Strategic Management in a global context

This article analyzes the attractiveness of the Pizza industry using Porter's five forces model and conducts a value chain analysis of Domino's Pizza. It also suggests core competencies that can help Domino's sustain its competitive advantage.

Running header: Strategic Management in a global context 1
Strategic Management in a global context
Students Name
Institutional Affiliation

Strategic Management in a global context 2
Question 1.
Over the years, Domino’s pizza has maintained being a strong player in the pizza
marketplace despite different challenges it has faced such as the negative reputation in the
marketplace (Lambert, 2014). Besides, the company has refined its way of doing business by
improving elements such as its delivery service to customers. This has allowed the company to
grow extensively. In this section, we are going to analyze the attractiveness of the Pizza industry
in which Domino’s operates in by applying the Porter’s five forces model. The porters five
forces model observes forces such as the bargaining power of buyers, threat of new entrants,
threat from substitute products, bargaining power of suppliers, and rivalry among existing
players.
To begin with, we have the bargaining power of buyers. Buyers are considered a driving
force in any market and therefore, understanding the buyer behavior is crucial for any business
(Rothaermel, 2015). The pizza industry has been very lucrative over the years due to the
consumer demand. According to a survey completed by Rasmussen Reports in the year 2011,
about 40% of Americans eat pizza once per month with adults aged between 30 and 49 being the
most frequent customers. However, this has increased over time.
In addition, the pizza segment of the food industry represents about 11.7% of all the
restaurants and accounts for more than 10% of all food service sales. As a result, the pizza
industry focusses on individual customers since it is unlikely that a single customer would
purchase a large portion of sales. Due to this demand, the customers bargaining power is high.
Besides, the pizza industry is highly differentiated as well as customer are more sensitive to price
fluctuations. Therefore, different companies such Pizza hut, Domino’s and Papa John’s among
others have established different competitive strategies so as to provide the best customer
experience.
Secondly, we have the threat of new entrants. New entrants tend to bring innovation in
the market by putting pressure on existing organizations (Martin, 2014). Therefore, organizations
will have to restructure their operations such as the pricing strategy, new value to consumers and
lastly reduction of operating costs. The Pizza industry is very attractive therefore, opening of
pizza stores is very easy. However due to the market share that the big pizza chains have
acquired, the threat of new entrants is low. For example, Papa John’s has about three thousand

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stores worldwide with each making a revenue of about $313,000. On the other hand, Domino’s
has about nine thousand three hundred store each generating revenue of about $170,000.
Besides, since more people are focusing on organic foods due to issues of obesity and
health concerns, the Pizza industry may think to shift its position from a low-cost provider to a
more health-conscious approach with a higher price tag (Lambert, 2014). This might
revolutionize the pizza industry hence ensuring more innovation in this sector is introduced.
Thirdly, we have threats from substitute products. In a market, substitute products create
a competitive environment hence reducing the potential for profit (Martin, 2014). Pizza hut, the
largest pizza chain restaurant in the world, has been able to stay on top of the market due to its
variety of products it offers from chicken, sandwiches, pasta and cakes. In addition, after
Domino’s captured the market with its new pizza, the company had to introduce more products
so as to stay afloat. The pizza industry has many players and even if pizza remains to be the at
the to of the menu, other products such as sandwiches have brought competition. Therefore, by
introducing other substitute products in the main pizza restaurants, competition has been curbed
hence pizza taking the lead.
Fourthly, we have the bargaining power of suppliers. Supplier are key stakeholders in the
entire value chain. Suppliers are able to dictate terms, set prices, and also determine the
availability and timelines of raw materials (Martin, 2014). Most of the Pizza eateries control their
own supply chains including both local supply chains and international supply chains. Suppliers
have a low bargaining power since they have to operate under the pizza eateries conditions.
Therefore, fluctuation of prices is quite difficult. This means that there is no pressure from
anyone or control of the availability of raw materials. For example, Dominos controls all its
business segments from domestic stores, domestic supply chain services to international services.
This has allowed the company to be able to create value for its customers since much of supplier
expenses are reduced exponentially. Besides, the product costs have been reduced highly so as to
ensure high number of customers are attracted to the product.
Lastly, we have rivalry among existing players. This force describes the rivalry between
present companies in a market (QuickMBA, 2018). The competitive pressure influences the
profits, prices and strategy adopted by the companies. The competitive rivalry between Pizza hit,
Domino’s, Papa john and Little Caesars experience has remained to be high over the years since

