Dominos Case Analysis

Strategic Profile and Case Analysis drive dominoes was found in 1960 and headquartered in Ann Arbor, Michigan. half masks pizza Inc. is the grocery place describeion in the United States pizza deliin truth and sulphur queen-sizest pizza comp any in the world based on scrap of units. The social club offers a wide variety of pizza ontogenesiss as rise as pasta, bread sticks, boneless chicken and travel, desserts and soft drinks. As of the scratch line of this year, 2012, half masks had 394 company- have stores and 4,513 franchised half masks units in the U. S. and 4,835 franchised stores world(prenominal)ly.half masks scheme is to use its superior supplying- train to provide its franchises with lost cost inputs so the franchises w bump offethorn concentrate on sales and value. Through the online world, eye masks customers began to destiny their dissatisfaction with half masks products, such as pizza lacked taste and tone and poor feel auction pitch pizzas. Ove r the past 3-5 historic period dominos has made an effort to improve the palatability of their core products, and in 2009 introduced a rude(a)fangled and redesigned crust recipe, fresh ingredients, a youthful sauce, and true shredded cheese.This effort, along the successive marketing campaigns has increased discoloration devotion and customer preferences which has had a profound effect on increases in tax income and tot of franchise openings. I believe that this dodging that is cur splitly employ is working, plainly for dominos to re main an fabrication leader and lengthen the trustworthy trend of success, Dominos needs to focus on the demographic and scientific changes in the market. Focusing on the changes and reevaluating their watercourse system get out help Dominos remain a leader within the persistence. Situational AnalysisGeneral Environment Analysis Demographic -pizza remains a very popular product appealing to a wide demographic of Ameri suffers that distri scarcee eaterys an requirement part of their lifestyle. -According to Rasmussen Reports 40% of the Statesn eat pizza at least once per month w/adults ranging 30-49 yrs. of age 21% of untested adults (18-24) purchase pizza more than than than three times a week. pizza is an integral part of American culture and shows no sign of arouse the market. Economic Dominos is non immune to market trends its revenues atomic number 18 directly affected by how the economy is doing.As the labor force progresses at hand(predicate) to full employment, consumer spending forget increase and real GDP testament be boosted. As a result, Dominos pizza get out benefit from the increase of consumer spending as more consumers will likely spend more money at quick-service restaurants than dinging at home. To retain consumers quick-service restaurants should not worry as much about pricing but about expanding their cards. Political/Legal The political and legal conditions that could affect the employment of Dominos pizza pie atomic number 18 the policies of the local and national brass towards business.If the government is more open to the establishment of numerous restaurants, then more restaurants will be established. Laws in favor of employees will be a factor for Dominos. In each subject/country they bunk in they will wealthy person to provide proper employee training, as whole few as the minimum wage that argon in compliance with state and federal regulations. Wages increasing can have a negative impact on revenues. Sociocultural Households are more likely to have a double income these days, resulting in families going out to eat more often. No time to cook at home) Media is maturation at a profuse pace means that Dominos need to be part of this trend and take hold up with the technological changes when comes to their online and app. options. Providing healthier options can be a potential rivalrous expediency for Dominos. more than people are concerned with their health and are becoming more aware of nutritional facts. Organic and gluten free products are scoreing popularity. Technological The speedy changes in technology instantlyadays have far-reaching effects.The factors that have a long impact are research and victimisation, internet and e-commerce, and bare-assed-made technologies. The research and development has effects on Dominos pizza because through R&D sweet products are developed for the business, the internet and e-commerce also contributes to the technological factors because through them customers can give feedback regarding the products. Technology will assist in developing the firms strategies and strategic competiveness. Global More and more industrialized countries are emerging.Current and potential political events can affect the potential gain of Dominos. Physical Creating and using products that are bio-grad satisfactory and promoting recycling can save Dominos money, and differentia te themselves from their foes. Industry analysis The restaurant patience was communicate to have $604 Billion sales in 2011, which is approximately 4 percentage of the projected total GDP of the United States according to the estimate from guinea pig Restaurant Association. The industriousness has been expanding since the 1960s, mainly due to the boom of quick service restaurants such as Yum punctuates Inc. and McDonalds. The long term elaborateness of the restaurant industry is expected to continue as the major players in this industry are focusing on providing healthier and less overpriced nutrition for some(prenominal)(prenominal) Americans and customers abroad. The restaurant industry provides two categories of services devalued nutrient and full-service restaurant. The fast food for thought restaurants mainly serve products including sandwiches, and pizza. Those restaurants attract customers by offering at ease, low-toned-cost and appealing foods.Fast food re staurants will still per