Contemporary Developments in Business and Management - Dominos Pizza - Assignment Example

Contemporary Developments in Business and Management Executive Summary The study aims to prepare a clear management report regarding the assessment of external business environmental factor of Domino’s Pizza while operating in the food service activities across the United Kingdom (UK). In order to critically examine the influence of external business environmental factors, the discussion explores the impact of current political, economic, social, technological, environmental and legal aspect of the UK on Domino’s Pizza. Evaluating strategic response of the organisation in terms of dealing with the external environmental factors in the UK is also a major consideration of this management report. In addition, the management report also tends to critically explore the changing competitive environment within the UK’s fast-food business industry and details about the policies and decision making processes of Domino’s Pizza. In order to critically assess the current competitive factors in the fast-food industry of UK, the study assess the industry through the of Porter’s Five Forces analysis. Finally, the report tends to critically examine the effectiveness of different strategic responses of Domino’s Pizza and demonstrates few of the key areas that are required to be improved by the organisation to remain sustainable in the competitive fast-food business industry. Table of Contents Executive Summary 2 1.0 Company Background 4 2.0 Task 1: Overview of the Primary External Environmental Factors 5 2.1 PESTEL Analysis 5 Political Factors 5 Economic Factors 6 Socio-Cultural Factors 7 Technological Factors 8 Environmental Factors 8 Legal Factors 9 3.0 Task 2: The Changing Competitive Environment 10 3.1 Porter’s Five Forces 10 Bargaining Power of Customers (High) 11 Bargaining Power of Suppliers (Moderate) 12 Threats of New Entrants (Low) 12 Threats of Substitute Products (Low) 13 Competitive Rivalry (High) 14 4.0 Critical Evaluation of the Organisation’s Effectiveness 14 4.1 Demonstrating Areas need to be improved 15 References 18 Appendix 1 23 Company Profile 23 1.0 Company Background Founded in the year 1960, Domino’s Pizza has long been observed as one of the leading fast-food delivery organisations across the world. The organisation has been witnessed to accomplish massive success through delivering its wide range of fast-food items to the global consumers. According to the recent business position of the organisation, it has been identified that Domino’s Pizza is recognised as the world’s second largest fast-food retail chains with more than 9000 franchised as well as company owned restaurants alone in the United States along with more than 70 international markets. The organization has built its strong brand image through serving with a wide range of products that meet the tastes and desires of the global consumers. Few of the globally dominant products of Domino’s are pizza, oven-baked sandwiches, pasta, cheese sticks, breadsticks as well as its variety of desert items (Dominos IP Holder LLC., 2008). In relation to the financial performance, the organisation has also been recognised to gain substantial profit. The competitive business strategy along with continuous process of developing fast-food items with the tastes and preferences of the global customers enables Domino’s to accumulate extensive financial benefits across domestic and overseas markets (Mishra, 2011). According to the recent financial performance of the organisation, it has been recorded that Domino’s has secured US$ 848.6million net sales during the last fiscal year, i.e. 2013. In the context of annual revenue, Domino’s has earned a total of US$ 294.9 million with a growth of 13%. The rate of earning per share to grew by 11.5% in the recent fiscal year performance. The current value of earning per share of the company is 43.4c. In addition, the company has also opened 67 franchised and company owned restaurants across different geographical locations during the year of 2013 (Domino’s Pizza Enterprise Limited, 2013). 2.0 Task 1: Overview of the Primary External Environmental Factors 2.1 PESTEL Analysis PESTEL analysis is generally defined as an effective framework to critically examine the external environmental factors of a particular geographical location or business market. It generally includes six major determinants such as political, economic, socio-cultural, technological, environmental and legal factors of any particular nation to understand business threats and opportunities existing for a particular organisation (Bowhill, 2008). In the subsequent section, PESTEL analysis pertaining to the UK’s fast-food business industry has been portrayed. Political Factors Political factors significantly determine the existing political system and governmental regulations of the host country that have major set of policies for the foreign marketers when seeking expansion of business subsidiaries. Political disturbances along with imbalances and unsympathetic governmental regulations have major influences on the continuous development of the global marketers while seeking expansion of business units into any other foreign locations (Dransfield & et. al., 2004). Besides, the governmental regulations and policies, the political factor also includes possible political influences that might have effect on foreign entrepreneurs while entering into any host countries (Gupta, 2013). In relation to the current political condition in the UK, the political system of Great Britain and Northern Ireland comprise a wide range of effective factors that substantially provide major opportunities for the foreign entrepreneurs to gain their business efficiency. Politically, the territories in the UK embrace a strong set of governing policies guided by the constitutional monarchy. The parliamentary system of the UK is headed by the respected monarch and is solely responsible to empower the trade opportunity across the nations and territories in the UK. The governmental regulations of the region include transparent and easily understandable policies that create major opportunities for the foreign traders to successfully accomplish their commercial goals and objectives (Mishra, 2011). Economic Factors The economic factor is one of the major influencing dimensions that have significant