DOMINOS-PIZZA_revised.pptx

STRATEGIC MANAGEMENT I
G-5, Group 3
Alma Alvaran Cartabio
Arlene Quiñones-Nabua
Bryan May DelosReyes Bandong
Jeserio G. Lonon Jr.
Jimson Nabua

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. 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. /page 405 Domino’s Pizza, Inc., 2013

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” (P. 1, page 405). This is the second
largest pizza restaurant in the world .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.
Domino’s Pizza consist of four business segments that are (P. 1, page 406):
(1) domestic company-owned stores, (2) domestic franchise stores,
(3) domestic supply chain, and (4) international
The main competitors of the company are Pizza Hut , Papa John’s , Little Ceasars and local pizza
producers. In addition, there are many substitute product that compete with Domino’s Pizza like,
Mcdonalds, KFC and so forth. (Page 411, competitiors)

Introduction:
Mission and Vision: /page 405 Corporate philosophy and mission statement
Domino’s does not have a stated vision statement, but the company mission statement is as follows:
“Exceptional franchisees and team members on a mission to be the best pizza delivery company in
the world.” Domino’s “guiding principles” are based on the concept of one united brand, system and
team (P. 1 , page 405):
• putting people first;
• striving to make every customer a loyal customer;
• delivering with smart hustle and positive energy; and
• winning by improving results every day. (2012 Annual Report)

Environmental Analysis: Value Chain

Environmental Analysis: General Environment
General Environment: Opportunities
Socio cultural demographic
❖ Steadily growing international appetite for American fast food, and an
improving global economy. Markets such as China, Russia, India and
Brazil are still relatively untapped. (page 407 supply chain and
international division)
Technology
❖ Increasing needs for online sales and delivery (page 407)
❖ Rapid changes in mobile computer and internet technology
Economic
❖ Current landscape in Quick service restaurants (QSR) is a bimodal
population distribution with Large population of bargain-minded customer
seeking deals. Such us cheaper and fast food options.
❖ Revenue in the Quick Service Restaurant pizza category increased in the
Carry-out portion by 3.5% in 2012; The carry out portion accounts for 46%
of the total QSP revenues
❖ Wild fluctuation in commodity prices, especially in dairy products since
they cannot be locked in for long period of time, are particularly
problematic for the industry. (page 412-413, external issues)

General Environment: Threats
Socio cultural demographic
❖ Rivalry (competitiveness) among firms is exceptionally high.(page 413)
❖ Little Caesars was listed as the fastest growing pizza chain in 2010, with
revenue up 13.6% over 2009, Followed by Pizza Hut's 8% increase and
Domino's 7.2%. (page 411)
Economic
❖ In the QSR Industry, Bargaining power of the consumers is quite powerful,
availability of restaurant option in most places are most abundant, and
consequently there is intense price competitiveness among rival firms
❖ Wild fluctuation in commodity prices, especially in dairy products since
they cannot be locked in for long period of time, are particularly
problematic for the industry. (page 413)
Environmental
❖ Increasing concerns of customers regarding food safety, animal welfare,
product sourcing, and community involvement (page 408)
Political
❖ Governments potentially forcing all restaurants to label all nutrition
information on the menu at the point sale
❖ Trademark and patents protection laws are not as sophisticated in
developing countries (page 408 Internal issues)

FORCES OPPORTUNITIES THREATS
Socio-cultural-demographic 🗸 🗸
Technological 🗸
Economic 🗸 🗸
Environment 🗸
Politico-Legal 🗸

Environmental Analysis: Operating Environment
Operating Force of Analysis - Opportunities
Rivalry among competing firms
❖ Combined four key business segments (1) domestic company-owned
stores, (2) domestic franchise stores, (3) domestic supply chain, and (4)
international (page 406)
❖ domestic supply chain supplies franchisees with dough, vegetables,
ovens, uniforms, and much more, enabling better control, pizza
consistency, and timely delivery of products. (page 407)
Potential Entrants
Substitute products
❖ Capitalized on this well with the introduction of its artisan pizzas and new
recipes (or higher quality products) for its crust, sauce, and cheeses.
(page 414)
Bargaining power of suppliers
Bargaining power of buyers
❖ Backward integration strategy enables buyer bargaining power by buying
raw materials bulk. larger franchise stores can better negotiate pricing on
food, packaging, and other supplies.

