)ULLIBEE FUUDS

CURPURATIUN
INTERNATIUNAL
EXPANSIUN
IB CASE ANALYSIS
Submitteu To: Piof C.P Ravinuianathan

SU8MI11LD 8
Aastha adav(01)
Abh|rup Mukhopadhyay(02)
Ad|tya Mohan(04)
An|ket S|ngh Mahara(10)
D||eep M(31)
10]2S]2010




2

xlMLl8 CuM 8A1CP 13
LkLCU1IVL SUMMAk
!olllbee loods CorporaLlon a company whlch sLarLed as an lcecream parlor now has abouL 1804
sLores worldwlde under lLs aegls wlLh LoLal sales exceedlng $1 bllllon 1he company now wanLs Lo go
for dlverslflcaLlon and expanslon Lo lncrease lLs presence ln lnLernaLlonal markeLs and compeLe wlLh
global fasL food glanLs llke Mcuonalds and klC ln our analysls of Lhe case we have Laken lnLo
conslderaLlon all Lhe aspecLs needed for an organlzaLlon Lo work ln a frulLful way le llnance
MarkeLlng CperaLlons and Puman 8esource
under lLs belL Lhe company has many famous brands llke Chowklng Creenwlch 8ed 8lbbon and
Manong epes lnlLlally Lhe company wenL for expanslon by lnnovaLlng new producLs llke
?umburger" and Chlcken[oy" and also by acqulrlng companles llke Creenwlch plzza and Chowklng
As Lhe fasL food lndusLry ls hlghly compeLlLlve Lhey face sLlff compeLlLlon from already esLabllshed
players llke Mcuonalds and klC along wlLh Lhe sLreeL food LhaL ls of much slgnlflcance ln counLrles
llke apua new Culnea and Pong kong where lLs wanLs Lo expands 1o face Lhls compeLlLlon lL needs
Lo deslgn a sLraLegy LhaL glves lL an edge over Lhe compeLlLors Cne of Lhe ways can be
cusLomlzaLlon of menus so LhaL Lhe servlces provlded by !olllbee aLLracL Lhe cusLomers Lo lLs sLores
!olllbee has Lrled Lo do Lhls by maklng Lhe menu Lo sulL LasLes of Lhe people llvlng ln dlfferenL parLs
of Lhe world eg Lhey LargeLed Lhe llllplno expaLrlaLe populaLlon ln uS whlch ls ln blg number
Powever Lhey need Lo Lake care of a cerLaln facLors llke governmenL pollcles and Lhe sLablllLy of
pollLlcal sysLem ln a counLry Also lf Lhey can procure raw maLerlal aL cheaper raLes and do some
Lechnologlcal advancemenLs Lhen LhaL would glve Lhem an edge over Lhelr compeLlLors
8ecause of lncreaslng globallzaLlon and lmproved supply chaln !olllbee has been able Lo reduce lLs
cosL Also a Lrend has been LhaL Lhe cusLomers wanL Lo eaL dlfferenL food and noL repeaL and
!olllbee has an exclLlng new menu names and flavors Also Lhey have been able Lo lmplemenL laLesL
of Lhe Lechnologles for Lhe processlng and cooklng of Lhe food ln Lhe resLauranLs whlch has reduced
Lhe cosLs Lo qulLe an exLenL and also people conslder lL Lo be more hyglenlc 1hese declslons are a
resulL of people llke 1ony 1an CakLlong and 1ony klLchner who have helped !olllbee ln deslgnlng
Lhe sLraLegles whlch have been lmplemenLed ln a proper way and hence have been glvlng rlch
dlvldends and proflLs
now Lhe company wanLs Lo enLer new markeLs llke apua new Culnea Callfornla and Pong kong
and each markeL ln lLself poses a dlfferenL problem apua new Culnea poses a slgnlflcanL problem
ln Lhe form a hlgh pollLlcal and counLry rlsk and also Lhey need Lo modlfy Lhelr menu accordlng Lo
Lhe LasLe of people over Lhere ln Callfornla Lhey have Lo compeLe wlLh companles llke klC and
Mcuonalds who have home advanLage and hence !olllbee don'L need Lo wesLernlze Lhelr producLs
and servlces and raLher concenLraLe on keeplng Lhem more llllplno because ln LhaL way Lhe people
over Lhere wlll geL someLhlng new and dlfferenL Lo eaL 1hey have Lo very careful over Lhere as lL ls a
much maLured markeL compared Lo Lhe markeLs ln Lhe easL where Lhey have been concenLraLlng Llll
daLe ln Pong kong Lhey need Lo puL ln a loL of money Lo hlre Chlnese speaklng sLaff and esLabllshlng
Lhe brand over Lhere by Laklng locals lnLo accounL
!olllbee has been spendlng a loL for expanslon as of laLe as ls vlslble from lLs balance sheeL and hence
Lhe Larnlng per Share ls also golng down 1hey have been conslsLenLly lncreaslng Lhelr neL sales and
neL lncome aL a very hlgh raLe along wlLh Lhe number of sLores opened Also Lhe P8 of Lhe company