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the companies have similar strategies. In addition, their products offer similar benefits hence the
costs of the products have also been affected. Since the top fifty independent restaurants
particularly in the United States, have no rivalry, they have managed to occupy the largest
market share. For example, in the US, independent pizza chains cover about 58% of the market
while the other top four pizza chains have occupied only 27.48% of the market (Lambert, 2014).
This makes the pizza industry more attractive even for new entrants.
Question 2.
Value chain analysis refers to the analysis of the normal activities that take place in an
organization for the purpose of determining the competitive strengths of the organization
(Smstudy, 2018). A value chain portrays the activities that primarily create value to the
customers of a given service or product. In conducting the value chain analysis of Domino’s, we
will consider both its primary activities and secondary activities. The primary activities involve
activities primarily concerned with the creating and delivery of a product or service (Smstudy,
2018). On the other hand, support activities involve activities that are not involved in production
but assist in enhancing the primary activities. A value chain analysis can be advantageous for a
business since a business that wishes to outperform its rivals can do that by differentiating itself
through performing its value chain activities better than its competitors.
Beginning with the primary activities, we have inbound logistics. Dominos has its very
own supply chain management team that is responsible for the procurement of both services and
products majorly for its stores, world resource center and supply chain centers (Ireland, Hitt, &
Hoskisson, 2008). Therefore, Dominos prefers developing long-term partnerships across
proactive suppliers hence generating cost-saving measures. Through these suppliers, Dominos is
able to buy all raw materials such as mozzarella cheese, sauce, wheat, vegetables, spices,
chicken, pepperoni and vegetables. This is a strength for Dominos.
Secondly, we have manufacturing operations. This primarily involves the preparation of
the pizza. After receiving the raw materials from the suppliers, Dominos restructures its
manufacturing in a specified manner. Dominos has a domestic supply chain segment that handles
the dough manufacturing and supply chain centers (Ireland, Hitt, & Hoskisson, 2008). This
allows the company to produce fresh dough on a daily basis hence ensuring the pizza stores
receive the dough in time. This helps reduce the time if the stores would individually produce

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their own dough therefore increasing efficiency. The domestic supply chain segment controls
about sixteen regional dough manufacturing centers that serve about three hundred stores daily.
Thirdly, we have the outbound logistics. Many people consider Dominos to be more of a
logistics company than a restaurant. This is because main of its income comes from pizza
delivery. Over the years, Dominos has curved out this niche by establishing its “total satisfaction
guarantee” through pizza delivery (Ireland, Hitt, & Hoskisson, 2008). In addition, its supply
chain services that produce the dough to the company have ensured all the company’s franchise
stores have the needed inventory required hence minimizing delays. However, the home delivery
service has been very advantageous for Dominos. Since the home delivery service faces huge
competition from different local and individual pizza shops, Dominos has still managed to
occupy the home delivery space by selecting locations that benefit the its core strategy. Its
logistics operations have allowed it to reduce the overhead costs hence providing less expensive
pizzas.
Fourthly, we have marketing. Marketing has been of great importance to Dominos since
it was crucial in growing the business after suffering the negative reputation from its customers
due to low quality pizzas. Dominos undertook one of the riskiest marketing campaign by
launching the “oh yes we did” campaign. This campaign focused on encouraging the formerly
dissatisfied customers to try the new pizza they had made with a full money-back guarantee
incase they are not satisfied (Lambert, 2014). This helped Dominos increase its sales by
recouping lost customers. The campaign has also allowed the company to double its awareness
across both demographically and geographically. To date, when consumers hear the name
Dominos, the brand is associated with the thirty minutes delivery guarantee.
Fifthly, we have customer service. Domino has spent many years curving out a strategy
for allowing customers get the best experience from its services. For example, by streamlining its
ordering and delivery processes and bringing its e-commerce efforts in house, the company has
been able to respond to customer needs more effectively (Ireland, Hitt, & Hoskisson, 2008). In
addition, by rebranding itself through the “total satisfaction guarantee”, customers have
developed loyalty with the brand. Domino’s promises a great experience for its customers such
that when this is not met, the customers are refunded their money immediately. Therefore,