impact on the global commercial industry while seeking expansion to overseas locations. The economic factors generally include the key economic indicators of a nation. The economic factor generally includes a wide range of indicators that can have influence on the business performance of the foreign marketers to achieve their financial goals. The key economic indicators that comprise economic factor such as annual GDP growth rate, Gross National Product (GNP) along with interest rate and annual inflation trend of the host countries. Moreover, the economic factor also encompasses the annual employment trend along with household income performance of the nations (Mahara, 2013). Global fast-food business industry has long been witnessed to provide major contribution towards empowering national economic growth and prosperity. As similar to the other global nations, the allied countries such as England, Wales, Scotland and Northern Ireland have also been observed to achieve a major economic growth due to the influential performance of the commercial sectors. In relation to the current economic condition, the fast-food industry is also known as a major contributor for Gross National Products (GNP) both in Great Britain and Northern Ireland, regional developments along with employments are considerably recognized than the other sources within a particular country. The current statistical report regarding the performance of the UK depicts that the annual economic growth of the nation has significantly attracted number of global marketers into the nations (The World Bank, 2014). According to the observation, the total GDP of UK has been recorded nearly US$ 2.34 trillion in the year 2012, which has enabled the region to be considered as the seventh largest economies. Moreover, the region has also been recognised to enjoy a large amount of wealth through its Foreign Direct Investment (FDI). According to the economic results of the year 2012, the region has achieved a growth of 25% in its FDI inflow due to the rapid emergence of the foreign marketers in the UK. In addition, substantial decrease in the unemployment rate, which has been recorded as 7.7% in the year 2012, is also a major sign towards facilitating business operations of Domino’s in the UK (Domino’s Pizza Enterprise Limited, 2013). Socio-Cultural Factors The factors have also major bearing regarding the development of global commercial industries. The diversified taste and preferences, cultural norms along with linguistic barriers can significantly impact the organisations to carry out their different types of business activities or serving products and/or services to the final consumers (Koumparoulis, 2013). In relation to the current socio-cultural aspects in the UK, the nations and territories have long been witnessed to be quite sympathetic for the foreign marketers while expanding business units into different locations in the UK. In this regard, higher degree of individualistic characteristics along with increasing level of openness of the English people offers major responsibilities for the foreign traders to obtain success in the UK. In addition, strong growth of interests towards foreign goods and services along with changing trend in tastes and preferences in the individuals is also a major attribute that has helped Domino’s to accumulate impressive growth in the UK (Chittithawor & et. al., 2011). Technological Factors The technological factors in the global business industries can be identified to radically transform the products and service facilities along with management functions of the organisations (Hussain, 2013). In relation to the current technological scopes in the UK, continuous evolution in the Information and Communication Technologies (ICTs) has played a key role for Domino’s to attain major success across the nations and territories of the region. In relation to the recent phenomenon, the integration of ICTs enabled Domino’s to streamline its production and delivery functions. In this regard, the process of online delivery of the fast-food items by the company is highly transformed due to the continuous development of technological aspects in the UK. Moreover, the company has also been recognised to substantially improve its relationship with customers by resolving online queries of the respective clients and other stakeholders with its exceptional technology based customer relationship management processes. In this regard, it is quite evident that the technology is a major external factor leading towards increasing business performance of Domino’s in the UK (Hussain, 2013). The availability of well-structured technological infrastructure is also a major aspect for Domino’s that has been instrumental in minimising the cost along with ensuring quality based services to valuable UK based fast-food consumers. The major facilities such as e-reservation, online booking, mobility and social media services have improved the performance of the industry to a large extent (Ismail, 2009). Environmental Factors Environmental factors can also be regarded as a strong set of elements for the organisations to be considered while entering any foreign business locations. In relation to the current environmental policies, the UK recognises a strong set of ecological provisions directed towards the business operations of the commercial ventures operating within the region. In relation to the present day context, the environmental policies towards increasing efficiency in terms of using natural resources substantially encourages both domestic and foreign marketers to perform business in the UK (Adeoye & Elegunde, 2012). With respect to the business process of Domino’s, the organisation has been observed to maintain adequate compliance with protecting ecological prosperity while substantially increasing its competitive position. Additionally, the organisation is also recognised to minimise its operational impacts on the wellness of the environment, which also promotes its long-term sustainability in the UK. In this context, reducing carbon emission in accordance with the environmental policies is also a major achievement of Domino’s in UK (Cengage Learning, n.d.). Legal Factors Legal factors basically represent the requisite laws and provisions of the host countries or region that have major influence on the foreign marketers. In this regards, tariffs