What Is The Business Model Analysis Dominos Australia?
A business model is something that an organization builds overtime. Various researchers have looked at the concept of business models over the years. According to Caravanis, Sindakis and Walter (2015), the idea of business models or business model innovation is founded in organizational practice, strategy management and industrial economics. They further explain that business models are not a strategy but they form a significant part of any strategy. They are also the key to understanding and communicating strategy within a company and across its stakeholders and business environment. DaSilva & Trkman (2014), further attempt to analyse the term business model especially when it comes to organizational long-range planning. The term business model has suffered because of evolving into an idea that is unclear and many companies in the 1990s failed by following what is thought to be innovative business models. The two researchers therefore redefine business model by looking at its historical development, resource-based view theory, consistent statements about business models and implications for further research. Business model is a term that was first mentioned in an academic article written by Bellman in 1957 which investigates how business games are constructed for training purposes. The term business model can also be confused with revenue model (George & Bock, 2011) which is an important part of any business model. A revenue model does not define how an organization creates value but how the company appropriates revenue through sales of goods and services. A revenue model does not define the company’s entire business model but is a very important part of the model. Several scholars have however seen business models as an aspect that should be used in explaining different phenomena (Zott et al.,2011). Further Porter notes that the business model must be applied together with the company strategy for it to work effectively. Taking the business model and applying it in isolation from the company’s strategy may hinder the company from achieving success. Without any clear strategy, the company may have its competitive advantage interfered with.
The theory of disruptive innovation was introduced in 1995. According to Christensen, Raynor & McDonald (2015), disruptive innovations are those that cause a shift in the current market and mainly emanate from low-end markets or new markets. They further explain that disruptive innovations only reach main consumers if their quality standards are met. Dong & Dijk (2015), further explain that the same business models have been applied for years by different companies hence to become unique, a company should cause a market disruption by being innovative.
This paper will analyse the current business model that has been adopted by Domino’s Pizza Australia. Domino’s is the largest pizza in Australia, in terms of network, the number of outlets it has and the sales that have been generated over the past years. The company is the largest franchisee for the Domino’s Pizza brand in the world. The company also has holds exclusive master franchise rights for Domino’s in Australia, New Zealand, Belgium, France, Netherlands, Japan and Germany (Domino’s Australia,2018). Domino’s Australia has implemented a unique business model that has seen it been the most successful pizza chain in Australia.
Domino’s has an opportunity of getting into the market of health-conscious consumers. There is a huge shift in the market towards healthy eating hence Domino’s should take advantage of this. This can be done by introducing a menu that is health-conscious, hence resulting in future revenue increase for the company. Customers like experimenting with flavors and the company can come up with further pizza flavors that will attract even more consumers. With more flavors and having flavors which are suitable for vegetarians, Domino’s has a chance of expanding and getting more customers
Domino’s has an opportunity to introduce exclusive restaurants in prime high-end areas hence helping the brand to increase its brand recognition (Jackson &Scott, 2015). This will enable the company attract consumers who like eating in restaurants that are considered as plush. Further, it will enable the company to create a new market niche of high-end customers.
Domino’s further has an opportunity to acquire new technology that will take its business to the next level. The industry that the company operates in highly competitive and technology can make the difference between success and failures. Currently, Domino’s has been doing research on a system that will enable it to produce and deliver pizza in exactly ten minutes (Dominos Australia, 2018). The aim is to give very fast service to customers hence the exploration of such technologies. This will enable the company to continue being the leading pizza company in Australia.
Domino’s Pizza further has opportunities in innovation. Being the leading company, the company can do research and come up with unique products that will enable it become market leader. The current business model can be disrupted and Domino’s can come up with products that will define a new market and add new value for its customers (Kiel,2014). This can lead to expansion of the current customer base and redefining the pizza industry afresh.
Domino’s Pizza is also faced with some threats. In 2017 the share price of the company went down by over 50%. This led to the CEO of Domino’s Australia stating that he will resign since the share price was previously one of the best performing in the industry. In the past two years the share price had been valued at about $8 billion hence leading to around $800 million being wiped off from the chairman’s wealth and $100 million from the bank (Amit & Aott,2015). The company saw a huge chunk of its market capitalization being wiped off.
