Assignment 2-495
Assignment 2-495
Executive Summary
There are several business tools that can help companies asses and identify effective strategies for the companies given the external and internal factors. Among the useful tools are BGC Matrix, Grand Strategy Matrix, and Quantitative Strategic Planning Matrix. The use of these matrices enabled Domino’s Pizza identify the best strategies which include product development, market development, and market penetration, among others.
Introduction
Every company needs sound strategies to thrive and lead in the market. Analyzing and applying appropriate strategies enable the company accomplish its business goals and direction. Domino’s Pizza was able to lead in the market in terms of revenue in 2014 by applying innovative strategies such as the inclusion of the mobile technology in receiving orders from the customers.
This paper discussed the possible strategies that Domino’s Pizza can apply to maintain its leading market share through the use of various business tools and matrices. The identified best strategies are in line with its culture of valuing operational cost efficiency and leadership.
Strategic Analysis
BGC Matrix
According to the Strategic Management Insight’s (2013) website, BCG Matrix is a corporate assessment tool used to assess the company’s products in relation to its relative market share and market growth rate while the Growth-share matrix is used to suggest strategies to companies through the assessment of industry growths and relative market share. The paper will use the two tools for the assessment of the Domino’s Pizza’s performance.
Domino’s Pizza’s revenue for the first three fiscal quarters in 2015 is USD 1.48 billion and its cash flow for the period is USD 133.5 million (Arbor, 2015). The company applied the strategies of global store reimaging, services innovation, and store count expansion to 194 (Arbor, 2015). The services innovations include allowing customers to order over smart phones which contributed to 50 percent of its sales and usage of pizza delivery cars (Little, 2015 and Waish, 2015).
Using the BCG Matrix below as presented in the website of the Strategic Management Insight’s (2013), we can conclude that the Domino’s Pizza belongs to the Cash Cow quadrant as it has high and stable earnings and cash flow, and the company gains from innovative investments. Therefore, the potential/possible strategies that the company can apply as per the BGC Matrix recommendations include product development, diversification, divestiture, and retrenchment (Strategic Management Insight 2013).
The Growth-share matrix below as presented in the website of the Strategic Management Insight’s (2013) will make us conclude that the Domino’s Pizza’s products portfolio has high relative market share and grow faster than the industry performance. Its competitor, Pizza Hut, based on its available financial information, has lower relative market share and grow slower than the industry growth of 6.2 percent (Yum, 2014 and Statista, 2016).
Grand Strategy Matrix
Using the Grand Strategy Matrix (2013) as presented below, Domino’s Pizza can be considered in the first Quadrant as it has healthy market growth of about 8 percent and strong competitive position as it generated the most revenue particularly in 2015 (Arbor, 2015). Hence it can use the possible strategies such as market development, market penetration, product development, integration in any direction, and related diversification (Grand Strategy Matrix, 2013).
Quantitative Strategic Planning Matrix (QSPM)
The Quantitative Strategic Planning Matrix revealed after analyzing the internal and external factors of Domino’s Pizza that the market development and penetration are very attractive strategies for the company to thrive and grow in the industry. The matrix weighted the strength, weaknesses, opportunities, and threats of the company and rated the attractiveness of the factors from 1-4 being 1 as the least attractive while 4 is the most attractive. Below is the matrix.
Cultural factors in analyzing and choosing alternative strategies
The strategies need to be aligned with the culture of the company for its smooth and efficient implementation. The cultural factors that need to be considered in analyzing and choosing alternative strategies include the topics that the employees discuss as it reflects the reputation of the company and the expected and acceptable behaviors of the employees and management as it define the capacity of the individuals in relation to the new strategy (Mind Tools, 2016).
Other cultural factors in analyzing strategies include the corporate image and hierarchy as the strategies should further enhance image and should be implemented according to functions and influences of the departments, the systems of the departments’ operations, and the decisions and strategic direction of the company’s leadership (Mind Tools, 2016).
Recommended strategies for Domino’s Pizza
Considering the financial performance, the market share, and the culture of the company, the recommended strategies for Domino’s Pizza include product and market and development, market penetration, related diversification, vertical integration, and retrenchment.
The evident corporate culture of Domino’s Pizza is cost efficiency in operations to maximize as reflected in the synergy of its dough manufacturing to its pizza production and strengthening of its delivery services stations rather than restaurants. Another evident culture is the strong drive for leadership as seen in its effort to innovative services to attract market.
Market penetration in the underserved countries and regions will be beneficial for Domino’s Pizza in maximizing revenues and beating competitors in those areas. Diversifying related products at its excellent taste will maintain loyalty and entice more customers while vertical integration such as investing in farm lands where pizza ingredients can be obtained can provide cost-savings benefits in the future. Retrenchment such as the usage of renewable energy in its manufacturing plants and restaurants will help the company maximize its revenues and profit.
Summary
The paper analyzed the possible strategies of the Domino’s Pizza in reference to its financial performance through the use of BGC Matrix, Grand Strategy Matrix, and Quantitative Strategic Planning Matrix. It was found out that the best strategies for the company are product and market and development, market penetration, related diversification, vertical integration, and retrenchment. The said strategies are in line with the company’s corporate culture of maximizing profit through operational cost-efficiency and drive for market leadership.
References
Arbor, Ann. 2015. Domino's Pizza® Announces Third Quarter 2015 Financial Results. PR Newswire. Retrieved from http://www.prnewswire.com/news-releases/dominos-pizza-announces-third-quarter-2015-financial-results-300156370.html
Little, Katie. 2015. Little Caesar's has no 'app for that'—and that's just how they like it. CNBC. Retrieved from http://www.cnbc.com/2015/03/12/little-caesars-has-no-app-for-that-and-thats-just-how-they-like-it.html
Waish, Tom. 2015. Domino's CEO rides audacity to top leadership award. Detroit Free Press. Retrieved from http://www.freep.com/story/money/business/columnists/tom-walsh/2015/11/21/dominos-doyle-leadership-award/76062024/
Statista. 2016. Growth rate of the pizza industry worldwide between 2014 to 2016, by region (in billion U.S. dollars). Retrieved from http://www.statista.com/statistics/499282/global-growth-rate-of-the-pizza-industry/
Strategic Management Insight. 2013. BCG growth-share matrix. Retrieved from https://www.strategicmanagementinsight.com/tools/bcg-matrix-growth-share.html
Grand Strategy Matrix. 2013. Pepsico. Youtube. Retrieved from https://www.youtube.com/watch?v=fYWHaOjWnN8
Yum. 2014. Yum Brands 2014 Annual Report. Retrieved from http://www.yum.com/annualreport/pdf/2014yumAnnReport.pdf
Mind Tools. 2016. The Cultural Web. Retrieved from https://www.mindtools.com/pages/article/newSTR_90.htm