xlMLl8 CuM 8A1CP 13
has played a very lmporLanL role as ls needed Lo conLrol Lhe organlzaLlon of Lhe slze of !olllbee 1he
recrulLmenL and selecLlon procedure ls very sound and Lhe organlzaLlon culLure and sLrucLure ls such
LhaL lL promoLes a frlendly envlronmenL ln Lhe company 8uL P8 dlvlslon also had some lssues llke
glvlng beLLer pays and fasL lncremenLs Lo lnLernaLlonal dlvlslon employees Lhan Lhe domesLlc
employees
1hus Lhe need ls Lo flnd a balance beLween expanslon and reducLlon ln cosL of sales 1hus Lhe
company should be careful ln lLs expanslon plans and should noL lnvesL abrupLly so LhaL lL does noL
go from a cash rlch company Lo a debL carrylng company 1hus Lhe company musL Lry Lo develop and
explolL lLs sLrengLh and overcome lLs shorLcomlngs
ln apua new Culnea because lL would be Lhelr flrsL sLore hence Lhey wlll have Lo work and spend a
loL for creaLlng Lhe brand and for adverLlslng campalgn over Lhere 8ecause Lhey have a very hlgh
rlsk ln LhaL markeL because of Lhe lnsLable pollLlcal slLuaLlon hence Lhey can have Lhelr franchlsees
over Lhere LhaL are ready Lo Lake all Lhe rlsk as Lhey know Lhe counLry ln and ouL
ln Pong kong Lhe managemenL sLrucLure ls ln a bad shape as Lhere ls a loL of confllcL beLween Lhe
managers ln a klosk and Lhe employees over language and pay lssues 1hus managers need Lo
moLlvaLe Lhe employees Lo work hard by havlng lnformal geLLogeLher Also Lhey can have a menu
LhaL serves for Chlnese LasLe and lnLeresLs
Cpenlng a sLore ln Callfornla would be Lhe mosL challenglng as Lhey would have Lo face an
lncreaslngly maLure cusLomer and also compeLe wlLh glanLs llke klC and Mcuonalds 8uL Lhe hlgh
denslLy of llllplno populaLlon ln Lhe sLaLe would help Lhem a loL as Lhey would llke Lhe orlglnal
llllplno food Also seLLlng up [olnLs ln uS would glve Lhem a global recognlLlon
CLher recommendaLlons lnclude
1 Peavy lnvesLmenL ln l1 lnfrasLrucLure
2 Pavlng Lwo dlfferenL S8u for lnLernaLlonal and domesLlc markeLs
Pavlng hlgh level of menu cusLomlzaLlon
4 Pavlng [olnL venLures wlLh local dealers when enLerlng lnLo lnLernaLlonal markeLs
3 use Lhe cheap labour avallable ln home Lo produce low cosL raw maLerlal Lo brlng down Lhe
cosLs







4

xlMLl8 CuM 8A1CP 13
9kC8LLM S1A1LMLN1
!olllbee afLer venLurlng lnLo Lhe fasL food buslness wanLed Lo expand Lhelr presence ln lnLernaLlonal
markeLs Pere lL was confronLed by Lwo ma[or lssues
O JheLher Lo go ahead wlLh lLs blue ocean sLraLegy of planL Lhe flag " and keep on expandlng
lLs presence ln dlverse geographlcal locales whlch would lead Lo exLenslve cusLomlzaLlon of
menu and oLher operaLlonal changes or concenLraLe on consolldaLlng lLs exlsLlng buslnesses
and focus on maklng Lhe buslness proflLable and have a cenLrallzed operaLlonal model
O lf !olllbee chooses Lo conLlnue wlLh lLs sLraLegy of expandlng lLs buslness base lnLo poLenLlal
markeLs Lhen lL wlll have Lo declde upon Lhe fuLure markeLs where lL can enLer Laklng lnLo
conslderaLlon Lhe dlfferenL pros and cons 1he markeLs ln conslderaLlon are 9apua New
Gu|nea nong kong and Ca||forn|a

8USINLSS LANDSCA9L ANALSIS
1 9Ck1Lk'S IIVL ICkCLS MCDLL
















I|g1 9orter`s f|ve forces mode|

Baigaining powei of
supplieis

Baigaining powei of buyeis

Thieat of
substitutes

Thieat of
new
entiants

Inuustiy
iivaliy
3

xlMLl8 CuM 8A1CP 13
lasL food lndusLry ls hlghly compeLlLlve
lndustry rivo/ry !olllbee has had Lo face severe compeLlLlon wlLhln Lhe fasL food lndusLry
1he source of rlvalry malnly sLems from prlce wars and markeLlng lnnovaLlon Some of lLs
ma[or compeLlLors belng mulLlnaLlonal glanLs llke Mcuonalds klC as well as cheap local fasL
food chalns operaLlng ln counLrles llke lndonesla
@reot of substitutes lL ls low Lo moderaLe 1he subsLlLuLes range from local sLreeL food Lo
hlgh end resLauranLs Powever sLreeL food ls unhyglenlc whereas ln resLauranLs Lhe servlce
was noL qulck Pence servlce and cleanllness was an advanLage for !olllbee
@reot of new entronts 1here exlsL qulLe a few barrlers for new players lnLendlng Lo enLer
Lhe bandwagon Pence Lhere ls a lower LhreaL of Lhese LnLry barrlers are
O lnablllLy Lo galn access Lo necessary Lechnology and speclallsed knowhow
O 8rand preferences among Lhe cusLomers for already esLabllshed names
O CusLomer loyalLy
O CaplLal requlremenLs
O Lconomles of scale
O ulsLrlbuLlon channels
orqoininq power of buyers 1he bargalnlng power of cusLomers was qulLe hlgh 1he
'cusLomer flrsL' pollcy of !olllbee shows lL all AL Lhe same Llme alLhough Lhey had oLher
opLlons avallable llke Mcuonalds and klC Lhe exLenL of cusLomlsaLlon of menu provlded by
!olllbee aLLracLed cusLomers Lo lLs sLores
orqoininq power of supp/iers 1he bargalnlng power of suppllers was low 1hough some
raw maLerlals are lmporLed Lhe counLry's sLock of Lechnlcally skllled people was an
advanLage Moreover !olllbee's pollcy of Lralnlng Lhe sLaff aL every locaLlon makes lL feaslble
Lo hlre even nonLechnlcal sLaff
2 ANSCII'S MA1kIk

I|g 2 Ansoff`s matr|x
ln Lhe 9h|||pp|ne market !olllbee sLarLed off wlLh markeL peneLraLlon LaLer due Lo
compeLlLlon from mulLlnaLlonal glanLs llke Mcuonalds lL resorLed Lo Lhe 'producL
developmenL' sLraLegy


xlMLl8 CuM 8A1CP 13
ln Lhe conLexL of lLs lnLernaLlonal operaLlons klLcher's approach of 'LargeLlng expaLs' and
'planL a flag' was prlmarlly a 'market deve|opment' sLraLegy 1hey wanLed Lo LargeL Lhe
llllpplno expaLrlaLes wlLh Lhe local llllpplno LasLe 1hrough expanslon ln lnLernaLlonal
markeLs !olllbee has been able Lo spread lLs rlsks
!olllbee has devoLed a conslderable amounL of resources ln ldenLlfylng Lhe consumers' LasLe
and preferences as well as ln Lhe 8u manufacLurlng and markeLlng of new producLs lL has
exLended lLs producL llne Lo lnclude all Lhe markeL segmenLs LxlsLlng producLs are lmproved
and relaunched wlLh a local Louch 1hus 'd|vers|f|cat|on' has been a ma[or (raLher Lhe
prlmary) facLor ln !olllbee's success especlally offshore