and codes in terms of making transaction of goods or services along with taxation policies of the host countries are generally considered as few major legal determinants. In addition, legal policies associated with patent rights of the products and/services of the organisations can also be considered as few of the major legal factors for the foreign entrepreneurs while entering or operating in the foreign business locations (Department for Environment, Food & Rural Affairs, 2013). In relation to the current legal policies in the UK, the legal policies ensure the reliable practice of business along with governance systems of the organisations, especially, the foreign marketers. In the context of current taxation policies, the regions in the UK incorporate a well-structured set of provisions with feasible and adjustable changes regarding the tax rates for the foreign entrepreneurs (UHY Hacker Young LLP, 2014). The current income tax reliefs along with increasing rate of contribution by each working individual to the national economies can also be regarded as quite sympathetic that substantially help Domino’s to increase its business opportunities in the UK. In addition, stable and sympathetic value added tax rates in the UK also provides a major support to Dominos in terms involve in fair and ethical business practice (Federation of Small Businesses, 2013). 3.0 Task 2: The Changing Competitive Environment 3.1 Porter’s Five Forces Porter’s Five Forces Analysis has been identified to be quite effective in terms of identifying and investigating the current strategy formulation processes of organizations. The execution of the framework with five different factors assists in assessing the competitiveness of a firm in a particular business industry (Kotler, 2000). The Porter’s Five Forces analysis in the context of Domino’s in the UK markets has been discussed in the following sections. Fig: Porters Five Forces Analysis of Domino’s Pizza Bargaining Power of Customers (High) In accordance with the present competitive fast-food industry in the UK, it can be stated that the bargaining power of the customers are relatively higher due to the increasing number competitors within the industry. However, Domino’s has been able to gain competitive position of collecting a large group of household, institutional as well as corporate customers across the different regions in the UK (Domino’s, 2014). According to the current fast-food business industry trend in the UK, the customers have higher probability of switching into different others fast-food service providers within the region. In relation to the competitive environment of the region, the existence of large number of globally renowned fast-food retailers have substantially increased the existing bargaining power of the customers in UK. Moreover, the diversification of its product lines through incorporating tastes, needs and preferences of the local and global consumers are potential elements for the company to successfully compete in the UK’s fast-food business industry. Additionally, exclusive process of selling and marketing techniques can also be regarded as a major set of tools for Domino’s to conserve its valuable buyers in the UK’s fast-food business industry (Domino’s Pizza Group Plc., 2013). Bargaining Power of Suppliers (Moderate) The bargaining power of suppliers of Domino’s in the current fast-food industry of the UK is moderate due to a wider availability of suppliers in the region. Moreover, Domino’s tends to procure materials needed for its operation from suppliers spread across different regions. The organisations highly consider the quality, reliability and cost of raw materials which has resulted in improving the business performance of the organisation. Moreover, the company possesses moderate switching options due to the existence of large numbers of valuable suppliers in the UK. The continuous growth in the agricultural industry along with wider accessibility of procuring quality based raw materials can also be regarded as a major potential for Domino’s to obtain its competitive position in this respective business location. With this regard, it can be stated that the bargaining power of the suppliers in different regions in the UK is moderate (Mann & Mann, 2009). Threats of New Entrants (Low) In accordance with the present day context, the threat of new entrants is significantly low for Domino’s in the UK’s fast-food business industry. The rapid growth of opportunities along with a feasible numbers of local brands in the UK fast-food market has provided an opportunity to Domino’s to sustain its long-term position. Although the market is accustomed with both domestic and international fast-food companies, the lower growth of new entrants lays a major advantage for Domino’s to achieve its desired business goals in the UK. The business strategy of the company can also be regarded as a major set of factors that has enabled Domino’s to lower the potential threats arising from the new entrants in the UK’s fast-food business industry. According to the current business strategies of Domino’s, it has been perceived that the integration of product diversification in accordance with the changing food habits of the consumers has substantially lowered the potential risks that might be derived from the new entrants in the UK’s markets (Tolhurst & Williams, 2009). Threats of Substitute Products (Low) The business strategy of Domino’s significantly focuses on producing exceptional range of fast-food items that are considerably diverse in terms of tastes and ingredient elements. The products and services of the company integrate exceptional and innovative technological features in its each product development with the changing trend of customers’ needs and desires. According to the modern business performance, the food items of the company integrate tastes and ingredients that are widely accepted by the local buyers. Moreover, the company also demarcate its varied fast-food items in accordance with the preferences of both the local and global clients. The strategy helps Domino’s to serve the appropriate set of food products to its major consumer segments (Bell & et. al., 2012). The threats from the substitute products are also lowered by Domino’s through its exceptional marketing and promotional activities. According to the current marketing and promotional strategy, the