Strategic Analysis of Domino's Pizza Assignment Sample

Entrepreneurship And Innovation Management

1. Introduction - Entrepreneurship And Innovation Management

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This report will consist of a SWOT analysis of an FTSE 250 company. The FTSE 250 company selected for this report is Domino’s Pizza. First, SWOT analysis of the company will be conducted, and based on the SWOT report, two areas where the companies need to implement changes will be identified. Innovation techniques will be employed to solve the problems in the two weak areas.

2. SWOT Analysis of Domino’s Pizza

Domino’s Pizza is one of the top pizza chains around the world. The American company is becoming popular among the people of different nations due to its wide variety of pizzas and other snacks (Idris et al., 2021). Initially, the company had its rivalry with Pizza Hut, another giant in the pizza chain, but it successfully overtook the company a long time ago. Domino's still has a lot of competitors in the market, such as KFC and Mcdonald's, and has many areas that need improvements. The SWOT analysis of Domino's is as follows:

Structure of SWOT Analysis

Source: (Kirkpatrick, Cuvelier, and Flanagan, 2018)

2.1. Strengths

The strengths of Domino’s Pizza are mentioned below:

• Brand Recall: The company has a high brand recall due to its effective advertising strategies. The company also guarantees to provide free pizzas to the customers if the order is not delivered within 30 minutes. This aggressive marketing style has helped the company create a feeling of promise among the customers.
• Huge Number of Restaurants: The company has over 9000 outlets worldwide and is spread across more than 60 countries (Teoh, 2019). This has helped the company establish a strong market customer base.
• Quick Service and Variety in Menu: The feature of Domino’s to provide quick services to the customers has helped the company gain recognition. The company has also worked to develop a versatile menu for customers of different tastes and choices.
• Low-Cost Items: Domino’s has understood the affordability factor of the customers. Therefore, the company has included items in its menu that can be easily affordable for the people of every class (Wenji, 2019).
• Proper Supply Chain Management: Domino's has an efficient supply chain which helps the company maintain its promise to provide faster customer service than any other fast-food chain.

2.2. Weaknesses

The company’s weaknesses are mentioned below:

• A large Number of Outlets: The company often finds it difficult to handle its large number of outlets. Sometimes, customers have been seen complaining about the food's quality, which eventually negatively impacts people's minds.
• Increasing Number of Health Conscious People: Nowadays, many people are shifting towards a healthy lifestyle, thus avoiding the consumption of fast food (Suganda, Oktavia, and Fridayanti, 2021). This is a weakness for the company, and the company is losing customers.
• Decrease in Staff Retention Rate: The company has always suffered from a low staff retention rate due to the deficiency of proper training programs for the staff. It has also been observed that many employees cannot handle the company's hectic environment and thus leave their jobs.
• Small Number of Eateries: The company mostly focuses on building delivery outlets. This has led to a serious decrease in the company's eateries. Especially in malls, customers look for a place to sit and eat (Kirkpatrick, Cuvelier, and Flanagan, 2018).

2.3. Opportunities

Some of the opportunities for Domino’s Pizza are listed below:

• Expanding the Market: The pizza industry is rapidly expanding, thus creating a huge opportunity for Domino's to expand its business. Since the already developed markets are facing an increase in mature customers, Domino's can target developing markets and establish their business.
• Penetrating in a Market: With its strong financial background and brand name, Domino's can easily penetrate a market and expand its business.
• Healthy Options: The number of health-conscious people is increasing day by day. Hence, the company can bring a wide range of healthy snacks to its menu to help Domino's increase its customer base.
• Introducing Restaurants: The company can find the cream areas of different nations and launch their restaurants there, which will help them increase their profits.

