DOMINOS PIZZA IN AUSTRALIA

Analysis with PESTLE, SWOT, 5 Forces ,and STP dominos can use in Australia

INTRODUCTION
 Founded in 1960, Domino's Pizza is the recognized world leader in pizza delivery operating a network of company-owned and franchise-owned stores in the United States and international markets. Domino's Pizza's Vision illustrates a company of exceptional people on a mission to be the best pizza delivery company in the world.  They pioneered the pizza delivery business, and their total system sells more than 400 million pizzas worldwide every year. Dominos currently has over 4,000 stores outside of the United States in over 60 international markets, and theyre still growing!  On 16 May 2005, Dominos successfully listed on the Australian Stock Exchange, following an oversubscribed offer, becoming the first and only publicly listed Australian pizza maker

INTRODUCTION
Products
 Dominos Pizza offers Crunchy Thin Crust, Ultimate Deep Dish and Classic Hand Tossed pizzas with a wide variety of toppings. Side items include Bread Sticks, Cheesy Bread, Cinna Stix, Buffalo Wings and Boneless Chicken. We also proudly serve icy cold Coca-Cola products. Dominos has recently expanded its menu significantly to also include Dominos American Legends specialty pizzas, Oven Baked Sandwiches, BreadBowl Pastas and Chocolate Lava Crunch Cakes. In late 2009, Dominos debuted its Inspired New Pizza a permanent change to its core hand-tossed product, reinvented from the crust up with new sauce, cheese and garlic-seasoned crust.

SWOT
 SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favourable and unfavourable to achieve that objective.

STRENGTH
 International Expansion: On may 12th 1983, Dominos opened its first international store in Canada, that same year Dominos opened its 1000th store overall and by 1995 they had a thousand international locations. In 1997 Dominos opened its 1500th international location, opening five stores in one day across five continents.  Position. Presently Dominos is the second largest pizza chain in US has nearly 9000 corporate and franchise stores in 60 countries and all 50 U S states

STRENGTH
 Acquisition Strategy: Dominos boosted its store numbers with the acquisition of 16 Big Daddy pizza stores in Melbourne and 30 pizza Haven stores in New Zealand.  On march 2008, Dominos announced it had purchased Pinkys pizza, a pizza chain which operates 27 stores in Victoria, New South Wales and South Australia.  Health consciousness: In Feb 2010, Dominos launched a range of health options. Teaming up with popular reality show the Biggest Loser and their trainer Shannon Ponton, Dominos launch their good choice range consisting of seven nutrition conscious calorie controller

STRENGTH
 Strong Brand: Dominos pizza Inc strong brand equity gives it a competitive advantage over other industry players. The intelligent marketing strategy and heavy advertising is a key strength to make its brand image retained and differentiated in the minds of its customers. In August 2004 Dominos became the number one Pizza company in Australia in terms of net work store numbers and the network sales with the opening of its 300th store in Bayswater, Melbourne.  Innovative skills: In 2002, Dominos became the first and only pizza maker in Australia to use hot cell bags, an electronic portable oven which ensures which ensures pizza is delivered up to 20% hotter. Also in 2002 Dominos became the first Australian pizza maker to launch the classic crust.

STRENGTH
Efficient and Effective Supply Chain Management:  Dominos platform for on line ordering averages 25% of sales generally Diversification strategy  Fat menu: The Menu features both vegetarian and meat pizzas and including stuffed crust both chicken wings and boneless chicken , potato wedges, garlic breads and a variety of dessert items including chocolate pots, cookies and waffles, Ben and Jerrys ice cream and a variety of soft drinks coca cola, fanta and sprite. Its core strength is delivering a quality pizza in a timely manner. Sells over 1 million pizzas a day  Their ability to remain unscathed despite the competition. Hard work, persistence and thinking outside the pizza box have been their success formula. Dominos is celebrating its 27th anniversary of selling pizzas in Australia.

WEAKNESS
 Bad publicity: The market momentum was quickly lost when a woman in St Louis was involved in an automobile accident with a Dominos pizza delivery driver. News turned in to bad publicity and in 1993 the 30 minute was discontinued.  Managing all franchise effectively  The company was faced with crucial issues of weakening bottom lines due to slow growth and decline in sales. The company experienced decline in its operating and net profits during the year 2007 as compared to previous years report 9.5% drop down in operating profits and about 64.3% decrease in net profits was recorded.

