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Domino’s pizza
Question 1
PESTEL ANALYSIS

Introduction
PESTEL analysis refers to a tool used in analyzing and monitoring the macro-environment i.e. the external marketing
environment by marketers which have an impact on an organization. The result from PESTEL analysis are usually utilized
by marketers to identify threats and weaknesses which is used in a SWOT analysis. PESTEL stands for - Political,
Economic, Social, Technological, Environmental & Legal factors that impact the macro environment of any particular
organization. Therefore, Domino's Pizza. Domino's Pizza, Inc. PESTEL analysis is a strategic tool used by the organization
marketing department to analyze its macro environment of the organization (Yüksel, 2012).

Political factors:
Political factors play a significant role in determining the factors that can impact Domino's Pizza, long term profitability in
a certain country or market. Domino's Pizza, Inc. is operating in Restaurants with more than 9,300 outlets in 65 countries
and expose itself to different types of political environment and political system risks. The achieve success in such a
dynamic Restaurants industry across various countries is to diversify the systematic risks of political environment
(Zimmermann, Schlimm, Waller & Pestel, 2005). Domino's Pizza, Inc. can closely analyze the following factors before
entering or investing in a certain market. Political issues affecting Domino’s Pizza operations include regulatory frame
work operating in judicial system which may distress the business in diverse ways.

Economic Factors:
The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign exchange rate and economic
cycle are some of the economic factors affecting the operations of Domino’s Pizza in dozens of countries it operates from.
Additionally, micro environment factors such as competition norms are impacting the competitive advantage of the firm.
Moreover, increase in inflation rate in some economies the business is operating from, pointers to increment of cost of raw
material which also leads in the direction of higher prices for goods hence negatively impacting the firms’ performance
(Zimmermann, Schlimm, Waller & Pestel, 2005).

Social Factors:
Domino's is a multinational firm and it is basically inaugurated from America; therefore, the organization is snowed under
by domino's western culture. There are different social forms of society which consists of, upper class, middle class, middle
upper class, and lower class. Moreover, every single nation, state has their own cultural norms, beliefs, religion, values
which might affect the organization worldwide (Zimmermann, Schlimm, Waller & Pestel, 2005). Also, demographic
changes in market as a result of social belief that pizza causes obesity is negatively affecting the firms’ performances as
people in various societies are turning to organic foods as means of health eating.