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Dominos has been able to maintain its exceptional delivery reputation without having to
compromise on standard.
On the support activities, we have procurement. Domino’s supply chain management has
allowed the company to manage the procurement of its products quite professionally hence
reducing the extra expenses between supply chains (Ireland, Hitt, & Hoskisson, 2008).
Therefore, the company has been able to provide its customers with cost effective products hence
ensuring customer satisfaction. In addition, its long terms contracts with its suppliers has allowed
the company to prevent the hidden costs involved in exchange of suppliers or the fluctuation of
prices by the suppliers.
Secondly, we have the human resource department. David Brandon the former CEO of
Dominos was a crucial figure in redefining Domino’s employees (Ireland, Hitt, & Hoskisson,
2008). For example, Brandon developed an inclusive management technique that would help
gather feedback directly from their employees such as “What’s Up, Domino’s?” forum. This
forum allowed employees communicate their own ideas hence being able to sustain high
performance over time. In addition, Brandon ensured each employee was treated differently in
terms of his or her personality so as to ensure maximum output. To date, Dominos invests highly
on its employees through training and development. In addition, the company rewards its
employees well hence being motivated to work towards the company’s objectives and goals.
Thirdly, we have technology and innovation. Dominos success can be attributed to its
streamlined online ordering of its products. By bringing its e-commerce efforts in-house,
Dominos has been able to address the rapid changes in technology (Lambert, 2014). The
company has invested highly on the technological space hence being able to beat new entrants in
the market. In addition, gathering feedback from customers regarding the quality of pizza has
been easy hence Dominos has been able to introduce new products in the market. The feedback
from customers has also allowed the company to work on different issues that may pose a threat
to its products in the future hence remaining one of the best pizza company globally.
Lastly, we have the firm’s infrastructure. Dominos business segments such as its
domestic stores, domestic supply chains and international supply chain have been dependent on
the World Resource Center for the provision of different services. This has increased the

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efficiency of the company since it does not have to rely on any third party for any major
assistance. Besides, its profits have grown with time.
Through the value chain analysis, Dominos can sustain its competitive advantage through
concentrating on various core competencies. To begin with, we have the continuous development
of a unique supply chain model. Dominos can continually develop its supply chains because
according to its business model, more of its revenue comes from its effective supply and logistics
function. Besides, since competition is growing every day, the company can consider reinventing
its supply chains from time to time so as to ensure it remains a household name. Secondly, we
have the promotion of unique global business model. This can help improve flexibility at the
regional level of each store thus ensuring the company’s competitive strategy is at par with the
market. This will additionally ensure increased market dominance.
Thirdly, we have lean food stores. This is a unique strategy that allows the company to
focus on the delivery of pizza to customers rather than accommodating customers to dine on
premises. For example, the company has no more than three seats for its customers in its food
stores. This strategy allows the company to focus primarily on delivery. This core competency
allows the company to increase its operating margins. Besides, this core strategy allows the
company to focus on keeping the overhead costs down while at the same time promoting
consistency on its logistical operations. This core competency can be advantageous for the
company since the market is shifting by the fact that consumers desire to get deliveries than
actually going to the shops. For example, companies such as Amazon have grown from the same
strategy since they focus directly on the consumer.
Question 3.
A cultural web refers to elements that can be employed to influence or describe
organizational culture (Johnson, and Scholes, 1988). Besides, the cultural web identifies about
six interrelated elements called the “paradigm” which portray what an organization is all about,
its values, what is does or its mission. Through analyzing each element, the bigger picture of
culture is clearly presented by determining what is working or not or what can be changed. In
this section, we will determine how the Dominos pizza’s culture has supported the successful
implementation of its strategy through the use of the cultural web.

