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Domino’s Pizza

Domino’s Pizza

 

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Domino’s Pizza

Background

Domino’s Pizza is considered as one of the most competitive entities given its decision to operate in a volatile fast food industry. The entity has rivals such as Pizza Hut, Pizza Hut and other entities are a critical threat to the operations of Domino’s Pizza. On the other hand, the entity has the potential to explore emerging markets around the world as they provide untapped market potential. From its financial statements, there have been significant increases in revenue from the year 2013 to the year 2014. This is indicative of the potential of growth for domino’s Pizza as consumers seek differentiation an, quality services and products.

Domino’s Pizza was established by Tom Monaghan in the year 1960 with the help from his brother James. The entity was able to experience significant growth in the preceding years with the opening of new stores in a span of ten years. The entity started its first international outlet in Winnipeg Canada in the year 1983, which was able to gain significant growth and profitability (Haugen, Musser, & Schlosser, 2013).

Tom Monaghan retired in the year 1998 after serving more than 38 years at the helm of management. This was also marked by disposal of more than 93% of the entity to Bain Capital Inc. for an estimated $1 billion. In the year 2004, the entity began trading in the securities exchange, as it had been able to transition from a private entity into a publicly traded company. The entity is considered as one of the most competitive pizza outlets in the world with more than 9,000 branches in 60 countries around the world.

 

 

 

Analysis

Potential Market

The Asian region is a lucrative market for Domino’s Pizza. Singapore would provide a relatively effective point of entry into the Asian market. This is primarily influenced by the presence of an expansive and rapidly growing middle class that should be utilized as a basis for developing products and delivering services that appeal to this segment of consumers (Nestle, 2013).

Market Analysis

Increasing the brand value is a primary strategy that can be used by the entity in enabling the entity to gain growth and increase in profitability. There is a high demand for pizza and other fast food services that provide high levels of service efficiency and cost effective products. This is also plagued by consumer perception over poor quality, which has been associated with low prices. The entity should focus on improving its image in the competitive market by focusing on pricing and promotion of its products.

Competitive Analysis

The entity faces a variety of sources of competition in Singapore such as other large pizza chains established in the country, frozen pizzas in grocery outlets, neighborhood pizzerias, and fast food entities that do not sell pizzas. There is a high prevalence in the usage of digital media as the primary form of interactions with consumers. This is widely evident in the use of online and phone ordering platforms by consumers. This is a significant source of competition for the entity that assumes a vital role in the success of the entity in the Asian market. The entity’s direct competitors are Pizza Hut, Little Caesars, McDonalds, Kentucky Fried Chicken (KFC), Taco Bell, Burger King, and Papa Johns.

Country Report

CAGE Framework

Cultural

The differences in culture are critical towards entry into the new market. Understanding the various values, beliefs, and consumer habits in Singapore is critical towards the entity’s success in this Asian market. Essentially varied cultural constructs between American and Asian culture are critical towards the success of the entity in the identified market. Other vital elements of consideration include the differences in languages between the country of origin, America, and the proposed market. Furthermore, differences in ethnicity and presence of challenges in connective social and ethnic networks can impede the successful entry of the entity in the Asian market.

Moreover, social norms play a critical role in consumer activity. This is a primary determinant in terms of pizza consumption in Singapore (Nestle, 2013). The focus should be on ensuring that products and services delivered to consumers are able to adhere to social values, norms, and preferences for successful entry into the identified market. It is also important to note that adhering to cultural constructs, the entity should move towards incorporation of national and ethnic identities of consumers in Singapore.

Administrative

Singapore and the United States have had strong historical ties, which are evident to date. This is critical as it provides a sense of familiarity. This would enable ease in entry given that American culture, values, and brands are familiar in the Singaporean community. Furthermore, the country has a shared political and monetary associated with the United States (Kotler, 2014). This is critical as it enables the entity to understand the economic and financial regulation environment established. It is critical to understand the existing government policies and agencies tasked with the regulation of the food and beverage industry. Gaining knowledge over the various policies, laws, and regulations governing the fast food and pizza industry is critical towards ensuring the success of the organization. Furthermore, the country has a relatively stable government and is devoid of any form of government hostilities and restrictions, which might be an impediment towards successful entry, and operation of a Domino’s outlet in Singapore.

Geographic

Singapore and the United States are far from each other with an estimated distance of 15,323 kilometers from New York to Seoul. The physical remoteness of Singapore does not render it as an inaccessible market but rather as a critical base for the Asian market. It is easily accessible by sea and air which are the two primary forms of international engagements between states. Furthermore, it has an advanced technology, which is manifested in the form of competitive communications agencies, and networks that can be utilized for communication activities (Kotler, 2014). The climate of Singapore is unique given that it is accustomed to a monsoon or coastal climate given its proximity to land water masses.

Economic

The country is understood to be an emerging country as indicated by the presence of a large middle-income class. The country has been classified as a top financial hub given its AAA rating in terms of credit attractiveness and market stability. It has a population of an estimated 5.5 million individuals with more than 2 million being drawn from foreign nations. Furthermore, there are differences between Singapore and the United States in terms of economic activity. It is noted that Singapore has a relatively high-income inequality in the developed world despite having a high per capita income (Kotler, 2014).

