Nii Nortey
MBA 691 FINALS
7/21/2022
SECTION A.
Pizza Hut should focus on its "growth strategy," given its current market position and other
strategic options. This is the wisest course of action. By pursuing the growth strategy, pizza Hut
might use its resources and abilities to grow its assets, income, sales, and competitive advantage.
With a 23% market share, the second-largest company in the sector, stability, and retrenchment
tactics are not yet an option. Pizza Hut can develop by aggressively expanding through calculated
actions. The continued expansion entails rising sales and the opportunity to exploit the experience
curve to lower the cost of goods sold per unit, boosting profits, and maybe overtaking the costleadership competition. This cost reduction becomes crucial if an industry for a firm is expanding
swiftly or consolidating and if rivals are engaged in price wars to gain market share. Making a
broad road map to move the business from where it is now to where it wants to be in the future is
the first step in the process. Every business division, including Pizza Hut's marketing plan, should
be involved in the design. The program should also be dynamic and focus on expanding the
business from all angles, including revenue, profit, staff, R&D, and stakeholder engagement.
Dowell (2006) asserts that businesses that expand horizontally by diversifying their product
offerings have high survival rates. Pizza Hut's growth strategies will work best with horizontal
integration. It can achieve this by extending its operations into new regions or broadening the
selection of goods and services available to present markets through acquisitions and strategic
alliances with smaller companies in the same industry and a marketing partnership with a company
in a different industry. A strategic alliance with amusement parks and online food delivery services
such as UberEats and DoorDash can also help achieve its desired horizontal growth externally.
Pizza Hut is in a very precarious position. First, the company's market share is meager compared
to Domino's. Domino's market share (42%) is almost twice as large as Pizza Hut's (23%) market
share, with Papa John's quickly coming up with a 22% market share. It will require a bold move
even to achieve the 30% market share because Domino's is continuing its aggressive marketing
strategy. Second, given the rate at which Papa John's is developing its technology and client base,
Pizza Hut is expected to lose its second-place position to the pizza chain.
The first strategy is to engage Little Caesars (which has a 13 percent market share) in
negotiations and acquire or strategic alliance proposal. If everything stays the same, Pizza Hut's
market share will jump to 36% if it completes the acquisition of Little Caesar. Pizza Hut can
compete with Dominos with a market share of roughly 36%. If the acquisition request is rejected,
pizza Hut should strive for a strategic partnership with Little Caesars so they may pool resources
to advance research and development for a competitive edge. In addition to Little Caesars, Pizza
Hut can collaborate with numerous other smaller businesses. Pizza Hut can partner with or buy
quickly expanding pizza franchises like Marcos Pizza, Papa Murphy's Pizza, and California
Kitchen Pizza. A new menu with fresh ingredients and flavors would attract more people. For
example, the partnership can research various pizza toppings, veggies, dough loaded with cheese,
and plant-based and vegan pizzas. Additionally, many resources should go toward improving
service delivery and quality. Whatever approach is successful, Pizza Hut must approach the market
aggressively.
Marketing alliances are most successful when two products complement one another, as is
the case with pizza and amusement parks and pizza and internet delivery services. Pizza Hut is
open to forming a long-term strategic partnership with Walt Disney World Resort and other
amusements and recreational parks. This will enable the company to reach out to customers by
making Pizza Hut pizza available on these premises. Pizza Hut must collaborate with companies
like Uber Eats, DoorDash, GrubHub, Deliveroo, etc., to improve delivery services and distribution
channels. Customers will receive the most outstanding and seamless experience possible across
various communication channels in an integrated manner by using this multi-channel service
delivery. Businesses are progressively adapting to multi-channel distribution as a current trend in
product distribution (Easingwood and Coelho, 2003). Cooperation with Walt Disney World Resort
will undoubtedly reshape the industry's rivalry.
SECTION B.
The two ideal functional strategies to help implement the recommended business strategies for
Pizza Hat are:
•
Marekting Strategy
•
Information Technology Strategy
Ford and Dominos collaborated to introduce driverless (autonomous) delivery in 2019.
Dominos has always been at the forefront of innovation, developing products like the insulated
bags that keep food hot throughout delivery and the 3D car-top sign currently used by taxis.
Further establishing the business to compete with third-party delivery services successfully,
Dominos was also instrumental in introducing live order tracking, which is now considered
standard technology in the restaurant and delivery industries. Not to mention that GPS
enhances in-store logistical planning and offers clients digital transparency. To introduce
delivery by e-bike, Dominos also teamed up with Rad Power Bikes in 2019. Twelve big pizzas
can fit on one bike, with a top-assisted speed of 20 miles per hour.
Due to Dominos' ability to overtake Pizza Hut as the market leader, research, marketing,
and information technology initiatives are the most practical ones that Pizza Hut should pursue.
