Case 18 Domino’s case study analysis questions:

1.     What are the strategically relevant components of the pizza restaurant segment of the U.S. quick service restaurant industry macro-environment?

·       The use of mobile apps and online delivery platforms affects how pizza restaurants reach and serve their customers.

·       Prowess in delivery and a new initiative of contactless delivery.

·       Limited menu and delivery of fresh, hot pizzas within half an hour

·       Introduced pan pizza and breadstick (1993)

·       (1993) – introduced ultimate deep dish pizza and crunchy thin crust pizza

·       (1994) – introduced buffalo wings

·       (1996) – launched website

·       (2004) – opened IPO in NYSE

·       (2007) – ordering pizza over the phone

·       (2008) – pizza tracker; track your order

2.     How have Domino’s corporate strategy choices strengthened or weakened its competitive position in the quick-service restaurant industry?

·       Domino’s is the pioneer in digital technology, investing heavily in online ordering platforms, mobile apps and delivery tracking systems. This enhanced customer convenience and experience, strengthening its competitive position in the digital age.

·       Dominos has heavily focused on its delivery and take-out services, aiming to provide a reliable and convenient option for customers looking for a quick meal. This emphasis has bolstered its position in the industry, particularly during the COVID-19 pandemic.

3.     How well is this strategy working for Domino’s? What would a SWOT analysis reveal?

·       STRENGTH

·       Strong digital presence and efficient online ordering system

·       Effective supply chain management

·       WEAKNESS

·       Reliance on franchisees may lead to inconsistency in service and quality

·       Vulnerability to fluctuations in food prices due to cost-sensitive pricing

·       OPPORTUNITIES

·       Growing demand for healthier and more diverse menu options

·       Leveraging further technological advancements for enhanced customer engagement and operational efficiency

·       THREATS

·       Intense competition and price wars

·       Increased health protocol

 

4.     What does your strategic group map of the pizza restaurant segment of the U.S. quick service restaurant industry look like? Is Domino’s well-positioned? Please explain.

·       Price

·       Quality

·       Delivery speed

·       Technology integration

·       Menu Diversity

·       Domino’s is well-positioned in the US pizza restaurant industry. Their strength lies in their strong focus on technology, ensuring a convenient ordering process and efficient delivery system. The emphasis on delivery speed is a significant advantage, especially in an industry where convenience is key. Their efforts to improve quality and diversify their menu have allowed to cater to a broader audience, adapting to changing consumer preferences. While they may not be the lowest-priced option, they offer good value for the price.

·       Domino’s has strategically positioned itself as a provider of quick, convenient, and reasonably priced pizza with a strong focus on technology.

5.     What is your assessment of Domino’s financial performance over the 2017 – 2019 period? (Use the financial ratios in the Appendix of the text as a guide in doing your financial analysis.)

	2017	2018	2019
Market Price	198.61	266.14	356.64
Earnings per share	5.01	8.96	11.23
P/E Ratio	39.64	38.04	29.93

(Domino's Pizza Inc PE Ratio 2010-2023 | DPZ | MacroTrends)

·       As per the Price – to – Earnings Ratio (P/E ratio) of Dominos from 2017 – 2019, a strong investor confidence in the firm’s outlook and growth.

6.     What strategic issues confront Domino’s in 2020?  What market or internal circumstances should most concern CEO Ritch Allison and his company’s senior leadership team?

·       The 2020 COVID pandemic has heavily impacted the restaurant industry. Lockdowns, reduced dine-in capacity, and safety concerns affected foot traffic and forced a heavy reliance on delivery and takeout. Domino’s had to ensure safety measures for employees, delivery drivers, and customers while adjusting its business model to accommodate the shift in consumer behaviours.

·       CEO Ritch Allison and the senior leadership team at Domino’s would need to address strategic issues by formulating and executing comprehensive strategies. This may include adapting to changing consumer preferences, embracing technological advancements, ensuring operational efficiency, and implementing sustainable and responsible business practices to secure a competitive position in the market.

7.     What recommendations would you make to Ritch Allison to address the strategic issues confronting Domino’s in 2020? 

·       Enhanced Safety Protocols: Implement and communicate enhanced safety measures to assure employees, customers, and delivery drivers of their safety during the pandemic.

 

Reference

Thompson, A et al (2022) Crafting and Executing Strategy: The Quest for Competitive Advantage, Case Teaching Note pp, 715 – 725.

Domino's Pizza Inc PE Ratio 2010-2023 | DPZ | MacroTrends

Case 11: Netflix case study analysis questions

1.     How strong are the competitive forces in the rapidly evolving global market for streamed video content? Do a five-forces analysis to support your answer.

·       Competition from rival sellers

·       Extreme competition within rival sellers has companies spending millions in content and original programming and exclusive rights to shows and movies.

·       Competition from potential new entrants

·       New players can easily create content through the usual platforms like Youtube or can setup their own streaming services. However, the established brand like Netflix, Amazon Prime, Binge, Disney plus, etc. makes it challenging to enter the streaming services business.

·       Competition from producers of substitute products

·       Cable and satellite TV can be considered substitutes. However, the convenience of streamed services reduced the immediate threat of substitutes.

·       Supplier bargaining power

·       The demand for quality streaming services has become an ongoing war between providers to get exclusive rights to content providers to attract and retain their subscribers thus leading to a high subscription cost.