OPPORTUNITY
 Opportunity for growth on its on line business since there is easy
internet access across Australia use of mobile internet, making it easy and convenient for customers

 Use of iPhone apps:  Dominos target market in Australia is the general population
especially the youth. Its opportunity in Melbourne is the faster growing population than any other Australian city ( Australian Bureau of Statistics). The figures show Melbourne's population boom accounted for one third of the nations growth 2009-2 2010.

THREAT
 Competitors: Dominos operates with Quick Service Restaurant (Q S R) Pizza segment of the first food market in Australia. The companys biggest threats on the pizza segment are Eagle Boys and Pizza Hut  Other Quick service Restaurant threats on other food segments include Subway, Mc Donald's, KFC, Red Rooster , Hungry Jacks and Chicken Treat Dominos is the 6th largest QSR chain in Australia by net work sales behind Mc Donalds, KFC, Hungry Jacks, Subway, Red Roster and Chicken Treat  Dominos diversification strategy would be seen as threat since it increases chances of rivalry in the market  The major threat of Dominos pizza inc is the increasing consumer awareness about harmful health implications high calorie fast food items, in addition potential harmful effects associated with the

THREAT
artificial additives, flavours and preservatives added to fast foods pose a threat to Dominos like all fast food restaurants  Rising food and Energy costs shrink margins  Dominos margins are dependant on food prices. Particularly wheat, corn, beef, poultry. The prices of these key inputs can rise significantly, impacting on the companys margins  Rising energy costs: Dominos is also affected by the prices of oil which has risen four fold since 2001. Oil is used to produce food as well as to transport it all over the world. More importantly the company covers over 10 million miles per week in pizza deliveries, making it a large consumer of gas. Because of this, increased costs shrink margins and hurt profitability

PESTLE
 PESTLE analysis, an acronym (Political, Economical, Social, Technological, Environmental, and Legal) that help to understand the overall market environment (market risks, market growth or decline, etc.) for a particular industry, business, product, or project. It is often a key part of strategic, marketing, and/or business planning.

POLITICAL
 The Australian government support trading and business  Australian government in good relationship with the USA and UK government  Currently government are controlling the marketing of fast food restaurant because of health concerns.

ECONOMICAL
 Rise on energy and gas cost.  Fuel price increase  The value of Australian food exports declined largely due to drought and changes in import demand from overseas countries.  Since the early 1990s, inflation targeting has been the main objective of Australia's monetary policy framework as controlling inflation preserves the value of money.  The current inflation rate is 2.80% and the RBA has set policy to achieve an inflation rate of 2-3 per cent on average.

SOCIAL
 Australia has a diverse cultural and life style with 22million population.  Health concern  Agricultural country

TECHNOLOGY
Research and development: Australias strong business performance in recent years was due to record of innovation and a longstanding commitment to research and development (R&D), aimed at increasing productivity, building new markets and boosting international competitiveness. The Australian Government supports R&D through direct funding as well as providing significant tax concessions to encourage private sector investment. Australia got great communication technology Online ordering has also been great in this era of time, where internet has completely taken over communication.

ENVIRONMENT
Australia has a business-friendly regulatory environment and favourable time zone. The Australian Government has announced its plan for a clean energy future to help Australia meet the environmental and economic challenges of competing in a low-pollution world.

LEGAL
 Must be licenced to operate:

PORTERS 5 FORCES
5 forces was developed by M.E.Porter in 1979. This helps organizations to analyze its competitive strength and position in the industry. According to Porter, the state of competition is an industry depends on five forces

THREAT OF NEW ENTRANTS

 Threat of new entrants -Barriers to entry- High The level of profits the industry is earning and the entry barriers are the factors that will determine the attractiveness of the industry for a new entrant (Wickham, 2000) 1) Market share (as of 2010) Dominos Pizza 46% Pizza Hat 29% Eagle Boys 17% Others 8% There are over 3500 independent pizza shops and 3,000 chain pizza shops in Australia 2)Brand Identity- The existing market leaders (the brands mentioned above) have strong brand identification and royal customers

ENTRY BARRIER
 Access to distribution- It is difficult for new comers to access the distribution channel  The Government policy: The governments dialogue to work with quick service restaurant sector and public health groups to help all Australians to improve their poor dietary habits and to make healthier food choices. Sales Growth  Dominos Pizza announced a $10.2 million half-year Net Profit After Tax, up 16.9% on the corresponding period previous year. (Feb, 2011). This might attract new entrant as this indicate that the industry is profitable.

