Thomas S. Monaghan began Domino's Pizza with one store in Ypsilanti, Michigan in 1960. To better serve his largest customer segment, i.e. University of Michigan students who were reluctant to go out for a pizza when preparing for exams, Monaghan began delivering to the customer's door. This concept was so successful that by 1996, the restaurant that Monaghan thought would pay for his college tuition had developed into a chain of 5,500 stores throughout the world generating sales of $2.75 billion and profits of $39 million. In the mid 90s, Domino's was the world's largest pizza-delivery company. In 1994, it sold 230 million pizzas, using 50,000 tons of mozzarella cheese, 77,000 tons of tomatoes, and 8,000 tons of pepperoni, the world's favorite topping.
1.Why has Domino's been very successful in some countries and failed miserably in others?
2.What can we suggest Domino's to do to improve its international operations?
[...] Specifically, the main competitors are traditional pizza restaurants or trucks offering take away pizzas. However, the majority does not offer home delivery. In these circumstances, home delivery is inevitably a competitive advantage. Knowing how to change policy in order to get a pay-back over a long period When analyzing the results by country, we realize that the profits come after a quite long period. Indeed, both DPII and franchises have experienced a difficult start. In Australia, the results were disappointing when the franchise was given to a local. [...]
[...] Using the basic model and methods of Domino's The main features of the U.S. market are: Control of fixed costs, particularly fixed costs of labor, control of the cost and quality of ingredient, and control of delivery time. These features provide the U.S. market a very high level of quality: 92%. Control of fixed costs On Exhibit we see that the U.S. has a share of fixed costs in their total costs of 20%.This share is the lowest worldwide. On the other hand, there are two categories of countries: - Those that have a share of fixed costs around the majority of countries. [...]
[...] Japan is one of the greatest successes of DPII; the master franchisee's aim was to retain existing customers and to attract new ones by offering them a larger choice of toppings such as local seafood or corn. The master franchise has also positioned DPII Japan on the high segment by settling in affluent neighborhoods that allowed raising prices. This success story shows that for DPII local master franchisees, while continuing to use the basic precepts of American, were able to evolve the business model to suit the local market. The selling price of pizza is critical and depends on the position chosen by the master franchisee. [...]
[...] The historical data of the company Domino's Pizza brings us to the conclusion that a successful implementation of DPII in a country depends on the choice of a master franchisee that knows perfectly the local market, and therefore takes measures to adapt the model basis to local specificities. Indeed, the correct application of methods DPII is certainly efficient, but not enough to guarantee success. The quite difficult implantation of DPII in Germany is an example to that since the master franchise is American who is not familiar with the country and simply tried to copy/paste the DPII American model without adapting it to the German market. [...]
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