1CONTEMPORARY STRATEGIC MANAGEMENT Pestel analysis: Political environmentAs discussed in the case study, Domino’s pizza ishavingtheirbranchesinmorethan65 countries around the world. Thus, one of the key political challenges that they will face is the diversified political scenario in different countries. This is due to the fact that, different countriesarehavingdifferentapproaches towards the business operation of Domino’s pizza.Moreover,withthechangeinthe political scenario in any particular countries, they have to adhere with the change in the regulations also. Economic environmentEconomicscenarioforDomino’spizzais comparatively favorable due to their gradual increase in sales. It is being stated in the case studythat,non-organicfoodmarketis increasingattherateof2percentinthe American market. Though, the rate is quite lower compared to the organic food, but still themarketisincreasing.However,inthe global market, changing customer preferences towards the organic and healthier options is
2CONTEMPORARY STRATEGIC MANAGEMENT puttingeconomicalpressureonthem. Moreover,withhavinghugenumberof competitorsinthemarket,themarket opportunity for Domino’s pizza in the global scenario is showing depreciating trend. Social environmentAs discussed earlier, rate of increase in the marketshareoforganicfoodsismore compared to the conventional foods. This is due to the fact that, consumers now a days are more health conscious and are more aware about the ill benefits of the fast foods. In the case, it is being given that obesity level among the people is increasing at alarming rate and thus it is having negative implications for fast foods chains such as Domino’s pizza. Thus, it one of the key strategic challenges for them to attract new customers in this social scenario. Withtheincreaseinthehealthawareness amongthepotentialconsumersaroundthe world, it will be beneficial for Dominos to introduce healthier products in the market. Technological environmentIn the current business scenario, technology playsanimportantroleinenhancingthe
3CONTEMPORARY STRATEGIC MANAGEMENT competitiveadvantagesoftheorganization. Moreover,thesectoroffastfood,where Dominosiscurrentlyoperatingismore dependedontechnology.Accordingly,they have also introduced newer technologies in reducing the time of product delivery to the customers.Inaddition,theyhavealso introducedthefacilityofonlineordering system and applications for iphone users to enable them to order from anywhere. However, with the rapid change in the technology in the current market scenario, it is important for them to initiate more technologies in order to enhance the customer convenience and to stay ahead in the competition. Environmental factorEnvironment is one of the key areas, which is being given much concentration in the recent time.Accordingly,contemporarybusiness organizationsarealsoinitiatingvarious measures in order to curb the impact of their operationontheenvironment.Oneofthe potential measures for Domino’s pizza will be the use of recycled materials for packaging.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
4CONTEMPORARY STRATEGIC MANAGEMENT This will help them to reduce the wastage beinggeneratedfromthepackaging.In addition, it will help them to enhance their reputation and goodwill in the market. Legal environmentWith the increase in the customer awareness regardingtheillimpactsofthefastfood, various legislations are also being introduced by the regulatory bodies in order to curb the consumption. Thus, Domino’s pizza will have toadherewiththenewlyintroduced legislations in different countries. Moreover, the legislations are different and diversified in different countries, which will pose challenge for them. it is important for them to initiate the introductionofhealthierproductsinthe market, which will adhere to the latest food legislations.
