Policies for Global Market
Marketing Policy
International and domestic practice
Strained International-Domestic Relations
As the International Division expanded, its relations with the Philippine-based operations seemed to deteriorate. Tensions over menu modifications reflected more serious issues that had surfaced soon after Kitchner began building his international group. Philippine staff saw International as newcomers who, despite their lack of experience in Jollibee, “discarded practices built over 16 years.” On the other side, International Division staff reported that they found the Philippine organization bureaucratic and slow-moving. They felt stymied by requirements to follow certain procedures and go through proper channels to obtain assistance.
The two parts of Jollibee continued to operate largely independently, but strained relations gradually eroded any sense of cooperation and reduced already limited exchanges to a minimum. Some International Division staff felt that the Philippine side, which controlled most of Jollibee’s resources, should do more to help their efforts to improve and adapt existing products and practices. Visco recalled that when he wanted assistance designing new packaging, the Philippine marketing manager took the attitude that international could fend for itself. Similarly, Salvosa wanted more cooperation on product development from Philippine R&D, but was frustrated by the lengthy discussions and approvals that seemed to be required.
International Expansion
The strains came from several things. It started when International tried to recruit people directly from the Philippine side, without consulting with their superiors. There also was some jealousy on a personal level because the people recruited were immediately promoted to the next level, with better pay and benefits.
The international people also seemed to develop a superiority complex. They wanted to do everything differently, so that if their stores did well, they could take all the credit. At one point, they proposed running a store in the Philippines as a training facility, but we thought they also wanted to show us that they could do it better than us. We saw them as lavish spenders while we paid very close attention to costs. Our people were saying, “We are earning the money, and they are spending it!” There was essentially no communication to work out these problems. So we spoke to TTC, because Kitchner reported to him.
Matters grew worse throughout 1996. One of the first signs of serious trouble came during a project to redesign the Jollibee logo, which TTC initiated in mid-1995. Triggered by International’s modification of the old logo, the redesign project committee had representatives from across the company. Having overseen International’s redesign, Kitchner was included. During the committee’s deliberations, some domestic managers felt that the International vice-president’s strong opinions were obstructive, and early in 1996 Kitchner stopped attending the meetings.
During this time, TTC was growing increasingly concerned about the International Division’s continuing struggles.. Around November 1996, he decided that he could no longer support Kitchner’s strategy of rapid expansion due to the financial problems it was creating. Many of the International stores were losing money, but the cost of supporting these widespread unprofitable activities was increasing. Despite the fact that even unprofitable stores generated franchise fees calculated as a percentage of sales, TTC was uncomfortable:
Kitchner wanted to put up lots of stores, maximizing revenue for Jollibee. Initially, I had supported this approach, thinking we could learn from an experienced outsider, but I came to believe that was not viable in the long term. We preferred to go slower, making sure that each store was profitable so that it would generate money for the franchisee, as well as for us. In general, we believe that whoever we do business with—suppliers and especially franchisees— should make money. This creates a good, long-term relationship.
In February 1997, Kitchner left Jollibee to return to Australia. A restructuring supervised directly by TTC shrank the International Division’s staff from 32 to 14, merging the finance, MIS and human resources functions with their bigger Philippine counterparts. (See Exhibit 9.) Jay Visco became interim head of International while TTC searched for a new Division leader.
Equal Opportunities Policy
Labor Policy
The Company, its subsidiaries and affiliates, recognize its responsibility to respect
and protect the rights of its employees worldwide. As such, the Company has
adopted the following guidelines as part of its goal to respect the fundamental rights
of its employees. The Company:
• Shall obey and comply with local labor practices and maintain good working
relationships with its employees.
• Shall not employ or support the use of any form of child labor, or forced or
coerced labor.
• Shall seek to provide a safe and healthy work environment.
• Shall not engage in nor support the use of corporal punishment, mental or
physical coercion, or verbal abuse.
• Shall respect its employees’ right to associate and engage in the collective
bargaining process pursuant to local labor practices.
• Prohibits discrimination of employees based upon sex, race, national origin,
political beliefs, or religion and maintains a discrimination-free work
environment.
• Prohibits, and complies with laws prohibiting acts of sexual harassment or
threats in the workplace.
• Shall comply with applicable industry standards relating to work hours and
payment of wages.
Working Capital Policies
Working Capital means the capital available for running the day-to-day operations of an organization. It is the excess of current assets over current liabilities. In other words, working capital is the excess of permanent capital plus long term liabilities over the fixed assets of a company.
