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  1. Why has Telepizza done so well?
  2. Assessment of growth options.
  3. Implications of recommendations for franchising strategy.
  4. My assessment of Telepizza's stock market valuation in Oct. 1998.
  5. Conclusion.

TP has grown from a single store in 1988 to the largest pizza chain in Spain. At the end of 1997 they had 399 stores and an estimated market share of 62% in Spain. But what made it so successful? Telepizza has an almost obsessive commitment to growth. At the moment, they have three possibilities, namely expansion within the domestic pizza market, international expansion or introducing new concepts as TeleGrill. ? Domestic Expansion: Growth has been at 20% p.a. during the last years and Telepizza is positive for an ongoing growth by comparisons to the US-market. TP knows on the other hand that market penetration is going to be a tough job since there is already a TP in every Spanish city with more than 20.000 inhabitants,. Hence, domestic growth can mainly be obtained by up-sizing the volume per order.
In my opinion, domestic growth should be pursued but not as a primary means of expansion.

[...] during the last years and Telepizza is positive for an ongoing growth by comparisons to the US- market. TP knows on the other hand that market penetration is going to be a tough job since there is already a TP in every Spanish city with more than 20.000 inhabitants,. Hence, domestic growth can mainly be obtained by upsizing the volume per order. In my opinion, domestic growth should be pursued but not as a primary means of expansion. The exhibit 7 in which European and US average pizza spending is shown makes clear that approaching Spanish pizza demand to US demand is not a sound way for estimates. [...]


[...] This is most likely to work out; anyhow, there remains a certain failure risk and it will take its time in any case. When not buying but establishing TP of nothing', there is the risk that they might not find appropriate staff and franchisees in the beginning My assessment of Telepizza's stock market valuation in Oct TP's ability to set demanding targets and then achieve them had earned the company a high valuation on the Spanish IBEX 35 index. Having a look at the valuation comparisons in the exhibit raises up several questions. [...]

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