College of Accountancy, Business, Economics and International Hospitality Management

Managerial Economics [ECO 307]

Name: Ashlley Nicole D. Villaran Date: November 06, 2023

Block: BSMA 3109

Activity 2: Classifying Business Expansion in Terms of Value Chain

In this activity, you are required to find each of the following:

a. A company that executes horizontal integration wherein there is a new activity is in the same stage of
that value chain. Simply put, a company can horizontally integrate by merging with another company,
acquiring another company, or internally expanding its operations.

Jollibee Food Corporation implemented horizontal integration in 1994, when it purchased 80% of
Greenwich Pizza shares, allowing it to enter the pizza-pasta industry. Greenwich has created an influential
presence in the food service industry from a 50-branch enterprise. Then, in 2006, Jollibee purchased the
remaining shares of its Greenwich partners for $384 million, establishing the Greenwich Pizza
Corporation. Foreign direct investment and franchising are used by the company to expand globally. Now,
JFC uses a globalization strategy to offer a standard in the taste of their food all over the world and offer a
part of Filipino culture. They have a large choice and variety of products offered in diverse markets,
capable of adapting the products easily, and have an advantage with Filipino expats with their original
products.

b. A company that performs vertical integration wherein a firm expands into a different stage of a value
chain. Additionally, this is a strategy that allows a company to streamline its operations by taking
direct ownership of various stages of its production process rather than relying on external contractors
or suppliers.

In the Philippines, Jollibee Food Corporation manages the production of its main goods,
transportation, and retail sales of their operation. It is considered as a prime example of efficient vertical
integration in the market. Jollibee constantly strives to ensure that the food they provide is of the highest
quality and taste since they know that consumers who are satisfied are a key factor in the company's
success. As a component of the value chain, the JFC's manufacturing process is heavily reliant on
technology to ensure that the food meets Jollibee standards and is manufactured safely and
"cost-effectively" without losing quality. In order to support its own products and keep customers loyal,
the company makes sure that there is a consistent supply of raw materials available at a fair price given
that quality is their first priority.
College of Accountancy, Business, Economics and International Hospitality Management
c. A company that is classified as a conglomerate is a business enterprise that participates in multiple
value chains that are different in nature. Specifically, In a conglomerate, one company owns a
controlling stake in smaller companies that each conduct business operations separately.

The Panasonic Group is a conglomerate that has expanded beyond its beginnings in consumer
electronics. It comprises eight operating companies, affiliates in Japan and abroad and Panasonic holdings
including Lifestyle (white appliances and housing items), Automotive (cockpit systems), Connect
(business-to-business), Industry (FA products, electronic materials and devices), and Energy (rechargeable
batteries). The corporation keeps serving their customers and society at large by concentrating on the
strengths of each operating company and taking on the challenges that they face on a daily basis. This
structure allows the operating companies to increase their competitiveness within the industries.

References:

https://graduateway.com/jolibee-situation-and-integration-in-the-uk-market

https://brandingnerd.ph/2022/03/20/carmens-best-a-brand-made-super-premium-through-its-vertical-integ
ration-process

https://pitchbook.com/profiles/company/41957-02