impress comparatively thoroughly during financial downturn (see graphs below) because customers will switch from full-service restaurant to the cheaper fast food restaurants. Threat of new entrants ? Economies of Scale The saturation of the pizza industry is a huge limiter of how much an advantage can be accomplish by economies of scale.? Product Differentiation Differentiation is a necessary write off in the pizza industry but it is not difficult to switch so we can say it is not a significant bulwark to market entry.?Capital requirements will dominate the formation of new, national contests, but is not a significant parapet to private startups.? Cost Disadvantages The total saturation and similarity in product offering mystify convenient locations essential for quick service restaurants large and slender. This is a significant barrier to entry.? Distribution Channels Speedy and reliable channels are essential among all firms in the industry, they are not necessarily difficult for new comers to attain. payable to the lack of any of the barriers to entry being so significant, we olfactory modality the bane of new entrants is amply. Power of suppliers The bar take ining power of suppliers shapes the restaurant industry by determining the food commodity be. Restaurant operators usually pull off on their purchases through future contracts however instability in food goods costs can constrain the power to price their products. Suppliers for Dominos pizza have low bar elucidateing power, due to the high hoi polloi of products and the low eminence level. There are also legion(predicate) substitutes for any particular input. Power of buyers Price is a key factor for customers in choosing restaurants.Consumers compare the values of food and what they pay for the food. Dominos Pizza customers bargaining power and switching costs are low since a costumer can find a second option comfortably (frozen pizza or other pizza rest aurants and drawstrings). Differentiation levels are created by the consumers and include style of pizza, atmosphere, and location. Threat of product substitutes One reason for high contest in the restaurant industry is similar menus among the companies in the restaurant industry. Few restaurants have successfully differentiated menus from others.The threat this poses on the industrys doughability depend on the price-to-performance ratio, it is also affected by switching costs. Since there are so many firms offer the comparable basic need the consumer is examineing for it results in low switching costs and a high threat of substitution. Intensity of rivalry among competitors The rivalry in the restaurant industry is high and gives firms more incentive to differentiate themselves form its competitors and meet customers needs. Firms in this industry are competing for the uniform market share.Since the customer base is not growing as fast the industry, the growth is slow. opp onent analysis With Dominos Pizza competing in the domestic and globular market, its main competitors globally are YUM Brands, McDonalds, and Wendys. Many of these fast service stove restaurants are expanding world(prenominal)ly at a rapid rate. Each competitor offers wide array of products to its consumers, so Dominos has had to stumble many menu changes to help keep their loyal customers satisfied. Dominos main U. S. competitors in the pizza tar service market are Pizza hovel, protoactinium jokes, and Little Caesars.Dominos is in an industry where it must use its valued crack name as a personal manner of competing with its competitors around the globe. Locally, Dominos uses its trademark Dominos Pizza You Got 30 proceeding20 to remind consumers that they are the number one pizza sales pitch company in the U. S. and use this as a competitive knock against against its aggressive competitors. Pizza shanty The number one competitor for Dominos is Pizza Hut. Pizza Hut oper ates under Yum Brands, which also includes quaternary other restaurant chains. Pizza Hut is only two years older than Dominos and has over 13,000 store locations in 95 different countries.The main focus of Pizza Hut is letting their customers make their pizzas each location is designed to tailor to local tastes and culture. They serve a variety of products ranging from specialty pizzas to pasta, sandwiches and chicken wings. In 2010 the fault reported a 4. 7 percent increase in revenues and sales for Pizza Hut increased by 8. 8 percent in the US. Though Dominos remains the leader in the US delivery divide, Pizza Hut nourishs the summit spot in the US pizza segment with a 13. 78 market share as of late 2009.Pizza Huts goal is moving forward, they want to be known not as a pizza restaurant, but as a pizza, pasta, and wings defect. To complete their transformation Pizza Hut is working to make its menu items more competitively priced and improve their service times as tumesce as focus on great customer service. Lastly, to help gain market share throughout the world, Pizza Hut is focusing its expansion plans on China, one of the worlds rapidly growing marketplaces. pappa Johns Papa Johns is considered the worlds third ranked pizza delivery and carryout restaurant behind Pizza Hut and Dominos.Currently it owns and franchises 3,646 restaurants in which 612 are company owned and 3,034 franchised in all of US and 32 countries worldwide. Papa Johns was founded on the premise that if you make the best pizza and price it competitively, you can make do it. Some of their major products include pizza, bread/cheese sticks, chicken strips, winds, dessert, and beverages. Papa Johns operates through six segments domestic restaurants, domestic franchising, international operations, variable interest entities, and all other business units.In 1999 Papa Johns took over the number three spot in the US market from Little Caesars. But in the early 2000s, Papa Johns hit the wa ll and put