Technological Factors:
Technology is fast disrupting various operations in Domino’s Pizza operations. As such, the firm is currently using baking
and heating ovens will be of new of advanced technology which are providing efficient service. Due to these innovative
technologies there are many latest ways Domino’s Pizza is employing as means of publicizing, through internet;
telemarketing through which it can ca advertise their products in much more rapidly than ever before (Yüksel, 2012). The
firm has also employed Computer based customer data that is MIS (managing information system) that helps in collecting
customer data, daily transactions, future forecasting and decision making.
Environmental Factors:
Different markets have different norms or environmental standards which can impact the profitability of an organization in
those markets. Various countries where Domino’s Pizza operates have different environmental factors that are affecting its
overall operations. These environmental factors may range from include weather conditions, climatic changes, regulations
on environmental pollution, recycling as well as countries regulations in terms of air and water regulations in restaurants
sectors (Yüksel, 2012).
Legal Factors:
In a number of countries Domino’s Pizza is operating from, the legal framework and institutions are not robust enough to
protect the intellectual property rights of an organization. However, each Domino's Franchisee is independently
responsible for its own legal and regulatory compliance and for the operation of its own Store(s) and all compliance and
other issues arising from any transactions with you and/or Products ordered by you from the Websites and Apps. This
means that each Domino's Franchisee is solely liable for all products purchased at the Store.
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QUESTION 2
PORTER'S FIVE FORCES FRAMEWORK
Introduction
Porter's Five Forces Framework is a tool used by organizations to analyze competition that exists in the business sector.
The tool is used to assess whether the industry in which the business unit is operating in is attractive or unattractive.
According to Potter, the attractiveness of the industry is measured interms of the profitability the business. the
attractiveness (or lack of it) of an industry in terms of its profitability. An "unattractive" industry is one in which the effect
of these five forces reduces overall profitability. The most unattractive industry would be one approaching "pure
competition", in which available profits for all firms are driven to normal profit levels (Cernusca, Gold, & Godsey,2012).
Porter refers to these forces as the microenvironment. These factors are the one close to the organization that affect its
ability to serve its customers and make a profit.
Therefore, using Porter model, the attractiveness of Domino’s Pizza in both domestic and international pizza industry can
be analyzed by considering five forces within a market. These factors are:
Threat of new Entrants:
The competitive threat to Domino’s Pizza business may not only be from existing players in the pizza market but also from
potential new entrants into the market place. Given the fact that the pizza industry is usually profitable, the industry is
likely to attractive to new companies with the desire to invest in the sector (Grundy, 2006). However, the fact that there
doesn’t exist major barriers to entry in pizza industry, new firms have easily entered the market and changed the dynamics
of the industry. This has posed a threat to Domino’s Pizza despite it being ranked second in US pizza sales ranking. Other
small-scale pizza companies have posed stiff competition to Domino’s Pizza as they offer the same quality pizza but at a
reduced price.
Competitive Rivalry:
The degree of rivalry between existing companies in the market is one that Porter describes as an important force. The fact
that there are many other pizza companies posing competition to Domino’s Pizza at both domestic and international stage
is a clear indication that the resulting competitive pressure especially that posed by its main rivals Pizza Hut, Papa John’s
and Little Caesars means that prices and profitability will be affected. The reason why Domino’s Pizza is considered to be
facing great rivalry in pizza market is because there are other similar sized companies operating in pizza sector, these
companies have similar strategies like Domino’s Pizza and the pizza which these companies offer have similar features as
to those also offered at Domino’s Pizza (Cernusca, Gold, & Godsey,2012).
Threat of Substitutes:
Porter describes substitute products as those that exist in another industry but may be used to fulfill the same need.
Usually, the more substitutes that exist for a product, the larger the company’s competitive environment and the lower the
potential for profit. In pizza industry, Domino’s Pizza doesn’t have any substitute meaning that it can control the market in
this sector. However, the availability of different pizza brands from other close competitors like the Yum brand from Pizza
Hut is greatly affecting the overall sales at Domino’s Pizza. A high threat of substitutes pizza brands is impacting
Domino’s Pizza ability to set prices that it wants (Cernusca, Gold, & Godsey,2012). This is because, some pizza brands are
priced lower it ends up attracting consumers towards it and thus reducing Domino’s Pizza sales.
Bargaining Power of Consumers:
The stronger the power of buyers in an industry the more likely it is that they will be able to force down prices and reduce
the profits of firms that provide the product. This case of buyers
bargaining power has over the past affected Domino’s Pizza as it come under fire from its customers where they
complained about being served low quality pizza with inferior ingredients that lacked taste. Negative consumer perception
can greatly cause harm to the business and thus Domino’s Pizza had to re-strategize so as to appease its consumers and lock
them from switching to their main rivals in the pizza market.
Bargaining Power of Suppliers:
Suppliers provide the raw material needed to provide a good or service. This means that there is usually a need to maintain
strong steady relationships with suppliers. Depending on the industry dynamics, suppliers may be in the position to dictate
terms, set prices and determine availability timelines (Grundy, 2006). Powerful suppliers may be able to increase costs
without affecting their own sales volume or reduce quantities that they sell. However, Domino’s Pizza has over the
years maintained proper supplier’s relations and no any noted time has they risked not being supplied with the necessary
raw materials to make pizza.