5CONTEMPORARY STRATEGIC MANAGEMENT Porter five force: Threat of entryThe threat of entry for Domino’s pizza is low due to the high saturation level in this industry. This is due to the fact that already there are hug competition in this sector with the presence of various global brands around the world. Thus, there is less chance and potentiality for the new entrants in the market, which is restricting them in entering in this sector. Moreover, investment is huge in entering in this sector due to the reason that, majority of the existing organizations in this sector is operating on global scenario. Thus, it is one of the key barriers for the new entrants to enter in this industry. Another barrier for the new entrant is the similar type of product offerings in the market. Domino’s pizza along with their competitors is offering similar products in the market. Thus, it will be difficult for them to gain market share by offering similar products without having any brand value. Thus, Domino’s pizza is having less threat of new entrants in the market. However, there will always be the chance of entering of new organizations that can compete with the existing ones. Threat of substitutesAs discussed earlier, the sector where Domino’s pizza is operating ishighly competitive in naturewith the presenceof various competitors in the market. According to the data being given in the case, in the pizza market of United States of America, there are various competitors of Domino’s pizza such as Pizza Hut, Papa
6CONTEMPORARY STRATEGIC MANAGEMENT John’s and some other distant competitors such as KFC and Taco Bell are having more or less similar markets share with having necktoneckcompetition.Thus,therateofcompetitionfor Domino’s pizza is high in the global market also. In accordance to that, threat of substitute for them is also very high due to the similarofferingsbeingofferedbyallthecompetitorsinthe market. In addition, with the increase in the competition in the market, the switching cost for the customers is also increasing. Thus, the threat of substitute for Domino’s pizza is high. Due to theincreaseincompetitioninthemarket,thepricesofthe products are more market determined in order to attract more customers. Thus, Domino’s pizza is having the barrier to charge price according to them. Bargainingpowerof suppliers The bargaining power of the suppliers for Domino’s pizza is low due to the presence of more number of suppliers in the market. According to the information being given in the case, the key ingredient for Domino’s pizza is the dough being used in the pizza. Moreover, it is also being stated in the case that, Dominos is having own manufacturing and supply chain to produce the dough. Thus, they are less depended on the external suppliers for sourcing of the raw materials. In addition, for the sourcing of the external raw materials, there are various suppliers being available in the market. Thus, it is helpful for Domino’s pizza to have more
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
7CONTEMPORARY STRATEGIC MANAGEMENT options in selecting the suppliers along with having low switching cost. This is due to the reason that, choosing a supplier over another will involve less or no cost for them. Moreover, the majority of the suppliers generate their revenue from supplying to the large restaurants such as Domino’s pizza. Hence, they are also depended on these restaurants and will not have upper hand in the process. Bargainingpowerof buyers As discussed in the earlier section, Domino’s pizza is having huge number of competition in the market. Thus, this provides more options for the end customers to choose their restaurants. As discussed in the given case, there are numerous competitors being present in the market with having similar rate of market share. This denotes that, loyal customers are less in this sector rather they are open to all the competitors being available in the market. Moreover, the switching cost is also less for the customers due to the fact they are having more options in their doorstep. Thus, the buyers are having the upper hand in choosing their restaurants and the force of bargaining power of buyers for Domino’s pizza is high.Duetothisfact,Dominoshavetofollowthemarket determined price for their product portfolio in order to attract more customers and to compete in the market. Industry rivalryWith the presence of huge number of competitors in the market, the rivalry in the industry is more. Moreover, in the case study it is
8CONTEMPORARY STRATEGIC MANAGEMENT being discussed that, the growth in the conventional food market is lesscomparedtothemarketgrowthoftheorganicfoods. However, as discussed earlier, the pizza industry is already being saturated with the presence of huge number of competitors. Thus, the current scenario is showing that the growth of the competitors inthissectorismorecomparedtothegrowthofthenew customers. Moreover, due to the presence of global competitors in this sector, majority of regions are being covered with having the high level of market penetration of the organizations. Thus, there is less chance of increase in the new customer base for this industry. Due to this factor, rivalry in this sector is increasing with the initiation of different promotional activities by the competitors in order to retain the existing customers. Thus, this force is high for Domino’s pizza. However, as discussed in the given case, Dominosisalsoinitiatingvarioustechnologiesandother promotional and loyalty schemes for the existing customers in order to enhance the level of satisfaction level of the customers. Moreover, theleadership rolesin thisorganization are being managedeffectively,whichpromotestheemergenceof innovation. Thus, it helps them to enhance the productivity and effectiveness of the employees along with gaining competitive advantages in the market. Moreover, as discussed in the given case, Dominos is having competency in delivering pizza to their
