MG624 - Market Analysis: Papa John's Entry into Australian Market

This report provides a comprehensive market analysis for Papa John's Pizza's potential expansion into the Australian market. It includes a PESTLE analysis, assessing political, economic, social, technological, legal, and environmental factors impacting the pizza industry in Australia. The report evaluates various market entry modes such as mergers, acquisitions, and contract manufacturing, recommending the most suitable approach for Papa John's. Furthermore, it analyzes market segmentation and the competitive landscape using Porter's generic strategies. The analysis suggests a potential merger between Papa John's Pizza and Zume Pizza for enhanced business operations and confirms the viability of the Australian market for profitable business, considering the macro environmental aspects. Desklib is a platform where you can find similar past papers and solved assignments.

Running head: MARKET ANALYSIS
Market Analysis
Name of the Student
Name of the University
Author Note

1MARKET ANALYSIS
Executive Summary:
The paper is focused in describing a company of the pizza processing industry in the form of
Papa John’s Pizza. The paper assesses the macro environmental factors of the Australian
pizza market and along with that, the paper provides significant information regarding the
various modes of market entry such as mergers, acquisition and contract manufacturing. The
paper analyses the best suitable method for the chosen organization to enter the Australian
market. Apart from that, the paper provides a detailed analysis of the competitive strategy of
the organization with a precise focus on the Porter’s generic strategies. In addition to this, the
paper produces a brief discussion on the market segmentation of the country as well. The
paper identifies the scope of forming a merged organization between Papa John’s Pizza and
Zume Pizza for better business conduction. The paper also confirms the suitability of the
Australian market for the profitable business conduction with a precise focus on the macro
environmental aspects.

2MARKET ANALYSIS
Table of Contents
Introduction:...............................................................................................................................4
PESTLE Analysis:.....................................................................................................................5
Political:.................................................................................................................................5
Economic:..............................................................................................................................6
Social:.....................................................................................................................................7
Technological:........................................................................................................................8
Legal:......................................................................................................................................9
Environmental:.......................................................................................................................9
Modes of Market Entry:...........................................................................................................10
Mergers:...............................................................................................................................10
Conglomerate mergers:....................................................................................................11
Vertical Mergers:.............................................................................................................11
Horizontal Mergers:.........................................................................................................12
Market Extension:............................................................................................................12
Congeneric Mergers:........................................................................................................12
Contract Manufacturing:......................................................................................................13
Acquisition:..........................................................................................................................13
Suitable mode of market entry:............................................................................................14
Market Segmentation:..............................................................................................................15
Competitive Strategy:...............................................................................................................16
Conclusion:..............................................................................................................................18

3MARKET ANALYSIS
References:...............................................................................................................................19
Appendix:.................................................................................................................................23

4MARKET ANALYSIS
Introduction:
The modern business organizations are observed to be significantly focused in the
identification of the profitable business opportunities to increase the generations of the
revenue. However, it is seen that the majority of the business industries are notably populated
with the competitor organizations. The level of competition is observed to be so intense that
the organizations are facing significant difficulty in their survival and in improving their
growth (Nestle 2013). Hence the majority of the organizations are observed to search for the
viable options so that they are able to spread their business in order to generate sufficient
amount of profit to survive in the intensely competitive industry. In addition to this, the
organizations are facing the need to identify their products with a precise focus on the rate of
consumption of the product and the business prospect of the product in a chosen country
where they want to spread their business. According to Baiardi, Bianchi and Lorenzini
(2015), the option of the business expansions is a feasible idea for the effective reduction of
the impact of such intense market competition. Adding to this, the various aspects of the
business expansion such as the market analysis, financial feasibility of the expansion,
business opportunity with a particular product are observed to be crucial for the achievement
of the desired success from the business expansion.
The paper analyses one such case for a chosen organization Papa John's Pizza with a
precise focus on their idea of business expansion to Australia. The chosen company is an
American pizza restaurant franchise, which operates in the Pizza delivery industry. The
chosen organization was established in the year 1984 by John Schnatter and is seen to expand
in a significant manner under the leadership of Steve Ritchie, the chief executive officer of
the organization over Europe, Asia and Latin America (Papajohns.com. 2019). The paper is
observed to reflect the results of an external analysis for the company in the destination

