Strategic Management of Domino's Pizza

This report explores the strategic management of Domino's Pizza with internal and external audit, SWOT and Porter analysis, and business level strategy. It includes the mission and vision statements of the company, its strengths, weaknesses, opportunities, and threats, and the necessary recommendations for its sustainability and profitability. The report also covers the functional level strategy and business level strategy of Domino's Pizza.

Running Head: MANAGEMENT 0
STRATEGIC MANAGEMENT

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Table of Contents
Introduction................................................................................................................................2
Internal and external audit of Domino’s....................................................................................4
Domino’s Strategies...................................................................................................................8
Recommendations....................................................................................................................11
Conclusion................................................................................................................................12
References................................................................................................................................13

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Introduction
Strategic management is one of the important business concept that explores various
approaches towards strategic vision, goals, strategy formulation and implementation. (Zott
and Amit, 2010). The business-operating environment is highly dynamic and competitive and
this requires organizations to create and execute significant strategies that help in their
sustainability and achieving competitive advantage in the industry. There are a series of steps
in the strategic management such as performing environmental analysis, setting up
organisational direction, developing organisational strategy and executing those strategies in
an effective way. Hence, it can be said that the success of an enterprise highly depends on the
models of strategic management as well as organisational abilities of the manager
(Chesbrough, 2010). In addition, strategic management concepts are still evolving and will
continue to undergo various changes. For any organisation to gain complete insights about
these concepts will help in gaining their objectives effectively and efficiently.
About Domino’s
To understand the case of strategic management more explicitly, Domino’s organisation is
selected. It is an international fast food chain established by James and Tomes Monaghan in
1960. Some of the major products of Domino’s includes Pizza, Pasta, Chicken wings and
Desert. The company currently having its operations in more than 85 nations and one of the
major factor in their growth is franchising contracts. Over the previous decade, Domino's
Pizza has grown its existence in Australia, with 693 of its fast food outlets situated across the
nation as of 2018. The company also reinforce their brand image with the promise of 30-
minute delivery (He, Zha and Li, 2013). In addition, the major attributes of strength of
Domino’s include customer satisfaction, cost-effective pricing strategy and aggressive
promotion. The company also believe in “Feed the power of possible” and thus just not
relying upon call-ins and walk-in but also the Internet to boost their sales. Moreover, it was
also founded that 68% of Domino’s Pizza delivery order was placed online in Quarter 2 of
Financial year 2019 (Jalan, 2019). This also shows the scope of digitalization for Domino’s in
era of competitive environment.

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Globally, Domino’s Pizza Inc. revenue was noted to $3.483B as per the March 31, 2019, an
18.12% increase over the years (macrotrends.net, 2019). Across Australia, Europe and Japan,
the company also opened about six stores per week in the 2017-18 financial year.
Mission and Vision
The mission and vision statements of Domino’s Pizza are not easy to find, however, one of
the common line in all their statement includes that “Our mission, to be Number One”.
Mission statement – The companies’ mission speech is to continue unique brand loyalty and
effective consumer service with the help of innovative/experience delivery and noteworthy
franchisees. Gaining knowledge from market analysis and perceptive previous experiences,
the company will drive to be the first choice pizza delivery choice around the globe. On a
continuous basis, the company strives to build products that suit the tastes of customer and
sturdily support its plan i.e. “Think global and act locally” (dominos.com, 2015). In addition,
the company is innovating their product portfolio time to time including their delicious new
products like crusts, flavours and toppings suited to the public taste. With regards to this, the
company is also offering value for money and reasonable products to the customers as a
significant share of their efforts.
Vision statement - The company vision is to lead the internet of food in every neighborhood
and striving to become the global optimal pizza delivery organisation while building their
employees and providing to their guest to make the best-case scenario. The organisation is
the market leader in the systematized pizza market and also strengthen its portfolio by
entering into various franchise agreements. The company has strived to build a goodwill for
being a home delivery expert capable of transporting pizzas to its loyal customers from all the
stores in the respective country (dominos.com, 2015). The company vision is also treated
with their corporate value that is set up bar high and never halt learning. In addition, measure
and manage the important aspects and thus produce the best for less.
In next part of the report, the internal and external audit of Domino’s is framed in extent with
various tools and framework. Furthermore, the current strategies at different levels of the
company are also explored. In last, the necessary recommendations are being suggested that
are needed to be adopted by Domino’s to ensure its sustainability and profitability.