Pizza Hut is not as technologically advanced or as aggressively marketed as Dominos and Papa
John, who hold the top three market shares in the pizza industry. This explains why Dominos
dominates the market (first mover advantage), and Papa John's is on the verge of overtaking it
for second place (second mover advantage). Pizza Hut is undoubtedly the third mover and will
probably enter the market utilizing open-source technologies, whether hardware, software,
code, or both, and oversee coordinating the global co-creation of products.
Forming a strategic partnership with UberEats, DoorDash, GrubHub, and Deliveroo to
share technology and develop top-rated apps that see daily download growth. For on-time
delivery, it will be necessary to outfit a software system with dependable and potent Apps that
can effectively coordinate with customers, drivers, and other key parties. The partnership will
develop a platform and apps to collect orders and deliver food in less than 20 minutes. The
technology will be such that Pizza Hut will be the first restaurant available when a client visits
an online delivery service like DoorDash or UberEats. It will offer customers and dash delivery
drivers long-term value.
Creating a strategic alliance with UberEats, DoorDash, GrubHub, and Deliveroo by sharing
technology to create Apps that are in high demand and are receiving an increasing number of
downloads every day. It will entail equipping a software system with dependable and powerful
Apps to efficiently coordinate with clients, drivers, and other relevant parties to ensure on-time
delivery. The alliance will create a platform and Apps for accepting orders and delivering food
in less than 20 minutes. The platform will be such that when a customer visits an online
delivery such as DoorDash or UberEats, Pizza Hut will be first restaurants available. It will
provide a long-term value to customers and dash delivery drivers. Customers can place highquality meal orders from the comfort of their homes or places of business.
SECTION C.
Franchising is the best worldwide entry option for Pizza Hut. In a franchising agreement,
Pizza Hut gives businesses in the target market the right to open retail stores utilizing Pizza Hut's
brand, menu items, and management system. In return, these businesses (franchisees) will give
Pizza Hut a royalty on their sales. Pizza Hut's presence in other nations to expand its brand makes
this strategy the best. As a result, Pizza Hut may quickly and cheaply grow in other countries.
Pizza Hut is projected to benefit from economies of scale as the business expands globally since it
can purchase more raw materials and improve its production capacity. Higher profits may result
from lower unit costs as a result. Therefore, Pizza Hut can focus on fending off Domino's and Papa
John's domestic rivals.
The right companies are essential to a successful international strategic collaboration. For
Pizza Hut to prevent squandering money and time, businesses must conduct adequate research and
due diligence before allying with cooperative enterprises. Pizza Hut must evaluate both the
strategic fit of the project strategy of the partner company and the fit of each company's resources.
In this type of connection, developing trust is crucial because it promotes openness in knowledge
sharing and a decreased fear of opportunistic conduct by the alliance parties. When there is a lot
of environmental unpredictability, this is highly crucial. For instance, if Pizza Hut expands into
China, it can team up with the nation's top online food delivery services, such as Ele.me, Meituan
Dianping, ENJOY, Daojia, Home-cook, and UberEats, to ensure prompt and efficient delivery.
Pizza Hut can expand swiftly, provide cutting-edge customer solutions, access new markets, and
share beneficial knowledge and resources through such an arrangement. The parties should
combine the finest each company offers if they want to get value for their money. This could be a
better comprehension of the product, sales, or marketing expertise, or simply having more people
working together to accelerate time to market. This is a game-changer in a company environment
that prizes innovation and speed. Pizza Hut will grow its consumer base, become a cost leader with
differentiating products and boost sales and profits if these goals are met in a strategic agreement.
SECTION D.
As part of its business strategy, Pizza Hut must employ an aggressive competitive strategy
involving sincere efforts to bring about changes inside the industry. This will include making
significant investments in human resources, organizational design, acquisitions, research and
development (R&D), and technology to keep ahead of the competition. Due to Papa John's assault
on its second-place market share, Pizza Hut must switch to a defensive stance. By using defensive
strategies, one can reduce the likelihood of attacks from critical rivals, direct attacks away from
potentially dangerous areas, or minimize the force of attacks from Dominoes and Papa John's.
Both defensive and offensive strategies will work well in the Pizza Hut situation, although more
resources should go toward offensive strategies. Pizza Hut should create an office of Tactical
Operations to handle all strategy-related operations for both strategies at the corporate level
(OTO). This office's goal is to completely overhaul the company's brand while taking steps to
reduce the incentives for competitors to attack the company's competitive advantages.
For the firm to deliver on the big plan, management should execute strategic initiatives,
communicate corporate strategy, and ensure that enterprise-level programs are translated into the
plans of the various units and departments. It should also align employee competency development
plans, personal goals, and incentives with strategic objectives. Pizza Hut should also be aware that
the business's strategy needs to be evaluated and modified to keep up with the evolving
competition. The focal point for organizing these responsibilities is the Office of Tactical
Operations. Although it won't handle all the work, it will streamline the procedures, so that strategy
execution is carried out in a coordinated manner throughout the entire organization.