The control of working capital can be divided into areas dealing with inventory, receivables, payables and cash. In order to continue trading, an organization should be in a position to meet its immediate obligations. Therefore, sufficient cash must be generated by the organization. Even the most profitable business can quickly go under if it does not have sufficient liquid resources. But an unprofitable company can survive for quite some time if it has sufficient liquid resources. This means, working capital is essential for the organization’s long term success and development. The greater the extent to which current assets cover the current liabilities, the more solvent the organization.
It is very important to manage working capital efficiently. This is important from the point of view of both liquidity and profitability. When there is a poor management of working capital, funds may be unnecessarily tied up in idle assets. This will reduce liquidity of the company and also the company will not be in a position to invest in productive assets like plant and machinery. It will affect profitability of the company.
Every organization should budget an appropriate amount of working capital to meet its anticipated future needs. If this is not done properly, the organization will be unable to meet its liabilities as they fall due. This is a situation where the relevant organization is said to be technically insolvent. The amount of working capital required by an organization will depend on many factors like the type of business activity, credit policy of the organization, promotional activities, time period of the year and many others. In uncertain conditions, organizations must hold a minimal level of cash and inventories based of expected revenue. An additional safety buffer should also be added to this amount.
There are three working capital management policies adopted by companies.
A large inventory is maintained under the conservative policy and therefore the return is lower than under an aggressive policy. In terms of risk and return, a moderate policy falls somewhere between the two extremes. Under a conservative working capital financing policy, the organization’s non-current assets, permanent current assets as well as a part of the fluctuating current assets are financed with permanent financing (equity and long term debt). Therefore the conservative financing policy is the least risky policy but it gives lowest return to the company.
With a moderate working capital financing policy, non-current assets and permanent current assets are financed with permanent finance and only the fluctuating current assets are financed with short term debt.
You may be aware that cash, inventories and receivables are all current assets that form part of working capital. But there is a basic difference between cash and inventories on one hand and receivables on the other. Higher level of cash and inventories means a safety buffer and therefore it is a more conservative situation. In the case of receivables, there is no such thing as a safety buffer of receivables. A higher level of receivables generally means that the company extends credit on more liberal terms. Aggressive working capital policy has been identified above as risky. Then lowering inventories and cash would be aggressive but increasing receivables would also be aggressive.
Human Resource Policies
Human resource policies are the formal rules and guidelines that businesses put in place to hire, train, assess, and reward the members of their workforce. These policies, when organized and disseminated in an easily used form, can serve to preempt many misunderstandings between employees and employers about their rights and obligations in the business place. It is tempting, as a new small business owner, to focus on the concerns of the business at hand, and put off the task of writing up a human resource policy.
SUBJECTS COVERED BY COMPANY HR POLICIES
Socio-environmental Policy
The following guidelines of Social and Environmental Policy:
International and domestic practice
- Working with an outside architect, a five-person panel from the International Division developed three new store decors, with better lighting and higher quality furniture.
- Redesigned Jollibee logo
- The international marketing group created a library of promotional photographs of each food product that could be assembled, in-house, into collages illustrating new promotions (e.g., a discounted price for buying a burger, fries, and soda). And purchasing changed from styrofoam to paper packaging to appeal to foreign consumers’ greater environmental consciousness.
- Division believed that menus should be adjusted to local preferences.
- International Division expanded beyond the Jollimeal concept.
- Although increased menu diversity almost always came at the cost of some operating efficiency (and, by implication, complicated the task of store level operating control), Kitchner was convinced that such concessions to local tastes were necessary.
Strained International-Domestic Relations
As the International Division expanded, its relations with the Philippine-based operations seemed to deteriorate. Tensions over menu modifications reflected more serious issues that had surfaced soon after Kitchner began building his international group. Philippine staff saw International as newcomers who, despite their lack of experience in Jollibee, “discarded practices built over 16 years.” On the other side, International Division staff reported that they found the Philippine organization bureaucratic and slow-moving. They felt stymied by requirements to follow certain procedures and go through proper channels to obtain assistance.
The two parts of Jollibee continued to operate largely independently, but strained relations gradually eroded any sense of cooperation and reduced already limited exchanges to a minimum. Some International Division staff felt that the Philippine side, which controlled most of Jollibee’s resources, should do more to help their efforts to improve and adapt existing products and practices. Visco recalled that when he wanted assistance designing new packaging, the Philippine marketing manager took the attitude that international could fend for itself. Similarly, Salvosa wanted more cooperation on product development from Philippine R&D, but was frustrated by the lengthy discussions and approvals that seemed to be required.