INDUS1k LLVLL ANALSIS
1 SWC1 ANALSIS

Strengths
O undersLandlng local LasLes
O ;ulck servlce
O Affordable prlces
O SLrong quallLy conLrol
O CompeLenL/wellLralned sLaff


Cpportun|t|es
O Crowlng nuclear famllles
O Crowlng urban llfesLyle
O More dlsposable lncome

Weaknesses
O Jeak brand name
O llnanclal consLralnLs
O Confuslng logo (logo slgnlfled a Loy
chaln or candy sLore)


1hreats
O lncreaslng consclousness abouL healLhy
dleL
O CpposlLlon on nonvegeLarlan lLems
from organlsaLlons llke L1A nCCs
8ellglous organlsaLlons
O AvallablllLy of healLhler opLlons llke
8eadyLoeaL food

2 9LS1 ANALSIS
9o/itico/ CovernmenL pollcles and regulaLlons may hamper Lhe fuLure prospecLs of Lhe fasL
food lndusLry ln cerLaln counLrles
conomic AvallablllLy and affordablllLy of Lhe facLors of producLlon parLlcularly land and
labour ulfferenLlaLlon of producLs dlsLrlbuLlon channels eLc
ocio/ CusLomer preferences fasLpaced llves
@ecno/oqico/ 1echnologlcal upgradaLlon ls a necesslLy ln achlevlng Lhe economles of
scale 1echnology llke auLomaLed assembly llne wlll ensure more conslsLency ln Lhe producLs


xlMLl8 CuM 8A1CP 13
offered 1ouchscreen menu wlll ellmlnaLe Lhe need for personnel Lo Lake down orders from
cusLomers Lhus savlng a loL of Llme and cosL
CCM9AN ANALSIS
!olllbee ls a fasLfood resLauranL chaln based ln Lhe hlllpplnes lL also lncludes many popular brands
llke Chowklng Creenwlch 8ed 8lbbon and Manong epes Slnce lLs lncepLlon !olllbee has become
an lncreaslngly proflLable fasLfood chaln wlLh 8 resLauranLs ln Lhe hlllpplnes and 3 ln oLher
counLrles employlng 2921 workers lncludlng all lLs brands !lC has 1804 sLores worldwlde and
LoLal sales of more Lhan uS$1 bllllon as of uecember 2008
1he !olllbee mascoL was lnsplred by local and forelgn chlldrens books !olllbee creaLed Lhe producL
names ?umburger and Chlcken!oy 1he company was lncorporaLed and leased a house on Maln
SL ln Cubao ;uezon ClLy as Lhe flrsL headquarLers Lumba (supporLlng consulLanL) formulaLed a
longLerm markeLlng sLraLegy LhaL ls llsLlng up a number of consumer promoLlons and Lrafflc bulldlng
schemes
1he commlssary sysLem ls responslble for Lhe value addlng processes done Lo produce genulne
!olllbee producLs 8elng parL of Lhe value chaln Lhe manufacLurlng process ls hlghly Lechnology
dependenL Lo ensure LhaL Lhe food ls conslsLenL Lo !olllbee sLandards and ls produced safely and
cheaply wlLhouL sacrlflclng Lhe quallLy

1he key Lo handllng Lhe complex commlssary operaLlons ls sLaLeofLhearL auLomaLlon
compuLerlzaLlon and conLlnuous lmprovemenL ln manufacLurlng equlpmenL and processes !olllbees
auLomaLed operaLlons noL only cuL producLlon Llme and ensure conslsLenL quallLy from baLch Lo
baLch buL also ensures food safeLy by mlnlmlzlng handllng and malnLalnlng Lhe hlghesL sLandards of
cleanllness
Lxpans|on and acqu|s|t|ons
1he company acqulred 80 of Creenwlch lzza ln 1994 enabllng lL Lo peneLraLe Lhe plzzapasLa
segmenL lrom a 30branch operaLlon Creenwlch has esLabllshed a sLrong presence ln Lhe food
servlce lndusLry ln early 200 !olllbee boughL ouL Lhe remalnlng shares of lLs parLners ln Creenwlch
lzza Corp equlvalenL Lo a 20 sLake for 84 mllllon ln cash
ln 2000 Lhe company acqulred Chowklng allowlng !olllbee Lo be parL of Lhe Aslan qulck servlce
resLauranL segmenL ln 200 !olllbee acqulred Lhe Chlnese fasLfood chaln Pongzhuangyuan Cn
CcLober 19 2010 lL has been announced LhaL !olllbee lnLends Lo acqulre a 0 percenL share of Mang
lnasal a fasLrlslng fasL food chaln speclallzlng ln barbecued chlcken
!olllbee purchased 0 of 1alpel resLauranL Lao uong ln !une and Chun Shul 1ang Lea house ln 200
ln 2004 !olllbee acqulred Chlnese fasL food chaln ?onghe uawang for $223 mllllon !olllbee enLered
lnLo a [olnLvenLure conLracL wlLh uSbased Chow lun Poldlngs LLC Lhe developer and owner of
!ln[a 8ar 8lsLro ln new Mexlco ln whlch !olllbee wlll have a 12 sLake for $930000
8

xlMLl8 CuM 8A1CP 13
Cn AugusL 2 2008 !olllbee formally slgned a 23 bllllon ($333 mllllon) deal wlLh 8el[lngbased
Pong Zhuang ?uan Lhrough lLs wholly owned subsldlary !olllbee Jorldwlde Le lLd 1he sale ls
sub[ecL Lo Lhe approval of Chlnas MlnlsLry of Commerce
Cn CcLober 2010 !olllbee acqulred 0 of Mang lnasal anoLher llllplno food chaln for bllllon
($88 mllllon) CurrenLly Lhe largesL fasLfood chaln ln Lhe counLry lL also has locaLlons ln Lhe unlLed
SLaLes Saudl Arabla Pong kong vleLnam Malaysla lndonesla uubal and 8runel