THREAT OF SUBSTITUTE
 Threat of substitute products Medium The customer may find that goods from a different industry will serve just as well. (Wickham, 2000) 1)Alternative price: If the price of pizza increases high enough, consumer might switch to frozen pizza from supermarket or other cheaper fast food such as Hamburgers, Fried Chickens and Chinese take away. 2) Change in buyers lifestyle and trend Increase in recent health-conscious lifestyle and governments engagement to encourage Australian people to have healthier diet, which could lead their consumer to have healthier alternatives. Healthy noodle and sushi categories are booming.

BARGAINING POWER OF BUYER

Customer can force down prices, demand higher quality or more services. (Porter,1979)

 Change in buyers lifestyle (such as increase in health conscious people demands

for healthier options)

 Product price; buyers tend to be more price-sensitive especially when they are
buying undifferentiated products. (Pizza tends to be standard product.)

 Buyers potential to integrate backwardly: If buyer decides to make home-made

pizza

 The average Australian eats pizza once a month totalling over 264 million pizzas
a year

BARGAINING POWER OF SUP.

 The bargaining power of suppliers- Medium Suppliers can exert bargaining power on participants in industry by raising prices or reducing the quality of purchased goods or services.(Porter,1979). 1) Suppliers can raise the prices of raw materials Depends on the commodities that are used in production of Pizza such as wheat, cheese, vegetables and meat. E.G. If the wheat harvest performs poorly due to adverse weather, supplier might have to increase prices, which force Dominos Pizza to raise their prices or lose their margin. 2) Differentiated raw materials -Dominos Pizza is using 100% Aussie beef -From January 2011, the company switched to new cheese supplier from San Joaquin Valley, which has 14% less fat but still taste full mozzarella cheese.

BARGAINING POWER OF SUPP

 Threat of forward integration E.G. Their supplier of wheat might decide to produce pizzas dough and sell them to the customers directly. 1) Suppliers can raise the prices of raw materials Depends on the commodities that are used in production of Pizza such as wheat, cheese, vegetables and meat. E.G. If the wheat harvest performs poorly due to adverse weather, supplier might have to increase prices, which force Dominos Pizza to raise their prices or lose their margin.  Differentiated raw materials -Dominos Pizza is using 100% Aussie beef -From January 2011, the company switched to new cheese supplier from San Joaquin Valley, which has 14% less fat but still taste full mozzarella cheese.

RIVALRY
Rivalry among existing firms- High Intense rivalry is related to the presence of the factors such as products or service characteristics and differentiation strategy. (Porter,1979) 1)Rivals-Other Pizza Brands such as Pizza hat, Eagle boys as well as another brands from Quick Service Restaurant Segment such as McDonalds, Subway, and KFC. 2)Advertisement and promotion to differentiate its products in order to gain edge over its competitors. E.G.  Use of Social Networking Site such as Facebook and Twitter to connect with their consumers

 Dominos Pizza launched iPhone application for online ordering, which was a big success with 350,000 downloads in the first 6 months, achieving A$2 million in sales in the first 12 weeks. In March, 2010, Pizza Hut also introduced its own online ordering application and 70,000 of them were downloaded in the first 30 days.

SEGMENTATION
Market condition

 More than 6.5 million migrants have settled in Australia since 1945  In good relation with America and UK  21 million population  Dominos market demographic is culturally diverse. Dominos
responded by adding several other variations of the basic pizza. Eg. Hand tossed and thin crust pizzas were added to the menu to satisfy demand in specific market areas and remain competitive.

SEGMENTATION
Customer segment  Life-style:  Different menu to suit every  Ability to customise your Pizza  Cultural based: Market research had revealed that Dominos market demographic was culturally diverse.  Religion  Halal meat  Vegetarian etc.

TARGET GROUP
 Age: 30years and under are Dominos major target group  Working-class  Time constrain people

POSITIONING
 As customer focused firm: They have been able to succeed in nontraditional markets by creating a cultural-specific product mix. Their product mix has evolved to include pizza, salads, sandwiches, chicken wings, and specialty desserts.  Price strategy: Dominos product pricing is competitive with others in the industry.  As conveniences firm: Taking advantage of an impatient consumer base, Dominos touted, you get fresh, hot pizza delivered to your door in 30 minutes or lessor its free.