The key partners in the Domino’s business model will be its suppliers. The suppliers will ensure delivery of quality ingredients that enable Domino produce quality pizzas for its consumers. The key activities that the company wants to carry out is to expand the existing business, ensure faster deliveries, introduce new flavors of pizza and invest in research and development. These activities will see the company grow further in 2018 and beyond. The value proposition of the company is to create faster service whereby ordering and receiving a pizza will all happen in under ten minutes. Further, the other value proposition is to increase customer satisfaction. Domino’s intends to ensure better customer relationships through implementing an efficient customer care system, encouraging customer feedback and listening to their customer suggestions. The main target segments will be millenials and children since pizza is a product mostly consumed by these groups. The key resources that will be required by the company are technological, human and financial resources so that the strategies are effectively implemented. The main channels that the company intends to use are online and instore marketing (Kiel,2014). In its strategy implementation, Domino’s will incur costs in new technology implementation, marketing activities and expansion strategies (Kiel,2014). The company’s major revenue stream is pizza sales
Domino’s model of business can be considered as a model for making profit. The business model of the company has seen the company grow massively over the years that it has been in existence. Domino’s has greatly increased its pizza sales in various ways. The first way has been ensuring that it locates it stores in places that are convenient for the customers. The company has ensured that all over Australis, there are Domino’s stores where the customer flow is great. This has seen the company be able to attract many customers to purchase hence enabling the stores to be profitable. Domino’s has further been able to increase its sales by coming up with an online pizza ordering system. This has enabled consumers order pizza from the comfort of their homes and businesses or wherever else they may be. The online ordering system has seen the company get massive profits due to the number of customers who order through this system. It has also enabled the company to be able to reach customers who may be abit far hence leading to a massive increase in the company profits. Another way that Domino’s has used to increase sales is by having a unique product offering, suitable to different types of consumers (Saebi & Foss, 2015). The company has a variety of pizza flavors and different sizes hence catering to different segments of its customer base. Due to this the company has been able to make massive sales hence increase its profits over the years.
Domino’s has further ensured that the profits are in place by having a robust operations strategy. The company has employed human resources that are experienced and innovative hence leading to efficient processes all over the company’s outlets. Due to this, there is minimal wastage and the company can save a lot of money in this area. This has also enabled the company retain customers since staff offer great customer service to the customers. Domino’s, due to its size has also been able to take advantage of the economies of scale to get cheaper raw materials from suppliers hence enabling the company to keep operations costs down (DaSilva & Trkman,2014). Due to this, the company has maximized on profits.
The business model of Domino’s can also be expressed as a set of capabilities and resources. The business model shows the resources that the company has that has made it become successful. One of the resources that the company has is human resources. The company has experienced human resources that are constantly trained so that it meets the company’s customer needs. The company also has financial resources. The profits that the company makes has enabled it to be able to expand its product offering and expand its presence in Australia and other countries. The financial resources have also enabled the company to invest in research and development, hence leading to innovation of new products and ways of work. Domino’s also has technological resources (Schuma & Lorro,2017). The company always invests in technologies that enable it to produce its pizza in a fast an efficient manner. Further, the company has invested in systems that enable staff to work efficiently and customers are also able to order pizza online and get them delivered currently in under 20 minutes.
Domino’s Pizza has capabilities that has enabled it to efficiently use its resources. One of these capabilities is a shared mind set and coherent brand identity. The company has created an environment where staff shares ideas and there is efficient communication within all organizational levels. This has seen staff move towards one direction in terms of organisational strategy and come up with great ideas. The company has also been able to create a robust brand image hence becoming a household name. The second capability that Domino’s has is Learning and collaboration. The company has developed a learning culture hence keeping abreast with all the matters that arise in its industry. The company also collaborates with different stakeholders to ensure that products meet high quality standards. The company also has a capability of ensuring customer connectivity (Ladd,2018). By adopting latest technologies and installing efficient systems, Domino’s has enabled its customers stay fully connected with the company hence ensuring feedback provision and idea suggestion.
Conclusion
Domino’s has been able to maintain a great business law model due its various capabilities, resources and opportunities that it has taken. The company has a great future since it is doing research so that it provides even better products to the consumers. The company’s business model has enabled it to become a market leader in the fast food industry (Viat,2016). Constant innovation will enable Domino’s to retain its current market position.
References
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Carayannis, E. G., Sindakis, S., & Walter, C. (2015). Business model innovation as lever of organizational sustainability. The Journal of psychology Transfer, 40(1), 85-104.
Christensen, C. M., Raynor, M. E., & McDonald, R. (2015). What is disruptive innovation. Harvard Business Review, 93(12), 44-53.
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De Jong, M., & van Dijk, M. (2015). Disrupting beliefs: A new approach to business-model innovation. McKinsey Quarterly, 3, 66-75.
Dominos Australia (2018). Inside Dominos. Retrieved from https://www.dominos.com.au/inside-dominos/corporate
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