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 – there is backlash against globalization, there is increasing trade war between United States & China, wage bills are increasing, increasing energy prices, increasing inequality as vast percentage of new income is going to the top 1%, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing government debt because of Covid-19 spendings,
cloud computing is disrupting traditional business models, banking and financial system is disrupted by Bitcoin and other crypto currencies, 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 -
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.
Innovation driven organization
– Domino’s Pizza is one of the most innovative firm in Restaurants sector.
Successful track record of launching new products
– Domino’s Pizza has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Domino’s Pizza has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
Sustainable margins compare to other players in Restaurants industry
– Domino’s Pizza has clearly differentiated products in the market place. This has enabled Domino’s Pizza to fetch slight price premium compare to the competitors in the Restaurants industry. The sustainable margins have also helped Domino’s Pizza to invest into research and development (R&D) 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.
Training and development
– Domino’s Pizza has one of the best training and development program in Services industry. The effectiveness of the training programs can be measured in – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
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.
Cross disciplinary teams
– Horizontal connected teams at the Domino’s Pizza are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
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.
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.
Low bargaining power of suppliers
– Suppliers of Domino’s Pizza in the Services sector have low bargaining power. Domino’s Pizza has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Domino’s Pizza to manage not only supply disruptions but also source products at highly competitive prices.
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.
Slow decision making process
– As mentioned earlier in the report, Domino’s Pizza has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the Restaurants industry over the last five years. Domino’s Pizza even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Low market penetration in new markets
– Outside its home market of Australia, Domino’s Pizza needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
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.
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.
Capital Spending Reduction
– Even during the low interest decade, Domino’s Pizza has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the Restaurants industry using digital technology.
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.
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.
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.
Compensation and incentives
– The revenue per employee of Domino’s Pizza is just above the Restaurants industry average. It needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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.
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 -
Creating value in data economy
– The success of analytics program of Domino’s Pizza has opened avenues for new revenue streams for the organization in Restaurants industry. This can help Domino’s Pizza to build a more holistic ecosystem for Domino’s Pizza products in the Restaurants industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Domino’s Pizza in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Restaurants industry, and it will provide faster access to the consumers.
Buying journey improvements
– Domino’s Pizza can improve the customer journey of consumers in the Restaurants industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Manufacturing automation
– Domino’s Pizza can use the latest technology developments to improve its manufacturing and designing process in Restaurants sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
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.
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.
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.
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.
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.
Leveraging digital technologies
– Domino’s Pizza can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Domino’s Pizza to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
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.
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.
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 -
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.
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.
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.
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.
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.
Easy access to finance
– Easy access to finance in Restaurants industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Domino’s Pizza can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Domino’s Pizza business can come under increasing regulations regarding data privacy, data security, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Domino’s Pizza needs to understand the core reasons impacting the Restaurants industry. This will help it in building a better workplace.
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.
Stagnating economy with rate increase
– Domino’s Pizza can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Restaurants industry.
Shortening product life cycle
– it is one of the major threat that Domino’s Pizza is facing in Restaurants sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
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.
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.
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.