5MARKET ANALYSIS
country through the PESTLE analysis and along with that, the paper assesses three different
modes of the market entry in the form of the mergers, acquisition and the contract
manufacturing. Apart from this, the paper also describes the market segmentation for the
company in the new location and also specifies the competitive advantage of the organization
through the application of the Porter’s generic strategies.
PESTLE Analysis:
The chosen organization is one of the very few globally recognised organizations
which operate in the mentioned industry. The products and the services of the company is
notably based on the variety of the pizza. In addition to this, Australia is evaluated to be one
of the countries where consumption of the pizza and the demand of the pizza are expressively
high. Under such situation, the evaluation of the external environment, that the chosen
organization is expected to face, is of great significance for them in the implementation of the
idea of the business expansion.
Political:
The political impact on the pizza manufacturing organizations of the country is
observed to be significantly limited and that is one of the prime reasons of the notable
emergence of many of the modern organizations. However it is seen that the government of
the country and the political parties are notably focused in the limitation of the adverse
impact of the drugs and the other hazardous elements in the manufacturing and the processing
of the pizza. Hence it is visible that the political parties are pretty effective in making sure
that the pizza manufacturing organizations of the country operates in an effective manner and
aligns their business conduction in such a manner that it does not produce any sort of harm to
the citizens of the country.

6MARKET ANALYSIS
Economic:
As mentioned earlier, the demand of the pizza in the region is observed to be
significant and that is pretty evident with significant amount of market that the organizations
of the mentioned industry in Australia are able to experience. The mentioned industry in
Australia is observed to have significant development over the years and that is pretty visible
with the fact that the industry raised the market value from 2.68 billion of US dollars to 3
billion US dollars in the time span of 1 year and that is in between the 2014 and 2015
respectively (Statista.com. 2019). Apart from this, the industry is observed to have an annual
growth of 3.1% over the timeframe 2013 to 2018 (Statista.com. 2019).
In addition to this, the industry was seen to include 4227 numbers of the business
organizations in the year 2015 which increased in a significant manner in the recent years
(Statista.com. 2019). In addition to this, the annual change in the revenue of the pizza
restaurant and takeaway industry in Australia is seen to be another major aspect of the
economy of the industry where it shows that the percentile change in the revenue of the
industry is notably going upwards (Ibisworld.com. 2019). The percentile change of the
revenue of the pizza restaurant and takeaway industry in Australia is observed to increase
from 0.9% of 2016/17 financial year to 2.4% of 2017/18 financial year and in the following
financial year, the percentile change in the revenue is expected to reach 3.1% (Ibisworld.com.
2019). Hence the scope of probable business conduction for the organizations operating in the
mentioned industry is pretty visible. As a result, the organization has notable amount of scope
in expanding the business to the nation Australia and the decision of the expansion is
expected to be economically feasible as that will provide the much required base to the
organization for the financial growth.

7MARKET ANALYSIS
Social:
The mentioned industry is seen to be significantly important for the society and that is
pretty evident with the notable amount of scope of employment that the operating
organization of the industry provides to the citizens of the nation. The concerned industry
provided 16241 numbers of opportunities to the people of the nation which in the recent years
is seen to increase enormously (Ibisworld.com. 2019). The scope of increased employment
that the multinational organizations belonging to the other nations, are capable of producing,
will be a significant factor for the minimization of issues generated from the part of the
people of the society (Midgley 2013). Apart from that, the organizations will have sufficient
scope for achieving skilled labours for the completion of the services and manufacturing of
the products. The average annual income of the Australian people in the year 2018 is
observed to be AU$85,982 with a variation that indicates comparatively higher number of
youth representation in the above mentioned statistics (Abs.gov.au. 2019). Hence the sum is
significant for describing the amount of consumption to which the organization will be
subjected to. Adding to this, the organization will have the chance to achieve a significant
number of customers by considering the customer segment in the youths of Australia. From
the below mentioned information, it is petty visible that the people having the weekly income
ranging from $300-$1499 will be the main targeted segment as the customers for the
company. The mentioned segment is seen to be populated by the youths of Australia.

8MARKET ANALYSIS
(Weekly Individual Income of the people of Australia)
(Information Courtesy: Profile.id.com.au. 2019)
Technological:
The industry is seen to have significant amount of scope for the usage of the
technology and the innovative applications for the betterment of this services and the quality
of the products (Noe et al. 2017). It is seen that the people of the mentioned country are
significantly tech-savvy and they notably prefers consumption of the limited amount of time
for the processing and the manufacturing of the products. Hence the presence of the
technological innovations for the reduction of the time is seen to be of great significance and
has the potential to increase the loyalty level of the customers. The usage of the robotics for
the effective and time efficient manufacturing of the pizzas is a significant opportunity for the
organization to increase the number of the customers and at the same time, the usage of the
GPS enabled vans for the speedy delivery of the products (Lam et al. 2013). Along with that,
the usage of the websites for receiving the orders and payments is seen to be significant
application of the technology for the organizations of the concerned industry (Noe et al.