Lk1LkNAL LNVIkCNMLN1AL IAC1CkSwh|ch are act|ng as dr|v|ng force for growth of
Io|||bee
INCkLASING GLC8ALI2A1ICN Sourclng beef maLerlals from 8razll and locaLlng ln forelgn markeLs
boLh lnLroduce Lhe company Lo global developmenLs such as crude prlces and Larlff and nonLarlff
barrlers LhaL changed how operaLlons conLlnued 1he forglng of LasLes of Lhe global markeL was an
opporLunlLy 1hls was posslble because of Lhe lncreaslng Lrend of mlgraLlon and Lhe Lrend for global
Lrade and lnvesLmenLs

INDUS1k 9kCII1A8ILI1
Mlnlmlzlng Lhe companys operaLlng cosL by creaLlng an efflclenL producLlon ls one way Lo lncrease
lLs proflLablllLy 1hls was done by adopLlng new Lechnologles speeded up Lhe companys operaLlon
1hls ln Lurn greaLly helped Lhe company Lo caplLallze on economles of scale 1he same concepL
forced oLher players Lo lnnovaLe and cause changes ln Lhe lndusLry

IN1LkLS1 CI 1nL 8ULkS ICk DIIILkLN1IA1LD 9kCDUC1S
Across Lhe seas Lhere ls only one use for !olllbee producLs LhaL ls Lo be eaLen lL was found ln due
course of Llme a need has Lo develop for new producLs LhaL can appeal Lo dlfferenL lnLeresLs 1he
developmenL of Lhe need ls a ma[or drlver of change ln Lhe lndusLry 8lghL now ln Lhe local markeL
as !olllbee do Lhey conLlnue Lo add new producLs Lo Lhelr menu sLlll malnLalnlng Lhe plnoy LasLe
LhaL Lhey have paLenLed

kL DkIVLkS AND ISSULS 8LnIND 1nL DIIILkLN1 DLCISICNS 1AkLN

1 1ony 1an CakLlong
O Lxpand|ng |nto fast food 1he oll crlsls of 19 lncreased Lhe producLlon cosL and also
decreased people`s spendlng power As a resulL Lhey were unwllllng Lo spend on non
essenLlal lLems of consumpLlon 1hls acLed as a poslLlve relnforcemenL for 11C`s declslons
DANGLk Mcuonald`s afLer LasLlng success ln dlfferenL parLs of Lhe world and especlally
afLer belng successful ln Canada whlch has a huge Aslan populaLlon Lurned lLs focus
Lowards Lhe Aslan 1lgers ln Lhe early 80`s hlllpplnes was Lhe naLural LargeL as lL ls Lhe Lhlrd
largesL Lngllsh speaklng counLry ln Lhe world llanked by Lhe aclflc Ccean and Lhe SouLh
9

xlMLl8 CuM 8A1CP 13
Chlna Sea lLs sLraLeglc locaLlon makes lL a crlLlcal enLry polnL Lo some 300 mllllon people ln
Lhe ASLAn markeLofferlng vasL Lrade opporLunlLlesand an ldeal base for buslness
Powever Lo counLer Lhls 1an Look a leaf ouL of Lhe Chlnese mlllLary LacLlclan Sun 1zu and
flew Lo uS Lo learn more abouL hls fuLure enemy 8eLurnlng Lo Lhe hlllpplnes armed wlLh
flrsLhand knowledge of whaL a ma[or Amerlcan fasL food chaln looks llke 1an relnvenLed hls
sLore uslng everyLhlng he had learned ln Lhe uS Pe lnLroduced a frlendly carLoon mascoL
brlghL and cheerful unlforms for Lhe sLaff a chlldfrlendly amblence a menu of deep frled
favourlLes and Lhe bellef LhaL Lhere's no such Lhlng as Loo much markeLlng

O Go|ng |nternat|ona| 1hls was a sLraLeglc move by 11C posslbly looklng aL Lhe geographlc
spread of llllplnos around Lhe world 1here are around 811mllllon overseas llllplnos
worldwlde represenLlng 11 of Lhe populaLlon of hlllpplnes MosL of Lhem work as docLors
physlcal LheraplsLs nurses accounLanLs l1 professlonals englneers archlLecLs enLerLalners
Lechnlclans Leachers mlllLary servlcemen seafarers sLudenLs careglvers domesLlc helpers
and household malds maklng Lhem a good LargeL markeL for !olllbee

O Go|ng aga|nst McDona|d`s 1an's frlends and assoclaLes warned hlm LhaL hls sLore would
be eaLen allve unless he consldered selllng hls buslness Lo Mcuonald's or be lLs franchlse
holder Powever !olllbee succeeded ln poslLlonlng lLself flrmly ln Lhe hlllpplne markeL
before Mcuonald came ln ln addlLlon Lo Lhe speclal undersLandlng of Lhe llllplno palaLe Lhls
naLlonal favourlLe had also masLered Lhe counLry's culLure and llfesLyle 1hey'd succeeded ln
capLurlng Lhe youLh demographlc wlLh lnsLore play acLlvlLles and a casL of capLlvaLlng
characLers 1helr mascoL wlLh orange [ackeL and Lhe blonde spagheLLlhalred glrl are beLLer
known and loved ln Lhe hlllpplnes Lhan 8onald Mcuonald ln facL by Lhe Llme Mcuonalds
came ln Lhe local franchlse already had nlne branches

2 1Cn? kl1CPnL8
O Separate Internat|ona| d|v|s|on Pavlng spenL fourLeen years ln such an emlnenL poslLlon ln
a ploneer ln fasL food llke lzza PuL lL's all buL obvlous LhaL klLchner would look for
auLonomy Lo operaLe 1hls broughL ln lnLernaLlonal pracLlses ln Lhe company mosLly
borrowed from Lhe wesLern culLure (wearlng Lles eLc) 1hls ls qulLe naLural conslderlng 1ony
ls from AusLralla Powever Lhe culLure change wasn`L ln sync wlLh !olllbee hlllpplnes
operaLlons nelLher was Lhe culLure change dellverlng on Lhe lnLernaLlonal fronLs