Operating Force of Analysis - Opportunities
Industry Growth
❖ There also is a steadily growing international appetite for U.S. fast
food and an improving global economy. These positive trends are
expected to continue into 2013 and should bode well for Domino’s
with its strong international presence. (page 406)
Shareholder’s Action
❖ Starting 2009, domestic stores are voted to increase their
advertisement revenue contribution rate to 5% and eventually 5.5%
in 2011 (page 406)
Creditors’ Action
Community perception

Operating Force of Analysis - Threats
Rivalry among competing firms
❖ Little Caesars was listed as the fastest-growing pizza chain in 2010, with revenues
up 13.6 percent over 2009, followed by Pizza Hut’s 8 percent increase (page 411)
❖ the three main rivals, Domino’s faces intense competition from many local mom-
and-pop pizza stores, frozen pizzas from the grocery store, as well as hundreds of
non-pizza fast-food options (page 411)
❖ Chipotle Mexican Grill claims to only use meat and dairy products from free-
ranging cattle, as opposed to cattle injected with growth hormones. (page 413)
Potential Entrants
❖ One large contributing factor for the low barriers to entry is many small
entrepreneurs can open mom-and-pop establishments and bypass the franchise
fees, royalties, selection process, and so on of owning a franchised restaurant and
lease an existing building relatively cheap. (page 413)
Substitute products
❖ Increasing preference for healthy food options (page 413)
❖ Competitors offer dine-in and offers other menu (such as pasta & salad).(page
413)
Bargaining power of suppliers
❖ They can offer products/produce with other competitors.

FORCES OPPORTUNITIES THREATS
Rivalry among competing firms 🗸 🗸
Potential entrants 🗸
Substitute products 🗸 🗸
Bargaining power of suppliers 🗸
Bargaining power of buyers 🗸
Industry growth 🗸
Shareholders’ actions 🗸
Creditors’ actions
Community perception

Environmental Analysis: Internal Environment
Internal Environment: Strengths
Marketing
❖ Developed PULSE Point of Sale System to maximize efficiencies
and provide Financial and marketing data on time.(page 409)
❖ Established International and domestic supply chain to directly
supplies franchisees with dough, vegetables, ovens, uniforms, and
much more, enabling better control, pizza consistency, and timely
delivery of products. (page 408)
❖ Markets their Pizza as having a gluten free crust
Production/Operations
❖ Recently introduced new Artisan pizzas and new recipes (higher
quality products). For their crust, sauce and cheese.
❖ Domino's operates store, in 70 different nations. International stores
grew 43% from 2008 March 2013 with total of 5,327 (page 407,
internal division)
Finance
❖ Domino’s revenues increased 2.6 percent in 2012 and the firm’s
long-term debt rose slightly to $1.53 billion.(page 409)

Internal Environment: Strengths
Organization & Management
❖ The company mission statement is as follows: “Exceptional franchisees and team
members on a mission to be the best pizza delivery company in the world.”
Domino’s “guiding principles” are based on the concept of one united brand,
system and team: (page 405)
● putting people first;
● striving to make every customer a loyal customer;
● delivering with smart hustle and positive energy; and
● winning by improving results every day. (2012 Annual Report)
Human Resources
❖ In 1986, Domino’s launched its Pizza Partners Foundation with a mission of
“team members helping team members.” The foundation is 100-percent funded
by team member and franchise contributions and has disbursed nearly $12
million to aid team members facing crisis situations such as fire, illness, or other
personal tragedies.
❖ Exclusively a delivery/take out business, reducing the overhead (page 414)
Research & Development
Information System
❖ PULSE touch screen ordering system allows for increased order accuracy and
provides driving direction to drivers.
❖ Backward Integrated supply chain provides over 99% of supplies for franchise
store. (page 409)

Internal Environment: Weakness
Marketing
❖ Restaurant foods have added healthy options, Domino's offer
little in respect to healthy food options such as salad or fruits.
(page 408)
Production/Operations
❖ Relatively large company to operate under a functional type
structure.
Finance
❖ Reported over $1.3 billion in negative stockholders' equity at
year ended 2012. (page 409)
Organization & Management
Human Resources
Research & Development
❖ Suffered quality image before the launch of the new Artisan
pizzas and there is some belief there remains residual quality
problem (page 408)
Information System

FUNCTIONAL AREA STRENGTHS WEAKNESSES
Marketing 🗸 🗸
Production/Operations 🗸 🗸
Finance 🗸 🗸
Organization & Mgt. 🗸
Human Resources 🗸
Research and Development 🗸
Information System 🗸

Internal Factor Evaluation (IFE) Matrix
❖ Strategy tool used to evaluate firm’s internal environment and to reveal its strength as well as
weaknesses.
❖ “ Weights are Industry-based whereas ratings are company based.”
Rating Values:
4 – Major strength
3 – Minor Strength
2 – Minor weakness
1 – Major weakness
Overall Rating:
>2.5 – Strong Internal Position
2.5 – Average Internal Position
<2.5 – Weak Internal Position
Total Weighted Score should be equals to 1.