9MARKET ANALYSIS
2017). The application of the technology and innovation in the business operations has the
potential to increase the effectiveness of the organization in terms of marketing and
promotional events and the processing of the food products that it will offer to the customers
also improves in the aspects such as the reduction in the processing time or the improvement
of the quality.
Legal:
It is observed that the government of Australia has implemented notable number of
legislations for the ethical sourcing of the raw materials, the control of the usage of the
hazardous elements and the presence of drugs in the preparation of the products. The main
base of the regulatory framework that makes sure that the organizations operating in the
concerned industry acknowledges the safety and good of health of the customers is observed
to be the food safety act of 1991 (Legislation.gov.au. 2019). The legislation is seen to have
five standards well placed for the aspects such as interpretation and application, food safety
programs, food safety practices and general requirements, food premises and equipment
(Legislation.gov.au. 2019). The above mentioned legislative frameworks will be significant
in forcing the chosen organization towards the ethical sourcing of the raw materials and in
preventing from any sort of violation of the described health standards of the people of the
country. Along with that, the regulatory framework will be instrumental in making sure that
the organization operates in accordance employment and the labour rules designed by the
government.
Environmental:
The industry is seen to have significant effect of the legislation, implemented for the
ethical sourcing of the raw materials. The impact of the legislation is seen to be significant in
making sure that the materials that are sourced for the production of the pizzas that the
concerned organization sells, is in accordance to the guidelines of the environmental

10MARKET ANALYSIS
protection (Westhoek et al. 2014). In addition to this, the scope for the utilization of
technological and the innovative ideas is notably guided through the effective management of
the environment by the implementation of the above mentioned legislation. The impact of the
mentioned aspect is significant on the organization as that forces the organization to source
the raw material for the production of the pizzas with a precise focus on the environmental
balance and sustainability.
Modes of Market Entry:
For the effective entry into the Australian market, the mentioned company is in need
to select viable modes of market entry. With the effective assessment of the company profile
and the condition of the chosen market, three different modes of market entry are considered
to be viable.
The chosen modes of the entry are mergers, acquisition and the contract manufacturing.
Mergers:
It is considered to be a process which is unites two existing organizations in order to
form a new one (Bena and Li 2014). It is observed to be a widely used method for the
business expansions. Majority of the organizations of the modern business world opts for this
in order to improve the condition of their business (Cartwright and Cooper 2014). The
companies that are facing the challenges to survive can opt a stable organization for the
merger in order to get rid of the adverse situation. On the other hand, the well positioned
organizations seeking opportunity for the entry into the new markets for the increment of the
revenue can opt a company with a comparatively less stable position (Bena and Li 2014).
This plays a major role in achievement of larger market share and creation of the value for
the shareholders through expanding the business processes (Cartwright and Cooper 2014).
There are majorly five types of mergers available in the business context and that are seen to

11MARKET ANALYSIS
be conglomerate mergers, congeneric mergers, market extension, horizontal and vertical
mergers (Bena and Li 2014).
As mentioned earlier, the chosen organization will be able to achieve the benefits such
as the entry to a new market and operate without any sort of concern regarding the
development of the infrastructure. Along with that, it will be significant for the chosen
organization as the idea of the merger will provide a larger number of customers to the
organization to aim at with their products. The achievement of the scope of operating in a
market that is more profitable compared to base market of the company will be significant for
the chosen organization. However, the concerns such as the financial burden of the other
company and the issues related to the human resources management of the merged
organization will be a major concern for the chosen organization on considering the option of
merger.
Conglomerate mergers:
The mentioned form of merger is generally seen to be conducted between companies
that are not operating in the same industry and are not related with the business activities as
well. This form of merger plays a crucial role in connecting two different companies that
have nothing in common, may that the be industry or the geographical region of operations
(Ashenfelter, Hosken and Weinberg 2014). The main objective of these sort of mergers are
observed to be the increment of the product chain of the organizations so that they be able to
offer increased number of products to the customers of the organization in spite of avoiding
the manufacturing concerns of the products. However, the introduction of the mixed
conglomerate significantly focuses on the integration of two companies that are determined in
the increment of the generation of the profit through the mergers. It is also seen that the
absence of the overlapping factors between two businesses and the notable feasibility of the
idea of integrating, has significant influence over this type of mergers.