International Expansion
The strains came from several things. It started when International tried to recruit people directly from the Philippine side, without consulting with their superiors. There also was some jealousy on a personal level because the people recruited were immediately promoted to the next level, with better pay and benefits.
The international people also seemed to develop a superiority complex. They wanted to do everything differently, so that if their stores did well, they could take all the credit. At one point, they proposed running a store in the Philippines as a training facility, but we thought they also wanted to show us that they could do it better than us. We saw them as lavish spenders while we paid very close attention to costs. Our people were saying, “We are earning the money, and they are spending it!” There was essentially no communication to work out these problems. So we spoke to TTC, because Kitchner reported to him.
Matters grew worse throughout 1996. One of the first signs of serious trouble came during a project to redesign the Jollibee logo, which TTC initiated in mid-1995. Triggered by International’s modification of the old logo, the redesign project committee had representatives from across the company. Having overseen International’s redesign, Kitchner was included. During the committee’s deliberations, some domestic managers felt that the International vice-president’s strong opinions were obstructive, and early in 1996 Kitchner stopped attending the meetings.
During this time, TTC was growing increasingly concerned about the International Division’s continuing struggles.. Around November 1996, he decided that he could no longer support Kitchner’s strategy of rapid expansion due to the financial problems it was creating. Many of the International stores were losing money, but the cost of supporting these widespread unprofitable activities was increasing. Despite the fact that even unprofitable stores generated franchise fees calculated as a percentage of sales, TTC was uncomfortable:
Kitchner wanted to put up lots of stores, maximizing revenue for Jollibee. Initially, I had supported this approach, thinking we could learn from an experienced outsider, but I came to believe that was not viable in the long term. We preferred to go slower, making sure that each store was profitable so that it would generate money for the franchisee, as well as for us. In general, we believe that whoever we do business with—suppliers and especially franchisees— should make money. This creates a good, long-term relationship.
In February 1997, Kitchner left Jollibee to return to Australia. A restructuring supervised directly by TTC shrank the International Division’s staff from 32 to 14, merging the finance, MIS and human resources functions with their bigger Philippine counterparts. (See Exhibit 9.) Jay Visco became interim head of International while TTC searched for a new Division leader.
Equal Opportunities Policy
- high recruitment standards
- local sourcing of staff where possible
- the skills, talents and performance of staff matter; gender, marital status, disability, race, colour, nationality or ethnic origin do not
- providing a safe and secure working environment
- staff should have opportunities for training and development
- jobs with the company should include career opportunities
- there should be challenges and rewards
- staff pay should reflect performance
- there should be good communication with staff
- the education of staff matters
Labor Policy
The Company, its subsidiaries and affiliates, recognize its responsibility to respect
and protect the rights of its employees worldwide. As such, the Company has
adopted the following guidelines as part of its goal to respect the fundamental rights
of its employees. The Company:
• Shall obey and comply with local labor practices and maintain good working
relationships with its employees.
• Shall not employ or support the use of any form of child labor, or forced or
coerced labor.
• Shall seek to provide a safe and healthy work environment.
• Shall not engage in nor support the use of corporal punishment, mental or
physical coercion, or verbal abuse.
• Shall respect its employees’ right to associate and engage in the collective
bargaining process pursuant to local labor practices.
• Prohibits discrimination of employees based upon sex, race, national origin,
political beliefs, or religion and maintains a discrimination-free work
environment.
• Prohibits, and complies with laws prohibiting acts of sexual harassment or
threats in the workplace.
• Shall comply with applicable industry standards relating to work hours and
payment of wages.
Working Capital Policies
Working Capital means the capital available for running the day-to-day operations of an organization. It is the excess of current assets over current liabilities. In other words, working capital is the excess of permanent capital plus long term liabilities over the fixed assets of a company.
The control of working capital can be divided into areas dealing with inventory, receivables, payables and cash. In order to continue trading, an organization should be in a position to meet its immediate obligations. Therefore, sufficient cash must be generated by the organization. Even the most profitable business can quickly go under if it does not have sufficient liquid resources. But an unprofitable company can survive for quite some time if it has sufficient liquid resources. This means, working capital is essential for the organization’s long term success and development. The greater the extent to which current assets cover the current liabilities, the more solvent the organization.