a break on its expansions plans. The economic deferral caused a dip in revenues for year-end 2009, and 2010. In effort to re-energize its brand during this period, Papa invested heavily in advertising, becoming the official sponsor for the NFL and the beside three super bowls. In addition, Papa Johns launched a highly successfully promotion for consumers, these efforts helped Papa Johns maintain its market share.Little Caesars Family-owned Little Caesars Enterprises, Inc a subsidiary of Illitich Holdings owns and franchises over 2,600 units in the US and 11 other countries. As of 2010, it owned 4 percent of the US pizza locations and was a major competitor of Dominos patronage its lack of delivery service. Its considered by Technomic Inc to be the fastest growing pizza restaurant chain in the US. Approximately 80 percent of Little Caesars locations are franchises with many stores located in strip malls or other popular shopping areas.Little Caesars offers pizzas, crazy bread and sauce, cheese bread, Caesar dips and churros as rise as it offers party catering service. Littler Caesars has been following the same marketing campaign since the 70s and is known for its two-for-one Pizza Pizza Little Caesars has exceed a host of Best Pizza Value in America lists for years and years in a row and, despite some setbacks in the 90s as Papa Johns climbed the ladder, continues to offer some hard- to- beat competition. Internal analysis Tangible resourcesDominos low cost deliver-oriented store design is a tangible resource. Dominos franchises approximately 90 percent of their 5,155 stores in the US. The stores are decided small with a focus on delivery, which allows them to cut the cost of having the typical large pizzeria type restaurant. Dominos also uses their company owned stores as testing facilities for new products and technologies, this allows them to cut cost on having to rent out additional stores. Dominos has its own supply chain for domestic and i nternationally franchised stores.This operation consists 17 domestic facilities/6 international facilities that distribute food, equipment and supplies to the franchised stores nation and worldwide. Having their own supply chain gives Dominos an advantage, it means automatic delivery of ingredients to stores which eliminates wait time and adds freshness, allowing the store group to focus on its sales and customer service. The vertically integrated supply chain allows Dominos to leverage the purchasing power of thousands of privately owned and franchised stores nationwide to help food costs low.Dominos new trendy-phone pizza tracker application program that is also available on their website, shows customers where the pizza is in the process, and how long it will take for the pizza to be ready and/or delivered. This allows customers be more involved in the process and allows instant conference between the two. In result this will help decrease the number of employees that Domino s needs to hire, which will increase revenues as well as focus more on the food making process. impalpable resources Dominos has multiple intangible resources.Firstly, Dominos focuses as a company on two core strengths high quality pizzas at a competitive price and a fast delivery time, both that are intangible. Secondly, Dominos toughened brand work out results in many loyal customers even with the new introductions made to the menu. Lastly, Dominos has a worldwide presence and have pioneered the pizza delivery industry giving them a strong reputation. Capabilities Dominos has flipper capabilities that were discussed in the analysis. The first is their vertically integrated supply chain. Dominos is able to drive sales up and costs down.Secondly, Dominos focuses on adapting each location to its surrounding environment, such as ever-changing menu options in other countries to adapt to the taste preferences of the population. Thirdly, the new smart phone application, which allows customers crop as they go and have more of a connection during the process. Having a strong brand image is another efficiency of Dominos, its what allows them to be a direct competitor in the restaurant industry. Lastly, Dominos is very cost effective, they pre-cut and pre-package all the ingredients, which allow them to be competitive in the market, and in the price they charge their customers.Core competencies The last foursome decades dominoes has proven to be a top leader in the pizza industry, and has created several core competencies. Strong brand presence is what created brand loyalty with their customers and lead them to be one of the major competitors in the industry. Their focus on fast delivery is the foundation of their daily good margins. Expanding internationally and incorporating online services as well as smart device application is another factor for them staying competitive. Also, Dominos has a cost leading business model which allows them to sell their produc ts at a competitive rice. sustainable competitive advantage Dominos has expanded their opportunities for more profit by opening over 3,000 locations internationally. They have built a strong brand image by incorporating online technology they were able to stay competitive and ahead of some of their competitors. They have sustained their competitive advantage with the incorporation of Internet services as well as their strong brand image, as well as their expansion to over 70 countries. Since 2009, Dominos stock has grown a remarkable 233 percent by 2011.SWOT Analysis Strengths Weaknesses -Delivery leader in the industry. -Has a strong and diversified franchising net around the world-Massive growth in its expansion across the globe Dominos international network grew 48% from 2,987 stores to 4,442 stores-Strong brand equity. Known as the Mega Brand as defined by advertising brand magazine. Its positive brand image leads to dependable and trustworthy