Dominos Pizza Enterprises Strategic Analysis - Case Study Example

Domino’s Pizza Enterprises Strategic Analysis Student’s Name Institutional Affiliation Course Name Date of Submission Executive Summary Domino’s Pizza Enterprises (Domino’s) is Australia’s largest pizza restaurant by sales and store numbers. Domino’s is also the world’s largest franchised pizza brand. The company was founded in 1983 in Queensland, Australia and has since grown to become a global pizza brand. Because the company faces numerous challenges, it is important that Domino’s become more innovative and introduce new products to help enhance its performance and competitiveness. In this light, it will be appropriate for the company to consider replacing its cooks and service staff with robots. This analysis has described the benefits that will accrue to Domino’s and its customer by introducing robots. The report has also described the internal and external factors in which this new product will be realized using SWOT framework. Additionally, the report has presented how Dominos can use its strengths to maximize opportunities and minimize the threats and weaknesses it faces using TOWS matrix. Introduction Domino’s Pizza Enterprises (Domino’s) is Australia’s largest pizza restaurant by sales and store numbers. Domino’s is also the world’s largest franchised pizza brand. The company was founded in 1983 in Queensland, Australia and has since grown to become a global pizza brand (Forbes 2016). Among the foreign countries where Domino’s operates franchises include France, New Zealand, Netherlands, Belgium, Japan, Italy and Germany. In total, the company currently operates over 1900 stores (Domino’s 2016). Besides, Domino’s was publicly listed in the Australian stock exchange making it the first pizza store to get public listing. Despite the challenges that the company has been facing in the industry such as competition, Domino’s has maintained good performance posting a net income of A$ 45.6m million in 2014/2015 financial year (BBC 2016). Domino’s is also one of the largest employers as it employs over 26,000 people. However, as competition gets stiffer, it is necessary for Domino’s to become more innovative by introducing new concepts to enhance its performance and competitiveness. One such concept is introducing robots to replace the cooker and serve customer. This paper will use SWOT framework to analyze the internal and external environment of Dominos under which the new product (robot) will operate followed by the SOWO framework in assessing how the company will use its strengths and opportunities to minimize weakness and threats while maximizing opportunities. SWOT Analysis Strengths Strong brand recognition: the company has invested heavily in advertising which has made its pizza become a strong brand which is easily recognizable both in Australia and internationally Strong franchise network: Dominos has created strong franchising system which from which it earns a lot of earnings in the form of royalties Strong brand presence: the company operates over 9,000 stores spread in over 60 countries (Forbes 2016). Strong supply chain: Dominos has effective and efficient supply chain system which ensures that it maintains leadership in product delivery. Besides, the firm has efficient dough making supply chain that ensures that its chains and franchises are supplied with quality products. Financially healthy: Dominos is generating high revenues and profits and this has made it financial sound. Strong innovation (Forbes 2016). Weaknesses High staff turnover: The company experiences high staff turnover every year High calorie in pizza: Dominos pizza have high calorie contents which makes the brand lose customers looking for healthier pizza. Provide similar menu as competitors with its pizza not having the best taste and no variety. Poor environmental programmes: the firm has not invested adequately in environmental initiatives (Domino’s 2016). Opportunity Market expansion into emerging markets, such as India, China and other developing countries Introducing healthier menus with new flavors to attract the growing health conscious consumers Diversity the product portfolio by introducing other menus alongside pizza, such as ice cream Emphasize on corporate social responsibility Threats Growing competition: Dominos competitors are working hard to become cost leaders and attract customers Changing consumer eating habits: Consumers are increasingly becoming heat conscious and look for healthier alternatives due to health concerns Volatile economic environment Environmental laws: Governments are introducing tougher environmental laws to ensure that firms cut down their carbon footprint and other pollutants Rising cost of raw materials, such as vegetables (Domino’s 2016). Finding TOWS Matrix for Domino’s Enterprise Exteternal Opportunities Threats 1. Market expansion into emerging markets, such as India, China and other developing countries 2. Introducing healthier menus with new flavors to attract the growing health conscious consumers 3. Diversity the product portfolio by introducing other menus alongside pizza, such as ice cream 4. Emphasize on corporate social responsibility 1. Growing competition 2. Changing consumer eating habits 3. Volatile economic environment 4. Rising cost of raw materials, such as vegetables 5. Environmental laws Strengths 1. Strong brand recognition 2. Strong franchise network 3. Strong brand presence 4. Strong supply chain system 5. Financially healthy 6. Low cost of production and operation 7. Strong innovation Strategies for Strengths to meet opportunities (S-O) Utilize its strong brand name to expand into the emerging markets, such as India, China and developing world Utilize its strong innovation to introduce healthier menus with new flavors that meets the local taste of customers in different markets Utilize its finacial health to invest in CSR programs, such as environmental conservation and philathropic initiatives Strategies for strenths to minimize threats (S-T) Utilize its strong financial abiluty to invent more on R&D on healthier meals Utilize its strong innovation to reduce the cost of operations so as to become a cost leader Enhance supply chain in foreign markets toto ensure cost leadership Weaknesses 1. High staff turnover 2. High calorie in pizza 3. Provide similar menu as competitors with its pizza not having the best taste and no variety. 