Disruptive Business Models: A Case Study of Dominos Pizza Inc.

This report discusses the case of Dominos Pizza Inc. and how its existing business model is under threat due to rapid innovations and inventions. The report examines Dominos' value proposition, customers, finances, and infrastructure using Osterwalder's business model canvas.

A business model can be defined as the rationale of the way an organization creates and
delivers value, social and cultural context. The business model identifies sources of revenue and
the manner in which an organization shall be profitable. On the other hand, disruption can be
defined as disturbance, interruption or hindrance in a process or activity. According to de Jong &
van Dijk (2015), business models are under attack due to the rapid innovations and inventions.
The current business models are under extreme disruption and displacement. This essay shall
discuss the case of Dominos Pizza Inc. Dominos Pizza Enterprises Ltd is the largest chain for
pizza in Australiaa in terms of network sales and store numbers. Australia has the largest
franchisee for Dominos in the world. For examining the business model canvas by Osterwalder,
the value proposition, customers, finances and infrastructure shall be explained.
The existing business model for Dominos can be explained using Osterwalder and
Pigneur’s work and thesis. The following building blocks shall help in explaining the business
model of Dominos.
Key Activities
In the existing business model, Dominos conducts the most important activity of
delivering pizza in the least amount of time. However, due to the advances in technology, there
lie threats as Dominos is deviating from its core activity of making pizza and delivering it in the
least time to other activities such as building digital capabilities like mobile applications. The
digital advances may be an opportunity for the company to enhance its business network.
However, it may be a threat as the people are confused if Dominos is a restaurant chain or a tech
company.
Key Resources

The key resources may be defined as the assets available to an organization allowing to
run the operations effectively. Dominos has a large human workforce to handle the operations
and meet the consumer demands. Apart from human resources, the organization is backed by
physical and intellectual resources. With the advances in technology, Dominos is developing its
intellectual resources. However, the human resources are under threat as the main focus is
shifting from making the best pizza to developing and maintaining the best technological apps.
Key Partners
Dominos builds successful relationships with its partners. The journey of Dominos does
not stop with pizza, but they also intend to partner with companies and individuals across the
supply chain. Dominos is in partnership with Schweppes, JBS, Leprino Foods and various others
who provide the brand with the best produce, equipments, store and franchisees
(Dominos.com.au, 2018). The advancement in technology shall help in making the produce
better which opens a wide opportunity for Dominos in serving the best quality pizzas. Dominos
is in partnership with Apple where the Dominos Pizza Live Tracker app helps in knowing the
users the status of their order (Dominos.com.au, 2018).
Value Propositions
The value proposition is built to explain how the unique offer at Dominos shall
differentiate from its competitors. Dominos is developing applications and exploring the digital
world to enhance the overall customer experience. Dominos offers online ordering and tracking
system to enrich the customer experience. However, the price of products is increasing at
Dominos as the company is focusing on developing mobile applications and technology. It forms
a part of the organizational cost adding to newness thereby distinguishing from the competitors.

Customer Segments
For building an effective business model, multiple set of customer segments may be
determined. Dominos serves the mass market and has no specific segmentation. As Dominos is a
restaurant chain, it has a wide view of potential customers. However, with the advancement in
technology where the company is making major technological innovations, the customer
segment has increased opportunities. In 2013, Dominos made the use of Splunk Enterprise
software for boosting the operational and sales data. Moreover, the customer segment was
enhanced as the company also launched Pizza Profiles where the customers could reorder their
favourite combinations in five simple clicks.
Channels
The value proposition is delivered to the target customers using fast, cost effective and
efficient channels. An organization can reach its clients through multiple platforms through store
front, distributors or a combination of both. In the year 2015, Dominos launched DXP for
delivery driving experts. The pizzas could be kept warm with this technology thereby improving
the customer segment. However, it costs the company between $20,000 and $25,000 for each
franchise. For so many years, Dominos has been delivering the pizza to the customers who place
order online. The advancement in technology that led to creation of DXP is disrupting the
business model as the van has a capacity of 80 pizzas. It shall increase the cost of maintenance
and delivery for a few orders to be delivered.
Customer Relationships

The main reason of success of Dominos is the customer relationship. It uses social media
for maintaining relationships with the customers. However, the advances of technology are also
leading to threats. There is a chance of miscommunication and misinterpretation of messages in
case of social media response while managing customers. Moreover, the focus of companies is
shifting towards self-service. It threatens certain market segment as not all the customers are tech
savvy. They require personal assistance that might hinder the relevance of customer segments.
Finances
This building block comprises of the cost structure such as fixed cost, variable cost,
economies of scope and scale. The costs associated with the business involve salary or rent to be
paid by the franchise. Dominos experiences economies of scale when the products are produced
in bulk. Automated delivery seems inevitable. Other pizza companies are looking into driverless
tech, too. Pizza Hut, Domino's Plano, Texas-based rival, said it is working with Toyota to launch
a fleet of delivery trucks. In renderings, they look like toasters on wheels.
Revenue Streams
Dominos makes income from every customer segment. It generates money from selling
pizzas and other food and beverages. The team of Dominos constantly strives to achieve best
practice operations while sourcing high quality ingredients. It is argued that the revenue streams
may be threatened due to advanced business technologies as the focus of the Dominos is shifting
from selling its core products- pizza.
There are two different perspectives of business models- business models as value
proposition and business models as a profit formula. It is analysed that business models as value

