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BSB Inc.: The Pizza Wars Come to Campus


AN OPERATIONS MANAGEMENT PRESENTATION
PRESENTED BY DETY NURFADILAH MUHAMMAD USMAN MIRZA ZIA NURUL HIDAYAH G1215654 G1210517 G1213229 G1133678

Introduction
BSB Inc.

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Nationally operated food-services company catering to organizations Target markets:


o

Corporate

Airlines

University/College

Operating organizational food-services for the past 10 years Contracted to cater to 6,000 students and 3,000 faculty at the university

Introduction
The University

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The university is a walking university; dorms, classes, bookstore, sundry shop, barber shop, branch bank, and food-service facilities are all within close proximity

The Cafeteria

The Dogwood Room

The Grill

Large cafeteria on the ground floor of the main administrative building

Located on the 2nd Floor of the Administration Building Serves upscale lunch buffet on weekdays only

Located at the corner of the recreational building near the dorms

The cafeteria is open for breakfast, lunch and dinner

Open from 11 A.M. to 10 P.M. weekdays, and until 12 A.M. on Fridays and Saturdays

Introduction

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Renee Kershaw joined as the manager of food-services at the university 18 months ago Undertook survey to determine customer needs and market trends Survey revealed the following:

Food consumed offcampus 44%

Prepared at dorms 20%

Major reasons to consume food off-campus 1. Lack of variety

Food delivery offcampus 36%

2. Inconvenient timings

Introduction
100% 90% 80% 16% 38% 57%

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Other findings from the survey:

70%
60% 50% 40% 30% 20% 10% 0%

1. Large percentage of students with cars


2. Large percentage of students with refrigerators and microwave ovens in the rooms

Students with cars on campus, 84%

Students having refrigera tors or microwa ves in their rooms, 62%

% of food consume d outside BSB, Inc., facilities, 43%

3. Substantial amount of food was consumed from outlets others than BSB Inc.

Students with cars on campus Students having refrigerators or % of food consumed outside microwaves in their rooms BSB, Inc., facilities

Introduction
In response to the survey, Kershaw made the following changes: Decided to expand the menu at the grill to include pizzas Installed a pizza oven Allocated space to store pizza ingredients and make pizzas Pizzas offered had limited topping options, so as to minimize lead time

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Started delivery service that covered the entire campus Hired existing personnel to deliver pizzas by bicycle

Introduction
Aftermath
The Good,
Sales 10 months after the introduction of pizzas, sales and profits increased steadily

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Customers indicated satisfaction with the reasonable pricing and speedy delivery service the Bad,

Increased demand put strain on The Grills facilities, existing equipment and space allocated were now insufficient to meet demand Growth Introduction
Maturity

Decline

Led to delay in delivery Sales began leveling off Request for off menu orders increased
Large orders could not be serviced easily

Increasing in delivery times


Lack of product variety

Introduction

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..And the Ugly!

The University recently announced the construction of a new student center which would house three private food-service providers, Taco Bell, Dunkin Donuts and Pizza Hut Kershaw is especially concerned with the entry of direct competitor Pizza Hut Pizza Hut is expected to offer a limited selection of pizzas Will not accept phone orders Will not offer delivery service

Question 1
By Mirza Zia

UIAM

Does BSB, Inc., enjoy any competitive advantages or core competencies?

Answer
Competitive Advantage

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Close proximity to customers

Location, Location, Location..

Market knowledge

This means

Food consumed at facilities other than BSB 43%

Quick delivery times


Food consumed at BSB facilities 57%

Lower costs More in tune with customer needs

Question 2
By Muhammad Usman

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Initially, how did Renee Kershaw choose to use her pizza operations to compete with off-campus eateries? What were her competitive priorities?

Answer
Kershaw chose to compete on two fronts
Price Convenience

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Pizzas were reasonably priced Allowed BSB Inc. to compete with off-campus operators Price was the order qualifier

Quick delivery times were ensured by: Preparing pizzas before hand Delivering through bicycles Delivery was the order winner

Question 3
By Muhammad Usman

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What impact will the new food court have on Kershaws pizza operations? What competitive priorities might she choose to focus on now?

Answer
New competition will slice the food-service market (get it, pizza, slice..)

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The new food court will bring BSB in competition with the new food operators. In effect, BSB will lose its monopoly over the university campus market The Bad News.. 1. The new competition will enjoy the same location advantage as BSB Inc. The Good News.