4. Poor environmental programmes Strategies for opportunities to minize weaknesse Introduce healthier menus with new flavors and taste to attract health conscious customers Invest more on CSR to enhance it compliance with environmental laws Strategies for weaknesse not to expose threats Improve stance on environment by investing more in sustainable initiatives Reposition the brand to show changes made in product quality Recommendations Target Market For a company to succeed in any market, it must identity and defines its target market. Defining a target market is important as it ensures that the targeted customers’ needs, tastes and preferences are understood and satisfied in the best way possible. The same applies to Domino’s that has defined its target market to ensure that the customers are served best. The customers targeted most by Domino’s are those customers that are look for affordable pizza quickly (Domino’s 2016). The majority of Domino’s customers are people who are always in a hurry and want pizza that is not just made quickly, but also those that are pocket friendly. New Product Description As competition in the pizza market increases, it becomes increasingly necessary for Domino’s to become more innovative to ensure competitiveness. Product development is one of the best ways that the firm can enhance its performance and competitiveness. As such, Domino’s introducing robots as it new product. The robots will be used to replace Domino’s restaurant workers, especially cookers and customer service staff. The replacement of cookers and customer service staff with robots will help minimize the costs for running the restaurant as it will minimize the amount of money that Domino’s pay as salaries to its staff (Luo 2015, p. 297). This will in turn enable the company charge affordable prices for its target customers. Place is another marketing mix element that the robots will help fulfill. In this respect, Dominos will ensure that the robots are introduced to all the stores and franchise stores. Additionally, once the robots are introduced, the company will initiate aggressive promotional campaign that includes advertising the robots using different communication tools, such as television, social media and billboards to create awareness about the new product. Customer Value Proposition Replacing cookers and staff that serves customers with robots will add value to customer and increase their satisfaction in many ways. First, by automating the cookers with robots, this will ensure that customers are provided with consistently high quality pizza, thus ensuring the satisfaction of their needs (Luo 2015, p. 297). Second, robots are very efficient and quick in service delivery. Therefore, there use in serving customers will be satisfying as robots will ensure that customers that visit Domino’s restaurants are served quickly and not kept on the waiting line. As indicated earlier, one of the target customers of Domino’s are those customers that want quick and affordable pizza (IBIS World 2015). As such, the use of robots will ensure that their needs are met by ensuring that they are served in a matter of few minutes without waiting. Besides, because robots are cost effective as one instance, they do not require salaries, this is good for customers because the use of robots will enable Domino’s cut down the cost of operations, thus reducing prices to meet the needs of its targeted customers, notes Luo (2015, p. 298). Justification Of The Choice Of New Product The introduction of robots to replace cookers and customer service staff fits the strategy of becoming a cost leader as described in the SWOT framework. As indicated in the SWOT, Domino’s is facing fierce competition both in Australia and internationally. Therefore, to gain a sustainable competitive advantage, the pizza company should strive to become a cost leader. Fortunately, the introduction of robots to replace some of its employees is one of the best ways that the company will be able to minimize its cost of operations and production, thus ensuring that it becomes a cost leader (Luo 2015, p. 300). This is because robots will only incur the cost of installing them and once this is done, this will go a long way in reducing the cost that the company has been incurring in paying its staff salaries. Conclusion Domino’s is a leading pizza brand in the world. However, like other firms, the company has weaknesses and threats that affect its performance as indicated in the SWOT. However, the company cause use its strengths and opportunities to counter the threats and weaknesses as indicated in the TWOS matrix. Additionally, to establish a strong position in the market, Domino’s should consider replacing its cookers and customer service staff with robots as this will not only help enhance efficiency of product and service delivery, but also ensure that its targeted customers’ needs are satisfied. References BBC 2016, Domino's Australia sees profits rise more than 55%, viewed 11 July 2016 http://www.bbc.com/news/business-35592868 Domino’s 2016, Domino's Corporate, viewed 11 July 2016 https://www.dominos.com.au/inside-dominos/corporate Forbes 2016, Domino's Pizza Enterprises on Forbes lists of most innovative growth companies, viewed 11 July 2016 http://www.forbes.com/companies/dominos-pizza-enterprises/ IBIS World 2015, Domino's Pizza Enterprises Limited - Profile company report Australia, viewed 11 July 2016 https://www.ibisworld.com.au/enterprisefull/default.aspx?entid=10353 Luo, Z 2015, Robotics, automation, and control in industrial and service settings. IGI Global, New York. Read More