Introduction
The objective of this paper is to conduct an internal and external environmental analysis focusing on Domino’ Pizza, the largest pizza store chain worldwide and the second largest in the United States. The analysis should focus on threats and opportunities for the external analysis and the strengths and weaknesses for the internal analysis. So far, the results of the analysis show that the company can do much more to improve its foothold in the market. It is not in a negative position, however. In fact, it is in a favorable one.
Comprehensive Written Analysis
External Environment Analysis
The external environment analysis should focus on two important variables: firstly, the opportunities that Domino’s Pizza can take to further their growth and expansion and secondly, the threats that can hinder that upward movement. Opportunities can be any external factors that the company has not tapped or used yet in its strategic management planning and implementation programs. These are factors that offer great potential as far as the goal of safeguarding, sustaining, and improving its position in a competitive market is—which by the way is the same reason why companies do environmental analysis.
Opportunities
Market Expansion
First that comes to the list of opportunities is the opportunity to expand. One question that the management team has to consider when it comes to expanding decisions is the one that asks whether the market can absorb the increase in supply (of products and services) that the opening of a new branch can cause.
Businesses follow the simple laws and rules of economies, one of the most basic and important of which is the law of supply and demand. A market that is overly saturated would most likely be unable to absorb the supply created by the companies in the said industry relentlessly expanding. That puts those expanding companies in a financially bad position because, the capital that they have expended to finance their expansion would basically yield nothing.
The added products and services that they created would not be bought (i.e. absorbed) by the market consumers because of the simple fact that it is already saturated. This is something that Domino’s Pizza must consider. So far, the company has been conservative when it comes to market expansion, so much so that it is slowly becoming its weakness. In the broader food industry, it is continuously being dwarfed by its competitors such as Kentucky Fried Chicken (KFC) and McDonalds because of these latter two’s aggressive market expansion programs.
The fact that the industry leaders are continuing to expand (in a sustainable manner) means that the market can still afford to accommodate an increase in supply of Domino’s Pizza’s products and service. So definitely, it is an opportunity waiting to be tapped.
Product Diversification
So far, the company has only offered mainstream pizza and food products to a poorly diversified population. The pizza industry alone is composed of numerous market segments. The company’s revenues and share of the market can improve considerably if the market would be able to develop and release products that would be able to meet the demands and expectations of the consumers in that market.
There will be much work to be done in the product diversification department after that because after being fully established in the pizza market, the company can still grow and expand by branching out to different segments in the food industry as well—just like what its bigger and more dominant and aggressive competitors did.
An example of a sub-segment in the pizza market that they may target—just to get started, is the market for health conscious pizza lovers. One of the major concerns of people who love Domino’s Pizza is the amount of calories and fats that it contains.
For the consumers in the health-conscious sub-segment, this could be a deal breaker. What the company should do is to introduce product variants that are low fat and low calorie. This is just an example of how the company can directly address and take advantage of this opportunity.
Threats
Intensive Competition and Emergence of New Trends
Intensive competition has and will always be an environmental threat to Domino’s Pizza’s existence as a business. This is why it has to be aggressive when it comes to its market expansion and penetration goals; otherwise, its competitors would just take its share of the market and it would start to lose customers . To focus more on the solution, one way how the company can address this threat would be to make sure that it would be in a favorable position every time there is a new trend on its consumers’ eating habits that emerges. The truth is that even the strongest of its competitors would find it real difficult to identify such trends before it emerges; the same is true for Domino’s Pizza. However, as long as the company can pull this timely adaptation strategy every time there is a new paradigm shift in the industry, it should be able to benefit from continuous, albeit a slower, rate of growth and expansion.
Based on the two matrices shown above, Domino’s Pizza is in a highly challenging position. It is being outscored by its top two competitors across all aspects and factors identified for review in the external environment analysis section.
Internal Environment Analysis
The company’s organizational statements are simple and straight to the point unlike others. Its vision is to be the number one when it comes to people and in selling pizza. Its mission is to simply sell more pizza, and have more fun doing it. Its values, on the other hand, are quite lengthy in comparison. It includes the values that require the company to treat its customers the way they wanted to be treated, produce the highest quality pizzas, to educate its stakeholders about what’s important, to think big and grow, to stimulate changes, to set the bar high and never stop learning, promote the company’s products from within, and be exceptional and extraordinary .
The company has been in the pizza selling industry since 1960. It started its first operations in the United States. The company has since grown to become the second largest chain of pizza stores in the United States (next to Pizza Hut). The company, however, is the largest pizza store chain in the world, thanks to its more aggressive expansion strategy than pizza hut.
The company’s corporate level strategy is more balanced than conservative or aggressive. In the broader food industry, its expansion programs, for example, can be deemed conservative. In the pizza industry, however, it is number one as evidenced by the fact that it is now the largest chain of pizza stores worldwide. This only makes sense because being balanced is a more sustainable way of expanding a business.
Its business unit level strategy is anchored in quality and customer satisfaction. The company offers some of the most lovable pizzas worldwide. The fact that its franchised branches overseas are growing rapidly should serve as evidence.
And lastly, when it comes to functional level strategy, the company invests heavily in research and development programs to make sure that its next generation of products would be able to adapt to the continuously changing trends in the pizza and food industry. It is also working closely with business partners in the form of franchise owners to further expand its reach—a double-edged strategy that fulfills both functional level and corporate level goals.
The matrix below shows the main strengths and weaknesses of the company and their respective ratings.
References
Domino's Pizza. (2016). Domino's Vision, Mission, and Values. https://www.dominos.com.au/inside-dominos/corporate/vision-and-mission.
Reeves, D. (2007). Leading to Change-Closing the Implementation Gap. Educational Leadership, 85.
