Read the case study given below and answer all the questions that follow.
Domino’s Pizza ‘Cheesy’ Business Strategy
Domino’s Pizza as the second largest pizza restaurant in the world and operates in more than 85 markets internationally. On average, Domino’s sales are more than 1.5 pizzas each day globally. Tom and James brothers purchase the “DomiNick’s” pizza stores and entered the pizza business in 1960. In 1965, Tom was the only owner and renamed the store as “Domino’s Pizza”. The company has franchising system that has 200 stores in 1978 itself. Today, Domino’s has more than 13,800 stores and 5,000 of them are at outside the US. Domino’s Pizza consists of four business segments which is Domestic Company-Owned Stores, Domestic Franchise, Domestic Supply Chain and International. The main competitors of the company are Pizza Hut, Papa John’s, Little Caesars, and local pizza producers. In addition, there are many substitute products that compete with Domino’s Pizza. These are McDonald’s, KFC and so forth.
Domino’s Pizza is at the Aggressive quadrant same as the market leader – Pizza Hut. The company should use its strength in marketplace to compete strategically. It can be seen as following Pizza Hut, but it is necessary. Market development, penetration and product development strategies are suitable for Domino’s. Forward integration is another option for the company. Domino’s Pizza has mainly three divisions which are: ➢ Domestic Company Owned Stores ➢ Domestic Supply Chain ➢ Franchising (combination of Domestic and International). According to BCG matrix, divisions of the Domino’s Pizza are at the Stars position which is the high relative market share position and high industry sales growth rate. It means that Domino’s has large market share in the fast-growing industry. Stars position generates huge amount of cash; however, it requires the investment of cash as well. In this point, Domino’s should apply the strategies that holds its position in the market. Because when market is maturated, company will be at Cash Cow position that requires little or no investment to generate cash.
To maintain its position, cost leadership strategy should be applied. Domino’s Pizza should continue to implement this strategy to maintain its position also. For the Franchise business that includes domestic and international franchises, maintaining strategies should be applied, because currently Domino’s is the second biggest player in its market. Market penetration strategy should be applied to gain more market share. For Domestic Company Owned Stores, the company should open new stores in Asia. Franchising is good option for the company, but Domino’s should also think the control over market and its stores.
These strategies help the company to remain its position in marketplace. Pizza Hut is leader and the owner of the Pizza Hut, YUM! Organization has many brands that provides financial stability and flexibility. On the other hand, Pizza Hut has strong cash flow when compared with Domino’s Pizza. These differences effect the operations, strategies and activities that Domino’s tried. Lastly, these main competitors are at the fasting-growing industry with the near company growth rates. This means that the distance between the two companies will remain the same overall.
1. Conduct a SWOT analysis for Dominos
2.
“To maintain its position, cost leadership strategy should be applied in Domino”,
Elaborate this statement based on the case above.
3. Explain the methods used and applied by Domino for their strategy implementation and execution.
4. To be market leader and as to overcome future competitors in the similar industry, advise Domino strategically on ways to overcome and to sustain in the industry for a longer term.