9CONTEMPORARY STRATEGIC MANAGEMENT customers in less time than their competitors. Thus, this type of competitiveadvantagewillhelpthemtostayaheadinthe competitionalongwitheffectivelyretainingtheexisting customers. Value chain analysis: Support activities InfrastructureAs discussed in the given case, Dominos is having second highest number of stores in the United States after Pizza hut. They are having 4474 franchise stores and 454 company owned stores in United States along with 4422 franchise stores around the world. Thus, they are having huge number of stores around the world, which helps them to cover the target market effectively along with enhancing the market presence. Humanresource management Asdiscussedinthecasestudy,Dominosishavingan participative style of leadership in their organization, which helps them to motivate the employees to generate innovative and out of the box ideas. Moreover, it is also been discussed that, employee feedbackmechanismisbeingeffectivelyinitiatedinthe organization in order to gather opinions and suggestion from them. According to their leadership approach, various employee engagement programs are being initiated such as “lunch with Dave”. This helps them to create favorable environment in the
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
10CONTEMPORARY STRATEGIC MANAGEMENT organization along with creating mutual understanding between the employees and the upper level management. Moreover, it is also been stated in the case that, their strategic approach of their leadership style is to adapt the leadership approach according to theindividualcharacteristics.Thishelpsthemtomeetthe requirement of all the employees and to generate competitive advantages by effectively managing them. Employees are being given training in order to equip them to deal with the negative situation. Technology developmentIn terms of technology development, food and beverage sectors are going through rapid changes. One of the key changes is the social media marketing. Major brands are involving social media marketing in order to enhance their brand visibility along with determining the change in the taste and preference pattern of the customers. Dominos is also having initiated effective plan of social media marketing, which involves more than 1.2 million Facebook fans and more than 20000 followers on Twitter. Thus, with this number of followers in the social media, Dominos will have the opportunity to market their newly introduce their newly introduced products and gathering feedback from the customers. ProcurementDominosishavingeffectiveandefficientsupplychain management in order to procure raw materials. In the case study, it is stated that, Dominos is having their own manufacturing
11CONTEMPORARY STRATEGIC MANAGEMENT facility for their dough. This is due to the reason that, the dough of the pizza is the most important ingredient for Dominos. Thus, in order to enhance the quality of the pizza, Dominos is having their own manufacturing facility to maintain the quality of the dough. Moreover, due to the fact of having own manufacturing facilities, Dominos is being able to reduce the cost of supply chain management by preventing the cost of intermediaries. Primary activities Inbound logisticsInbound logistics of Dominos include sourcing the raw materials that have to be bought from the third party vendors. This includes the dough, which are being sourced from their manufacturing facilities. In addition, vegetable items such as mushroom, onion, tomatoes, olives and other items along with the non vegetarian items such as chicken, pork and meat balls are being sourced from the third party vendors. OperationsIn the given case, it is being stated that, the pizza being offered by Dominos are being made according to the taste and preference pattern of the target customers. This is due to the reason that, Dominos is having their business presence in different locations across the world. Accordingly, they have changed the taste of their pizza to attract the customers. In addition, customization is also been available for the customers, which enable them to have thepizzaaccordingtothepreferences.Thus,thestrategic
