Strategic Management Report: An Analysis of Domino's Pizza's Strategy

This report offers a comprehensive strategic management analysis of Domino's Pizza, examining its operations within a global context. It begins with an application of Porter's five forces to assess the competitive landscape of the pizza industry, evaluating competition, new entrants, customer and supplier power, and the threat of substitutes. A value chain analysis is then conducted, dissecting Domino's primary and support activities, identifying core competencies, and applying the VRIN criteria to evaluate sustainable competitive advantages. The report also addresses organizational culture and utilizes Ansoff's matrix to explore growth strategies. Finally, it presents recommendations for future growth options, supported by references.

Running Head: STRATEGIC MANAGEMENT IN A GLOBAL CONTEXT 0
Strategic Management In A Global Context
(student name)
11-14-2018

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Contents
Domino’s Pizza: a case study in organizational evolution..............................................................2
Q1. Porter’s five-force model..........................................................................................................2
1. Competition within the industry...........................................................................................2
2. New potential entrants into the industry...............................................................................3
3. Power of customers...............................................................................................................3
4. Power of suppliers................................................................................................................4
5. Substitute’s products threat...................................................................................................4
Q2. Value chain analysis.................................................................................................................5
Value chain activities...................................................................................................................5
Value chain linkages: core competencies....................................................................................8
VRIN criteria...............................................................................................................................9
Q3. Organizational culture.............................................................................................................10
Q4. Domino’s Ansoff’s matrix......................................................................................................14
Recommendation for future growth options..............................................................................15
Conclusion.....................................................................................................................................17
References......................................................................................................................................19

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Domino’s Pizza: a case study in organizational evolution
Q1. Porter’s five-force model
This is a business analysis model that will evaluate the attractiveness of the industry in which
an organization is operating. This model was explained initially in Michael Porter’s book in
1980. The industry structure of an organization and its corporate strategy is analyzed with the
help of five forces that are undeniable and play an important role in shaping every industry and
market worldwide (Mandere & Indiasty, 2014). In the case of Domino’s pizza, the pizza industry
will be analyzed, based on the following five forces:
1. Competition within the industry
Three major competitors of Domino’s are Pizza Hut, Papa John’s, and Little Caesar Pizza.
 Pizza Hut- it is one of the most prominent competitors of Domino’s. Dominos’ is
number one in US delivery section but the top company in the pizza segment is Pizza
Hut. The company is older than Dominos but has targeted 95 countries with 13,000
stores. It majorly focuses on various Pizza, which is ready to eat, where the customer
can customize the toppings option as per their local culture and taste. Moreover, the
company is focusing over more competitive priced items in the menu, and likes to be
known for “pizza pasta and wings brand” (Porter & Heppelmann, 2014)
 Papa John’s – considering pizza delivery segment, this company ranked at third
position after pizza hut and Domino’s. John Schnatter established the company in
1984. It has targeted more than 32 countries in 52 states, with more than 3,646
restaurants owned and franchises. This company operates within six segments, which

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are Domestic commissaries, domestic restaurant, domestic franchises, variable
interest entities, international operation, and various other business units.
 Little Caesar’s – this in the pizza industry stands out to be at the fourth position. A
family-owned enterprise franchises and owned 2600 units in the United States and 11
various nations. The major positioning of the company is opening up stores in strip
malls and is considered as the fastest growing restaurant chain in the United States in
2009. The company was popular for two for one Pizza, this marketing campaign
initiated in 1971, however, in 1975 became an everlasting fixture (Betton, 2017).
2. New potential entrants into the industry
Another force that influences the market of the pizza industry is new firms that are entering
into the market. They are affected and do affect the organization and its strategy. The strategy
that Domino’s follow to tackle this force is economies of scale, which will help the firm in
lowering the fixed cost of each unit produced. Through innovation in services and products, was
another strategy to handle this force. For example, new flavors, additional products, capture a
new market, use of advanced technology like a mobile application. New entrants are less
comfortable while entering into such a dynamic industry, where already global leaders have
maximum market shares and goodwill. It was significantly reducing the opportunity for
extraordinary revenues or profits for new entrants, which eventually discourage new players over
the industry (Dobbs, 2014).
3. Power of customers
Buyers bargaining power, in another force that affects Domino’s strategy and sale. The
customer would like to pay a minimum price for the best quality product. This is something that
creates pressure on Domino’s, as the switching cost for the customer is nil. To tackle this,

