KFC dominate - Sample Essay
JFC simply concentrates on competing head-to-head with competitive rivals this will lead to competitive convergence where all ‘players’ find the environment tough and threatening. It needs to encourage managers to seek out opportunities in the business environment which they call strategic gaps. A strategic gap is an opportunity in the competitive environment that is not being fully exploited by competitors. By using some of the frameworks, managers can begin to identify opportunities to gain competitive advantage in five way, opportunity in substitute industries, opportunity in other strategic in other strategic groups/ spaces, opportunities in the chain of buyers, opportunities for complementary products or services and opportunies in new marketing segments (Sloman J, 2009)
About the opportunities in substitute industries, JFC faces competition from industries that are producing substitutes, but substitution also provides opportunities. In order to identify gaps a realistic assessment has to be made of the relative merits of the products/technologies in the eyes of the customer. In Hanoi, there is many traditional foods which is favoured by consumer for instance Pho, noodles and meat roll but the safe quality in those is low, food poisoning is a serious health issue in Viet Nam (WHO, 2008). This means that JFC needs to design fast-food marketing in exploiting it to counter to traditional food. Establish an advertising focus on the safety on products is necessary.
Opportunities in the chain of buyers, that identifying who is the strategic customer is critically important. It was also noted that this can be confusing, as there may be several people involved in the overall purchase decision. The user is one party but they may not buy the fast-foods product themselves (SlomanJ, 2006). There may be other influencers on the purchase decision too. Importantly, each of these parties may value different aspects of the product or service. Lotteria, KFC target market to young age like students, officer who have enough financial ability to make purchase decision hence their stores near large street and office, university in Hanoi as well Ho Chi Minh city.
KFC dominate the Northern market with 48 stores competitive with Lotteria 38 stores (GPdaily, 2009). JFC have a concentration in customers are children, families and young people. Although children have no capability to buy products but owning big influence on purchase decision from their parent, JFC may shift its view of the market and aim its promotion and selling at children ‘buyers’ with the intention of creating new strategic customers. They use attraction to for children with family by put stores closely supper market, school and making a marketing strategy towards them.
Another to consider is that opportunities in new market segments, looking for new market segments may provide opportunities but product/service features of JFC may need to change. Presently, KFC, Lotteria and BBQ are towards to urban area with medium income class they forget low-income class who have tight budget but still want to be satisfied by food-fast during busy work in city (Vietnamnet, 2009). With the emphasis is on selling emotional appeal, the alternative may be to provide a standard model as well low service of fast-food that costs less and would appeal to another potential market of low class people.
It is necessary for Jollibee to choose a right generic strategy. The business cannot work well when select one or more approaches, and then fail to achieve them. Michael Porter has argued that a firm’s strengths ultimately fall into one of two headings: cost advantage and differentiation on generic strategy. Figure 6: Porter’s Generic strategies (Mindtools, 2009) Jollibee must classify the market in Vietnam and in global as two different markets.
Expanding to the global where Jollibee must face many number of competitions, they cannot target a wide market, but in Vietnam market there is a few dominant competitors in fast-food industry that had been well-established in long time. When expand business operation in Vietnam, JFC provides fast-food products with a wide broad scope market of Vietnam besides attempting to giving unique products with Filipino taste, happy brand, focusing on children-family value (JFC, 2009).
Therefore, the differentiation strategy is the best for company which seeks to provide products or services that offer benefits different from those of competitors and that are widely valued by buyers. The value added by the uniqueness of the product Filipino taste is played an important role to make the differentiation strategy of Jollibee which seeks to provide products or services that offer benefits different from those of competitors and that are widely valued by buyers (QuickMba, 2009). It may allow JFC to charge a premium price for it, the higher price will more than cover the extra costs incurred in offering the unique product like Filipino taste. In the situation, once suppliers increase their prices the JFC still may be able to pass along the costs to its customers who cannot find substitute products easily. A form of portfolio analysis was used for classifying product lines or SBUs within a large company is that GE-Mc Kinsey Matrix.
GE-McKinsey 9-box Matrix (Att, 2009) From the Vietnam market, Jollibee defined business level strategies bases of the competitive strategy. To defined the position in the future, Jollibee define SBUs focus base on Porter’ five forces. By which, the demand for fast-food in Vietnam market is wide, the rivalry within industry is still high with some dominant firms in market and the profitability as well growth in this industry is potential due to demand increasing.
Jollibee have cheap price, Asian meals suitable with Vietnamese people. It is low strength competitive due to when JFC expands market in Vietnam, specific North area, it will face hardly with KFC, Lotteria that were established in long term with loyal brand. Thus the industry attractiveness is high. On other hand, Jollibee account for a small market share compared with KFC and Lotteria, the distribution channel access is not wide, the profit margin relative to competitors is low. Hence the competitive strength of business unit is low.
Jollibee is stepping into “Selectivity/earnings” cells on GE-McKinsey. In order to strengthen the position, those SBUs at JFC have to focus more on research and development spending, and trying to access the channel distribution in Vietnam. 2. Strategic Method Jollibee is worldwide brand which a company already has a successful fast-food product. It is desiring to expand Vietnam market as well other ones by many fast-food restaurants to compete with competitors like KFC, Lotteria, it is important to build a powerful distribution system, accessing customers base at local market when expanding. In this situation Jollibee use Alliance to exploit new chances and obtaining more market share from local market.
It cooperate with two or more organizations in Vietnam like KinhDo, BaoNgoc to work together at particular fast-foods field, so that each benefits from the strengths of the other, and gains competitive advantage by wide distribution systems and the customers base from these partners (Bnet, 2009). When selecting prospective partners, JFC will be gaining access to more research, more products and more presence in Vietnam by the network from local partners. Strategic alliances also involve the sharing of knowledge and expertise between partners as well as the reduction of risk and costs in areas such as relationships with suppliers and the development of new products and technologies in order to meet its strategic objective (Bnet, 2009).