Pizza Hut Company - Case Study Example

Pizza Hut Company Student’s Name: Instructor’s Name: Course Code: Date of Submission: Table of Contents Table of Contents 2 Introduction 3 External business environment 3 Strategies of Pizza Hut Company 4 Strategy development process 5 Threats and opportunities of the company 6 Porter’s five forces 7 Conclusion 8 Introduction Strategic business planning is very essential to any business as it operates in the market. Strategic planning involves designing long term plans by an organization so that it can achieve the competitive advantage and engage in business operations which can sustain the business. Strategic plans involve marketing strategies, human resource planning and even the management of the organization (Lorenzen 2006). In this regard therefore, I will discuss the strategic planning of Pizza Hut Company. Pizza Hut is a company which was started in the United States by two brothers who are Dan and Frank in the year 1958. The company specializes in the production of pizzas and slide dishes which include salad, pasta, breadsticks and garlic bread. Today it is among the world’s largest food production companies. By the year 2012 there were more than 6000 restaurants in the US and 5139 restaurants in other market in 94 countries. The company started in the US but later expanded the operations into other countries and up to 2012 it had expanded its operations into 94 countries (Pizza Hut Company 2012). The company is characterized by the production of its high quality products like the Stuffed crust pizza and Dippin strips pizza. Another feature of this company is that it always experiments new products in the market and the products which do not perform well are discontinued. External business environment Pizza Hut company operates under some external environment which includes the competition, social factors, legal, economic, political and technological factors. Pizza Hut company has, managed to gain competitive advantage by the changing consumer consumptions (Erica 2012). Social factors include the health issues and consumption patterns. The products of Pizza Hut Company are known to have no health issues hence many customers like the company’s products. The Pizza Hut Company is faced with stiff competition from other competitors in the same industry. There are various strategies the company has applied and gained competitive advantage despite the high competition in the same industry (Lorenzen 2006). One of the strategies that the company has applied is the through advertisement and development of new products as well as quality of products and services it offers. The company also operates under some legal framework. The legal factors include factors like the working hours and the legality of the business operations (Erica 2012). Pizza Hut company engages in legal business and has been able to meet the working conditions in the various countries hence it will continue excelling and expanding to new markets because it operates in businesses which are accepted by many countries. On the other hand, the company also operates in under some economic conditions. The company’s operations have been favored by the stable world economy which influences the customers’ buying patterns. The exchange rates are also low when the world economy is stable leading to high customer purchasing. Furthermore the company operates in countries which have good economy leading to successful business operations. There are also political factors under which the company operates. The company started operating in the US where the company operations were subsidized which enabled the company to make good profits. This enabled the company to enter into foreign markets (Max 2012). The world political stability has also enabled the company to operate smoothly in the business environment. Without political stability the company could not expand its operations into new markets. The company has managed to operate smoothly in the changing technological environment. Pizza Hut company applies the most appropriate technology in the production of its products (Max 2012). Innovation is encouraged as a way of encouraging application of various skills including technology to improve the quality and design of the company’s products. Strategies of Pizza Hut Company In this case study of Pizza Hut Company, there is various strategies that have been applied by the company and are identifiable and they include marketing pricing and variety of products. The company applies slogans which attract customers. For instance, in the year 2007 the slogan was that ‘gather around the good staff’, then it changed to ‘Now you’re eating’, and currently the slogan is that ‘Make it great’ (Pizza Hut Company 2012). Through these slogans, the customers are challenged to know what the company offers which is unique hence offering it a competitive advantage. Further, the company sponsored various films and made advertisements in the film. For example it sponsored the film Back to the Future Part II. Many customers of the company were made aware of the company’s products. They also send emails to customers informing them of their new products and the variety of the products they offer. Another identifiable strategy that is applied by Pizza Hut company is continues development of products. The company always develops new products into the market and if they do well they are continued and if they don’t do well they are discontinued (Brian 2000). Through development of new products, they meet the customers’ demands hence the company has been able and will continue attracting and maintaining the customers by offering variety of products to the customers. Strategy development process The following are the steps that should be followed when making a strategy; The first step is to identify the strategy. This is the step of ensuring that the strategy is the right one and can help the company to gain competitive advantage (Erica 2012). The strategy should be able improve the value of the company for it to be a viable strategy. The second step is to develop a workable plan on how to implement the strategy. It should include the goals and objectives of the plan. The third step is identifying the barriers that can hinder the successful implementation of the strategy for example the cultural factors (Erica 2012). The next step is to develop various strategies can help enable the management to overcome these barriers to strategy implementation. At this stage also, the firm recognizes the skills it has whether it can be able to implement the strategy and if not the management can conduct some training on the managers so that they can be able to implement the strategy. Lastly, it is the implementation stage where the strategy systems are put into practice and being monitored. All parties to the strategy implementation should be informed on the importance of the strategy and therefore be encouraged to participate (Erica 2012). And finally it is the evaluation stage where the planned outcomes are compared with