2.4. Threats

Possible threats for the company are as follows:

• Highly Competitive Market: The high competition in the market has always been a threat for Domino’s Pizza. Some of the major competitors for the company are Pizza Hut, KFC, Subway, and McDonald’s. The company always deals with high pressure from the mentioned brands, thus directly threatening the company's business operations.
• Changing Eating Habits of Customers: Many nations are suffering from obesity problems. The governments of many countries are concentrating on spreading awareness regarding this problem and are directing the people to avoid junk food. This acts as a threat to Domino’s since the customers are starting to move towards healthy options.
• High Cost of Raw Materials: The cost of the raw materials that the company uses in its pizzas is increasing at an alarming rate. This is a big problem for Domino’s since it is becoming hard for the company to maintain the expected quality of pizzas with high-priced raw materials.

3. Innovation Model to Address an Identified Weakness and Threat

Innovation plays a crucial part in every company’s business strategy. Mostly, the innovators of a company fail due to the selection of wrong innovation models (Wolfer, 2022). So, the innovators of a company need to gain proper knowledge regarding the various innovation models and identify a perfect model that can benefit the business's growth in the market. An innovation model is a structured framework that helps identify and implement effective business ideas. Moreover, innovation models also help adopt strategic ways to bring effective changes within the company. Here, in the case of Domino's Pizza, the identified weakness and threat that needs an innovation model are the increasing number of health-conscious people and the Highly Competitive Market, respectively. The company can overcome the identified weakness and threat with the effective use of proper innovation models (Rubin and Abramson, 2018). The two ideal innovation models that can help the company to solve the mentioned issues are the Incremental Innovation Model and the Sustaining Innovation Model. Each model has different functions that can help the company in various aspects. The features of the two models are as follows:

Four Main Types of Innovation Models

Source: (Streatfield et al., 2019)

3.1. Incremental Innovation Model

The Incremental Innovation Model is a process in which a company brings small changes to its existing services and products. The changes brought by the company through this innovation model are usually aimed at improving a product's productivity and efficiency. The model also helps to increase the sustainability capability of the product in the market (Kobarg, Stumpf-Wollersheim, and Welpe, 2019). Companies often use this model to maintain the existing position of a product or improve the position of a product in the market. With the often changes in the demands of customers, the Incremental Innovation model has become a crucial part of the companies to evolve a product according to the customer’s choices.

3.2. Sustaining Innovation Model

The Sustaining Innovation Model is a process where the companies launch new and better products to sustain and compete in the market. This innovation model is often used by companies already quite successful in the market (Le et al., 2020). The main factor that makes the firms adopt this innovation model is profit. The aim of the firms while implementing this innovation model is to develop new products that can eventually increase their profit margin. This innovation model can also be used by companies facing high competition and threats to their business. Creating better products can help companies maintain their grip on the market and avoid the negative consequences of the competitive market (Lyver and Lu, 2018).

3.3. Addressing the Identified Weakness with the Two Selected Innovation Models

• Use of Incremental Innovation Model on the Weakness

The selected weakness of Domino's Pizza, taken after the SWOT analysis, is the increasing number of health-conscious people. This weakness has cost Domino’s to lose a lot of customers in recent times. Due to the increase in obesity cases in different nations, people are starting to avoid consuming fast food like Pizza. Here, applying the Incremental Innovation Model can prove quite beneficial for the company, and the company can also retain a big customer base of health-conscious people. Based on the innovation model, the company can bring changes to its menu and introduce a wide variety of healthy food for health-conscious people. The healthy food introduced by the company can help the firm retain many new customers, and the company will also promote a social cause that can improve its image among the people. Another dimension of the innovation model states the importance of increasing the product's sustainability in the market (Limba et al., 2018). Therefore, the innovation model can also help the company make its existing food products more sustainable in the market.