company offers equal privilege to its different categories of products in order to design new consumer segments. Therefore, it can be stated that threats from the substitute products for the company is generally low. Competitive Rivalry (High) Domino’s can also be considered as one of the leading companies in in terms of maintaining its competitive value and principle of business practices. In this context, it can be stated that the service of delivering food-items at the right time to the consumers is a major competitive advantage for Domino’s than the existing rivals in the UK. According to the current environment in the fast-food business industry of the UK, the extensive growth rate of the industry imposes major threat on the competitive position of Domino’s. The strong influence of the major rivals along with increasing intensity of the market size significantly carries out major threat to Domino’s. The large size of the UK’s fast-food business industry significantly offers major opportunities to both local and international competitors. Although the large market size offers major opportunity to the company, it can also lower the competitive position of Domino’s due to the large number of existing competitors in the UK (Bell & et. al., 2012). In relation to competitive rivalry, it has been recognised that Domino’s faces immense competition from the existing marketers namely McDonald’s, Pizza hut and other local fast-food producing units. Correspondingly, it can be stated that Domino’s is facing a higher rate of competitive rivalry in its respective industries. 4.0 Critical Evaluation of the Organisation’s Effectiveness According to the modern business concept, Domino’s has established its competitive position as the prominent pizza delivery company in the world through offering a range of fast-food items through both offline and online selling processes. In this regard, appropriate utilisation of valuable organisational resources and formulate competitive business strategies often help Domino’s to conserve its long-term sustainability in the UK’s fast-food business industry (Dominos IP Holder LLC., 2008). Although the fast-food industry in the UK includes fierce competition, the strategic directions aligned with the organisational effectiveness can be affirmed to lead Domino’s to effectively compete over the existing rivals in the market. In this regard few of the major competitive factors that lead the company to dominate in the current UK’s fast-food business industry include resource management and allocation, value proposition, brand management, customer relationship processes of the organisation (Tolhurst, D. & Williams, 2009). In relation to the current business performance of Domino’s, managing and appropriate allocation of its vital resources are closely tied with production, delivery of products and customer relations are the most competitive factors. In addition, the strategy of delivering products within the postulated time frame is also a major response of Domino’s in the competitive UK’s fast-food market. In this regard, the involvement of cutting-edge technological system of providing convenience to the customers helps the company to procure orders and deliver desired products within the specified time. In this regard, it can be stated that the managing and effective utilisation of vital resources is a major responsibility of Domino’s to sustain in the competitive fast-food market of the UK (Tolhurst, D. & Williams, 2009). 4.1 Demonstrating Areas need to be improved In relation to the current scenario of the UK’s fast-food industry, the business operations of Domino’s are highly accustomed with numerous competitive strategic measures and practices (Domino’s Pizza Group Plc., 2013). However, in order to sustain the competitive position for long-term, the company should focus on making continuous improvement in its few key areas. Leverage Brand Awareness The business objective of Domino’s is to offer quality-based food items in a more convenient and affordable rate than other competitors within the market. In this regard, it is crucial that the company should take adequate measure in terms of leveraging the brand awareness of the company to remain competitive in the UK’s fast-food industry (Federation of Small Businesses, 2013). Strengthening Marketing and Promotional Activities In order to sustain its position as a leading player in the UK’s fast-food industry, the marketing strategies of the company should also need to be improved. In this regard, increasing advertising and promotional campaigns of the key brands of the organisation would be a major advantageous factor for Domino’s. Moreover, broadening media relations as well as increasing activities associated with public relations can also be considered to substantially improve the competitive position of Domino’s in the UK’s fast-food industry (Bell & et. al., 2012). Maintaining Environmental efficiency The business performance of Domino’s includes a set of environmental policies that conserve adequate protection of ecosystem surrounding to its operative locations. In order to reduce potential issues relating to the environmental protection practices, the business policies of Domino’s should develop long-term plan to minimise carbon footprint by substantially reducing the use of non-biodegradable resources. Moreover, minimising carbon emission by introducing the use of eco-friendly automobile vehicles would also help Domino’s to minimise any potential environmental related issues (Federation of Small Businesses, 2013). References Adeoye, A. O. & Elegunde, A. F., 2012. Impacts of External Business Environment on Organisational Performance in the Food and Beverage Industry in Nigeria. British Journal of Arts and Social Sciences, Vol. 6, No. 2, pp. 194-201. Bell, D. E. & et. al., 2012. Domino’s Pizza. Harvard Business Review. 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Appendix 1 Company Profile Business Type Public Traded as New York Stock Exchange (NYSE) Industry Type Restaurants Year of Establishment June 10, 1960, Ypsilanti, Michigan Headquarters Domino Farms Office Park Michigan, United States Area covered Globally Products offered Italian-American cuisine, pasta, submarine sandwiches, wraps, desserts, Pizza, chicken wings, Revenue US$1.802 billion (as on February 2014 ) Employees 220,000 as on December, 2013 Read More