Department of Tourism & Hospitality Management

Group-Synergy

Course Title: Strategic Management

Course Code: 6004.

Submitted To:

Dr. Muhammad Shoeb-Ur-Rahman

Associate Professor

Department of Tourism and Hospitality Management,

University of Dhaka.

Submitted by:

Name ID

Fariha Rahnum 71930028

Mohammad Saiful Islam 71724020

Md Fokhrul Alam 71826008

Table of Contents
Introduction:..........................................................................................................................................3
History :.................................................................................................................................................4
Business Model.....................................................................................................................................5
Current Scenario:...................................................................................................................................5
Vision Statement:..............................................................................................................................5
Mission and Goals :...........................................................................................................................5
The Purpose:..........................................................................................................................................7
Strategic Issues Identification:...............................................................................................................8
External Analysis of the company:....................................................................................................8
Positive market outlook:................................................................................................................8
International market expansion:.....................................................................................................8
Growing health concerns:..............................................................................................................8
Margin expansion:.........................................................................................................................9
Internal Analysis of the Company...................................................................................................10
Great innovation:.........................................................................................................................10
Domino’s Pizza is renowned for its ability to study its experiences and make corrective measures
to enhance its future market performance. This has enabled the company to increase its
innovation ability. This innovative approach led to a timely solution to the cold pizza delivery
problem. The firm has also earned itself the tag of being a leading market trend setter. Domino’s
main focus is on satisfying customers and achieving better customer experience (Pizza
Marketplace.com, 2013, para. 4)..................................................................................................10
Robust brand name:.....................................................................................................................10
Poor advertising skills:................................................................................................................10
Competitive Challenge:...............................................................................................................11
Current Strategies:.......................................................................................................................11
Digital platform...........................................................................................................................12
Strategic Management Recommendations:..........................................................................................13
Direct store ownership:....................................................................................................................13
Conclusion...........................................................................................................................................14
References...........................................................................................................................................15
 Domino’s pizza

Introduction:

Background Domino’s pizza has been a legacy company in preparing pizza and delivering
them to customers. But, the period between 2007-2010 was a major struggle for it. The
overall growth of company went slow, declined sales and the stock price was stuck at $8.76
per share, it almost went down to 3$ per share. The customers were giving never ending
negative reviews on quality and service: such as crust can be compared to cardboard and
sauce to ketchup. The company had to reinvent itself to survive in the competitive market
(Taylor, 2016). The company had rebounded back considerably well from the slow down and
is heading towards a positive business outlook. As the business model of Domino’s is
oriented towards home deliveries of pizza in a stipulated time, the speed of preparing the
pizza and on-time delivery are the key success factors. During the sales decline the company
made some changes to top level management. So far, these changes have benefitted it very
well. In October 2008, Russell Weiner joined as Chief Marketing Officer and in 2010 Patrick
Doyle Joined as CEO. The result can be seen with current stock price of around $260
(Dominos, 2019)
History :

“DomiNick’s” pizza restaurant was bought for 900$ by Tom and James brothers in 1960 to
enter pizza business. In 1965, Tom renamed the store as “Domino’s Pizza”. Within a span of
13 years, the company grew to 200 outlets. In 1989, company opened its 5,000th store and in
1990, it signed it’s 1000th franchise. In 1996, the company launched its online website and
reached 2.8 billion dollars in sales. In 1998, Tom sold 93% of its stake to Bain Capital, and
also Domino’s launched its Heat wave bag, a patented innovation which helped them to
deliver hot pizza at customer doorstep. In 2004, the Domino’s Pizza Inc. became a public
traded company on New York Stock Exchange (NYSE). In 2017, Domino's and Ford have
teamed up to see the way self-driving vehicles can be used for pizza delivery (Dominos,
2019)
Business Model

Current Scenario:

Domino’s Pizza Inc. is spread around the globe in 85 markets and is also one of largest pizza
restaurant in world with more than 14,800 locations. The company works in form of large
network of franchise and company-owned stores. The company average sales are 2.5 million
pizza unit each day (Dominos Annual Report 2017, 2018). Domino’s through its business
model works upon handcrafting its product and serve the quality food at competitive price.
With efficient technology, innovations and resources at place the company focuses on
providing the customer with good service experience.

Vision Statement:

-To be the #1 Pizza company in every neighborhood.

Mission and Goals :

-Wants to be customer favorite delivery and takeaway brand.

-The Customer should be able to order easily.

- Wants to provide good customer service and value for product.