12CONTEMPORARY STRATEGIC MANAGEMENT objective of their operation will be to offer then above discussed productsattheminimumtimepossiblecomparedtotheir competitors. Outbound logisticsOutbound logistics of Dominos includes transporting the raw materialsfromthethirdpartyvendorsandmanufacturing facilities to the stores around the world. The key objective of their outbound facility is to provide the raw materials to the stores fresh and intact, without having any damage on the quality. Moreover, the outbound activities of them include providing the products to the customers in the stores. In this case, the key objective is to serve hot and fresh pizza to the customers. Marketing and salesThe customer segment of them includes the people up to the age of 50 years. This huge age group is being selected due to the reason that, pizza is being liked mainly by the children and also the adults who consider pizza as their favorite fast food. However, the segmented age group is being targeted up to the age of 50 years due to the reason that, people above that age are less attracted towards the fast food. The diversified product portfolio is also helping them to cover more market base along with meeting the diversified requirement of the customers. They have advertisedtheirtimelydeliveryastheirkeycompetitive advantages in the market. This helps them to attract the customers by offering them minimum time of delivery compared to their
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
13CONTEMPORARY STRATEGIC MANAGEMENT competitors. Service and supportAs discussed earlier, the key objective of the service of Dominos is to provide hot and fresh pizza to their customers. Moreover, the service of them is being designed in such a way that, it will provide timely and affordable service to the customers. The service of them also includes the ambience of the stores along with the politeness of the frontline employees to the customers. The more polite will be the employees in the providing service to the customers, the more will be the satisfaction of the customers. This will help to enhance the brand loyalty of the customers. Identification of the value chain linkages One of the key linkages is the human resource management with the service and support of dominos. This is due to the reason that, due to the help of their effective human resource management, the employees is more motivated and satisfied in their workplace, which leads to positive customer service. Another linkage is between the procurement and inbound facilities. This is due to the reasonthat,Dominosishavingeffectivepolicyofprocurement,whichhelpsin maintaining the proper inbound operations for sourcing of raw materials. There are also linkages between the infrastructure and operations due to the reason that, the more effective will be the infrastructure, the more effective will be the operation. Due to having huge and efficient infrastructure of Dominos, they are being able to determine the diversified needs around the world and offer the products accordingly.
14CONTEMPORARY STRATEGIC MANAGEMENT Identified core competencies One of the identified core competencies is the procurement policy. This is due to the reason that, according to the VRIN framework, procurement policy of Dominos is helping them to reduce the cost by having the own manufacturing facility. Thus, it is having value for them. in addition, the quality and ingredients being used by them in manufacturing their dough is also kept secret. Thus, it is unique and distinctive in their way, which fulfills the rare aspect of VRIN framework. It is also difficult to imitate due to the secret ingredients being used by Dominos. Though the product of Dominos is having various substitutes, but the procurement of the few ingredients will make them unique and distinctive. Human resource management is another competency due to the reason that, it will create value by equipping the employees and enhancing their skills and expertise. It is also rare due to the reason that, the individual skills and expertise of the employees are unique. It is also difficult to imitate due to the fact that the skills of the employees cannot be imitated. Substitutes are available but the exact alternative for the employees cannot be determined. Ansoff’s product & market matrix of Dominos Market developmentThe first step Ansoff matrix is the market development. This step refers to the identification and entering new market with the existing products. In the given case, it is being stated that, Dominosishavingdiversifiedproductportfolioalongwith havingtheirstoresinvariouslocationsaroundtheworld.
15CONTEMPORARY STRATEGIC MANAGEMENT However, Dominos is being present mostly in the major cities around the world. Thus, there are less metropolitan areas being left to penetrate and is already being saturated. Thus, in order to penetrate in the new markets with their existing product portfolio, Dominos should target the tier II cities. With the increase in the income level of the customers around the world, the economy in thetierIIcitiesisrapidlyenhancing.Thus,themarket opportunityishugeinthesecitiesforDominos.Moreover, customers in the tier II cities are not being accustomed with the products offered by Dominos. Thus, it will help them to market their existing products as the new product in these markets. The more they will penetrate in the new markets, the more areas they will cover as their target market along with the increase in the brand value and revenue. The policy of human resource management is helping Dominos to open more stores in tier II cities. This is due to the reason that, withthehelpofeffectivehumanresourcemanagement, employees can be effectively recruited and trained to cater to the new market with same business approach. Moreover, the human resource management policy of Dominos will also help to induct the new employees in the organization effectively with having less probability of emergence of any issues in the organization. Market penetrationThe next step in this matrix is the market penetration. According