Management and Marketing Principles

INDUSTRIAL ANALYSIS

JOLLIBEE FOOD CORPORATION

 Table of Contents

Table of Contents.............................................................................................................................ii

List of Tables and Figures................................................................................................................iii

Executive Summary.........................................................................................................................1

Overview of the Case.......................................................................................................................2

Viewpoint.........................................................................................................................................3

Time Context...................................................................................................................................3

Case Facts.....................................................................................................................................4

The Problem.................................................................................................................................7

Objectives of the Case.................................................................................................................8

Alternative Courses of Action/Criteria............................................................................................9

Recommendation..........................................................................................................................12

Conclusion.....................................................................................................................................13

References.....................................................................................................................................14

List of Tables and Figures

Figure 1. Root Cause Analysis

Table 1. Alternative Course of Action #1

Table 2. Alternative Course of Action #2

Executive Summary

President Rodrigo Duterte signed an executive order on Labor Day in 2018 that stops illegal labor

contracting and subcontracting or “endo”, but still allows other forms of contractualization. As stated by

Labor Secretary Silvestre Belo III, other forms of contractualization were still authorized. In his speech,

President Duterte stated as quoted:

“I remain firm in my commitment to put an end to endo and illegal contractualization. However, I believe

that in order to implement an effective and lasting solution to the problems brought about by

contractualization, Congress needs to enact a law amending the Labor Code (2018)”.

Thus, the researchers were given a task of assessing the economic situation of Jollibee Foods

Corporation, one of the largest food chains in the Philippines, which is suspected by the Department of

Labor and Employment to be non-compliant about the law of regularization of employees. Therefore,

the main problem of this case study is:

Jollibee Food Corporation practicing contractualization, wherein thousands of workers are affected. The

researchers came up with alternative courses of action which will help the corporation solve this issue.

(1) Outsource the workers, and (2) Direct hiring.

The researchers were able to come into conclusion that outsourcing is the most flexible, effective, and

efficient recruitment solution, which specializes in managed service provision project solutions, advisory

services. It requires a project leader that will deliver his or her recruitments through a team of specialist

recruiters. It will benefit from a marked uplift in the quality of hires that drives organizational

performance, and significantly reduces operating costs and time to hire. It is also better for risk

management as it allows to minimize the risk in any associated risks with the outsourcing partners by
reducing their burden. Lastly, the ultimate benefit of outsourcing is to help the company to gain a

competitive edge in the market.

The succeeding documents of this case study will be used to regulate the potential viability of the

proposed projects for the development of strategies in hiring employees. The paper aims to: assess the

cause and effect of the given economic problem, and to formulate an optimal decision for better

strategies. Both of which will result in better legal labor contracts for the employees, and a more

effective management of Jollibee Food Corporation.

Overview of the Case

It was in 1978, when an Ice cream franchise founded by Tony Tan Caktiong deviated into a restaurant

that was first named as “Jolibe”, from the root word itself “bee”- what was associated with hard work

became one of the Asia’s top quick-service restaurant chains. It was established and had its

headquartered first in Pasig, Philippines. Manuel Lumba, a marketing consultant was of big help in the

development and progress of chain and domino changes of results, from having its own flag shipped

product which is a burger to incorporating a design of a bee from comic books and Disney figure, the

‘Jolibe’ turned into a ‘Jollibee’ restaurant. Its status and trademark with the signature meals it

introduced to Filipino people

escalated quickly over the years. Now, it has over 1,150 stores in 16 different countries and it is

dominating the market in the Philippines by being the largest fast-food chain having 750 stores

nationwide. With this, we can arrive at the idea that an expansion and growth of restaurants would

mean a larger number of workforce and manpower.

According to DOLE (Department of Labor and Employment) last 2018, there were 3,377 companies in

the Philippines that were involved in labor-only contracting, and Jollibee Corporation is among those top

companies that were listed. Moreover, it was mentioned that Jollibee has 14,690 affected workers in
this Contractualization case.

The researchers intend to scrutinize the cause-and-effect relationship of Contractualization practice

between the company and the workers which will be discussed further in every section of this paper.

Viewpoint

This section of the paper should state the perspective from which the case is being examined.

To create and better develop the case, the researchers seek to determine the vantage point of the

affected workers. The study would exhibit the results of labor-only contracting to workers which has

been going on for years implemented by numerous companies and even the largest ones which includes

Jollibee Corporation, as our selected company.

The contractualization practice itself already is a problem, with this, as the negative effects of the

practice is directed to the workers, the comprehension and evaluation of this study would help them

during their application for work and in terms of conditions that they would encounter.

Time Context

This section of the paper should tell us when the problem was observed.

On the 1st of May 2018, President Rodrigo Duterte signed the Executive order prohibiting illegal

“contractualization”. He claimed that he stands firm on his conviction in stopping “endo” through

creating an executive order, also asking for more time in order to fulfil his campaign to end

contractualization. On the 28th of the same month, DOLE released the list of top 20 labor-only

contracting companies in the Philippines with Jollibee Foods Corporation (JFC) on top with an estimated

14,960 affected workers. After Jollibee Foods Corporation (JFC) terminated their contracts, laid off

workers held a protest as a way of expressing their objection and disapproval of how JFC handled their
employees and their demand to be regularized. JFC claimed compliance with the law and stated that it

had been following the rules set by the department’s Department Order (DO) 174.

Case Facts

In this section, this information will be the basis of case analysis.

Jollibee Foods Corporation (JFC) is a Filipino big fast-food corporation that has received positive

feedback from masses of people over time. Its understanding of the population’s taste brought them to

their renowned success and to where they are now. Dominating the market, JFC controls brands such as

Jollibee, Greenwich Pizza, Chowking, Red Ribbon and Mang Inasal (Garcia, Lovelock & Writz, 767).