O #9|ant the Io|||bee f|ag strategy" 1hls was concepLuallsed Lo Lap markeLs wlLh poLenLlal
and whlch has noL yeL been capLured by Lhe esLabllshed players Powever somewhere down
Lhe llne Lhe acLual phllosophy was losL ln a ego baLLle as Lo how fasL !olllbee can esLabllsh
lLself ln Lhe lnLernaLlonal markeL and ln dolng so prove Lhemselves Lo Lhe hlllpplnes
buslness Also 1ony Lrled Lo apply lzza PuL`s sLraLegy Lo !olllbee now Lhere was a couple of
ma[or areas whlch dlfferenLlaLed lzza PuL from !olllbee
4 lzza PuL was already well esLabllshed and had no shorLage of funds
10

xlMLl8 CuM 8A1CP 13
4 lzza as a producL per se doesn`L need so much of modlflcaLlons and cusLomlzaLlons
lL's a lLallan food and people who llke lL llke lL for whaL lL ls Powever !olllbee ls
poslLloned as a fasL food" chaln So lL has Lo adapL accordlng Lo Lhe deflnlLlon of
fasL food" ln dlfferenL markeLs 1hls would have requlred Lo expand slowly whlch
Lhey dldn`L leadlng Lo a sLraln ln Lhe flnanclals whlch evenLually led Lo sourlng of Lhe
relaLlonshlp wlLh Lhe hlllpplnes dlvlslon

NLW MAkkL1 ANALSIS AND kLCCMMLNDA1ICNS
9A9UA NLW GUINLA MarkeLlng Lo Lhe populace here wlll be of ma[or challenge as lL ls one of Lhe
mosL dlverse counLrles of Lhe world wlLh over 830 languages belng spoken by a populaLlon of [usL
seven mllllon 83 of Lhe people here depend on agrlculLure for llvellhood AL Lhe brlnk of apuan
lndependence ln 193 Lhere were 40000 expaLrlaLes (mosLly AusLrallan and Chlnese) ln apua new
Culnea


1aklng lnLo accounL Lhese facLors Lhe markeLlng sLraLegy should be adapLed Lo communlcaLe Lo Lhe
predomlnanLly rural and heLerogeneous crowd nC follows recognlLlon of bonds of klnshlp wlLh
obllgaLlons exLendlng beyond Lhe lmmedlaLe famlly group 1hus !olllbee should poslLlon lLself as a
place Lo bond over food raLher Lhan Lhe funcLlonal quallLles of Champ !olllmeal eLc Also nC wlll
requlre ma[or cusLomlzaLlon of Lhe menu as lL was requlred Lo serve a crowd whlch was a mlxLure of
AusLrallans and Chlnese 1he operaLlonal aspecLs wlll also have Lo be Lweaked around Lo lncorporaLe
more equlLy parLlclpaLlon from Lhe company so as Lo help develop Lhe markeL flrsL and Lhen go lnLo
producL developmenL 1he prlce polnL wlll also have Lo be adapLed Lo caLer Lo a larger populaLlon ln
nC lL`s doubLful wheLher lL wlll be able Lo supporL Lhe 20 sLores plan of !olllbee Powever Lhls can
be achleved lf Lhey Lake over Lhe exlsLlng operaLlons and buslness of Lhe AusLrallan Chlcken
resLauranL chalnnC meanwhlle was golng Lhrough a clvll war Lhrough 1990s and only posL 199 lL
Lrled Lo resLore peace Conslderlng Lhe hlgh rlsk lnvolved from boLh a LargeL markeL perspecLlve and
pollLlcal lnsLablllLy we would suggesL LhaL apua new Culnea wlll noL be a vlable markeL

CALIICkNIA Pavlng successfully esLabllshed Lhemselves ln Cuam a LerrlLory of Lhe uS !olllbee
have falr enough knowledge abouL Lhe uS cusLomer`s food hablLs and preferences Callfornla ls a
good cholce as lL ls Lhe mosL populous provlnce ln Lhe uS A hlghly dlverslfled economy of Callfornla
makes lL less vulnerable Lo envlronmenLal rlsks ln 199 Lhe Cu for Lhe sLaLe was approxlmaLely one
Lrllllon Annual growLh raLes ln 1998 and 1999 averaged 3 Also uala ClLy ln Callfornla has a large
concenLraLlon of llllplno wlLh one of Lhe hlghesL concenLraLlon of llllplno expaLrlaLes All Lhese
favourably welgh ln favour of Callfornla
1he markeLlng sLraLegy wlll have Lo be adapLed radlcally Lo markeL Lo Lhe predomlnanLly urban
Callfornla crowd !olllbee wlll have Lo ln parLlcular focus on Lhe producL feaLures packaglng sales
promoLlon eLc Lo adapL Lo Callfornlan markeL new age Lools llke web markeLlng promoLlons vla
1vCs magazlnes flyers eLc wlll have Lo be lnLegraLed ln Lhe enLlre markeLlng plan 1hls has Lo be
supporLed by sufflclenL brandlng exerclse Lo break Lhe cluLLer and poslLlon lLself dlfferenLly
compared Lo Lhe lncumbenLs (Mcuonalds klC eLc) lnsLead of Lrylng Lo wesLernlse lLs offerlngs lL
11

xlMLl8 CuM 8A1CP 13
should poslLlon lLself as an auLhenLlc orlenLal llllplno fasL food chaln 1hey won`L be able Lo break
Lhe cluLLer lf Lhey dlsh ouL Lhe exacL same lLems LhaL Mcuonalds or klC offerLhey have Lhe flrsL
mover advanLage here and also a greaLer brand equlLy ln Lhelr backyard A servlce orlenLed
archlLecLure and good supply chaln mechanlsm are requlred Lo supporL Lhe hlghly compeLlLlve
markeL ln Callfornla Also Lhey wlll have Lo adhere Lo luA norms and come up wlLh Lhe requlred
ecolabelllng pracLlses and composlLlon speclflcaLlon sLandards 1helr communlcaLlon sLraLegy musL
also Lake care of Lhe followlng feaLures whlch are radlcally dlfferenL from easLern culLures
lndlvlduallsLlc wesLern vs CollecLlvlsL easLern culLure
Low power dlsLance of wesL vs hlgh power dlsLance of easL
Plgh rlsk Laklng of wesL vs low rlsk Laklng of easL
Colng ahead as a !v wlLh Lhe Manlla based buslness man may dlluLe Lhe rlsk of !olllbee buL lL should
look aL favourable parLners ln uS Lo succeed Accordlng Lo us Lhls ls a markeL wlLh hlgh rlsks buL also
whlch offers a very maLured markeL and fasL food awareness ls arguably Lhe besL ln Lhe world"fasL
foods Slllcon valley" So !olllbee as a fasL food chaln wlll geL Lo learn a loL from Lhls locaLlon whlch
can help lL beLLer run lLs overall buslness