-The customer should be able to easily access its good-looking stores. (Investor Dominos
UK, 2018)
The Purpose:

The purpose of report is to identify the strategic planning issues which Domino’s Pizza is
looking forward to achieve or it is already undertaking to achieve within given span of next
three to five years. Also, we analyze the last 10 years of company’s market response to curb
the effect of slowdown in sale, due to bad quality, service and rising competition in 2007-
2010. The way strategic decisions taken during the period of 2007-2010 have paved a future
growth for company. We look into the way company is heading forward to achieve it’s set
goals and objectives. With help of this study, we will also come out with long term and
essential recommendations for the company to achieve its goals.
Strategic Issues Identification:

External Analysis of the company:

Positive market outlook:

Consumer demands are also expected to increase with the overall global economy improving
following poor performance in the recent past. According to Morning Star (2013, para. 6),
restaurant industry sales in the US are expected to attain the $604 billion mark. This will
represent a 3.6% annual growth.

This is critical, particularly coming immediately after a period of economic lull that lasted for
about three years (Morning Star, 2013, para 7). The improving economic situation and
conditions are enabling customers and potential buyers remain with a significant amount of
disposable income that they can eventually spend on luxury products, such as buying and
enjoying fast foods with their families and friends.

International market expansion:

Domino’s eventual entry in 2010 into the German market has provided it with a great
opportunity to enhance its profits and market performance in general.

A Master Franchise Agreement signed between the company and Yakir Gabay, the owner of
over 3,000 residential units and a multiple number of hotels, offers a lucrative business
opportunity for the restaurant chain. This has seen Domino’s grow to become the leading
hotel operator in the entire German market. The growth is also attributed to Yakir’s extensive
business network (Morning Star, 2013, para 3).

Growing health concerns:

There has been growing concern among the consumers of fast foods that continued
consumption of junk foods puts food users at greater risks health wise.
This situation could see quite a considerable number of potential customers lower their
demand for the foods sold at Domino’s. In essence, the company will suffer losses as a result
of diminished sales because its main focus is on pizza products (BizLeader, 2013, para 4).

Margin expansion:

The fast food industry is one of the leading industries globally in terms of high competition.
The existing players are well established and pose a great market challenge to each other.
New entrants are also flocking the industry (BizLeader, 2013, para 4).

All the players face the challenge of affecting their respective margin expansion as
internationalization remains the obvious option to sustain the competition. The firms are
spending huge capital amounts to sustain the expansion. This eventually puts the firms at the
risk of failing to recoup substantial returns (PR Newswire, 2013, para 3).
Internal Analysis of the Company

Great innovation:

Domino’s Pizza is renowned for its ability to study its experiences and make corrective
measures to enhance its future market performance. This has enabled the company to increase
its innovation ability. This innovative approach led to a timely solution to the cold pizza
delivery problem. The firm has also earned itself the tag of being a leading market trend
setter. Domino’s main focus is on satisfying customers and achieving better customer
experience (Pizza Marketplace.com, 2013, para. 4).

Robust brand name:

Domino’s Pizza is a strong brand name that is renowned for its pioneering pizza delivery
business (PR Newswire, 2013, para 5). This, in turn, influences its power to retain and build
loyal customers. It also enables the firm to constantly introduce new products.

For instance, the company has introduced several brands of its food products, including
Domino’s Oven Baked Sandwiches, Domino’s BreadBowl Pats, as well as Chocolate Lave
Crunch Cakes, among many others over a very short span of time (PR Newswire, 2013, para
6).

Given the goodwill that the brand has managed to build in the market, Domino’s can afford
to introduce many products and still benefit from immediate customer acceptance. This
reduces the possibility of encountering losses as a result of products taking too long in the
market introduction and familiarization phase.

Poor advertising skills:

Domino’s committed a blunder in its marketing and advertising strategy when the company
informed its consumers that it was able to deliver fresh and hot pizza irrespective of cold
weather conditions. The villainous character, “The Noid”, was annoying and fictitious
(Montgomery, 2013, para 3). It caused more confusion in the company’s marketing strategy,
although it was short-lived.
Competitive Challenge:

The situation of the credit markets in the US has been of major concern in limiting Domino’s
from achieving maximum market growth in the country. In close to ten years now, Domino’s
has not been able to expand its operations in the US market through expanding its network of
stores. As Buss (2013, p. 2) notes, only as little as 1,000 new stores are being planned for the
US market by the company’s management.

This contrasts heavily with its external market plans that have so far lined up thousands of
new stores for opening. The company is continuously reducing its number of stores in the US
market. This affects its ability and power to compete in the world’s leading fast food market
(Buss, 2013, p. 2).

With the US economy only having emerged from a financial crisis that spread all over the
world, there are limited chances that the situation will normalize in the very near future in
order to boost the company’s competitive power in the market. Thus, it implies that the
single-unit operators within the American market are curtailed from opening up new branches
to contain the challenge being posed by other rival firms, such as McDonalds.

