SWOT Analysis / TOWS Matrix for Domino’s Pizza (Australia)
Based on various researches at Oak Spring University , Domino’s Pizza is operating in a macro-environment that has been destablized by – central banks are concerned over increasing inflation, wage bills are increasing, banking and financial system is disrupted by Bitcoin and other crypto currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, there is backlash against globalization, supply chains are disrupted by pandemic ,
increasing transportation and logistics costs, increasing household debt because of falling income levels, etc
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Domino’s Pizza can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Domino’s Pizza, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Domino’s Pizza operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Domino’s Pizza can be done for the following purposes –
1. Strategic planning of Domino’s Pizza
2. Improving business portfolio management of Domino’s Pizza
3. Assessing feasibility of the new initiative in Australia
4. Making a Restaurants sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Domino’s Pizza
Strengths of Domino’s Pizza | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Domino’s Pizza are -
Effective Research and Development (R&D)
– Domino’s Pizza has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Domino’s Pizza staying ahead in the Restaurants industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Domino’s Pizza is one of the leading players in the Restaurants industry in Australia. It is in a position to attract the best talent available in Australia. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Domino’s Pizza
– The covid-19 pandemic has put organizational resilience at the centre of everthing Domino’s Pizza does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy of Domino’s Pizza comprises – understanding the underlying the factors in the Restaurants industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Domino’s Pizza in Restaurants industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Analytics focus
– Domino’s Pizza is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Restaurants industry. The technology infrastructure of Australia is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High switching costs
– The high switching costs that Domino’s Pizza has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Learning organization
- Domino’s Pizza is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Domino’s Pizza is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders at Domino’s Pizza emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Domino’s Pizza is present in almost all the verticals within the Restaurants industry. This has provided Domino’s Pizza a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management in the Restaurants industry
– Domino’s Pizza is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Restaurants industry
- digital transformation varies from industry to industry. For Domino’s Pizza digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Domino’s Pizza has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to lead change in Restaurants
– Domino’s Pizza is one of the leading players in the Restaurants industry in Australia. Over the years it has not only transformed the business landscape in the Restaurants industry in Australia but also across the existing markets. The ability to lead change has enabled Domino’s Pizza in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of Domino’s Pizza | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Domino’s Pizza are -
High operating costs
– Compare to the competitors, Domino’s Pizza has high operating costs in the Restaurants industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Domino’s Pizza lucrative customers.
Ability to respond to the competition
– As the decision making is very deliberative at Domino’s Pizza, in the dynamic environment of Restaurants industry it has struggled to respond to the nimble upstart competition. Domino’s Pizza has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Domino’s Pizza supply chain. Even after few cautionary changes, Domino’s Pizza is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Domino’s Pizza vulnerable to further global disruptions in South East Asia.
Interest costs
– Compare to the competition, Domino’s Pizza has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Domino’s Pizza is one of the leading players in the Restaurants industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Restaurants industry in last five years.
Skills based hiring in Restaurants industry
– The stress on hiring functional specialists at Domino’s Pizza has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Domino’s Pizza is dominated by functional specialists. It is not different from other players in the Restaurants industry, but Domino’s Pizza needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Domino’s Pizza to focus more on services in the Restaurants industry rather than just following the product oriented approach.
Aligning sales with marketing
– From the outside it seems that Domino’s Pizza needs to have more collaboration between its sales team and marketing team. Sales professionals in the Restaurants industry have deep experience in developing customer relationships. Marketing department at Domino’s Pizza can leverage the sales team experience to cultivate customer relationships as Domino’s Pizza is planning to shift buying processes online.
High cash cycle compare to competitors
Domino’s Pizza has a high cash cycle compare to other players in the Restaurants industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners in Restaurants industry
– because of the regulatory requirements in Australia, Domino’s Pizza is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the Restaurants industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Domino’s Pizza is slow explore the new channels of communication. These new channels of communication can help Domino’s Pizza to provide better information regarding Restaurants products and services. It can also build an online community to further reach out to potential customers.
Domino’s Pizza Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Domino’s Pizza are -
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Domino’s Pizza can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help Domino’s Pizza to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Domino’s Pizza to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Domino’s Pizza to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Domino’s Pizza can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Restaurants industry, but it has also influenced the consumer preferences. Domino’s Pizza can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Domino’s Pizza can use these opportunities to build new business models that can help the communities that Domino’s Pizza operates in. Secondly it can use opportunities from government spending in Restaurants sector.
Loyalty marketing
– Domino’s Pizza has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Use of Bitcoin and other crypto currencies for transactions in Restaurants industry
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Domino’s Pizza in the Restaurants industry. Now Domino’s Pizza can target international markets with far fewer capital restrictions requirements than the existing system.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Restaurants industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Domino’s Pizza can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Domino’s Pizza can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Building a culture of innovation
– managers at Domino’s Pizza can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Restaurants industry.
Low interest rates
– Even though inflation is raising its head in most developed economies, Domino’s Pizza can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Domino’s Pizza is facing challenges because of the dominance of functional experts in the organization. Domino’s Pizza can utilize new technology in the field of Restaurants industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Domino’s Pizza can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Domino’s Pizza to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Domino’s Pizza External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Domino’s Pizza are -
Increasing wage structure of Domino’s Pizza
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Domino’s Pizza.
Consumer confidence and its impact on Domino’s Pizza demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in Restaurants industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Domino’s Pizza will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, Domino’s Pizza may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Restaurants sector.
Technology acceleration in Forth Industrial Revolution
– Domino’s Pizza has witnessed rapid integration of technology during Covid-19 in the Restaurants industry. As one of the leading players in the industry, Domino’s Pizza needs to keep up with the evolution of technology in the Restaurants sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Domino’s Pizza in Restaurants industry. The Restaurants industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High dependence on third party suppliers
– Domino’s Pizza high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Domino’s Pizza.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Domino’s Pizza can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate Domino’s Pizza prominent markets.
Environmental challenges
– Domino’s Pizza needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Domino’s Pizza can take advantage of this fund but it will also bring new competitors in the Restaurants industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Domino’s Pizza in the Restaurants sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Domino’s Pizza Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Domino’s Pizza needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Domino’s Pizza is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Domino’s Pizza is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Domino’s Pizza to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Domino’s Pizza needs to make to build a sustainable competitive advantage.