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Internal and external audit of Domino’s
To understand the detailed analysis of strategic marketing of Domino’s Pizza, the internal and
external audit is necessary. It can be done by emphasizing SWOT and PORTER matrix for
external audit and internal audit.
SWOT analysis of Domino’s
Strengths – (Internal Audit)
 One of the leading Pizza delivery company globally. In 2018, Domino’s Pizza
standout at fifth position to be the most valuable fast food brands worldwide (Klein,
2018). However, in Australia, it comes at second position following KFC.
 Franchisee of Domino’s is globally available. Considering 2019 first quarter and
through its global footprint, Domino's functioned a network of more than 16,100
franchised and firm-owned stores in the US and over 85 global marketplaces
(biz.dominos.com, 2019).
 Adoption of trending technology in its in-house system and mechanism such as
Domino’s Tracker, Pizza theatre, Hotspots, and so on. By embracing upon developing
own technology, Domino’s can enhance the consumer experience, improve customer
data and restate speedily.
 Affordable prices matching with customer pocket level. The company is dominating
the Pizza market with its fortressing strategy which is based on every decision from
pricing to saving of cost. This is also one of the reasons for their growth in the Asian
markets.
Weakness – (Internal Audit)
 Low level of ambience as compare to the competitors. Many consumers have
expressed their dissatisfaction considering Domino’s services over the years on both
social media and newspaper ratings. It was founded that these disappointments are
related with misplaced garlic bread, uneven pizza slices, poorly distributed pepperoni,
order mix-ups and low level of customer service. In many countries, customer faced
these sorts of similar complaints.
 Menu not elaborated and timely modified as per latest customer preference and
chains. The company has not introduced any such good product from long period in

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comparison to its competitor i.e. McDonald. For example, McDonald's has launched a
new McVeggie burger in certain Australian stores to measure how their customers
react to vegetarian-friendly patty options.
 Lack of space in Outlets. According to various reports related to Domino’s store, the
average store size in 1,600 square feet, against 1,000 square feet in metros (Kaushik,
2011). On the other hand, McDonald's covers 4,000 square feet on an average in
relation to the store size.
Opportunities – (External Audit)
 Market expansion opportunities especially in Asian nations such as India and China.
For example, Considering 2017 second quarter, Malaysia is the biggest Domino’s
Pizza market in Southeast Asia and fifth largest in Asia Pacific (dominos.com.my,
2019). Hence, there is more scope of opportunities for Domino’s to expand their
footprints.
 Introduction and adding of region specific pizza toppings as well as new flavours
options with the modified menu item.
 Introduction of new products and system by leveraging supply chain and distribution
network.
 Adoption of disruptive technology in the market to gain consumer insights and market
trends. For example, Domino’s may emphasis on big data analysis to gain various
insights about Pizza consumption in various countries across the world.
Threats – (External Audit)
 Changing customer trend towards organic and healthy foods. The changing consumer
preference towards higher quality as well as demand for authenticity has highly
impacted the fast food business including Dominos (Anguelovski, 2015). In addition,
there is also more organic growth in Australia with rising consumer consciousness
surrounding health and well-being.
 Incoming competition from a fragmented number of small firms. Various small
restaurants offering fast food products are increasing rapidly and this hampers the
business of big restaurants chains including Dominos.

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PESTLE analysis of Domino’s
 Political Factors – It includes various significant factors related to political scenario
of the country, such as political stability, politician’s integrity, trade barriers and so
on. Considering Dominos and fast food industry, Australia has a sound business
environment and political authority is much decentralized in Australia. This policy
favours for Dominos in Australia in the course of their business.
 Economic Factors – Food and beverage industry is a thriving part of Australian
economy. Moreover, Australian economy has remained resilient and stable and has
not experienced a recession since 1991. This shows growth status for Fast food
business too and thus Dominos can consider these aspects as positive while expanding
their business more in Australia and other countries.
 Social Factors – In Australia at present time, there is a growing hunger for organics
and people are moving towards Veg food more. This presents the needs of changing
various strategies considering Dominos such as including more health product in their
menu items, make advertising towards company sustainability practices and so on.
 Technological Factors – Due to globalization and mass consumption, Dominos
needs to use various significant technologies such as Data mining and Artificial
Intelligence in order to make their business more robust from the environment threats
such as competitors, disruptive innovation and so on. This will help Dominos to build
up their competitive position with the help of proactive strategies.
 Legal Factors – There is various legal context also in association with Australia,
which must be considered by Dominos to operate their business successfully. For
instance, it is important for Dominos to undertake significant labour laws, wages acts
and other obligations to sustain their business for longer period of time. In addition,
the company also need to modify their franchisee rules as per different country laws
as it will help the company to expand in an effective way.
 Environmental Factors – Every company is required to utilize every resource in an
effective way for the longer sustainability of their environment variables. This will
also help the company to build brand image in society. Dominos needs to ensure that
their stores are not involved in any such unethical practices causing harm to the
environment.