Despite their success, the issue on contractualization comes into play. Employees face endo

contractualization where they face a termination contradicting the contract they agreed on. This

concept cause harm to the company’s workforce.

• On March 16, 2017, DOLE Secretary Silvestre Bello III signed the Department Order (DO) No. 174,

series 2017, in which agency contracting practices of recruiting and supplying workers for an employer

only for the purpose of doing work is deemed illegal. However, legal contractualization of

contractualization is still allowed. Wanting for the complete banishment of contractualization, labor

groups were appalled by the new order of only stricter rules for contractualization. The Department

Order also prohibits endo contractualization (Rappler, 2017).

• President Rodrigo Duterte signed an executive order (EO) on Labor Day in 2018 to stop illegal labor

contracting and subcontracting or “endo” but still allowed other forms of contractualization. As stated

by Labor Secretary Silvestre Belo III, forms of contractualization were still authorized (Belo, 2018). In his

speech, President Duterte stated as quoted: “I remain firm in my commitment to put an end to endo

and illegal contractualization. However, I believe that in order to implement an effective and lasting
solution to the problems brought about by contractualization, Congress needs to enact a law amending

the Labor Code” (Duterte, 2018).

• In April 2018, along with the inspection of Jollibee Foods Corporation (JFC) for illegal labor contracts,

NCR Director Henry John Jalbuena of DOLE ordered for regularization of 6,482 workers in reference to a

report to Undersecretary Joel Malunsod.

• In May 2018, the Department of Labor and Employment (DOLE) released a list of 20 companies that

were engaged and suspected to be non-compliant with the regularization of a number of workers.

Jollibee Foods Corporation (JFC) was at the top of the list with 14, 690 affected workers, followed by

DOLE Philippines, Inc. with 10, 521 then Philippines Long Distance Telephone Co. with 8, 310 (ABS-CBN

News, 2018).

• After Jollibee was found guilty of non-compliance with laws regarding laboronly contracts, the fast-

food company terminated its agency service contracts with Staff Search Agency and Toplis Solutions.

This resulted in the lay-off of hundreds of its workers. The termination was deemed to be illegal and was

considered a violation to DOLE’s order for JFC to regularize 6,400 of its workers in February 2018

(APHEDA, 2018).

• In June 2018, laid-off Jollibee workers held a second protest outside the gate of Jollibee Foods

Corporation (JFC) warehouse in Parañaque where they set up camp called ‘beehive.’

• According to Defend Job Philippines and SM-JFC, JFC’s has been non-compliant with the ruling of DOLE

Secretary Silvestre Bello III regularization of workers.

• Earlier on, dismissed workers of Jollibee Foods Corporation held a protest outside of Jollibee main

office in Pasig City. The workers laid down in front of the building to express their disapproval of JFC's

termination of service contracts resulting in hundreds losing their jobs.

• For the battle for regularization, SM-JFC and Defend Job Philippines launched the #BEEastMode

campaign which urges Filipinos both in and out of the country to temporarily avoid purchasing the fast-

food chain’s products as well as its other subordinate companies as a support. As stressed by Rogelio

Magistrado, the president of SM-JFC, the fast-food corporation would pay attention to the worker’s

pleas for regularization, higher income and better labor conditions when pressure is added on the

company’s profits (Magistrado, 2018).

The Problem

This section describes the key issue(s) or challenges facing the organization which are found in the case.

Figure 1:

MAIN PROBLEM

Jollibee Food Corporation (JFC) is practicing the

Contractualization wherein thousand of workers are
affected.

Many workers or employees are suffering because

they get no benefits, security of tenure and other
allowances.

People supported these many workers and started

to boycott and campaign against JFC.

JFC do not pay separation pay, benefits, and other

allowances compared to hiring regular employees.
 ROOT CAUSE

Figure 1. Root Cause Analysis Model

Based on the analysis of Figure 1, it was discerned that due to the practice of Contractualization of the

Jollibee Food Corporations (JFC), it gives financial advantageous to them, because they do not have to

pay for separation pay; they do not need give other benefits such as housing allowances, 13 th month

pay, etc.; and other allowances. Compared to hiring regular employees, workers are to be given basic

pay, 13th month bonuses, healthcare, insurances, and other benefits. As an employee, the basic right of

the citizen is to have the first two steps in Maslow Hierarchy of needs: 1) Physiological needs; and 2)

Safety needs.

Since the Jollibee Food corporation did not regularize employees, they had a lot of contractual

employees which resulted in sub-problems: a) Many workers or employees are suffering because they

get no benefits, security of tenure and other allowances after (6) six or fixed months of working; and

since this was reported nationwide b) A lot of people supported these many workers and started to

boycott and campaigned against the Jollibee Food Corporation (JFC).

Objectives of the Case

This section determines the attainable goals based on the problem identified.

Generally, the purpose of this study is to assess the conflict and come up in practice of Jollibee

Corporation regarding labor-only contracting. Specifically, this study aims to:

 Extract information and determine the root cause of the Contractualization practice

 Determine and elaborate the effects to the Company and especially to workers

 Evaluate the linkage between the root cause and effects

 Anticipate potential and further solutions to eliminate percentage of contractual employees

 Come up with a recommendation to satisfy the worker’s needs.

 Educate employees during their application process to possible jobs.

Alternative Courses of Action/Criteria

In this section, a list of the courses of action the organization can take to solve its problem it meet the

Table 1. Alternative course of action #1 challenge.