Jollibee and its Merging Strategy

        Chicken joy, Yumburger, Jolly spaghetti, these are just some of the classic meals Jollibee has been offering for the past decades. Over the years it has completely taken over the fast food industry here in the Philippines by entrancing the masses with their top of the chart food line and skyrocket profits. Although at some point, things shifted slowly out of Jollibee’s control, competition became thougher and people preferred to dine at other fast food restaurants like McDonald’s and KFC.

           

         In order to strengthen their market in the fast food industry, Jollibee started to veer their focus. Instead of focusing on how to satisfy their customers more and improving their products, they increased their profits abundantly by purchasing other food companies. In 1994, Jollibee started merging with other companies and bought 80% of Greenwich Pizza which enabled them to also penetrate the pizza-pasta market. Years pass and they also got a hold of Delifrance Asia, Chowking, Red Ribbon and Mang Inasal. Just try and imagine how strong Jollibee is now and how wide their market is. No wonder it tops the fast food industry here in the Philippines.

An astute move of focusing on their competitors rather than their products lead them to dominance of food services in the Philippines. Their dominance is evident from acquiring and merging with companies in the Western Pizza and Pasta segment to the Oriental quick-service restaurant segment.  Merging and acquisition seemed to have been an effective strategy for Jollibee not only because of its dominance but also because of numerous other reasons. Merging and acquisition increases revenue through decreased manufacturing and human labor costs. Extra budget is allotted for product improvement. Merging cancels out coinciding jobs decreasing the costs for salary.

However, like everything else, merging and acquisition have their disadvantages. As stated earlier, merging and acquisition cuts human labor costs. This means many people lose their jobs because of coinciding jobs. Merging and acquisition only concerns the managers and the top people of the companies. This results to poor staff communication. Staffs are usually not informed about acquisitions therefore earning negative comments from them.

Merging and acquisition seemed to be the best idea when Jollibee acquired it. However, it has also negatively affected Jollibee in some ways. When Jollibee merged and acquired Mang Inasal, Chowking, Delifrance, and Greenwich, it has forsaken product innovation. The same menu occupies the lighted boards in Jollibee stores when customers come in and rarely does it change. This may be a minus factor for them because other food companies introduce new products every now and then. Like KFC for instance, they have been introducing new products almost every season.

Merging and acquisition can be considered as a gold mine to big companies, but it affects consumers and majority of Filipinos gravely. This might be a good thing for Jollibee but there is an ongoing concern that should certainly avert your attention from whatever you might be doing right now. Jollibee is not far from monopoly through merging and acquiring with other companies. It might seem unlikely, but with the power Jollibee has right now, it seems possible in time. Becoming a monopoly will lessen competition, drive prices up and sacrificing consumers' welfare. Competition is what keeps prices from increasing. Companies need to stabilize their prices in order to keep up with competition. Jollibee, if it becomes the lone manager of food services in the country, can make a lot of profit by increasing prices perpetually since there are no significant competitors. One should not be surprised buying one-piece chicken with rice worth Php200 because there are no other stores he/she can go to. Such is the detrimental effect of Jollibee monopolizing.

         Jollibee’s merging and acquisition with other companies compromises many jobs. This will result to many Filipinos losing their source of income. The other workers who luckily kept their jobs have to deal with a new boss, a new task, and a new struggle to keep their jobs. Merging and acquisition only has benefits to the big companies which can create humungous profit using any strategy leaving hopeless Filipino consumers and workers crawling under their dominance.

 -Ferdinand Badillo