QUESTION 3 VALUE CHAIN ANALYSIS

Introduction
Value chain analysis is a process where an organization identifies its primary and support activities that add value to its
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final product and then analyses these activities to reduce costs or

increase differentiation. The goal of value chain analysis is to establish which activities are the most valuable (i.e. are the
source of cost or differentiation advantage) to the firm and which ones could be improved to provide competitive advantage
(Kurttila, Pesonen, Kangas, & Kajanus, 2000). The firm that competes through differentiation advantage will try to perform
its activities better than competitors would do. If it competes through cost advantage, it will try to perform internal
activities at lower costs than competitors would do. When a company is capable of producing goods at lower costs than the
market price or to provide superior products, it earns profits. In this regard, Domino’s Pizza value chain analysis can be
analyzed by undertaking SWOT analysis of the firm (Pickton, & Wright, 1998). Every organization has its own strengths
and weaknesses as well as threats and opportunities thus Domino’s value chain analysis can be conducted by understanding
its SWOT analysis.
Domino’s Strengths:
Currently Domino's is the market leader in providing wide range of pizzas, in a manner that there is no much competition
in this sector. There admirable image has made the organization more worth full. Moreover, Domino's is render pleasing
taste, quality products with qualified staff, splendid ambience and hygienic surroundings. They are specialized in pizzas.
Moreover, Motivation level of staff is very high which make the organization more prosperous. They are ISO (International
Standard Organization) certified. They have equipped with plenty of resources for operating different activities of the
organization. They are providing free home delivery service. They have created monopoly in this sector (Kurttila, Pesonen,
Kangas, & Kajanus, 2000). Another big Strength and even a Competitive Advantage is the fact that they have a full service
restaurant as well as delivery services. Most of domino's competitors do not have restaurants. Because of the restaurant,
Domino's can market too many different segments
that other pizza chains cannot. For example, Domino's can market to families much easier than Pizza Hut or Little
Caesar's.
Domino's weaknesses:
As far as domino's weaknesses is concerned, domino's holding a restaurant to run is also the major weakness that it has,
because of it has higher overhead cost than that of competitors as competitors don't have a restaurant to deal with therefore
their overhead cost is quite lower than that of Domino's. As a result of higher overhead cost domino's charge higher prices.
Obviously, Domino's is not the low cost producer. As they charge higher prices so that's why they are accountable for
quality pizza and good service (Pickton,& Wright, 1998). They are providing less range of products comparatively with
high prices. They are more focused on western taste instead of Eastern.
Domino’s Opportunities
Domino's has a high potential therefore it has numerous opportunities likewise, if it come across new markets then new
opportunities will be born. Considering eastern test of the people like Mc Donald’s, Domino's can come up with new
products. Market share can be increased by bringing variety of new products. Prices can be reduced because of more
domino's.
Domino’s Threats:
Currently major threat that Domino's can face are from competitors, as their immediate competitor which is pizza hut, is
working over to open their branch hastily. But competitive advantage that Domino's have over pizza hut is their lower price
(Pickton,& Wright, 1998).