The severe last check a company has on the viability of its chosen strategies is budgeting.
The new tactical operations office will require many resources to carry out its mandates due to the
aggressiveness of the latest tactics and their creation. The amount assigned will specify the
maximum sum that the Office of Tactical Operations and department heads may spend throughout
the fiscal period without needing clearance from a higher-up. The budgets for marketing, sales,
customer service, operations, human resources, and engineering should all be raised by 25% from
the previous year. Management should also authorize fresh funding for the OPO office.
A divided corporation is said to have synergy if the return on investment of each division
is higher than the return it would have if each division operated independently. Pizza Hut can
develop coordinated and cost-effective scale synergies between the marketing and sales
departments to increase gross margins and lower manufacturing unit costs. The business can
physically transfer the sales and purchasing teams so that they are seated next to one another in
the same department. A move like this might enable the purchasing team to purchase the goods
that the sales team will market. This team can turn around gross margin in one quarter by hearing
each other on the phone, celebrating "big deals" across the aisles, and getting to know one other
better.
Additionally, Pizza Hut's marketing, sales, operations, and research departments can work
together to share expertise and develop new business opportunities. The sales staff may highlight
unmet consumer wants, or a SWOT analysis may point out strengths in current products that could
serve as the foundation for new products or market prospects. The marketing division gets this
information. The marketing division will make every effort to have the most precise and thorough
product concept to gauge the reactions of the intended consumers. The marketing division will
work with the operations and research departments on a technical analysis of the product has
potential. Launching a new creation through such collaboration would synergize with Pizza Hut.
SECTION E.
Pizza Hut needs to make workforce modifications considering its existing condition and
suggested methods, especially since it intends to expand internationally. The business requires
personnel with specialized skills in cost leadership, product differentiation, forming alliances, and
acquiring companies. The industry needs to acquire new personnel and retrain current staff to carry
out the newly developed strategy. Top management needs reform and a new strategic direction.
Current workers should go through extensive skill-development training. Pizza Hut should also
entice top-tier professionals in the sector to join by presenting attractive employment opportunities.
Recruits in senior management should be capable of mentoring others. These individuals may
achieve organizational goals by using their abilities and skills in the most effective and efficient
ways possible. Without guidance, people tend to carry out their jobs in the sequence, how, and
according to the tasks they believe should be carried out. Such a workplace is not necessary for
Pizza Hut. Setting up a reliable performance appraisal system to locate good performers with
promotion potential is one technique for finding the ideal individuals to recruit.
SECTION F.
Pizza Hut can assess the effectiveness of the adopted initiatives using conventional
financial metrics. These include operating cash flow, return on equity, earnings per share, and
return on investment. Return on investment (ROI) is a metric used to assess the effectiveness and
performance of investments. This aids management in determining a venture's past and future
success. Investors in Pizza Hut can see how much money a firm produces for its common
shareholders by looking at its profits per share (EPS). Investors can use the ratio to determine how
well a firm is doing compared to its rivals and sector. The only way to tell if the new tactics have
improved Pizza Hut's performance is to anticipate it. Investors can learn how effectively a
company generates profits by looking at its return on equity (ROE). The operating cash is the
revenue a firm receives through its ongoing, regular commercial operations, such as the production
and sale of items or the rendering of client services.
Shareholder value is the monetary benefit shareholders of a firm receive in exchange for
their ownership of its stock. When a corporation generates a return on invested capital (ROIC)
more remarkable than its weighted average cost of capital, this raises shareholder value (WACC).
Because ROE, EPS, and ROE can easily be manipulated, many experts believe shareholder value
is a better indicator of a company's performance.
Another tool for evaluating a company's success is the balanced scorecard that Kaplan and
Norton propose. A balanced scorecard is a strategy performance management tool or a wellstructured report that managers may use to track how the employees under their supervision are
carrying out their duties and the results of those decisions. It combines operational measurements
of customer happiness, internal business processes, and the company's innovation and
improvement activities—the drivers of future financial performance—with financial analysis that
reveal the outcomes of actions previously performed. Management creates goals or objectives for
each of the four categories in the balanced scorecard:
•
Financial: How do we appear to shareholders?
•
Customer: How do customers view us?
•
Internal business perspective: What must we excel at?
•
Innovation and learning: Can we continue to improve and create value?
Benchmarking evaluates goods, services, and procedures against the most formidable
rivals or businesses acknowledged as market leaders. Pizza Hut can determine every aspect of its
business operations against Dominoes and Papa John's. The most common comparison categories
are operations, marketing, and service quality. Pizza lags in these areas compared to the two other
key companies in the business.
References
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G. Dowell, “Product Line Strategies of New Entrants in an Established Industry: Evidence
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