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To begin with, we have stories. This refers to the events that are spoken about within an
organization (Johnson & Scholes, 1988). These events are passed from older employees to
newcomers in the organization hence ensuring the events are kept alive. The stories tend to
portray values that apply within a company. Dominos promotes ethics in its operations strictly.
For example, this can be observed by the company’s campaign “Oh yes we did”. This campaign
has been central to Dominos culture and has remained a motivation to employees. Even when the
new CEO came in, the campaign was still pushed forward since the company is key in ensuring
their performance and services are centered towards ethical practices.
This has allowed the company implement different strategies such as being the leader in
pizza delivery. In addition, the recognition of employees by the top management has allowed the
employees always feel part of the organization. One unforgettable event that has remained an
important aspect in the culture of the organization is how the former CEO, David Brandon would
have lunch with randomly selected employees (Ireland, Hitt, & Hoskisson, 2008). This allowed
the employees to express their concerns directly hence feeling part of the company. The culture
of employee recognition is being pushed by the CEO Patrick Doyle. This has allowed the
company grow as well as implement its different strategies effectively.
Secondly, we have symbols. This element represents the recognizable elements of an
organization such as logos, privileges, titles or language (The Mind Tools Content Team, 2018).
Dominos has built up a “fast delivery” culture within its business model. This culture has
allowed the business grow exponentially hence the delivery aspect being able to drive more
revenue in the company. Since 1973, Dominos has been able build up the “fast delivery” culture
by focusing more on it as niche in the market. Therefore, customer loyalty has grown over the
years to a point that when Dominos is mentioned, it’s definitely distinguished as the best pizza
delivery food shop.
Thirdly, we have power structures. The most powerful individuals or groups in an
organization are closely linked or associated with the beliefs and core assumptions of the
organization (The Mind Tools Content Team, 2018). These individuals influence the strategic
direction, operations and decisions of the company. David Brandon, the CEO of Dominos from
1999 to 2010, had a significant influence on the company since he established a culture that has
propelled the company to date. For example, the management skills adopted by the company

Strategic Management in a global context 9
from Brandon allowed the employees to develop a persistent spirit of growing. In 2009, after the
company received negative reputation due to the low-quality pizza it produced, Brandon led the
company to recollect itself and present itself to the customers as a reputable brand that provides
the best quality products. This form of leadership/stewardship has allowed the company
implement its strategies successfully.
Fourthly, we have rituals and routines. Rituals refers to the events in an organization that
emphasize what is important to the organization (The Mind Tools Content Team, 2018). On the
other hand, routines reveal how employees interact from within and outside the organization. In
Dominos, every employee has learnt the culture of always being responsible. For example, for
Dominos drivers, in cases where they are not delivering any products, they are usually busy with
other responsibilities in the organization. This has become a routine to each employee hence
increasing productivity in the organization. On the other hand, employees in Dominos are
programmed to believe that any negative situation that occurs should be treated as an opportunity
to be successful. This has become a ritual for Dominos and therefore, the company has managed
to remain as the 2nd largest pizza chain worldwide.
Fifthly, we have organizational structure. This element includes the lines of power or
structure defined by an organization (The Mind Tools Content Team, 2018). Dominos has a
hierarchical organization structure since lines of power come from the top to the bottom. For
example, power may flow from the president, to the chief financial officer, human resource
manager, and lastly to the fast food manager.
Since the organizational structure is closely knitted to the organizational culture,
Dominos has ensured the development of its employees since the structure recognizes the
employees as an important ingredient in the company. In addition, implementing of its strategies
has been easier due to the responsiveness of the employees. Lastly, we have control systems.
This element is involved with how an organization is being managed and may include aspects
such as quality systems, rewards or financial systems (The Mind Tools Content Team, 2018).
Dominos is customer oriented, therefore, the company is defined or managed in regards to the
type of service they provide to consumers. This can be termed as a quality system. Domino’s
primary focus is directly on customer loyalty, promotions and customer service. This culture of