QUESTION 4
ANSOFF’S PRODUCT & MARKET MATRIX
Introduction
The Ansoff Product and Market Matrix is a strategic planning tool that provides a framework to help executives, senior
managers, and marketers devise strategies for future growth of their business. The tool was developed by Igor Ansoff.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or
existing products in new or existing markets. The output from the Ansoff product/market matrix is a series of suggested
growth strategies which set the direction for the business strategy. Ansoff identified four product marketing strategies;
market penetration, market development, product development, and diversification (Rezaei, Khavarian, &
Ghafurzadeh,2016). When displayed visually, these four areas create the Ansoff Growth Matrix Sutherland (2008).
Therefore, the Domino’s Pizza growth matrix can be examined by looking at the four major aspects as suggested by Igor
Ansoff.
Market Penetration:
The first quadrant in the Ansoff matrix is market penetration. Domino’s Pizza can easily adopt this as a strategy since it has
an existing product with a known market and they only need a growth strategy within that market. Domino’s used Ansoff
Matrix in 2009. Domino’s by then had shares of the pizza sales and delivery market and they strove to increase their sales
in the future by updating their Recipe. Here we can identify how Domino’s has targeted an already utilized market with
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a similar product (Rezaei, Khavarian, & Ghafurzadeh,2016). The new recipe was accompanied with promotional campaign
to drive up sales through Advertisement.
Market Development:
Market development is the second market growth strategy in the Ansoff matrix. Domino’s Pizza can adopt this strategy
as it targets a new market with existing products. In this situation, Domino’s Pizza might leverage its strengths by
developing a new product targeted to its new customers. As revealed, over the years Domino’s Pizza has expanded into
new markets where it has received quite okay in terms of its overall performance. In particular, the company has expanded
its consumer base setting up more than 9,300 outlets in over 65 countries hence getting deep in its market development.
Product Development:
Product development in the Ansoff matrix refers to firms which have a good market share in an existing market and
therefore might need to introduce new products for expansion. Domino’s Pizza undertook Product development strategy as
it has a good customer base and knows that the market for its existing product has reached saturation. In this case,
the market penetration strategy is might not be applicable to Domino’s Pizza. Therefore, the firm must design new a new
product development strategy that caters to the existing market. Domino’s Pizza has overall been successful in this
strategy as its marketing strategy is effective thus customers are able to get proper information regarding the new
products which have been introduced by Domino’s Pizza.
Diversification:
The diversification strategy in the Ansoff matrix applies when the product is completely new and is being introduced into a
new market. Usually, this is the most risky part of all the four growth strategies since it requires both product and market
development and maybe outside the core competencies of Domino’s Pizza. Domino’s Pizza over the years has undertaken
diversification strategy in order to expand its market base. However, Domino’s Pizza has been very attentive when
implementing this strategy by diversifying into related markets using existing resources and capabilities (Thijsen, Tong, &
van Leer, 2014).

Recommendations for Domino’s Pizza Future Growth

Majority of Domino’s Pizza growth strategies adopted by the company started back in 2009, as part of an ambitious
program to increase its competiveness in the market and in the industry as a whole. Since 2009 the overall growth rate of
Domino’s Pizza has gone up and the company has been competing effectively with its main competitors especially Pizza
Hut in the market. However, in order to ensure further future growth, I would recommend Domino’s Pizza to undertake the
following measures:
1. To establish a value proportion: Domino’s Pizza should strive to understand what sets it apart from the pizza
market competition. In this regard, the management should identify why customers prefer their pizza and how their
products and services are different from other players in the market. By identifying this, Domino’s Pizza management
should convince other smaller pizza outlets to do business with them and thus achieving future growth.
2. Identifying their ideal customers: Domino’s Pizza should major down in identifying their key customers.
Through this, the company should first concentrate in satisfying
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these customers after which they should embark on others and thus stimulating their future growth.
3. Define key indicators: Domino’s Pizza should embark on a comprehensive reevaluation of its overall
performance. Through this, the management will be able to identify areas where necessary change is required and
implement effective strategies in regards to these changes which will propel them to future growth.
4. Verify their key revenue streams: Management of Domino’s Pizza should identify their key revenue streams.
With this, they should identify new revenue streams which they should capitalize on to make their business more profitable
and thus achieving long term growth strategies.
5. Focusing on their strengths: Domino’s Pizza should capitalize on majoring on their key strength areas especially
which they do better than their major competitors. With this, they should work upon these identified strengths to grow their
business.

Conclusion
It is evident at this point that Domino's Pizza Incorporation has a good brand image, which is one of its strongest points. In
addition, the company has had a good history despite a few criticisms on taste as mentioned in the case study. Domino's
advertising strategies are quite effective and have worked to improve the sales of the company as well as its competiveness
in the market. However, the company faces major threats that might put the future of the company to dire test. The
sociocultural changes that continue to occur in the world today require that the company make rapid changes and
continuous monitoring of the lifestyles of the people in various parts of the world: especially where they operate. Their
level of competition in the fast food industry is
growing stronger by day and maintaining loyal customers is the ultimate strategy for any business in the industry today.