This is indicative that the entity has a high opportunity for success given the presence of a large population with disposable incomes. It should develop products that take into consideration the diverse economic needs of individuals in the country. This should also take into account the presence of economic inequalities in the country, which can be used for segmentation purposes in developing appropriate products and services for consumption. Furthermore, given that Singapore is a developed country, the costs of entry are likely to be high as well as possibilities of success and failure because of varied levels of demand amongst consumers (Wall, 2013).

Target Market

Competition

Large pizza and fast-food outlets such as McDonalds, Kentucky Fried Chicken (KFC), Taco Bell, and Burger King. McDonalds has a high presence in Singapore with an estimated 41% value share of the fast-food market in the world. The entity faces a variety of sources of competition in Singapore such as other large pizza chains established in the country, frozen pizzas in grocery outlets, neighborhood pizzerias, and fast food entities that do not sell pizzas. There is a high prevalence in the usage of digital media as the primary form of interactions with consumers. This is widely evident in the use of online and phone ordering platforms by consumers. The entity’s direct competitors are Pizza Hut, Little Caesars, McDonalds, Kentucky Fried Chicken (KFC), Taco Bell, Burger King, and Papa Johns.

McDonalds’ presence in the fast-food industry, especially in Singapore, is a primary threat to the success of Domino’s pizza (Wall, 2013). This entity has a significant influence on Domino’s Pizza in terms of its strategies and positioning in the Singaporean market. Furthermore, this will influence the possibilities of success of Dominos, given that McDonalds has a significant market share and control of the pizza market (Kotler, 2014).

 

 

 

 

SWOT Analysis

Strengths Weaknesses
  • Extensive brand loyalty
  • Strong brand
  • Strong online and mobile ordering platforms
  • International presence
  • Efficient and effective supply chain function
  • High staff number and wages
  • Decline in sales figures
  • Poor management of franchises
  • Decline growth

 

Opportunities Threats
  • Improved efficiency levels
  • Growing populations in emerging markets
  • Healthy product lines

 

 

Strong competition

Increased health awareness amongst consumers

High costs of labor and raw materials

 

 

 

Marketing Plan

Distribution

Improving access to cost effective and quality products would be effective in enabling success in the identified market. The entity can replicate the distribution system adopted by successful players such as McDonalds. Given that the entity is operating in a foreign market, the entity should ensure that it maintains a lean supply chain to ensure optimize lead-time in the receipt of raw materials.

Pricing

This is critical as it may have a variety of effects on the ability of the entity to gain successful entry into the Singaporean food and beverages market. The entity can use price strategy by adhering to industry trends as established by significant players such as Pizza Hut, Little Caesars, McDonalds, Kentucky Fried Chicken (KFC), Taco Bell, Burger King, and Papa Johns. This is critical because a low price would affirm the premise that the entity delivers low quality products and services to its customers. A high price as compared to other players in this market would render the entity’s products as exorbitant and unacceptable. Thus, price equilibrium can be achieved if the entity is able to imitate the prices of existing entities while retaining its profit margins and forecasts for profitability.

Promotion

The entity should use online platforms as its primary form of marketing in targeting Singaporean consumers. This is relatively critical because a significant part of the population in the developed world uses online ordering from fast-food and pizza delivery entities. Furthermore, social media outlets can be used to attract potential consumers and provide an effective source of followers who can be used to notify customers of discounts and offers. Furthermore, price is a critical aspect of promotion and can be utilized to attract consumers within the different consumer segments in the pizza market.

Recommendations

The entity should focus on improving its brand image given the numerous incidences of lapses in service and product delivery. Additionally, these negative events in the United States have had a significant negative reflection on the entity’s profitability, brand strength and potential successes in foreign markets. This can be achieved by revitalization of the brand through development of new products, realignment of its strategies and repositioning within the fast-food industry. This would be effective in providing the organization with success and improving profit margins. Furthermore, the entity can also focus on delivery of high quality products that are in alignment with consumer needs, preferences, and wants in a relatively volatile market. This is critical towards ensuring the survival of the entity and its general ability to compete with the likes of McDonalds and Burger King.

Furthermore, digital ordering is a critical aspect of the fast food industry and more so in the ordering of pizzas from restaurants. This can be achieved by establishment of a strong online campaign and presence to provide an extensive segment of the population with optimized convenience in selection and requisition of pizza orders from different locations. This is critical for modern pizza outlets as it enables them to remain relevant, engage their respective customers on a personal basis and in the process improving delivery of orders. Real time data reporting capabilities can be achieved by improved information technology infrastructure and capabilities. This is important towards improving customer experiences, sales order levels, streamlining its supply chain and achievement of economies of scale.

 

 

 

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References

Haugen, D. M., Musser, S., & Schlosser, E. (2013). The food industry in Eric Schlosser’s Fast food nation. Detroit: Greenhaven Press.

Kotler, P. (2014). Marketing management. Upper Saddle River, N.J: Prentice Hall.

Nestle, M. (2013). Food politics: How the food industry influences nutrition and health. Berkeley, Calif: University of California Press.

Wall, B. (2013). Pizza Restaurants USA. Mintel Research Group. Retrieved from http://0-academic.mintel.com.innopac.library.unr.edu/display/637782/

 

 

 

 

 

 

 

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