2.1 Resource-Based View
Tangible Resources
Papa John’s International Inc. grew annually to become the third largest pizza franchise across the world. The company focuses on achieving such a goal was focusing on the production of high-quality products using bets ingredients, provision of responsive customer service and focus on employee development and training. Other steps put in place include convenient ordering systems and extensive marketing campaigns. In general, these efforts spearheaded the company’s overall profit and improvement though there is a lot the company has in store for the future. Over the past decade, the company has had significant changes towards its growth, which were part of its strategy to capture new customers and open up its stores across the globe. Technology played a major part in its overall progress especially in customer service and delivery.
John Schnatter began the company in 1984 with an investment of $1,600 from his savings, which he made while working part time in a pizza restaurant in high school. His interest in the business began then and hoped that one day he would set up his franchise and learn from the pioneers. Luck was on his side as he shifted from selling pizza from the back of Mick’s Lounge to setting up his restaurant. Over the years, his franchise grew in huge strides; each year offered better opportunities for him. In 2001, the company set up an online ordering service, which helped customers book in their orders from their leisure spots. In 2007, after the introduction mobile technology, the company began text orders and in 20101, they launched their Android and iPhone apps. These changes led to the advancement of Papa John’s annual returns and customer base.
2.2 Financial Analysis (The figures are in US dollars)
Current ratio
The ratio shows some of the current assets which may help in offsetting the current financial hurdles of the company. Papa John’s International recorded a ratio of 3.2 and 2.7 in the year2012 and 2011 respectively. In 2013, the company had a higher ratio of 4.5, showing the financial ability of the company to offset some of its debts. With such progress, the company will be in a position to break even in a few years.
Acid test ratio
The company had a good record of its ratio since it was slightly above the thumb rule for the corresponding years. The ratio decreased significantly between 2011 and 2012 though there is a slight increase towards 2013. Its liquidity seems to be improving despite the hurdle witnessed in the 2011 and 2012.
Gross profit margin
The gross profit margin shows the earnings a company has per dollar of its total revenues. Papa John’s overall gross profit margin was around 50 percent; 50.1 percent in 2013, 52.1 percent in 2012 and 50.7 percent in 2011. It shows that the company was ripping profits across the three years by maintaining its revenue and expenses. It implies that its profits are at par regardless of a stagnating figure.
Net profit margin
The net profit of Papa John was on a stagnated level like its gross profit margin. It shows that the company is on a linear growth curve, with the ability to break even from its previous targets. Although there is much the company can do to improve on its margin levels, especially with the rising pizza companies across the globe.
Asset turnover
The company’s asset turnover was 1.7, 1.75 and 1.9 in the year 2013, 2012 and 2011 respectively. The company had a slight drop though it was not noticeable to the overall growth margin. It might arise from the company’s need to incorporate different strategies in its current working curve.
Inventory turnover period
Papa John’s turnover period is quite fast, enabling them to recover its losses and implement new plans in a short period. Having such a fast rate is beneficial to the company’s ability in recovering from major financial hardships. Moreover, it would be profitable to the company in the long run as they budget for plans.
2.3 Specific knowledge, skills and abilities
One of the major strategies in building Papa John’s brand was loyalty to its customers, employees, and suppliers. Establishing a good correlation between these three bodies helped the company make major strides towards the overall growth. The company created a five major component strategy that would enable them to make significant progress with time. The first one was offering high-quality menu options to cater for its growing customer base. Other than offering pizza, the company brought in various fast foods such as breast sticks, chicken poppers, and dessert items. The second strategy was to create effective marketing programs for its products. It would ensure global assimilation of the company and enable them to target new markets. The third strategy was to offer training and development for its employees as a way of keeping a tradition and continuation of its lineup. Employees have different strategies and abilities to complete a certain task and providing them the freedom will not be beneficial towards its overall growth. The fourth strategy is offering effective marketing programs such as online systems and mobile apps to provide both marketing and sales opportunities. The fifth strategy is creating a strong franchise system that will help the brand grow as a single entity and make major strides in the pizza industry.
Reference
Strickland, A. J., & Meyer, J. (2014). Papa John's International, Inc.: Its Strategy in the Pizza Restaurant Industry. Cases In Crafting and Executing Strategy, 40-49. Retrieved from Case.