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Domino’s strategies to build a large customer base, which will help the company in two ways,
first to diminish the threat of customer bargaining power and second is to gain the opportunity to
streamline its production process and sales. Moreover, this threat was reduced by constant
innovative product development, because customers expect a discount on stable products and if
the company is introducing new products without any discount, it was acceptable by the buyers.
New products will be helpful in reducing the existing consumer defection to its competitors
(Gaudin, 2018).
4. Power of suppliers
A company is accruing raw material from various sources that are different suppliers. This
can make supplier in a dominant position, which can hamper the profit margin of Domino’s. To
reduce this threat, the strategies used by the company were creating an efficient supply chain,
which includes various suppliers, exploring new designs with different material, even if the
prices increase of some raw material then the organization can go for another alternative material
(Zhao, Wu, & Sha, 2015).
5. Substitute’s products threat
Substitute products are something that can be replaced by one product and fulfill the needs of
the customer. This is one of the major concern while strategizing. The major substitute of
Domino’s is McDonald’s or KFC, which is offering a burger and is able to fulfill the similar
need of consumers as Domino’s. To handle this situation, the strategies made by Domino’s are
becoming service oriented instead of just focusing over product, the company tries to understand
the customer’s core needs instead of concerning on what customer is purchasing. This threat can
be reduced by increasing the switching cost for customers (Porter, How smart, connected
products are transforming competition, 2014).

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Q2. Value chain analysis
Value chain activities
(Source: (Smartsheet, 2018)
Value chain analysis, as shown in figure 1 is a particular set of activities conducted by a
company that initiated from procuring raw material, process converting into final goods, and
finally, reach to end consumers (Puck & Mudambi, 2016). Domino’s has its unique value chain
bifurcated into two parts that are primary activities and support activities.
Primary activities:
 Inbound logistics- this activity includes purchasing raw material like dough, sauce,
cheese, spaghetti, fruits and vegetable, salt and pepper. These products too, have varieties
like ranges of sauce that are the regular, white, and sweet sauce. It is the strength for
domino’s, as the firm maintains a minimum of four days of stock, they have small cold

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storage at every store, and most importantly, level of inventory is monitored through POS
data using centrally.
 Operations- operations include, pizza dough is prepared and other ingredients are
procured through other commissionaires that include topping and seasoning and then
distributed to various stores of Domino’s. At outlets, the customization is done, as per
customer requirement and flavor. According to customer order, the salads and pasta are
prepared using raw material. Everything is done in a particular time span because the
company claims to make food available in provided time. This is a major strength for the
company as everything is done on time while considering the quality standard of the
product.
 Outbound logistics- the logistics are a major activity of the company, initially, it is
required to transport bases of pizza from a centralized location to the store, which is done
through refrigerated trucks. In addition, either delivery boy or vans deliver the prepared
food to the customer doorstep.
 Marketing and sales- where sales and marketing are considered the company has a strong
social media presence, which turns out to be the strength of the company. Moreover, the
marketing campaign is conducted domestically according to the country the company is
operating and targeting. Various discounts options and coupons are provided, to influence
customers to have food from Domino’s.
 Service- it is the activity, which the company majorly focuses. The services include
providing hot pizza at the doorstep of the customer within a specified time. It also
includes providing customer service at the outlet and make the customer feel happy and
comfortable by providing the best taste of food in a healthy environment. Online service

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is the biggest strength due to which the Domino’s sale has reached so high. Moreover, the
online order can be through its website and application, where discounts are also offered
to the customer.
Support activities:
 General administration- it includes all back-office work, that is financial reports, it is
neither any strength nor weakness of the firm, but the administration is also essential to
manage for effective working among all the departments.
 Human resource management- this is considered a great strength for the company. The
management of human capital is very strong of Domino’s. Appropriate training for
preparing food is provided to employees, as taste must be according to standard, and
same in every outlet. Moreover, delivery boys are also motivated to reach out to the
customer in time and handle food with due diligence for the maximum satisfaction of the
customer.
 Technology development- this is the major strength for the company, Domino’s gain
global technology advantage, through Domino’s tracking system, corrugated pizza box,
order over the phone, application for I phone and Android phones, hotter delivery
through Heatwave delivery bags, vehicle delivery that includes technology to keep food
hot and fresh.
 Procurement – the raw material is been procured from the local places which are best for
that particular ingredient. For example, if tomatoes are good of one state, and corns of
another, then these two different ingredients are procured from a different source and
then distributed the best material to the outlets. The time span is also considered while