It is very important to manage working capital efficiently. This is important from the point of view of both liquidity and profitability. When there is a poor management of working capital, funds may be unnecessarily tied up in idle assets. This will reduce liquidity of the company and also the company will not be in a position to invest in productive assets like plant and machinery. It will affect profitability of the company.
Every organization should budget an appropriate amount of working capital to meet its anticipated future needs. If this is not done properly, the organization will be unable to meet its liabilities as they fall due. This is a situation where the relevant organization is said to be technically insolvent. The amount of working capital required by an organization will depend on many factors like the type of business activity, credit policy of the organization, promotional activities, time period of the year and many others. In uncertain conditions, organizations must hold a minimal level of cash and inventories based of expected revenue. An additional safety buffer should also be added to this amount.
There are three working capital management policies adopted by companies.
- Aggressive policy
- Conservative policy
- Moderate policy
A large inventory is maintained under the conservative policy and therefore the return is lower than under an aggressive policy. In terms of risk and return, a moderate policy falls somewhere between the two extremes. Under a conservative working capital financing policy, the organization’s non-current assets, permanent current assets as well as a part of the fluctuating current assets are financed with permanent financing (equity and long term debt). Therefore the conservative financing policy is the least risky policy but it gives lowest return to the company.
With a moderate working capital financing policy, non-current assets and permanent current assets are financed with permanent finance and only the fluctuating current assets are financed with short term debt.
You may be aware that cash, inventories and receivables are all current assets that form part of working capital. But there is a basic difference between cash and inventories on one hand and receivables on the other. Higher level of cash and inventories means a safety buffer and therefore it is a more conservative situation. In the case of receivables, there is no such thing as a safety buffer of receivables. A higher level of receivables generally means that the company extends credit on more liberal terms. Aggressive working capital policy has been identified above as risky. Then lowering inventories and cash would be aggressive but increasing receivables would also be aggressive.
Human Resource Policies
Human resource policies are the formal rules and guidelines that businesses put in place to hire, train, assess, and reward the members of their workforce. These policies, when organized and disseminated in an easily used form, can serve to preempt many misunderstandings between employees and employers about their rights and obligations in the business place. It is tempting, as a new small business owner, to focus on the concerns of the business at hand, and put off the task of writing up a human resource policy.
SUBJECTS COVERED BY COMPANY HR POLICIES
- Equal Employment Opportunity policies
- Employee classifications
- Workdays, paydays, and pay advances
- Overtime compensation
- Meal periods and break periods
- Payroll deductions
- Vacation policies
- Holidays
- Sick days and personal leave (for bereavement, jury duty, voting, etc.)
- Performance evaluations and salary increases
- Performance improvement
- Termination policies
Socio-environmental Policy
The following guidelines of Social and Environmental Policy:
- To act in accordance with the current public policies and legislations
- To continuously develop and improve financial products with social and environmental objectives and to incorporate social and environmental criteria in other products, when appropriate;
- To offer different conditions for financial support to projects with social and environmental additionalities and projects that address environmental damage;
- To deem the approach to social and environmental dimensions a strategic issue in the analysis of financial assistance, in the management of assets and in the analysis of risk to beneficiaries and undertakings;
- To continuously develop and improve methodologies and analytical, monitoring and assessment tools, incorporating social and environmental criteria;
- To respect the recommendations and restrictions of ecological-economic zoning and agro-ecological zoning, if applicable;
- To support agricultural and forestry projects related to opening new areas only when consistent with ecological-economic zoning;
- To monitor the employment impacts of undertakings and consider the policies of the company System related to human rights and to the protection of people with disabilities;
- To foster eco-efficiency in undertakings supported, adopting socially and environmentally sustainable processes and products, using management systems throughout the supply chain and reducing greenhouse gas emissions;
- To foster and guide the adoption of efforts to prevent and mitigate social impact and unsuitable environments;
- To continuously expand and update information on the patterns of impact and socioenvironmental, energy and GHG emissions performance in key economic sectors, as well as on the evolution of different technological paths and innovations;
- To continuously expand and update knowledge concerning sustainable development as well as social and environmental responsibility while sharing information and experiences with beneficiaries, financial institutions and other organizations, seeking dialogue and fostering the integration of efforts to strengthen the approach to social and environmental dimensions as a strategic issue.