Question

DOMINO’S SIZZLES WITH PIZZA TRACKER

When it comes to pizza, everyone has an opinion. Some of us think that our current pizza is just fine the way it is. Others have a favorite pizza joint that makes it like no one else. And many pizza lovers in America agreed up until recently that Domino’s home-delivered pizza was among the worst. The home-delivery market for pizza chains in the United States is approximately $15 billion per year.

Domino’s, which owns the largest home-delivery market share of any U.S. pizza chain, is finding ways to innovate by overhauling its in-store transaction processing systems and by providing other useful services to customers, such as its Pizza Tracker. And more important, Domino’s is trying very hard to overcome its reputation for poor quality by radically improving ingredients and freshness. Critics believe the company significantly improved the quality of its

pizza and customer service in 2010.

Domino’s was founded in 1960 by Tom Monaghan and his brother James when they purchased a single pizza store in Ypsilanti, Michigan. The company slowly began to grow, and by 1978, Domino’s had 200 stores. Today, the company is headquartered in Ann Arbor, Michigan, and operates almost 9,000 stores located in all 50 U.S. states and across the world in 60 international markets. In 2009, Domino’s had $1.5 billion in sales and earned $80 million in profit.

Domino’s is part of a heated battle among prominent pizza chains, including Pizza Hut, Papa John’s, and Little Caesar. Pizza Hut is the only chain larger than Domino’s in the U.S., but each of the four has significant market share. Domino’s also competes with local pizza stores throughout the U.S. To gain a competitive advantage Domino’s needs to deliver excellent customer service, and most importantly, good pizza. But it also benefits from highly effective

information systems.

Domino’s proprietary point-of-sale system, Pulse, is an important asset in maintaining consistent and efficient management functions in each of its restaurants. A point-of-sale system captures purchase and payment data at a physical location where goods or services are bought and sold using computers, automated cash registers, scanners, or other digital devices.

In 2003, Domino’s implemented Pulse in a large portion of its stores, and those stores reported improved customer service, reduced mistakes, and shorter training times. Since then, Pulse has become a staple of all Domino’s franchises. Some of the functions Pulse performs at Domino’s franchises are taking and customizing orders using a touch-screen interface, maintaining sales figures, and compiling customer information. Domino’s prefers not to disclose the specific dollar amounts that it has saved from Pulse, but it’s clear from industry analysts that

the technology is working to cut costs and increase customer satisfaction.

More recently, Domino’s released a new hardware and software platform called Pulse Evolution, which is now in use in a majority of Domino’s more than 5,000 U.S. branches. Pulse Evolution improves on the older technology in several ways. First, the older software used a ‘thick-client’ model, which required all machines using the software to be fully equipped personal computers running Windows. Pulse Evolution, on the other hand, uses ‘thin-client’ architecture in which networked workstations with little independent processing power collect data and send them over the Internet to powerful Lenovo PCs for processing. These workstations lack hard drives, fans, and other moving parts, making them less expensive and easier to maintain. Also, Pulse Evolution is easier to update and more secure, since there’s only one machine in the store which needs to be updated.

Along with Pulse Evolution, Domino’s rolled out its state-of-the-art online ordering system, which includes Pizza Tracker. The system allows customers to watch a simulated photographic version of their pizza as they customize its size, sauces, and toppings. The image changes with each change a customer makes. Then, once customers place an order, they are able to view its progress online with Pizza Tracker. Pizza Tracker displays a horizontal bar that tracks an order’s progress graphically. As a Domino’s store completes each step of the order fulfillment process, a section of the bar becomes red. Even customers that place their orders via telephone can monitor their progress on the Web using Pizza Tracker at stores using Pulse Evolution. In 2010, Domino’s introduced an online polling system to continuously upload information from local stores.

As with most instances of organizational change of this magnitude, Domino’s experienced some resistance. Domino’s originally wanted its franchises to select Pulse to comply with its requirements for data security, but some franchises have resisted switching to Pulse and sought alternative systems. After Domino’s tried to compel those franchises to use Pulse, the U.S. District Court for Minnesota sided with franchisees who claimed that Domino’s could not force them to use this system. Now, Domino’s continues to make improvements to Pulse in an

effort to make it overwhelmingly appealing to all franchisees.

Pizza Hut and Papa John’s also have online ordering capability, but lack the Pizza Tracker and the simulated pizza features that Domino’s has successfully implemented. Today, online orders account for almost 20 percent of all of Domino’s orders, which is up from less than 15 percent in 2008. But the battle to sell pizza with technology rages on. Pizza Hut customers can now use their iPhones to place orders, and Papa John’s customers can place orders by texting. With many billions of dollars at stake, all the large national pizza chains will be developing innovative new ways of ordering pizza and participating in its creation.

Answer the Following Questions.

1.     What were the objectives of Domino, and which strategies did the company apply?

2.     Briefly define the IT infrastructure and the enterprise systems of Domino, and describe how did these entities help Domino in understanding of customer’s needs?