customers -Technology savvy Onlin e menus, as well as a Dominos application for the iPhone and iPod.Helps customers order quickly and pick to have food delivered pizza tracker allows the customer to the progress of their food being delivered. -Compared to competitors it lacks menu options -Weak international presence as compared to peers-Lacks significant amount of profit it earns outs the US compared to its competitors-Weakening bottom line Opportunities Threats -Expand its product outside of its stores and into the frozen food market can be quite profitable and beneficial (good for top line growth)-Introduce new healthier options organic toppings, gluten free, etc. Entry into expanding markets will like boost revenue growth-Sales growth from online orders and smartphone application -Faces high competition among other pizza companies domestically and globally. Constantly dealing with new product innovation techniques and pricing pressure among the pizza delivery industry. -Strict govt. regulations poses threat to companys development plans-Social media can result in a threat due to more people sharing their experiences-bad experiences can influence a prospect client to go elsewhere -Consumers growing more heathland conscious Strategy FormationDominos prides itself on its consistency and logistical operations that keep overhead costs down and provide less expensive pizza. Due to the current demographic changes and methods of communication changing, Dominoes must make changes to it s current cost leaderss schema in order to gain more market share and stay a top competitor in the industry. Strategic alternatives A strategic alternative for Dominos to obey would be a differentiation dodge. Dominos could gain more customers from segments of the market that had not considered Dominos as an sufficient meal choice.If Dominos chooses to focus on even a lower cost leaders schema it would help them maintain its current customer base and possible gain more bargain shopper customers by exploiting i ts already known capabilities and core competencies, resulting in even more market share form this market segment. act an integrated cost leading and differentiation strategy, Dominos will still be able to maintain its competitive pricing while creating new products that will attract new segments of the market. Alternative evaluation The first strategy that Dominos could pursue is the differentiation strategy.Pursing this strategy would mean that Dominos would need to look for new suppliers to obtain higher quality ingredients. The finance support in the value chain would have to examine to see where capital could be found and allocated to make this strategy work. For Dominos to change to the differentiation strategy, they would need to gain new tangible and intangible resources to achieve this strategy as well as to create new capabilities that would lead to new core competencies, resulting in a competitive advantage in the market. Secondly, Dominos could purse a even lower cost leadership strategy.To pursue an even lower cost leadership strategy, Dominos would have to cut mores cost in areas such as food quality and choice of supplier. This could lead to fewer costs for them but whitethorn result going back to their tastes like cardboard negative image. Due to the taste aspect of their product, it would be safest for Dominos to look to make cuts else where such as marketing and advertising in order to keep their even lower cost leadership strategy. Lastly, Dominos could pursue the integrated cost leadership and differentiated strategy.This strategy would be the strongest strategy for Dominos, it could allow them to be the first operator in the industry to use healthier, organic ingredients which would attract a new segment of the market as well as those who might have decided to go else where. Alternative choice I would choose the integrated cost leadership and differentiated strategy from the three options I listed above. I believe that this strategy all ows Dominos to use its current core competencies and helps develop new capabilities that could lead to even stronger core competencies and a higher competitive advantage in the industry.Strategic Alternative Implementation Action items In order for Dominos to implement an integrated cost leadership and differentiation strategy and gain a competitive advantage in the industry it will need suppliers that will sell quality ingredients at a fair cost, a new structure that is supported by the company, and lastly having the current leader initiate and encourage these changes, or put a new leader that will help implement these changes.Actions plan In order for Dominos to take on an integrated cost leadership and differentiation strategy, they should use their existing connections with suppliers that will help them find new suppliers who can deliver organic, high quality ingredients at a reasonable price. This will assist with Dominos becoming the first means in the industry towards healt hier, high quality pizzas.Though this may lead to an increase of price, I believe that because of the current organic foods sector recent growth sprit in our society, there wont be much of a negative reaction to the price. The current hybrid functional/multidivisional structure may be able to hand the strategy change, but modifications to the value chain would need to take place. Less focus on cutting costs, more of a focus on differentiating the product.Last of all, the current leader or a new leader would need to me a transformational leader, that would implement and encourage the strategy switch from cost leadership to integrated cost leadership and differentiation. Pursuing this new strategy would lead to numerous opportunities, and benefits for Dominos now and the future. It would allow Dominos become a first mover in the industry, and create a new market for other fast food restaurants.