the actual outcomes and decide whether the strategy was successful or not. In addition, the future strategic plans of Pizza Hut Company are to attract and maintain its customers through improving the marketing strategies (Pizza Hut Company 2012). For instance, in order to increase the market share the company should review their marketing strategies and where necessary make amendments so that the strategies can enable the company to be competent. Through this the company will increase its sales. On the same note, the company needs to review its pricing strategies. It should segment the market into various segments so that the different customers’ financial capabilities are taken care of. This is because not all the customers have the same financial capacity to purchase the company’s products. Through segmentation the products will be charged different prices at every segment depending on the consumer income. The market can be segmented into male and sex, urban and rural market segment and high and low income earners. This will enable the company to price their products appropriately hence will have a large customer base. Also there is the issue of monitoring the strategy. Pizza Hut Company has managed to monitor its strategies effectively and that is why it among the best restaurants in the world. After designing and adopting a strategy, the company selects a team of experts whose role is to monitor the progress of the strategy (Pizza Hut Company 2012). If the strategy is progressing on well, they encourage the implementation team to keep improving on the strategy but if the strategy deviates from the planned expectations, they correct the deviations at each stage. For instance, the marketing strategy is monitored at every bit to know how effective it is and make necessary amendments to ensure the strategy improves the value of the company’s products. Threats and opportunities of the company Furthermore, Pizza Hut Company has various opportunities and threats. The first opportunity is the ability to expand the operations into new markets (Brian 2000). This is because the company has strong financial capacity and good reputation which have led to big customer base leading to expansion of the company into different countries. There is also the strength of applying appropriate technology in the production of the products. This has enabled the company to gain the competitive advantage. On the other hand, there are some threats the company faces. The first one is high degree of competition. There is high competition in the same industry in the recent years which have led the company to reduce its income (Brian 2000). Also the level of technology is changing very fast and the fear is that the level of technology maybe beyond the capacity of the company. Therefore the company will face challenges in changing the level of technology regularly which can be costly. The company’s internal strategies of Pizza Hut Company have also enabled the company to have competitive advantage. To start with, the company has clear and competitive guideline for hiring employees. The guidelines ensure that the company hires qualified and competitive employees who add value to the organization. Also the company management encourages teamwork which enables the employees to socialize and share ideas which help them to improve their productivity (Lorenzen 2006). Moreover, there are strategies for rewarding employees as a way of motivating them. When the employees are motivated and appreciated, they will be satisfied with their jobs hence add value to the company as well as improving its reputation. Porter’s five forces Pizza Hut Company has further applied and analyzed the porter’s five forces in the implementation of its strategies. Because of the high profits the Hospitality industry firms make, there are many entrants into the industry (Porter 2008). This is because there are no barriers to entry hence the company’s total revenues have reduced. The company has put in place strategies which have enabled it to cope with the competition from the new entrants like the expansion of the company operations. There has been no threat of new substitutes into the industry hence the company enjoys the high market share making huge profits. So far there have been no alternative products that could serve the same purpose as the products of Pizza Hut Company and this has ensured that the company makes good returns (Porter 2008). On the other hand, the bargaining power of the customers is low because the company has developed loyalty with many customers hence it has regular customers reducing their bargaining power. The bargaining power of the suppliers is also low because the Pizza Hut Company has good reputation which attracts many suppliers. Also the there is no monopoly in the supply of the materials to the company hence the bargaining power of the suppliers is low (Porter 2008). Finally, the extent of competition is not too high which can lead to rivalry due to unfair business practices like lowering the prices which lead to making of losses. About the company’s future position, it can be concluded that the company has better chances of continuing to excel in the market (Porter 2008). This is because of the good strategies the company has which include internal and external strategies. The good image of the company will further enable Pizza Hut Company to attract and maintain the customers. Conclusion Pizza Hut company is a company that started operating in the year 1958 and it expanded its operations globally. However, the company faces both internal and external environment. The external environments include political, environmental, social, technological and legal factors. The identifiable strategies that the company has applied in its operations include the marketing and product development strategies. The process of implementing a strategic plan include the identification of the strategy, designing work plan, identifying barriers, identifying strategies for managing the barriers and then implementation and evaluation of the strategy. Pizza Hut Company has also gained competitive advantage through careful analysis of the porter’s five forces which include threats of new entrants, threats of new substitutes, suppliers bargaining power, customers bargaining power and the extent of rivalry competition. References Bradford, R & Duncan, J 2000, Simplified Strategic Planning, London, Chandler House. Brian, T 2000, The 100 Absolutely Unbreakable Laws of Business Success, New York, Berrett, Koehler Publishers. Erica, O 2012, Strategic planning, London, John Wiley & sons, Inc. Lorenzen, M 2006, “Strategic Planning for Academic Library Instructional Programming." In: Illinois Libraries, Vol. 86, No. 2, pp. 22-29. Max, M 2012, The Strategy Book, FT Prentice Hall. Porter, M 2008, The Five Competitive Forces That Shape Strategy, Harvard business Review, Vol. 86, No. 1, pp. 78-93. Pizza Hut Company 2012, Pizza Hut Company, Viewed August 28th 2013 from www.pizzahut.co.uk/ http://www.pizzahut.co.uk/about-us Read More