3.     Identify and briefly discuss the porter forces that were mentioned through the case, and identify the strategic role Pulse will play for Domino to face the competitive forces?

4.     How could you use the four factors of the Unified Theory of Acceptance and Use of Technology to convince the franchises to adopt Pulse?

Answer 1

Domino's sizzles with prizza tacker:

Domino's :

Domino's is an international Pizza delivery brand whose headquarter is in Michigan, United States founded in 1960. It has 9000 corporate and franchised stores in 60 international markets and all 50 states in U.S, making it second largest pizza chain in the United States. It offers some products like pizza both veg and non veg, bread sticks, cheese sticks, sandwiches, boneless chicken, salads and variet of desserts.

1. Objectives of Domino's :

The pulse system used have helped domino's in increasing the sale and improving customer service by reducing mistakes.Pulse is a software developed for this purpose is an importand asset for company to have efficient management system in stores. This software is a boom for domino's making it easier to keep track of the customer's order and data. This software is used to cut costs of the company and improve customer satisfaction. It also has online tracking system, even in this a customer can customize its pizza with different toppings or sauces and the customized pizza is displayed to them which is known as photographic version. After ordering they keep on tracking the pizza to see its different processes.

Strategies applied by the company:

Here in this case study the company used the strategy is Online tracking system and Online purchasing system by using the software PULSE and Propietary point-of-sale system.

Pulse:

• Pulse is a software used to increase sales and improve customer service by reducing mistakes and shorter training times.
• pulse have some importants functions which it can perform such as touch screen interface, maintaining sales figure, compiling customer information and delivery driving routine system

Point of sale system

• It captures purchase and payment data at physical location
• Through this system goods and services are bought/ sold
• Computer, automated cash registers, scanners or other digital devices

2. IT infrastructure:

IT infrastructure of domino's include MIS i.e. management information system . This management system is useful for managing the whole process from receiving the order to delivery order. It was adopted for customer convenience and improving service for fast delivery.

MIS in Domino's include

ERP- Include TALEO (enterprise recuting solutin)

CRM-Include DOM (domino's voice activated ordering system)

TPS-Include PULSE (Point of sale system)

As per case study we will only discuss about TPS which includes

PULSE:

• Improved customer service by reducing mistakes
• It performed some functions like- touch screen interface, maintaining sales figure, compiling customer information and delivery driver routine system

Point of sale system:

• Captures purchase and payment data at physical location
• Keeps record of customer Data with goods and services which are bought/sold

PULSE Evolution:

• It uses thin client model
• Start of the art online ordering system which includes pizza tracker
• Customization of pizza by customer's choice of toppings and sauces

3. Porter's Five forces model

In any industry a strategic management tool is used to analyze industry and understand underlying levers of profitability which is known as Porter;s Fiver forced model. With this strategic management tool we can understand how domino's can influence profitability and develop a strategy.

Porter's Five Forces model was given by Michael Porter which are:

1. Threat of new entrants
2. Bargaining power of suppliers
3. Bargaining power of Buyers
4. Threat from substitute products
5. Rivalry among the existing firm

Threat of new entrants	Bargaining Power of suppliers	Bargaining power of buyers	Threat from substitute products	Rivalry among the existing firm
The saturation in the industry is huge Cost disadvantages are significant Pressure to provide new value propositions to customers Speedy and reliable channels are essential among all firms Entry of any local store with great taste and low prices can hit domino's sales	Suppliers in dominant position can decrease the margins od domino's earn in the market Higher supplier bargaining power lowers the overall profitability of domino's Switching cost is nearly zero so finding a second option is easy Suppliers have negotiating power to extract high prices It can be improved by building effective supply chain	Customer's bargaining power is likely to be low Customer's want customized pizza with their choice of toppings and sauces They even want to track those pizza The products customer need are high volume and not differentiated Lot of substitutes available To improve customer service domino's intoduced pulse, point on sale, and pulse evolution	There are too many substitues in the industry of domino's like Pizza hut, Papa John's and other local pizza stores Threat of substitue is high so to overcome this domino's has to stick with its taste To give competition to substitues domino;s came up with online tracking system and online purchasing system by introducing Pulse and porpietary point of the sale This helped in increasing sales and customer service	High rivalry among firms Huge number of companies offerinf same product Pizza hut is till giving a tough competition to Domino's by being the largest seller of pizza in U.S. Domino's have threat from its own franchisers as they arenot willing to adopt Pulse and Pulse evolution software rather they are using their own software

4. Unified theory of acceptance:

Unified theory of acceptance is a model proposed by Venkatesh and others in user acceptance of information technology.It explains user intention yo use an information system and subsequent usage behaviour.

The four component of Unified theory of acceptance are:

1. Performance expectancy: To tell franchisers about how performance have been changed in the stores where PULSE software is being used.
2. Effort expectancy: Software can help franchisers to improve sales and reduce mistakes to give customer service
3. Social Infulence: Social influence includes how the domino's store who are using this sofware can influence their franchisers
4. Facilitating conditions: By making more improvements in software which may make an overwhelmingy appealing to franchisers