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PORTER Five Forces analysis of Dominos
PORTER five forces framework is considered an effective analytical tool that can be
implemented to evaluate the industry competitiveness in relation to attractiveness with the
help of inherent profit potential (E. Dobbs, 2014). The necessary information is used to help
various strategic planners and managers of Domino’s Pizza chain while developing strategic
decisions.
 Threat of new entrants – There is a moderate level of threat of new entrants in case
of Domino’s as the saturation in the industry is huge and cost disadvantages are
significant. In addition, the company is operating on global scale and for any
organisation to compete with Domino’s requires huge capital. This present as a
challenge to the new entrants including others such as high brand loyalty, varieties of
product lines and so on.
 Bargaining power of buyers – Customer have varieties of option to choose from
various fast food outlets. This shows that bargaining power of buyer is high due to
presence of substitute. In addition, Domino’s products are available in high volume
and not differentiated much in comparison with other big outlets as well as small fast
food chains. Hence, it is necessary for Domino’s to consider these aspects in order to
engage the customer for longer period.
 Bargaining power of suppliers – The company gather their resources and raw
materials from various sources and thus due to presence of lot of suppliers, there is
low bargaining power. In addition, Domino’s established their presence in the global
market brings various benefits for the firm it offers ways to build long-term
relationship with the organisation.
 Threat of substitute product – There are various fluctuations in the fast food sector
resulting in high threat of the substitute products. Moreover, low switching costs from
the side of customer also add threat to the organisation, as there are offering varieties
of similar products.
 Competitive Rivalry – The competition in case of Domino’s is very high due to
presence of various other fast food outlets. In addition, the industry attractiveness is
resulting in bring more fast food outlets every year and this may effect Domino’s
profitability. In 2018, Domino’s Pizza standout at fifth position to be the most
valuable fast food brands worldwide.

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Domino’s Strategies
Domino’s business strategy is a summary of the business plans to achieve its goals and
ensure its sustainability in the industry. It is important for any organisation to explore all
external and internal environment factors proactively in order to attain competitive edge in
the industry with the help of adequate business strategy (Kuratko and Audretsch, 2009).
Domino’s owns low cost infrastructure investment and franchisee-owned commercial model
that is building it's business more feasible than the rivals. In addition,
Functional level strategy
In response to Domino’s functional level strategy, it includes their significant marketing
strategy, financial strategy, HR strategy, production strategy and Research and development
strategy. The market of Domino’s is divided upon demographic and geographic factors and
the company is usually opting for distinguished targeting strategy to aid the market depend on
the taste and preferences. The company does promotion and advertising aggressively through
its websites, mobile app, and personalized SMS to individual consumer and thus increase
more brand awareness (Hebden et al, 2011). In relation to their financial strategy, it is geared
towards creating a leaner organisation with a focus on key business processes. The company
facilitates production of standardized mixture of ingredients. In addition, cost minimization is
a financial strategic goal based on the cost leadership generic strategy.
In extent with HR strategy, the company pursue its HR strategy with aggressive recruitment
in light of expansion of its various stores globally. The company also undertakes several
corporate training and development programme including in-store training programs. The
company offers its employees to have a unique platform aids in the development of employee
skills overall as this help the company with increased loyalty towards the brand from the
perspective of employee.