Environmental Analysis: Internal Factor Evaluation (IFE) Matrix
Nr Strengths Weights Rating
Weighted
score
1
Domino's reached $1 billion in USA online sales in 2012 from website, Iphone and
Android apps alone. Accounting for over 60% of all sales
0.11 4 0.44
2 Domino's operates store, in 70 different nations 0.09 4 0.36
3 International stores grew 43% from 2008 March 2013 with total of 5,327 0.08 4 0.32
4 Backward Integrated supply chain provides over 99% of supplies for franchise store 0.09 4 0.36
5 Domino's enjoys large economies of scale and great brand recognition. 0.07 4 0.28
6 Exclusively a delivery/take out business, reducing the overhead. 0.04 4 0.16
7
PULSE touch screen ordering system allows for increased order accuracy and provides
driving direction to drivers
0.04 4 0.16
8 Markets their Pizza as having a gluten free crust 0.02 4 0.08
9
Recently introduced new Artisan pizzas and new recipes (higher quality products). For
their crust, sauce and cheese.
0.05 4 0.2

Environmental Analysis: Internal Factor Evaluation (IFE) Matrix
Nr Weakness Weights Rating
Weighted
score
1
While many fast food restaurants have added healthy options, Domino's offer little in
respect to healthy food options such as salad or fruits
0.06 1 0.06
2
Domino's does not produce sustainability report or have a sustainability statement on
their website
0.02 1 0.02
3 Reported over $1.3 billion in negative stockholders' equity at year ended 2012. 0.15 1 0.15
4 Relatively large company to operate under a functional type structure 0.05 2 0.1
5
One Large slice of hand tossed pepperoni pizza contains 300 calories and 12 grams of
fat. 8 slice per pizza
0.03 1 0.03
6 No dine In option 0.02 1 0.02
7
Suffered quality image before the launch of the new Artisan pizzas and there is some
belief there remains residual quality problem
0.08 2 0.16
TOTAL WEIGHTED SCORE 1 2.9

External Factor Evaluation (EFE) Matrix
❖ Strategic analysis tool used to evaluate firm’s external environment and to reveal its strengths as well as
weaknesses.
❖ Summarizes and evaluates major Opportunities and Threats in the functional areas of business.
❖ “ Weights are Industry-based whereas ratings are company based.”
Rating Values:
4 – Major Opportunity
3 – Minor Opportunity
2 – Minor Threat
1 – Major Threat
Overall Rating:
>2.5 – Strong Internal Position
2.5 – Average Internal Position
<2.5 – Weak Internal Position
Total Weighted Score should be equals to 1.

Environmental Analysis: External Factor Evaluation (EFE) Matrix
Nr Opportunities Weights Rating
Weighted
score
1
Senior management estimates the company is only serving approx. 50% of the
international market they could possibly be serving
0.1 4 0.4
2
Steadily growing international appetite for american fast food, and an improving global
economy. Markets such as china, Russia, India and Brazil are still relatively untapped.
0.08 3 0.24
3 Many customers are looking for healthier fast food options 0.08 1 0.08
4
College campuses, shopping malls, and other high traffic areas are more commonly
frequented by young people
0.06 3 0.18
5
According to US census in 2010, over 16% of residential identify themselves as
hispanic
0.02 1 0.02
6
an inconvenience over delivery, customers today are willing to tolerate a degree of
inconvenience that historically were not if they get aq better deal.
0.03 3 0.09
7 The small margin in the restaurant business why so many mom and pops fail. 0.02 3 0.06
8
Current landscape in Quick service restaurants (QSR) is a bimodal population
distribution with Large population of bargain-minded customer seeking deals. Such us
cheaper and fast food options.
0.05 4 0.2
9
Starting 2009, domestic stores are voted to increase their advertisement revenue
contribution rate to 5% and eventually 5.5% in 2011
0.06 4 0.24

Environmental Analysis: External Factor Evaluation (EFE) Matrix
Nr Threat Weights Rating
Weighted
score
1
Governments potentially forcing all restaurants to label all nutrition information on the
menu at the point sale
0.03 2 0.06
2 Trademark and patents protection laws are not as sophisticated in developing countries 0.02 2 0.04
3
Yum Brands (parent company of Pizza hut) revenues are over 60% greater than
Domino's.
0.1 3 0.3
4
Little Caesars was Listed as the fastest growing pizza chain in 2010, with revenue up
13.6% over 2009, Followed by Pizza Hut's 8% increase and Domino's 7.2%.
0.08 3 0.24
5
Many Restaurants such as Wendy's Subway, and Even Pizza hut offers customers low
calorie options on the menu
0.06 1 0.06
6
There are over 925,000 fast food service locations in the USA or 1 for about every 330
people
0.03 2 0.06
7
Barriers to Entry are relatively low for restaurant industry, but Rivalry (competitiveness)
among firms is exceptionally high.
0.03 3 0.09
8
In the QSR Industry, Bargaining power of the consumers is quite powerful, availability of
restaurant option in most places are most abundant, and consequently there is intense
price competitiveness among rival firms
0.05 3 0.15
9
Wild fluctuation in commodity prices, especially in dairy products since they cannot be
locked in for long period of time, are particularly problematic for the industry.
0.06 2 0.12
10 Labor is the second greatest expense in the fast food industry 0.04 3 0.12
TOTAL WEIGHTED SCORE 1 2.75