nCNG kCNG lL's one of Lhe freesL economles ln Lhe world and malnLalns a hlghly developed caplLal
economy 8eLween 191 and 199 Pong kongs gross domesLlc producL grew 180 Llmes whlle per
caplLa Cu lncreased 8 Llmes over lL ls ln all respecL a very lnLernaLlonal provlnce wlLh very hlgh
forelgn lnvesLmenLs and ls conslsLenLly ranked very hlgh ln Lhe Lase of uolng 8uslness lndex
Clven such a scenarlo lL should be very proflLable Lo be a parL of Lhe boomlng economy Powever
rlghL afLer lL goL lndependence from Lhe unlLed klngdom ln 199 lL was severely hlL by Lhe Aslan
flnanclal crlsls Also glven LhaL 93 of Lhe populaLlon are Chlnese compllcaLes maLLers 1o markeL Lo
Lhe domlnanL Chlnese populaLlon !olllbee wlll have Lo modlfy lLs offerlngs AL Lhe same Llme lL
should geL more local sLaffs ln Lhe operaLlons and have a Chlnese aL Lhe helm lL wlll need Lo pump ln
loLs of money Lo survlve ln Lhe face of Lhe flnanclal crlsls and also Lo bulld a brand amongsL Lhe
locals So lL wlll flrsL have Lo markeL Lo Lhe locals and have an lnLernal brandlng exerclse for Lhelr
employees Lo communlcaLe Lhelr preference and lnLeresL of worklng wlLh Lhe locals and be
responslve and senslLlve Lo Lhelr culLure Powever conslderlng Lhe rlgld organlsaLlonal sLrucLure and
aLLlLude of !ollbee lL looks hlghly lmprobable LhaL Lhey wlll Lamper wlLh Lhelr menu whlch rules ouL
Lhls opLlon






12

xlMLl8 CuM 8A1CP 13
CUk n9C1nLSIS A|though Io|||bee`s market share and sa|es were |ncreas|ng because of
|nternat|ona||sat|on of |ts bus|ness yet |t was becom|ng |ess prof|tab|e because of such ventures
1h|s can be proved by a f|nanc|a| ana|ys|s of Io|||bee

IINANCIAL ANALSIS CI ICLLI8LL

!olllbee ls on an expanslon spree especlally ln Lhe lasL years (19941993 199) Cne of Lhe
hldden reasons whlch ls supporLlng !olllbee ls almosL consLanL exchange raLe (shown ln llg
1)

I|g3 I|g4

ln Lhe flrsL glance aL Lhe balance sheeL lL mlghL be alarmlng Lo see LhaL Lhe Larnlngs per
share of Lhe company ls decreaslng from an lncreaslng Lrend (llg2) buL lL ls perfecLly flne as
Lhe company expanded a loL ln Lhe years 1993 and 199 (refer 1able1)
?ear
Company
owned
Lach
year lranchlses
Lach
year 1oLal
Lach
?ear
1992 23 4 89 9 112 1
199 0 3 9 124 12
1994 44 14 10 10 148 24
1993 33 11 11 1 18
199 84 29 124 11 203 9
199 9 12 14 10 22 18
1ab|e1

1here ls a blg [ump of company owned sLores from 3 Lo 14 ln Lhe year1994 and ln 1993
0
10
20
0
1992 199 1994 1993 199
9esos]Do||ar
0
02
04
0
08
1
1992 199 1994 1993 199
L9S
1

xlMLl8 CuM 8A1CP 13
agaln Lhey expanded by anoLher 11 sLores Lven Lhe lranchlse number lncreased
conslderably durlng Lhese years
Jhen we looked lnLo Lhe sales and neL lncome of !olllbee for Lhe pasL years Lhe daLa looked
encouraglng


I|gS I|g6
8oLh sales and neL lncome were lncreaslng aL a CAC8 of 1 and 13 respecLlvely 8uL
when we looked deep lnLo Lhe flnanclals lL ls noL all LhaL good from 1993199 1oLal sales
of Lhe company lncreased by abouL 244 buL Lhe cosL of sales lncreased by a sLaggerlng
42 Along wlLh Lhls Lhe debL of Lhe company lncreased a loL Loo sum of advances and
prepald expenses almosL doubled compared Lo Lhe prevlous year
1hls slLuaLlon can furLher be proved by looklng aL Lhe currenL raLlo of Lhe company




I|g7
0
1L+09
2L+09
L+09
4L+09
3L+09
L+09
L+09
8L+09
1992 199 1994 1993 199
sa|es |n pesos
0
100000000
200000000
00000000
400000000
300000000
00000000
00000000
1992 199 1994 1993 199
Net |ncome |n 9esos
0
03
1
13
2
1992 199 1994 1993 199
Current rat|o
14

xlMLl8 CuM 8A1CP 13
CurrenL raLlo of Lhe company ls falllng drasLlcally for Lhe lasL Lwo years whlch ls alarmlng