proposition. Value proposition help in satisfying customer needs. Dominos may improve its
product or services for the purpose of creating customer value. However, there are limits to
improvement. Dominos tailors its products and service according to the needs of certain
customer segments thereby creating value. Dominos must give weight on intangibles as it is a
value element in the restaurant industry. Dominos must work hard to maintain its brand image.
Business models are also considered as a means of profit formula. The business models
are formulated in a manner that serves profitability for every organization. It is a company’s plan
for generating revenues and profits. Value finance is one of the main dimensions of business
model where it is determined how a firm shall make money and sustain profit over a prolonged
period of time. It is suggested that Dominos must create utility for its customers through its
products and services to capture profits. It is analysed that a business model is a step-by-step
action for the businesses to operate in a profitable manner. Investors that focus on business
models are leaving room for an ineffective management team and believe the best business
models can run themselves.
Conclusively, The business model identifies sources of revenue and the manner in which
an organization shall be profitable. Dominos conducts the most important activity of delivering
pizza in the least amount of time. Apart from human resources, the organization is backed by
physical and intellectual resources. Dominos is in partnership with Schweppes, JBS, Leprino
Foods and various others who provide the brand with the best produce, equipments, store and
franchisees. Dominos offers online ordering and tracking system to enrich the customer
experience. However, the price of products is increasing at Dominos as the company is focusing
on developing mobile applications and technology. Moreover, the customer segment was
enhanced as the company also launched Pizza Profiles where the customers could reorder their

favourite combinations in five simple clicks. For so many years, Dominos has been delivering
the pizza to the customers who place order online.
‘’

References
Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range
Planning, 43(2–3), 354-363.
de Jong, M., & van Dijk, M. (2015). Disrupting beliefs: A new approach to business-model
innovation. McKinsey Quarterly.
Johnson, M. W., Christensen, C. M., &Kagermann, H. (2008). Reinventing your business model.
Harvard Business Review, 86(12), 50. Scroll down to find the article.
Osterwalder, A., &Pigneur, Y. (2010). Business Model Generation. New Jersey: Wiley (the unit
textbook). The textbook is available from the CQUniversity library for free.
Porter, M. E., &Heppelmann, J. E. (2014). How smart, connected products are transforming
competition. Harvard Business Review, 92(11), 64-88.
Porter, M. E., &Heppelmann, J. E. (2015). How smart, connected products are transforming
companies. Harvard Business Review, 93(10), 96-16.
Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future
research. Journal of Management : JOM, 37(4), 1019-1042.

Transcript
A business model can be defined as the rationale of the way an organization creates and
delivers value, social and cultural context. The business model identifies sources of revenue and
the manner in which an organization shall be profitable. This report discusses the case of
Dominos Pizza Inc. The existing business model for Dominos can be explained using
Osterwalder and Pigneur’s work and thesis. For examining the business model canvas by
Osterwalder, the value proposition, customers, finances and infrastructure shall be explained.
In the existing business model, Dominos conducts the most important activity of
delivering pizza in the least amount of time. The digital advances may be an opportunity for the
company to enhance its business network. Dominos has a large human workforce to handle the
operations and meet the consumer demands. Dominos is in partnership with Schweppes, JBS,
Leprino Foods and various others who provide the brand with the best produce, equipments,
store and franchisees.
Dominos is in partnership with Schweppes, JBS, Leprino Foods and various others who
provide the brand with the best produce, equipments, store and franchisees. As Dominos is a
restaurant chain, it has a wide view of potential customers. However, with the advancement in
technology where the company is making major technological innovations, the customer
segment has increased opportunities. In the year 2015, Dominos launched DXP for delivery
driving experts. For so many years, Dominos has been delivering the pizza to the customers who
place order online. The advancement in technology that led to creation of DXP is disrupting the

business model as the van has a capacity of 80 pizzas. There is a chance of miscommunication
and misinterpretation of messages in case of social media response while managing customers.
Dominos experiences economies of scale when the products are produced in bulk.
Automated delivery seems inevitable. The team of Dominos constantly strives to achieve best
practice operations while sourcing high quality ingredients. Dominos may improve its product or
services for the purpose of creating customer value. However, there are limits to improvement.
Dominos offers online ordering and tracking system to enrich the customer experience.
However, the price of products is increasing at Dominos as the company is focusing on
developing mobile applications and technology. Value finance is one of the main dimensions of
business model where it is determined how a firm shall make money and sustain profit over a
prolonged period of time. Investors that focus on business models are leaving room for an
ineffective management team and believe the best business models can run themselves.