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Applicant’s Results: Borderline Pass
Title: Macro and micro analysis of Jollibee Singapore
Comments: Overall, a commendable effort, though there are a few quirks here and there that ultimately made this a C+ piece.
1. PESTEL Analysis of Jollibee
A PESTEL Analysis was used to assess the external environment of Jollibee in the Singaporean market. For this paper, this analysis is limited to the: (a) political; (b) economic; and (c) social factors that affect the said fast food chain.
1.1. Political Factors
In Singapore, a food shop license issued by the National Environment Agency (NEA) is required before a food establishment can operate. The country ranks 1st in the 2019 Global Food Security Index, of which one of the indices is food quality and safety (Economist Intelligence Unit, 2019).
According to the Singapore Food Agency, the Jollibee branches have a clean track record with a grade of A, that is, a score of 85% or higher (Singapore Food Agency, 2020). One of the concerns with regards to fast food establishments is the “unhealthy” food being served to customers. A country may opt to impose fat tax on such type of food to make it less competitive in the market however, it is expected that Singapore will avert from this blunt taxation (Lim, 2013).
With the ongoing COVID-19 pandemic, one of the challenges for businesses is to operate under strict government restrictions. Just recently, one of the local Jollibee branches was fined S$1,000 for violating safe distancing measures against the pandemic (Esmaquel, 2020).
1.2. Economic Factors
Singapore is considered as the world’s most open economy in the 2020 index (The Heritage Foundation, 2020). Furthermore, the country is ranked as one of the most business-friendly countries. With a strong economy and high level of disposable income, the country attracts plenty of fast food chains.
1.3. Social Factors
Singaporeans, particularly the younger generations, are becoming more health-conscious which might affect the fast food industry (Euromonitor International, 2018). Healthier food items such as salad and vegetarian dishes are becoming popular in the country due to its popularity in Western media as well as government’s encouragement for its citizens to adopt a healthy lifestyle.
2. Porter’s Five Forces Analysis of Jollibee
2.1. Threats of New Entrants
Due to low switching costs and high number of available substitutes, the threat of new entrants is a strong force. It is important for Jollibee to establish brand loyalty to minimize the threat of new entrants. Additionally, Jollibee should also consider widening their target market and investing in research and development to provide innovative products to customers which can set them apart from competitors.
2.2. Bargaining Power of Suppliers Most fast food companies acquire their raw materials from a number of suppliers. Hence, the bargaining power of suppliers is considered to be low because Jollibee can readily procure their materials from different suppliers.
2.3. Bargaining Power of Buyers There is a strong bargaining power of buyers due to strong forces associated with low switching costs, large number of providers and high availability of substitutes. Buyers can easily switch from one food outlet to another and demand the best products at the cheapest price possible. This can pressure Jollibee to make their price range more competitive and tailor their products to the palates of Singaporeans.
2.4. Threats of Substitute Products or Services
The threat of substitutes poses a high danger level. This is primarily due to the free-market system of Singapore and oversaturation of the fast food market in the country. While it is challenging for Jollibee to compete in this type of market, it can lessen the threat of substitute products by building their brand and setting strong differentiation.
2.5. Rivalry among Existing Competitors
There is a competitive market when it comes to fast food establishments in Singapore. McDonald’s remain as the fast food outlet with the highest market share (40%). Other popular fast food establishments include KFC (13%), Burger King (4%), and Long John’s Silver (2%). There is a preference for Western food because of their already established branding and excellent targeted marketing (Lim and Wei, 2019).
3. SWOT Analysis
• Establishment of cloud kitchen to meet increasing food delivery demand (Cabuag, 2020).
• Customized menu
• Innovative business model
• Limited number of branches in Singapore (10 branches)
• Poor customer service
• Addition of healthy menu to target health-conscious customers
• Increase brand awareness through social media
• Partnerships with other brands for merchandise, etc.
• Unique product offerings (i.e. local dishes)
• Strong competition both from local and foreign fast food chains
• Oversaturated market by big players
• Losses due to the COVID-19 pandemic
• Rising labor costs
The fast food industry in Singapore is very competitive and dominated by big market players. Jollibee should strengthen their brand awareness and appeal to the multiracial masses of the
country. With the current pandemic, the fast food chain should also invest in technologies such as self-ordering kiosks to lower their dependence on labor and improve their efficiency.