Jollibee Case Study Essay

1. IntroductionAnil K. Gupta and Vijay Govindarajan argue in their article, Knowledge flows and the structure of consider within transnational corporations, that mainly all previous research on strategic control within multinational companies (MNCs) has paid attention to wherefore these choose to go abroad. They instead argue that for triumphful offshore business, ane must down the stairsstand how communication flows within the different sub-units of the organization. As Jollibee Foods conjunction considers whether they should establish a 4th store in Hong Kong, it faces several challenges. unmatchable of the main challenges regards friendship polish off amongst its Philippine facilities and the newly accomplished mavins abroad. It is therefore relevant to look at the following research scrupleWhat consequences does the current strategic control over its subsidiaries have on the companionship transfer amid the Jollibee headquarters on the Philippines and the offsh ore Jollibee Food plants in Hong Kong?In answering the research question, we impart start by explaining the fabric of Gupta & Govindarajans (1991) on different kinds of subsidiaries, with attention paid to noesis transfer and their related control instruments. Further we will examine what kind of challenges Jollibee Foods fraternity is facing with its working out to Hong Kong. Finally, the above analysis will provide us with information about the existing opportunities on the Chinese market place and will enable us to suggest a reconstruction of the offshore business in Hong Kong to make it more favored. Jollibee meets several tasks in their offshoring project, precisely collectible to space limitation there will in this paper hardly be focus on two selected challenges, the challenges of adjusting to Chinese taste and their trouble structure.2. Jollibee Foods social structure and its strategic control over its subsidiary in Hong-KongGupta and Govindarajan (1991) proposed that there exists a certain association between different types of subsidiary units and the strategic corporate control of that subsidiary. They defined four ideal types as Implementor, globose innovator, Integrated Player and Local Innovator, based on the amount of knowledge that flows and the direction of this knowledge, between the subsidiary and the rest of the MNC.Upon Tingzons arrival the main system of the offshore business has been flag set. Flag plant aims at establishing a presence in each market onwards competitors, and so, emphasizing at implementing customer expectation, influencing taste and building pock (case p. 11). The sign plan in Hong Kong has been to become one of the major players in the market fast. The previous international strategy meant that the subsidiaries in Hong Kong functioned as implementors. An implementor is characterized by a high degree of knowledge inflow from the headquarters but with a low degree of knowledge leak hence mainly applying the strategy used in the parent comp whatever without any local adaption (Gupta and Govindarajan 1991). operate as an implementor has meant that the established Hong Kong stores have not been engaged in any knowledge creation, but simply followed instructions from the Philippine headquarters. furthermore one can argue that Jollibees approach to Hong Kong has been to primarily implement the already existing practices from the Philippines. For example, the scorecard offered in Hong Kong is almost the same as the Filipino one, knowledge of what to sell has simply been brought in from headquarter (case scallywag. 12)Further evidence lay out for that the Hong Kong subsidiary has been operating like an implementor can be seen in the guidance transfer of the CEOs brother-in-law, from the parent smart set to the Hong Kong subsidiary (case page 12). In addition, the store-level managers were all Filipino while little crew were Chinese and staffing problems consequently grew. To solv e the problem the Manila based Franchise renovation Manager worked continuously with Hong Kong for more than six months, without success. In 1997 a repugn over discipline between the four Chinese Managers, and the five Filipino Managers, resulted in the Chinese Managers leaving Jollibee with simply Filipino crew left(p) (page 12). This points towards the subsidiaries in Hong Kong adapting the characteristic of an implementor, e.g. pure inflow of knowledge from the parent company and little outflow of knowledge from the Hong Kong subsidiary. Furthermore is the overall flag planting strategy of Jollibee very indicative of the skewed power balance between Jollibee and its subsidiaries.3. Organizational ChallengesJollibee experienced the internal challenges of organizational culture clash between its implemented Filipino workers and the Chinese staff. Furthermore the implementation