·       Customer bargaining power

·       With the influx of streaming services available, customers can easily switch subscription platforms if they are dissatisfied with the content.

2.     What forces are driving change in this market for streamed entertainment? Are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability?

·       Technological advancement: A favourable effect to both customers and suppliers. Improved streaming technology and a faster 5G internet speed enable higher-quality streaming and can attract more subscribers.

·       Competition: The competition amongst streaming platforms has driven up the costs of the content which is an unfavorable effect to both customers and suppliers.

·       Globalisation: A favourable effects to many streaming platforms as new market means more subscribers and more profits.

·       Content: Quality-themed content means a favourable welcome to customers.

3.     What does your strategic group map of this industry look like? How attractively is Netflix positioned on the map? Why?

CONTENT	High
	Moderate
	Low
	PRICE

 LEGEND:

-       NETFLIX 

-       DISNEY Plus 

-       HBO Max 

-       APPLE TV

         ·           NETFLIX is positioned as a company with a strong focus on original content and premium pricing. NETFLIX's original content focus is a benchmark for all streaming services.                             NETFLIX's global reach has become the company’s competitive advantage. NETFLIX is the                    most recognized streaming platform worldwide.

4.     What key factors will determine a streaming company’s success in this industry in the next 3–5 years?

·       Content Quality and Library: Offering vast and diverse content quality and library of shows will determine the success of any streaming platform in the next 3 to 5 years.

·       Pricing: With more competition in the streaming platform business, a streaming platform company should be balanced. Companies should offer bundled services to lure more customers and subscribers.

·       Partnerships: A streaming platform company should consider partnering exclusively to content creators or studios or probably other streaming platform companies for better content and a much quality-driven content to attract more subscribers.

·       Innovation: In the world of streaming services, technological innovation is a game-changer. Any streaming platform company should strive to develop innovation to attract more subscribers.

5.     What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fits the competitive approach that Netflix is taking? What type of competitive advantage is Netflix trying to achieve?

·       Differentiation Strategy: Netflix produces high-quality original series, films, and documentaries across various genres, catering to a wide range of audiences worldwide. This put Netflix as a gold standard in terms of streaming services.

6.     What does a SWOT analysis of Netflix reveal about the overall attractiveness of its situation in mid-2020?

STRENGTH	WEAKNESSES	OPPORTUNITIES	THREATS
·       Extensive library content ·       Global reach ·       Original content	·       Increasing competition ·       High content costs	·       Global expansion ·       Strategic re-branding ·       Partnerships and collaborations	·       rising operational costs ·       Password sharing

 

7.     What is your appraisal of Netflix’s operating and financial performance based on the data in case Exhibits 1, 2, 5, 6, and 7? What positives and negatives do you see in Netflix’s performance? Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Netflix’s recent financial performance.

·       Positive: Judging from Exhibit 1, the revenues of Netflix have grown significantly since 2015.

·       Negative: Exhibit 6 suggests a drop in paid net additions in the UCAN (US and Canada streaming) area. This translates into a drop in subscribers second quarter of 2019.

·       It seems like Netflix’s net profit margin and ROA are both increasing from 2015 and a steady debt-to-equity ratio, suggesting that the company’s stability is promising.

8.     How well is Apple positioned to compete in the global streaming market as of mid-2020?  What do you see as Apple’s chief competitive weakness, and what can Apple do to correct this weakness?

·       Apple was positioned to compete in the global streaming market but faced strengths and weaknesses in its efforts to establish itself to the market.

Strength ·       Brand recognition ·       Financial resources ·       Original content

Weakness ·       Limited content library ·       Pricing

 

9.     How does Netflix’s competitive strength compare against that of 2–3 streaming rivals you deem most likely to challenge Netflix’s current leadership position as of mid-2020? Do a weighted competitive strength assessment using the methodology presented in Table 4.4 in Chapter 4 to support your answer. Based on your assessment and calculations, does Netflix have a net competitive advantage over some/all of these rivals?

Key success factor	Importance Weight	NETFLIX		DISNEY PLUS		HBO Max
Content Quality	0.30	9	2.7	5	1.5	7	2.1
Content Library	0.25	9	2.25	6	1.5	5	1.25
Original Series content	0.25	7	1.75	6	1.5	5	1.25
Pricing	0.20	8	1.6	5	1	3	0.6
Sum of importance weights	1
Overall Weighted strength			8.3		5.5		5.2

 

·       NETFLIX holds the most competitive net advantage of all other streaming platforms as of mid-2020’s era.

  10.  What 2–3 top priority issues do Netflix management need to address?

·       Content Expansion

·       International growth

·       Subscriber retention

11.  What recommendations would you make to Netflix CEO Reed Hastings?  At a minimum, your recommendations should cover what to do about each of the top priority issues identified in question 10.

·       Content Expansion: Continue investing in original content to maintain and attract more subscriber. Keep your subscribers intrigue and interested in your original story content.

·       International growth: Continue to expand into new international markets. Expanding will increase subscribers and revenue streams.

·       Subscriber retention: Regularly evaluate pricing strategies and consider adjusting bundle options to suit subscribers needs.

 

Thompson, A et al (2022) Crafting and Executing Strategy: The Quest for Competitive Advantage, Case Teaching Note pp, 505 -519.