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procuring so that there is no issue of shortage of raw material in any outlet. The inter-
store transfer is also available in case of an uncertain situation (Christopher, 2016).
Value chain linkages: core competencies
The linkages between human resource management, technology development, and
services create major core competencies for Domino’s.
Core competencies of the company include the best customer service, as it is one of the
largest pizza company in the delivery segment. It is an industry leader for customer satisfaction.
This shows that the service of the company is really strong and efficient. However, human
capital management and technology development are another competitive advantages of the
company that is working for providing the best service to the customers. Therefore, it can be said
that the support activities of technology development and human resource management which is
linked with a primary activity, services, which eventually result in the core competencies of the
company (Amara & Traore, 2016).
One of the competitive advantages of the firm is innovation, which is the result of good
human resource management and advanced technology. The main motive of the company is to
provide customer hot food at their home, within a specified delivery time. For this, the advanced
technology used is online ordering, where with a click customer can order food from the Outlet.
For keeping food hot, heat wave bags to delivery, with vehicles include a panel to keep food hot
until the customer. To offer customer same taste with high quality can only be provided through
a proper training to chefs and other employees. These linkages result into the satisfied customer
service (Oke & Prajogo, 2016).

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VRIN criteria
The linkages that lead to core competencies were identified in the previous section, these
linkages fulfill the criteria of VRIN framework propounded by Jay Barney, in 1991 (Chatzoglou
& Chatzoudes, 2018).
VRIN is a framework focuses over four qualities:
 Value – the linkage between technology development and service creates core
competencies for the company which will fulfill the criteria of “value” element in this
framework
 Rareness – according to this element, a core competency that is rarely provided by a
competitor. In case of Domino’s delivery service fulfill the criteria. Pizza hut, being one
of the major competitors of Domino’s can gain an advantage in fulfilling its customer
satisfaction at their outlet, but when the service considering doorstep approachability, no
pizza firm can beat Domino’s.
 Imitability– this element considers a core competency, which the competitors cannot
imitate. Domino’s advanced technology like the pizza tracker is not imitable by their
competitors, which fulfill the “imitability criteria of VRIN framework
 Non-substitutable- it consists of a resource that cannot be replaced by any other source.
The human capital of Domino’s fulfill this criterion, as a human resource of the firm is its
competitive advantage, which leads to innovation, and eventually enhances customer
satisfaction (Choi & Park, 2016).

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Q3. Organizational culture
A culture is something that influences the organization as a whole, it the way people work,
communicate, within an organization. The cultural web analysis is a framework or model that
explain the organizational convictions, paradigm and assuming in a firm that is clear by means of
six elements. The six elements include stories, symbols, rituals and routines, organizational
structures, power structures, control systems, and symbols (Alvesson, 2016).
 Stories – This element explains organizational culture, which is constantly communicated
within the organization. As this element is about communication in the organization, the
culture of dominos includes free communication across the organization. In case of
dissemination of information to the staff, the methods used are email, posters, notice
boards, and pamphlets. The innovation is always encouraged in the organization,
therefore the free flow of ideas are communicated by the staff and to the staff (Collins &
Benard, 2018).
 Symbols- the element of this model illustrate the recognizable sign ort expressing of the
company like corporate identity, the logo, office building, company cars, dress code,
language, and functions. Considering this element, Dominos has a globalized logo in blue
and red color that makes it expressible, moreover, all the delivery vehicles have the logo
of Domino’s to publicize the brand.

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(Source: (Dominos, 2018)
 Power structure- this element is directly linked to the paradigm, as the powerful human
resource of a company is considered to directly influence the ideas and core assumptions
within an organization. Considering this element, Domino’s major competitive advantage
observed is human resource management, which means the company has people who are
in a powerful position to influence ideas within Domino’s. For example, the
organizational manager has the responsibility of outlets in-group, like there are four or
five outlets, of which he will manage the work, and is considered the most experienced
person in the outlet, who has total knowledge of the restaurant or outlets (Huckin &
Berkenkotter, 2016).
 Organizational structure- as per this element, a company has a hierarchal composition,
that links the relationship between human resources, which construct the layers of the
form, although, informal power structure, is also part of the organizational structure.
Domino’s has an organizational structure, where CEO and executive managers are
largely responsible for new innovative ideas, that are executed by lower-level managers,
but the culture of Domino’s always welcome ideas from all the sources like salesmen, or
lower staff members. The company follows multicultural staff within an organization
because Domino’s is a global player; the staff is from various culture and nations.
Therefore, culture is enabled according to the strategy of the company (Wass & Harrison,
2017).
 Control system- this element considers the way a company is being controlled and
managed. The financial system, rewards, and quality systems are included in this
element. As already discussed, the administration of Domino’s is very strong, which fully