It is worth noting that only 10 percent of Domino’s outlets in the US are company-owned,
with the remaining 90 percent being franchised-owned (Buss, 2013, p. 1). It is a more
challenging fact for Domino’s to fail to expand its market presence within this lucrative
market, with the US market being by far the largest pizza market in the whole world (Buss,
2013, p. 1).

Current Strategies:

Domino’s is currently combining a series of strategies to formulate its major market strategy
that has helped in enhancing its market operations and performance. With the advent of
information technology, the firm has focused on developing a digital marketing technology
that it has integrated with social media to increase interactivity with its mainly youthful
clientele. Additionally, the company is combining this with consistent pricing strategies for
its menu as a means of sustaining its sales momentum that it has managed to enjoy for the last
few years.
Digital platform

Domino’s has established a mobile-optimized website that is intended for use in making
orders online. The firm has also pursued a plan that has eventually seen it introduce both
Smartphone, as well as tablet apps intended for use in making orders (Marshall, 2013, para
6).

The Pizza Hero game software that was launched for iPad use underscores the great
determination by the company to make use of digital capabilities in enhancing market
performance. With the majority of fast food consumers mainly being youthful people, the
company is relying on the group’s admiration for IT to attract them and eventually influence
its market performance.

The popularity of social media websites, Facebook and Twitter, has also been inculcated into
Domino’s market strategy as the company uses these platforms to increase its interactivity
with customers. Potential customers are also attracted by the social marketing power upon
reading sentiments and recommendations by the company’s long-standing customers. In
other words, the company is utilizing the power of social media to reduce its advertising costs
as the platform achieves the same results (Speedy, 2013, para 5).
Strategic Management Recommendations:

Direct store ownership:

Domino’s should consider involving itself directly in owning stores, especially within the
lucrative American market. Waiting and hoping that the credit market situation in the country
will stabilize in the near future to enable the franchisers the opportunity to borrow funds and
expand their outlets is impractical.

Instead, Domino’s should invest part of its capital in opening up company-owned outlets to
boost its overall presence in the market. This will give the firm a greater footing, similar to its
main rivals.

In case running too many company-owned outlets poses a management challenge for the
company, the organization can make arrangements with its individual market partners to hand
them the shops. Such an arrangement would see the individual entrepreneurs run and manage
the outlets as though they owned them personally, but submitting the resultant profits to the
franchiser and receiving quotas from the same.

This will help in spearheading expansion in the market, while also empowering the franchise
to grow their businesses. With Domino’s setting the quota-based system on the franchisee’s
performance in the market, most of the franchisees will work hard to ensure that the
businesses they manage grow bigger.
Conclusion

Domino’s Pizza is a leading global fast-food restaurant chain whose headquarters and
foundations are based in the USA, but it has an enlarged network covering over 70 countries.
The chain is currently considered as the second-best performing in the market after another
American brand Pizza Hut. Domino’s greatest strength is in its innovation skills and
capabilities that have seen it emerge as a market pioneer in many instances.

However, it’s advertising and marketing strategies have hampered its market performance
following its promise to the market that it would manage to deliver hot and fresh pizza to its
clientele during the cold season. Improving the global financial situation, especially after a
long-term crisis, is proving to be of benefit to the company as it offers added opportunities
for growth. Equally, the international expansion of the company is influencing its overall
market performance by expanding the market and increasing sales volume.

The greatest market challenges for the firm are the failure of its US-based franchises to
access credit and expand their business operations. This is affecting the overall business
performance because the American market is by far the largest globally in as far as pizza
sales are concerned.

Thus, any firm must take the American market seriously if it intends to compete effectively.
As a remedy, the firm should invest directly in opening up branches in the country and invite
franchisees to manage the branches on its behalf, instead of wasting time in waiting for the
normalization of the domestic credit market.
References

Abc News, 2013, Domino’s Pizza® wants select startups, great ideas to be
#PoweredByPizza, Web.

BizLeader, 2013, Domino’s Pizza® online ordering is faster than ever with launch of pizza
profiles, Web.

Buss, D., 2013, ‘Domino’s global growth feeds Pizza chain’s rising success’, Forbes, Web.

Domino’s, 2013, About Pizza, Web.

Gluyas, R., 2013, ‘Meij delivers larger slice of Domino’s pie’, The Australian, Web.

Marshall, R., 2013, ‘Domino’s Buderim CEO aiming high‘, Sunshine Coast Daily, Web.

Montgomery, R., 2013, ‘Investors find Domino’s is topping out’, The Australian, Web.

Morning Star, 2013, Pittsburgh Domino’s Pizza franchise owner reaps national accolade,
Web.

Pizza Marketplace.com, 2013, Domino’s new store design hits New Orleans market, Web.

PR Newswire, 2013, New Orleans Domino’s Pizza opens first new store design in the West
Bank Area, Web.

Speedy, B., 2013, ‘Domino’s lifts profit, eyes expansion into Japan’, The Austrian, Web.