kLCCMMLNDA1ICN
rlmary alm of 1lngzon ls Lo flnd a flne balance beLween Lhe expanslon and reducLlon ln cosL
of sales of Lhe company lf we look aL cash ln hand Lhe company ls ln a sLable poslLlon
Cpenlng mulLlple sLores aL Lhe same Llme wlll lncrease Lhe operaLlng lncome and Lhus
reduclng boLLom llne of Lhe company lL ls beLLer lf Lhey look lnLo one markeL aL a Llme
lnsLead of belng greedy
lrom a sLable poslLlon Lhe company shouldn'L go lnLo debL wlLh dlfferences ln Lhe lnLernal
deparLmenLs lL ls beLLer lf !olllbee ls cosL consclous and careful ln lLs expanslon plans ln Lhe
comlng years
nk 9LkS9LC1IVL
1he Puman 8esources has played a slgnlflcanL role ln Lhe success of !olllbee 1he P8
pracLlces prevalenL are very powerful
Strengths
1o sLarL wlLh Lhe llve ls ln !olllbee's phllosophy are very sLrong parLlcularly 'fun
aLmosphere' and 'frlendllness ln Lhe organlsaLlon' Pavlng an open and frlendly culLure ls a
hyglene facLor whlch goes a long way ln reLalnlng employees and faclllLaLlng hlgh
producLlvlLy
1he recrulLmenL and selecLlon procedure prevalenL ln !olllbee ls very sLrlngenL Lhereby
ensurlng a servlceorlenLed sLaff ln any sLore of !olllbee Lhe sLore managers are Lhe key Lo
moLlvaLe and conLrol crew members 1hey faclllLaLe efflclenL use of Lhelr Llme whlch noL
only enables fasLer servlce buL also reduces Lhe number of crew members needed
ln boLh Lhe uomesLlc as well as lnLernaLlonal dlvlslon of !olllbee a loL of focus ls glven on
Lralnlng whlch ls a prerequlslLe ln an lndusLry as compeLlLlve and dynamlc as a fasL food
lndusLry lor every new sLore LhaL lL opens ln every new markeL !olllbee conducLs exLenslve
Lralnlng programs for Lhe local sLore managers and crew members wlLh a vlew Lo lmparL
necessary skllls LhaL may be dlfferenL from Lhe domesLlc requlremenL
I|aws
Pavlng sald all Lhls however Lhere exlsL a few loopholes ln Lhe organlsaLlon lor example
when resldenL and CLC 1ony 1an CakLlong declded Lo creaLe a dlsLlncL lnLernaLlonal
ulvlslon Lhe need for Lhls change was noL communlcaLed clearly Lo Lhe domesLlc hlllpplne
managemenL 1hls led Lo a sense of uncerLalnLy among Lhe hlllpplne sLaff resulLlng ln Lhelr
13

xlMLl8 CuM 8A1CP 13
lndlfferenL aLLlLude Lowards Lhe newly creaLed dlvlslon Such dlfferences led Lo a lack of
coordlnaLlon beLween Lhe Lwo dlvlslons
1he mosL slgnlflcanL dlfference beLween Lhe domesLlc and lnLernaLlonal dlvlslon's P8 was
LhaL Lhe pracLlces and procedures followed ln domesLlc dlvlslon were very convenLlonal
whlle Lhose ln Lhe lnLernaLlonal dlvlslon were more professlonal and modern ln accordance
wlLh Lhe requlremenLs of an lnLernaLlonal operaLlon lor example v of lnLernaLlonal
CperaLlons 1ony klLchner creaLed a more professlonal work aLmosphere by lnLroduclng a
'dress code' ln hls ulvlslon Also Lhe hlllpplne organlsaLlon was consldered bureaucraLlc
and slowmovlng by Lhe modern lnLernaLlonal ulvlslon
8ecause Lhe Lwo dlvlslons dld noL geL along well personal lssues also sLarLed cropplng up
llke early promoLlon and beLLer pay and beneflLs Lo Lhe lnLernaLlonal ulvlslon sLaff Cne of
Lhe ma[or reasons for such a wlde pay gap could be LhaL 1ony klLchner had hlred new
managers for markeLlng flnance quallLy conLrol and producL developmenL 1hese new
managers were all experlenced ouLslders hence lL requlred beLLer perks Lo reLaln Lhem Cn
Lhe oLher hand Lhe hlllpplne managemenL prlmarlly conslsLed of Lhe 1an famlly members
WA ICkWAkD
Jhlle enLerlng lnLo any new markeL !olllbee should caplLallse on lLs sLrengLhs and should
Lry Lo overcome lLs shorLcomlngs
1he lssue of lack of coordlnaLlon beLween Lhe Lwo ulvlslons occurred due Lo Lhe dlfference
ln culLure and P8 pollcles Powever wlLh Lhe arrlval of Manolo 1lngzon Ceneral Manager
lnLernaLlonal ulvlslon Lhe Lenslon beLween Lhe dlvlslons mlghL cease because(1) he ls a
fellow llllplno who has worked for uS fasL food chalns ln hlllpplne and ls hence more
accepLed by domesLlc dlvlslon and (2) he was a managemenL Lralnee ln !olllbee for 10
years and hence ls belleved Lo be famlllar wlLh Lhe organlsaLlon culLure
9opuo New 6uineo
Slnce Lhls would be lLs flrsL sLore ln apua new Culnea !olllbee wlll have Lo lncur huge
expenses ln Lerms of conducLlng markeL research abouL consumer preferences hlrlng
compeLenL sLaff and lLs Lralnlng 1hus Lhere has Lo be avallablllLy of sufflclenL funds Lo carry
ouL an effecLlve recrulLmenL drlve across Lhe franchlsee rlghL from lranchlse Servlces
Manager (lSM) Lo Lhe crew members
nonq konq
!olllbee's exlsLlng sLores ln Pong kong are already sLruggllng wlLh managemenL lssues
lnsLead of aggravaLlng Lhe dlfferences beLween Lhe Chlnese and llllplnos Lhe SLore
Managers are requlred Lo moLlvaLe Lhe sLaff Lo achleve a common goal 1hey should sLrlve
Lo creaLe a frlendly and harmonlous work culLure wlLhln Lhelr sLores A few reLenLlon
Lechnlques can be applled llke organlslng lnformal geLLogeLher of all Lhe sLaff members
1

xlMLl8 CuM 8A1CP 13
1hls way people from boLh Lhe reglons can mlngle wlLh one anoLher ouLslde Lhe work
envlronmenL and may Lry Lo resolve Lhelr personal dlfferences Lhemselves

co/ifornio
8elng able Lo successfully run a sLore ln Callfornla would be a slgnlflcanL mllesLone ln Lhe
growLh of !olllbee Powever lL wlll noL be a cake walk So far !olllbee has been banklng on
lLs human caplLal 8uL ln order Lo succeed ln Lhls markeL lL needs Lo upgrade lLs Lechnology
as Lhe labour cosL ls enormously hlgh ln Lhls parL of Lhe world 1hus havlng sophlsLlcaLed
equlpmenLs and cooklng devlces ls a necessary and noL sufflclenL condlLlon Lo be aL par wlLh
compeLlLlon ln order Lo make a mark !olllbee needs Lo lnvesL heavlly on promoLlonal
campalgns and meanwhlle needs Lo keep dolng whaL lL ls besL aL modlfylng Lhe reclpe Lo
prepare exacLly whaL Lhe consumers wanLed
Lk9ANDING C9LkA1ICNS