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Business level strategy
Source: (De Wit and Meyer, 2010)
In extent with business level strategy, Domino’s embraces upon integrated cost leadership
and differentiation. This strategy helps the company to maintain its competitive pricing while
developing new products that will attract new segments of the market (Kaliappen and
Hilman, 2013). For instance, the company is cutting more costs in areas such as supplier
choice and food quality. In relation with differentiation strategy, Domino’s seeks for new
suppliers to obtain higher quality ingredients (Chen and Huang, 2013). However, from future
perspectives, the company is planning to take on integrated cost leadership and differentiation
strategy by embracing upon current connections with the suppliers that will help them to
explore new suppliers having capability to deliver organics and high quality ingredients at
affordable price. This will help the brand to be first mover in the industry by offering
healthier and high quality pizza.
Corporate level and International strategy
Domino’s Pizza competes for head-on in the fast food sector among organizations such as
McDonald, KFC and Burger King (Habib, Abu Dardak and Zakaria, 2011). Though, more
definitely, the company assists in the pizza delivery outlets and these comprises of Papa
Johns, Pizza Hut and other local brands.
Considering corporate level strategy, the company operates on three different segments in
addition with the business line. The first is locally owned and franchised stores. There were
390 company-owned and 5,486-franchised Domino's Pizza stores in the US in 2018, making
a total of 5,876 (statista.com, 2019). The second segment includes domestic supply chain
stores which operate through manufacturing and supply-chain centres. The last segment
Dominos

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includes international operating stores, which includes number of stores outside of the
contiguous United States.
To gain competitive environment in the current environment, the company first strategy that
Domino’s implement on is concentration strategy. Under concentration strategy, there are
three subgroups i.e. product development market development and market penetration.
Domino’s has adopted product development strategy by trading new sorts of pizza, the deep
fish and the thin crust including chicken wings, pasta bowls, and deserts to the similar market
of pizza customers. This approach enables Domino to reinforce its menu list and diversify
while alluring to a larger market of individuals. In market development, Domino’s is doing
this by going globally and trading pizza in 85 imported nations (Schroeder, 2019). It helps the
company in significantly improving its revenue scale. The third strategy is known as market
penetration. Where Domino’s sell more of the similar product in the same market with better
sales.
The company also formulates various domestic and international franchise agreements that
help the company to grow at a rapid rate all over the globe. Domino's internationalization
strategy helps in recognizing the need for some adaptation in order to address the societal and
cultural differences come upon in each distinct market.

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Recommendations
Considering all above analysis, various recommendations are being suggested considering
future practices that will help the organisation in its long-term sustainability.
 The company is required to add healthier options in their menu item including veg
pizza and measure how their customers react to vegetarian-friendly patty options. This
will help the company to move up with the trend and also raises customer loyalty.
Domino’s biggest competitor McDonald already doing great in this segment and thus
it is very important for Domino’s to proactively develop new strategies before losing
more market share in the fast food industry.
 Domino’s is targeting wider area of market; however, its quality of pizza is decreasing
in comparison with Pizza Hut. The company needs to highly emphasize on sourcing
quality raw materials of suppliers and focus on in-store production. This will benefit
Domino’s in attracting newer market segment effectively and also build customer
loyalty. In addition, the company should adopt disruptive technologies such as AR in
order to gain various insights about customer trend and market practices. By doing so,
Domino’s can build up future strategies in advance and thus attain competitive edge
in the fast-food industry.
 The company can raise customer satisfaction by improving store ambience and layout
as customers also look for sensory experience rather than tangible benefits. By doing
so, customer retention is also possible for longer period of time and make them
satisfied with the superior experience. Hence, if Domino’s is not appealing enough to
them in terms of food, services and ambience, the company will never come into the
‘favourite restaurants’ list.
 It was also founded that 68% of Domino’s Pizza delivery order was placed online in
Q2 FY19. Hence, the company need to re-build their online system more robust in
order to raise sales through online medium. In addition, Domino’s needs to do more
advertising and offers deals on online medium and social sites as there is large
number of active users and thus the company can cater their needs in more effective
way. In addition, selling pizza online will also help the company to save various cost
in relation with stores such as labour cost, maintenance cost, etc.

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Conclusion
It is evident that Domino’s has maintained strong brand image all over the world and their
business strategy is also quite effective as it helps the company to cop up with the rapid
changes in the business environment. However, competition in the fast-food industry is
increasing day by day, this gives threat to Domino’s in relation with the new entrants, and in
order to retain loyal customers, the company needs to reinforce some of its strategies in
various parts of the world.
The company also needs to emphasize more on online ordering system where the sales
percentage is higher. In addition, the company may expand its business operations in Asian
markets having highest population mix such as India and China. It will help the brand to
achieve economy of scale and brings out more revenue and profitability. Hence, this report
outlined all the strategic management approaches of the organisation help in the development
and growth of the brand.

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