1. BSB Inc. will likely retain its delivery service advantage


2. Limited variety at Pizza Hut could be an advantage for BSB Inc. 3. Given standardized menus of large franchises such as Pizza Hut, they might be unwilling to lower costs. BSB may likely retain its cost advantage

2. New competitors are backed by brand names and reputation


3. The new competition offers varieties such as snacks and fast food 4. Of the three, Pizza Hut would be of major concern, since it will directly compete with BSB in the pizza market

New competitive priorities for BSB should include


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1. Product Flexibility

2. Volume Flexibility

3. Operating Flexibility

Expand offering to include different types of pizza toppings,

..snack foods (to compete with Dunkin Donuts) and

.fast food (to compete with Taco Bell)

Increase pizza production to meet rising demand

Expand operating hours to capture night-owl market and during times Pizza Hut and the other operators are closed

Question 4
By Dety Nurfadilah

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If she were to change the competitive priorities for the pizza operation, what are the gaps between the priorities and capabilities of her process? How might that affect her operating processes and capacity decisions?

Answer
New Priorities

Product Flexibility

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Volume Flexibility

Operation Flexibility Insufficient space and equipment for making pizzas putting strain on Grill operations

The Gaps

Higher demand from groups who order pizzas in volume for various on-campus functions affecting delivery times
Increasing request from student for pizza toppings and combinations currently not on menu.

If product flexibility and volume flexibility become more important, then the implications are:
1. Inventory issue

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Kershaw needs to stock additional toppings because of demand for variety. This will aid product flexibility.
2. Delivery service If BSB Inc. hopes to keep up with the increase of demand and capacity, it will have to increase its delivery fleet to ensure on time delivery of pizzas to dorm rooms across campus.

3. Capacity issue
Facility: Kershaw need to add capacity to meet increased demand. She may even have to consider moving into a new area that fully focusing on the pizza operation. Equipment: Furthermore, Kershaw will have to invest in larger ovens and equipment to meet the rising demand Personnel: Additionally, it will have to manage staff to operate late nights. This will help BSB achieve volume and operation flexibility.

Question 5
By Nurul Hidayah

UIAM

What would be a good service strategy for Kershaws operations on campus to meet the food court competition?

SWOT Analysis for BSB Inc.


Strength
Convenience: Offers phone order and delivery service

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Weakness

Affordability: Through a standardized menu offering, BSB Inc. is able to offer affordable meals to students on campus
Market knowledge: BSB is an experienced market player and has deep knowledge about the student food preferences.

Limited Capacity: The existing capacities is not sufficient, and is putting strain on its delivery service
Limited Variety: Standard offering below customer expectations

Opportunity
Operating Hours: It is unlikely that Pizza Hut will be operating late nights. BSB currently operates The Grill until 12 A.M. on Fridays and Saturdays. Standardized Menu: For Pizza Hut, are expected to offer a limited selection of pizzas

Threats
Lack of Brand Recognition: BSB lacks the reputable brand name of the new entrants, who are well established in the market Lack of Convenience Food Offering: Taco Bell and Dunkin Donuts offer easy/ready-to-go fast food matching with the student situations (hectic situation and always on the move)

Aspects in Operations Strategy


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Products

Operating System

Services

Sourcing Operations Strategy

Process & Technology

Facilities

Capacity

Quality

Human Resources

Good competitive service strategy that can be taken by Kershaw:


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Varied Menu

Operating Hours

Innovation

Add new types of items such as fast food options and snacks Add new types of pizza toppings and combinations

Expand operating hours especially during examination and special events on campus

Extend the menu (with same ingredients to maintain low cost) but encourage product innovations. E.g. Make your own pizzas

Delivery

Volume

Affordability

Kershaw might take advantage of being the only food-service provider offering delivery service on campus and advertise heavily highlighting their competitive advantage, i.e. fast delivery on campus.

Kershaw is currently operating at The Grill at full capacity. They will have to increase production capacity to increase pizza production. For this, they will have relocate to a larger area. The cafeteria is a viable candidates for relocation

Compete on the basis of price. Large foodservice franchises charge similar prices nationwide. They will most likely be unwilling to lower prices, giving BSB the price advantage

Conclusion
1. Volume, Variety 2. Operating Hours 3. Innovation In Tandem With

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Affordability and Delivery

BSB Market Share

QUESTIONS?
Wed tell you a pizza joke, but it would be too cheesy.

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