9apua New Gu|nea
uslng of blue ocean sLraLegy !olllbee can Lake over Lhe AusLrallan chaln's markeL share wlLh quallLy
lmprovemenL JlLh very few compeLlLors !olllbee could easlly capLure Lhe markeL and seL Lhe
sLandard LhaL would block new enLranLs for Llme belng
8uL Lhe operaLlonal cosL belng very hlgh lncludlng seL up cosL have no guaranLee LhaL wlll be able Lo
allow expanslon ln fuLure ln a new markeL AL Lhe same Llme Lhe franchlsees are also ready Lo
provlde full flnanclal supporL Lo reduce !olllbee's rlsk and also Lhey have made a LreaLy wlLh a
peLroleum reLaller for comblned operaLlons
nC was abouL Lo recelve $30 mllllon from many lenders lncludlng AusLrallan CovL !apanese
lmporL LxporL 8ank eLc for lnfrasLrucLural developmenL whlch may allow Lhe organlzaLlon Lo geL
supporL ln developlng fasL food ln Lhe naLlon Moreover abundanL naLural resource based lndusLrles
(palm oll processlng Lourlsm coffee cocoa coconuLs palm kernels Lea sweeL poLaLoes frulL
vegeLables poulLry pork) wlll allow cheaper raw maLerlal and decrease dependency on exLernal
suppllers
nong kong
Lxpandlng Lo fourLh sLore ln Pong kong ls noL an lssue of flnanclal Lerms buL more of manpower
requlremenL (Chlnese) and also of local percepLlons relaLed Lo food Chlnese are very healLh
consclous and also have a llklng for rlce and sLeamed food lLems also Pence lf Lhe menu can be
cusLomlsed ln a way lL sulLs Lhe Chlnese people and noL only hlllpplnes LasLe erhaps Chlnese
employee people noL geLLlng lnLeresL ln Lhe operaLlons mlghL be as Lhey feel allenaLed Lo Lhe food
1

xlMLl8 CuM 8A1CP 13
;uallLy and promoLlonal sLraLegles musL also be Laken lnLo conslderaLlon and can cenLrallse Lo maln
offlce or lMSes before openlng Lhe nexL sLore ln Pong kong Large worklng populaLlon and
lmporLance of Lhe kowloon can also glve brandlng and hlgh sales opporLunlLy Lo !olllbee


Ca||forn|a
LnLerlng lnLo Lhls markeL wlll brlng a hlgh brandlng opporLunlLy alLhough lL may face Lough
compeLlLlon and hlgh cosL belng parL of SLaLes 8uL looklng aL Lhe hlgh lmmlgranL lllplno populaLlon
Lhe sales may be largely supporLed by Lhelr LasLes
JlLh a franchlslng parLner ready Lo serve as an lnvesLmenL of abouL 40 Lhe sLarLlng operaLlon may
be easy buL sLlll Lhe presence of global compeLlLors llke Mc uonald may hlnder as Lhe enLrance as
!olllbee was noL havlng such a global brand name
Jell connecLed wlLh lnLernaLlonal alr and sea rouLes Lhe sLaLe can provlde fasL and effecLlve loglsLlcs
(examplesLos Angeles lnLernaLlonal AlrporL and San lranclsco lnLernaLlonal AlrporL are ma[or hubs
for Lransaclflc and LransconLlnenLal loglsLlcs)

kLCCMMLNDA1ICN ICk C9LkA1ICNAL U1ILI2A1ICN AND IM9LLMLN1A1ICN S1kA1LGILS
O Looklng aL Lhe slLuaLlon Lhere ls a need of heavy lnvesLmenLs lnLo l1 sysLems whlch wlll
allow !olllbee Lo manage dayLoday operaLlons from Lhelr headquarLers ln Lhe hlllpplnes
and also help ln collecLlon real Llme sales and lnvenLory daLa across Lhe organlzaLlon

O Moreover Lhere ls a need Lo clearly dlvlde Lhe organlzaLlon lnLo Lwo sLraLeglc buslness unlLs
(S8u) under Lhe company brand (lnLernaLlonal and uomesLlc) ln order Lo allgn Lhe goals wlLh
respecL Lo Lhe varlous geographlc dlvlslons 1hls wlll allow Lhe lnLernaLlonal ulvlslon Lo
ensure greaLer coordlnaLlon across l1 acLlvlLles such as L8 aL global level as well as poollng
procuremenL purchases wherever over wlde geographlcal areas

O A clear dlsLlncLlon of responslblllLles resource sharlng and area of conLrol beLween Lhe S8us
wlll help Lo lncrease cooperaLlon aL a flrmwlde level

O Plgh level of menu cusLomlsaLlon ls needed ln sLores whlch caLer Lo non hlllpplnes
cusLomer CounLrles llke Chlna where Lhe expecLed LasLe varles accordlng Lo local needs
cusLomlzaLlon wlll be hlghly helpful CompeLlLors llke Mc uonald's Chlna dlvlslon also Laken
menu cusLomlzaLlon lnLo conslderaLlon

O hlllpplnes ls an agrlculLural naLlon hence !olllbee was able Lo lnLegraLe sourclng of raw
maLerlals especlally lmporLed beef paLLles could be a soluLlon Llll world LransporLaLlon and
sanlLary lssues does noL affecL Lhe operaLlons

18

xlMLl8 CuM 8A1CP 13
O lor lnLernaLlonal markeLs locaLlng commlssarles ln Lhe same counLry Lhrough [olnL venLures
could be a poLenLlal source of success for Lhe company !olllbee could provlde Lhe
Lechnology whlle Lhe parLner deals wlLh approprlaLe Lechnlques Lo sell ln Lhe forelgn markeL
1hls wlll brlng down Lhe loglsLlc cosL of lmporLlng Lo many naLlons far from domesLlc
sources

O use of Pub and SLake model wlll help fasLer Lurnover of loglsLlcs and reducLlon ln cosL
lormaLlon of hubs wlll also help ln achlevlng economles of scale ln LransporLaLlon and
warehouslng of raw maLerlal Lhus opLlmlslng Lhe supply chaln value

O lor Lhe local markeL an lncrease ln Lhe number of commlssarles could poLenLlally decrease
Lhe LransporLaLlon cosLs and Lhe duraLlon of shlpmenLs Allowlng Lhe company Lo focus on
Lhe quallLy of producL only