods Corporation (https://www.jollibee.com.ph/)

(Wikispaces, 2018) https://libbyaanoosterr.wikispaces.com/page/edit/Jollibee%27s+-

+An+Oligopoly.?goto=https%3A%2F%2Flibbyaanoosterr.wikispaces.com%2FJollibee%27s%2B-
%2BAn%2BOligopoly.