Competitive Profile Matrix:
Competitive Profile Matrix is an analytical tool that provides necessary
information of competitive advantage based on critical success factors and able
to identify relative strengths and weaknesses. Domino’s major competitors are
Pizza Hut and Papa John’s. Success factors were identified in order to compare
competing stores.
Alma Alvaran Cartabio
The following ratings were used to indicate how effectively
the Domino’s strategies respond to the factor:
4 – Major strength
3 – Minor Strength
2 – Minor weakness
1 – Major weakness

Assumptions: General Environment Stability
The Socio-Cultural-Demographic environment of Domino’s
Pizza is stable due to the following;
❖ Starting 2009, domestic stores are voted to increase their
advertisement revenue contribution rate to 5% and eventually
5.5% in 2011. This increased the market of Domino’s as the
company is gaining business from advertisement aside from
the pizza delivery.
❖ College campuses, shopping malls, and other high traffic areas
are more commonly frequented by young people.
❖ Steadily growing international appetite for american fast food,
and an improving global economy.
❖ Current landscape in Quick service restaurants (QSR) is a
bimodal population distribution with Large population of
bargain-minded customer seeking deals.
❖ An inconvenience over delivery. Customers today are willing to
tolerate a degree of inconvenience that historically were not if
they get a better deal.
Jimson Nabua

Jimson Nabua
Assumptions: Industry Growth Prospects
The market presents a promising opportunity;
❖ Senior management estimates the company is only serving
approx. 50% of the international market they could possibly be
serving. They must also see this opportunity to establish
additional store branches in many locations like in Asia, North
and Middle-East.
❖ Many customers are looking for healthy foods and flavoured
pizza with healthier ingredients such as vegetarian types,
gluten-free crust pizzas, and less-calories pizza.
❖ From 5.5% of advertisement could be an opportunity to
increase visibility through advertisement and mobile apps to
compete with current technology of marketing.
❖ Expanding Supply Chains to support the growing branches to
other territories outside US.

Jimson Nabua
Assumptions: Company’s Competitive Position
The competitive strength of the company is; Affordable
prices, accessible ordering through the PULSE System,
aggressive advertisement promotions, Market visibility, and
presence in many locations.
❖ The company reached $1 Billion in USA online sales in
2012 from its website and mobile apps alone.
❖ Operates stores in 70 different nations.
❖ International stores grew 43 percent from 2008 to 2013 to s
total of 5,327 stores.
❖ Exclusively offering delivery and take-out business,
reducing operational expenses.
❖ Pulse touch screen ordering system allows fast
transactions, increases accuracy, provides directions to
drivers, and monitors royalty fees.
❖ Recently introduced new Artisan pizzas, and new recipes
for higher-quality products.

Statement of the Problem:
Formulating effective strategy to sustain as the leader internationally in the pizza
delivery and fast food industry, as evidenced by the following:
● Lack of sustainability report | page 408 “Sustainability”
● Increasing retained deficit and lower earnings per share and price/earnings
ratio compared to Competitors (i.e. Papa John’s) | pages 409-411, exhibits
6&7, “Finance”
● Lack of products catering to the growing health conscious population | page
413 “Nutrition Concerns”
● Decreasing no. of company owned stores and increasing no. of franchise
owned and international stores resulting to risk on dependence to
diversified/volatile international laws | page 407 Exhibit 3 & 4
Source Material: “Strategic Management: A Competitive Advantage Approach, Concepts and Cases (16th Edition) by: Fred R. David | Forest R. David

Statement of the Problem:
Formulating effective strategy to sustain as the leader internationally in the pizza
delivery and fast food industry , as evidenced by the following:
● Non-exclusive purchase agreement of ingredients and supplies with
franchisees.| page 407 “Domestic Supply Chain”
● Increasing dependence on incentive-based system for franchisees through
profit sharing schemes for new stores and purchasing supplies. | page 408
“Internal Issues”
Source Material: “Strategic Management: A Competitive Advantage Approach, Concepts and Cases (16th Edition) by: Fred R. David | Forest R. David

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