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Running a business is a difficult task for the management team, as well as, the owners. The managers and owners must face the challenges and the risks involved in managing a business, especially if it spans internationally. Pizza is one of the most popular foods in the world. Almost every people in this world, at some point in their lives, have tasted Pizza. Pizza marginalised the social status of the people, from class A to E individuals eat Pizza. Therefore, the demand for the food is high and businesses catering to this market have emerged over the past years. One of the most popular Pizza parlours in the world today is the Pizza Hut. The company is one of the oldest chains of restaurants in the industry today, having been in the food industry for almost 50 years. Pizza Hut continues to flourish in the business, adding more chains in every part of this world. This paper describes the appropriate tools and techniques in the strategic analysis in order to examine the current trends and issues in the business environment of Pizza Hut. In addition, at the beginning of this paper a brief history pf Pizza Hut will be provided. In the strategic analysis of Pizza Hut different methods will be used. For the analysis of the impact of the external environment a PEST analysis will be used, in determining the mobility barriers and the strategic space, strat6egic group analysis will be utilised. Moreover, for the determination of the competitive advantage of Pizza Hut, Porters Five Forces Analysis will be used and competitor analysis will be used for the determination of the wherabilities of the competitors in order to assess the opportunities and threats in the industry.
Pizza Hut was established on June 15 1958 in Wichita, Kansas by two brothers Frank and Dan Carney. The brothers had the concept of opening a pizza parlour which was relatively new during the 1950s and the potential of this business was seen by the two. They borrowed around $600 from their mother to buy second-hand equipments and rent a small space to open the first Pizza Hut. The next year, the second store was
The services of all the restaurants range from eat-in and carry out with approximately 60 to 90 seating for people. In 1986. During the same year. no longer dominates the pizza industry. Pizza Hut already had 5. have reached over $5 million dollars. In order to keep up with the competition and remain one of the top players in the industry Pizza Hut must examine the trends and issues using the proper techniques and methods. the total amount of the sales of the company in 1986 alone amounted to $2 billion dollars. By the year 1996. PEST stands for Political. the PEST Analysis is used to aid an organisation to obtain a better comprehension of the broader environment in the sector of business and can be used in carrying out the continuous process of environmental analysis. Kansas and for only just a decade Pizza Hut already has 310 pizza parlours in various locations serving approximately a million people. “The Best Pizzas under one Roof. In addition. identify and assess the external forces that have a huge impact in the performance of an organisation. and thus the playing field for this particular industry have been more competitive in the past decades. Economic. 2007) The restaurant of Pizza Hut has a particular concept and design which is a prominent red roof. Pizza Hut launched their campaign. In the year 1998.opened in Topeka. the company had the largest share of the market in that year for 46.025 branches in the United States alone with half of it franchised. . and Technological Factors.” in celebration of the company’s 40th anniversary. Pizza Hut was listed in the New York Stock Exchange under the symbol PIZ. a number of restaurants have emerged. Pizza Hut. (Pizza Hut. the company introduced the concept of deliver service. Social. Impact Analysis The external environment plays an important role in the sector of business. According to the Chartered Management Institute (2005) the PEST Analysis is a method utilised in order to examine.4%. In the year 1970. the total sales of Pizza Hut reached $4 billion dollars world wide. In the years 1990. the sales in the domestic market. which is the United States.
Another factor is the regulation of the business and the environment. the unemployment and inflation rates. Economic Factors. if the government is more open in the establishment of numerous Pizza Hut restaurants. thus consumers will demand that the foods be healthy. whether national of local affects how the business is being conducted. On the other hands. Aside from the attitudes and beliefs. If the current trend in the society is being health conscious. then more restaurants will be established. .this part is concerned on the overall perspective of the economy.it is the most difficult from the four factors because the attitudes and beliefs of people are difficult to quantify. The political and legal conditions that could affect the business of Pizza Hut are the policies of the local and national government towards business. if the current trend in food is Thai. The macro economy of a nation has a huge impact on the business such as Pizza Hut.the policies and actions of the government wherein Pizza hut is located. the recipes of the Pizza do not include pork. In the case of India beef is not served in the Pizza. If the overall economy of a country is not favourable. therefore Pizza Hut can add an additional food such as Vietnamese or Thai soups. demographic factors such as population and life expectancy are also important aspects in the analysis of the social factors. The influence of the values and beliefs affects the business of Pizza Hut. Japanese or Vietnamese. Factors in the economy include the gross domestic product. the foreign trade deficit and surplus. example in Muslim countries such as Egypt and Middle East. The changing trends in the taste of the consumers also play an important role in the external analysis of the environment. Social Factors. lesser people will franchise Pizza Hut because they will most likely loss a great amount of money instead obtaining profits. if the policies do not protect the business then fewer restaurants will be established. If the business environment is not friendly with the company. then there is a possibility that Pizza Hut will not open a restaurant and instead move to a more businessfriendly government.Political Factors.