of the international menu was not as successful as expected (case p. 13). The strategy of focussing o n Filipino expatriates in new markets, might has helped Jollibees creation to the Hong-Kong market, since they already had a distinguished costumer group of Filipinos. But as Tingzon asks in the case might we risk boxing ourselves into a Filipino niche that prevents us from growing enough to support operations in each country? (case p. 11).We found that the expatriate-led strategy have prevented further expansion of the company on the Hong Kong market. This is due to the local knowledge that resides in Chinese workers and managers are not exploited when only employing Filipino managers. As say above, in the early entry into the Hong Kong market, Jollibee did also employ Chinese managers but due to their sole implementation of inflows from headquarters, clashes arose between the Chinese and the Filipino managers. Furthermore one major challenge to success fully establish a 4th store and gain more market share is to adapt the wonted menu to the Chinese taste. The main challenge fo r Jollibee now is how to get in, and best use, the knowledge that resides in Chinese workers.4. Altering the Strategy for the Hong Kong SubsidiaryFrom the above particle we can conclude that there exists several challenges of how the subsidiary in Hong Kong has antecedently been structured, for example has one of the sub-franchisees tried to suggest changes to the menu. To be able to pull out more local costumers he proposed low fat chicken and Chinese tea, as he sensed a demand for these products among the Chinese plenty (case p. 12). He has tried to implement these changes for several of months but has not as yet received a go-ahead from the headquarters. This indicates that Jollibee mainly sees its subsidiaries as implementors, without any outflow of local knowledge to the other subsidiaries. But for Jollibee to succeed in scuttle a fourth store and increase its market share on the Hong Kong market, reconstruction and adaption to the local market is crucial. The top managem ent saw a high profit potential in Hong Kong, and therefore urged Tingzon to open the fourth store.But as the profit potential is high, the competition in Hong Kong for standardized food companies, such as McDonalds, is also very intense. Jollibee Food Construction does not have the competitive advantage of a first doer and is not alone on the market. For example has their main competitor, McDonalds, twain stronger brand recognition in the Hong Kong market and they are stronger financially. Hence Jollibee has to take on a different subsidiary strategy than the implementor, in order to success (Hymer p. 61).With this in mind the strategy of the Hong Kong sub-division can become a successful sub-division if it adapts the characteristics of a local innovator instead of trying to be an implementor, with both low inflow and outflow of knowledge. One main challenge for Jollibee is to displume more local employees and as Gupta and Govindarajans proposition 3 states under norms and admin istrative rationality will the composition of the top-management for the specific subsidiary lie of mainly locals if the division acts as a local innovator (Gupta and Govindarajan 1991). As an implementor has the possibility for autonomous initiative been low while it as a local innovator exists space to adapt to the local environment, e.g. for Jollibee to take on a more Chinese menu.5. ConclusionIn conclusion, as Jollibee ensconce whether or not to establish one more store in Hong Kong, they have to look over their strategic control over its subsidiaries. As examined above, the company has mainly viewed their subsidiaries as implementors. We found this international strategy insufficient, and that it hindered them to fully exploit the market potential in Hong Kong. The prevailing challenges for Jollibee now is how to realize and best use the knowledge that resides in Chinese workers. Due to limitations of the paper, it is only a fraction of possible explanations that have been hi ghlighted and these revolve primarily most the importance of increasing the local engagement in the Hong Kong subsidiary, and increase the local innovation towards more local taste. Hence we argue for Jollibees subsidiaries in Hong Kong to adapt towards a local innovator role.6. BibliographyCase Bartlett, C. A. (2001). Jollibee Foods Corporation (A) foreign Expansion. Harvard business enterprise SchoolGupta, A.K.,Govindarajan, V. (1991). Knowledge flows and the structure of control within multinational corporations. Academy of charge, Review 16(4) 768-792Gupta, A.K., Govindarajan, V. (2000). Knowledge flows within multinational corporations. Strategic Management Journal 21, pp. 473-496.letto-Gilles, G. (2005). 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