• Use of Sustaining Innovation Model on the Weakness

As mentioned earlier, the Sustaining Innovation Model enables a company to introduce new and better products in the market that can help the firm to sustain itself in the highly competitive market. Since Domino’s Pizza already has a lot of competitors in the market, this innovation model will help the company gain the upper hand in the market (Streatfield et al., 2019). To deal with the problem of an increasing number of health-conscious people, the company can bring in new and healthier products into the market, replacing the old unhealthier products. As per the model, the firm can also increase its profit margin since it will obtain many customers from the health-conscious segment. It will also help the company maintain its reputation as a giant brand in the fast-food chain industry and maintain its solid market grip. Moreover, it will also enable the company to fight with rival companies such as KFC, Subway, and Mcdonald's.

3.4. Addressing the Identified Threat with the Two Selected Innovation Models

• Use of Incremental Innovation Model on the Threat

The threat identified to implementing the Incremental Innovation Model is Domino's the highly competitive market of Domino’s Pizza. The threat deals with the chances of other brands overtaking the company in terms of sales. Therefore, according to the innovation model, the company can bring small changes into its business structure to maintain its strong position in the market. As discussed earlier, the company has been facing issues regarding the quality of its food products that have hurt the brand's image. The company can solve this problem by implementing proper quality control activities on the outcome of the products. This will enable the company to provide food of desired quality to the customer, eventually increasing customer satisfaction. Satisfying the customers will help the company retain new customers and keep the old ones loyal to the brand, which can eventually create a competitive edge for the firm. Another strategy that can be used by Domino's to maintain its market is observing the strategies implemented by its competitors. The company needs to build a specific team that will be directed to keep a close eye on the different strategies Domino's competitors apply in the market (Lasrado, 2019). This will help the company gain an idea regarding its competitors' various strengths and weaknesses and will enable them to implement effective strategies to counter the problems.

Implementing attractive deals and offers on the products and services of the company can also help Domino's Pizza retain many customers in the future. The deals can include attractive discounts on the food products and offers like buy one get one free. Deals are also a great way to gain new customers who are new to the brand. Overall, providing deals can benefit the company in many ways and help Domino's to give a strong fight against its competitors.

• Use of Sustaining Innovation Model on the Threat

The sustainability of a product in the highly competitive market is the biggest threat for Domino’s Pizza. Hence, the company needs to provide special attention to increasing the sustainability of its existing products. Based on the Sustaining Innovation Model, Domino's can take many effective steps to increase the sustainability of its products. The first and foremost step can be accessing the required raw materials. The company should ensure that the raw materials required to produce a particular food product and ample quantity are always available. It has been observed that the company also faces difficulties due to the high price of the raw materials required to produce the food products. So, the company should give attention to its pricing strategies and come up with ideal prices for the products that can be acceptable to the company and the customers. To overcome the threat of the highly competitive market, Domino's can improve its supply chain (Teoh, 2019). Although the company already has a well-established supply chain, it still needs to implement various crucial changes to make it more capable of handling the competitive market.

To survive in a competitive market, a company always needs to develop newer products. The same applies to Domino's Pizza too. The company needs to identify the changes in the needs and demands of its customers. Accordingly, the company can launch new products that can help them gain many customers. The company can also take ideas from other firms and, inspired by them, implement crucial changes that can contribute to its success. The company can establish a highly skilled Research and Development (R&D) team. The R&D team can innovate new products to help the company satisfy the changing customer demands. Most of Domino's Pizza's competitors are shifting towards providing healthier food to its customers. The company also needs to implement this change and should include healthier options in its menu. All the things mentioned here can help the company increase its products' sustainability and survive in the highly competitive market it is in.

4. Conclusion

The report starts with a SWOT analysis of Domino's Pizza. The SWOT analysis has enabled the author to identify the selected firm's various strengths, weaknesses, opportunities, and strengths. One of the main weaknesses and threats has been taken from the SWOT analysis, and they were critically analyzed based on the two innovation models. The innovation models selected for the report are the Incremental Innovation Model and the Sustaining Innovation Model. The author used the innovation models to find effective solutions to the problems. Implementing the innovation models will also help the readers understand the various aspects of the models and the crucial role they can play in improving the business operation of a firm.

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