the internet and ecommerce also contributes to the technological factors because through them customers can give feedback regarding the products of Pizza Hut which can also aid in the research and development.the fast changes in technology nowadays has farreaching effects in the businesses. The research and development has effects on the business of Pizza Hut because through R&D new products are developed for the business. such as replacing it with substitutes that are cheaper than the prices of the suppliers. According to Bensoussan (2003) there are five steps in which strategic group analysis can be applied and these are: Analyse industry structure. and if Pizza Hut thinks that the suppliers are over-charging then shift to another supplier. . in order to shift the power from the supplier to the company Pizza Hut can alter it in a number of ways. therefore more customers could be lured in buying their products which eventually would shift from Pizza Hut to these new entrants. and the service of the company.new entrants in the pizza industry could be a threat in Pizza Hut because it can lessen the market share of the company. Threats of New Entrants. therefore Pizza Hut should create measures to counter the approaches used by the new entrants. and new technologies. Bargaining Power of Suppliers. Usually new entrants offer cheaper products than the established.Technological Factors.in the analysis of the structure of the industry wherein Pizza Hut markets. Pizza Hut should order in bulk so that the prices will be cheaper. The factors that have a huge impact are the research and development. Pizza Hut uses raw materials in creating their products. The new entrants in this field usually offer cheaper prices of products. Porter’s Five Forces Industry Analysis can be utilised. Strategic Group Analysis According to Harrigan (1985) strategic group analysis is an analytical technique that gives insights in the various approaches utilised by the competitors in the marketplace and the resulting indirect indications for the performance of the organisation. internet and e-commerce.the supplier power is the capability of the supplier to control the cost and supply of the raw materials used in the market.
Degree of Internal Rivalry. In the case of Pizza Hut. Bargaining Power of the Buyers. therefore Pizza Hut must also be aware with the entry of the substitutes so that they could create measures to counter it. a high buyer power the entry to the industry could be hard. and sandwiches that have pizza flavours. the mobility barriers and the bargaining power.Threats of Substitution. the degree of competition is tough. On the other hand. . the degree of rivalry can either be low-level or high-level.the bargaining power of the suppliers and buyers in the industry is low. Bargaining Power.In mapping the strategic groups. the buyers have low power because almost all the people love Pizzas and there arte only few players in the industry. still it poses threats such as instant pizzas.the power of the buyer can either be low or high. in order to gain the biggest market share. In low buyer powers the conditions of the market allows the companies or entrepreneurs to enter easily because of the wide markets. Map the Strategic Groups. therefore the threats to these two is low. Although the Pizza Industry has low threats of substitutes. however Pizza Hut must still be aware on the changes that may occur.it exists when the demand for the product decreases because there are substitute products that performs better at a cheaper price. In the case of Pizza Hut the competition is in the high-level. Pizza Hut should list the relevant competitors into strategic groups.the barriers to entry in the pizza parlour industry is relatively low. and the senior managers should look at the following: Mobility Barriers. the threat of substitution is also low. Pizza Hut must have aggressive advertisement and competitive pricing. therefore entering to new markets in different parts of the world is easy for Pizza Hut. although the market is wide. due to fewer barriers in the entry and the employees do not need to be highly experienced. Threat of Substitution.Just like.it is the final factor in the Five-Force theory.
Gauge the Strength of barriers between groups. Use the Porter’s five forces model of the strategic group in which Pizza Hut belongs and assess the weaknesses and strengths of the firm.com/term_paper_topics/2008/08/internationa-28.Choose the membership of Pizza Hut in the prime strategic group. prices so that the company could be one of the top players in the industry. Pizza Hut must develop attractive menus. Last. substitutes would be created in the future.typepad. first is to determine the factors that prevent companies in a strategic group to compete with companies in another group. There are two types of strategic response that could be use in order to meet the challenges and these are mildly proactive and intensely proactive. However. Fourth. Pizza Hut must analyse the strategic opportunities and threats that come with the changes in the industry.gauging the strength of the barriers has five steps in which Pizza Hut must follow.html . http://ivythesis. there are also negative scenarios in the future such as more competition from the new entrants in the market. Second. and suppliers may be fewer in the near future. is to utilise the Porter’s Five-Forces Analysis on strategic groups. Third. Pizza Hut must identify the strength of bargaining power between the buyers and suppliers and the strategic groups and the industry. Based on the analysis the positive scenarios that could be seen in Pizza Hut is it will penetrate more markets in various parts of the world and the company will gain more shares in the market.Rivalry from other strategic groups.the rivalry is stiff in the case of the food industry and in order to come out on top. Understand the strategy of the firm vis a vis strategic group’s interaction. identify the threats of substitutes between the strategic groups.in identifying the right response to the evolution of the food industry. as well as. Determine the strategic group that will provide the greatest opportunity to utilise the strength of the company and decrease the weakness of Pizza Hut. Identify the appropriate strategic responses. is to examine the strengths of the rivalry between the strategic groups.