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customer comes first has allowed the company implement new strategies geared at increasing
customer experience.
Question 4.
i. Market penetration.
Dominos has maintained its second position in the pizza industry primarily due to how it
has structured its business model. Beginning with price, Dominos has structured its supply chain
such that a lot of expenses are reduced, therefore, through providing low-cost high-quality
pizza’s, the business has been able to acquire more customers over the years. In addition, its
augmented “Oh yes we did” campaign has been instrumental in creating awareness of the brand.
This has automatically led to dramatic results for the company. Social media has also been
important in penetrating the market for Dominos.
Dominos has a very strong social media presence and has employed the interaction in the
social media to promote itself as well as provide high quality customer service. Diversification of
products has also been another market penetration technique that Dominos has employed in
order to capture a large market share. For example, after Dominos formulated its pizza due to the
negative reputation from customers, the company expanded its menu by introducing oven baked
sandwiches, hence being able to grow its revenues and customer base.
Recommendation.
I believe Dominos should try to reinvent its marketing campaigns since new competitors
are coming up each day. They should not depend on the “Oh yes we did” campaign always but
they should reinvent themselves and introduce campaigns that will capture a greater customer
base. In addition, since many customers are after organic foods due to issues such as obesity,
Dominos should think about introducing new recipes so as to meet customer needs while trying
as much to maintain moderate prices on its products. This will increase both its revenue and
customer base.
ii. Market development.
Marketing development refers to a strategic step than an organization may take towards
an existing market rather than a new market (Spacey, 2017). It helps to tap the untapped market

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within an existing market. To counter the competition in the market, Dominos has introduced
new products in the menu as well as reducing the prices of its products. In addition, by providing
easy delivery of the products to its customers, the company has been able gain a high market
share. Since Dominos has been able to develop strong supply chains, pricing its products
aggressively against competitors has paid off hence ensuring continuous growth of the marker
share.
Dominos segments its offerings based on geographic and demographic factors. For
example, in India, the company understands that the cow is sacred and therefore the company
has replaced beef with sausage and chicken toppings. Opening of new franchises has been
another advantage for Dominos. The market reach has grown tremendously hence Dominos
growing to be a household brand.
Recommendation.
Dominos can develop unique products that differ from the rests of its products so as to
capture the high-end customers. This is because most of its competitors have focused on low
costs products leaving the high-end customers to acquire services from other smaller brands.
Besides, the company will have to increase revenue pers store in order to be able to capture a
high market share rather than opening more stores that don not generate enough revenue.
iii. Product development.
Product development is crucial to any company since it allows a company to increase its
share in the market by satisfying a customer demand (Goodman, 2015). However, not every
product appeals to a customer hence a company is forced to define its target market. In 2009, the
negative reputation pressured on Domino forced it to redefine its products by improving the taste
and quality of its pizza. Through its rigorous market campaign, the product was accepted by the
customers hence allowing the brand to grow extensively. In addition, the company introduced
new products such as the oven backed sandwich which was highly accepted hence boosting
sales.
Domino’s main reason of adding new desserts, side dishes, and new entries into its menu
was to match the “better taste” segment of the pizza industry. This was critical for the company
in obtaining a higher market share.

Strategic Management in a global context 12
Recommendation.
I believe Dominoes should continue innovating its products so as to increase its
competitive advantage. In addition, since the focus of many customers is on organic foods, the
company can consider adding to its menu some organic foods that would capture this ready
market. Through Dominos extensive network with its customers primarily through social media,
the company should also seek feedback on the products it introduces so as to ensure it does not
compromise on quality or taste. This is crucial since Dominos will be able to attract new
customers with its favorable products.

Strategic Management in a global context 13
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