Question

In: Economics

Domino’s Pizza risk faced in the current economic and political environment Dominos Pizza faces a mountain...

Domino’s Pizza risk faced in the current economic and political environment Dominos Pizza faces a mountain of challenges. As global warming is getting worse, the ingredients that Dominos uses for their pizzas may be at risk. This means everything from the dairy to the veggies to the grain used to make the crust. I'm curious to know if Dominos has addressed that as a potential risk factor?

Solutions

Expert Solution

The scale of the changes at Domino’s are remarkable. Doyle became CEO in 2010, after some troubled years, when the company’s growth was slow and its stock price was stuck, a lame $8.76 per share. Today, Domino’s is the second-largest pizza chain in the world, with more than 12,500 locations in more than 80 countries, and a share price approaching $160. It has moved from being the butt of late-night jokes to becoming a favorite of the stock pickers on CNBC. Domino’s is not just in the pizza-making business, the CEO emphasizes, but in the pizza-delivery business, which means it has to be in the technology business. “We are as much a tech company as we are a pizza company,” he told the audience, pointing out that of the 800 people working at headquarters, fully 400 work in software and analytics. All that technology has changed how customers order (using the Domino’s app, or directly via twitter, or even by texting an emoji); how they monitor the status of their order; and how Domino’s manages its operations.

Second, Doyle explains, Domino’s had to reinvigorate the brand. Even if delivery was the essential part of its business, the pizza mattered too—and the pizza was bad. Soon after he took over, the company launched an ad campaign that has become legendary for its boldness, sharing comments from focus groups about what people thought of the product: “worst pizza I ever had”; “the sauce tastes like ketchup”; “the crust tastes like cardboard.” Doyle appeared in the ads, accepted the withering criticism, and promised to “work days, nights, and weekends” to get better. He and his colleagues worked to spice up the company’s image as well as its products. Once the pizza got better, Doyle announced plans to open a Domino’s in Italy—a move that was nothing if not daring. (Starbucks still doesn’t have coffee shops in Italy, although there is talk of opening them in 2017.) He also worked with crowd-sourced auto designers to create a Domino’s delivery car, the DXP, a colorful, cool-looking, modified Chevrolet Spark (an article called it a “cheese lover’s Batmobile”) with just one seat, and a warming oven with room for 80 pizzas.

“Transportation is a core part of the business,” Doyle explained, so it makes sense for Domino’s to create a “purpose-built pizza-delivery vehicle.” (The company is also experimenting with robotic delivery, and delivery by drones.) There is substance to all of these initiatives, but it’s pretty obvious they’re also designed to modernize the company’s image, to create a sense of style and a sense of humor to accompany the mushrooms and pepper.

I could go on about the innovations at Domino’s, but Doyle’s most important lessons are about the mindset required for organizations to do big things in tough fields. Two of the great ills of executive life are what he calls, borrowing from behavioral economics, “omission bias” and “loss aversion.” Omission bias is the tendency to worry more about doing something than not doing something, because everyone sees the results of a move gone bad, and few see the costs of moves not made. Loss aversion describes the tendency to play not to lose rather than play to win. “The pain of loss is double the pleasure of winning,” he argues, so the natural inclination is to be cautious, even in situations that demand creativity. Leaders who want to shake things up have to be comfortable with the idea that “failure is an option,” Doyle concludes. In a world of hyper-competition and nonstop disruption, playing it safe is the riskiest course of all. That’s a recipe for reinvention that makes for good pizza and big change.


Related Solutions

Domino’s Pizza abandoned its current expansion into several European markets. The chain announced it would suspend...
Domino’s Pizza abandoned its current expansion into several European markets. The chain announced it would suspend its plan to add new stores and sell approximately 100 existing stores in Switzerland, Sweden, Iceland and Norway. The decision came after stores in these four countries failed to make a profit for several years. Investors applauded the decision and pushed UK division of Domino’s Pizza’s stock price up by more than 5% after the announcement. The chain indicated it would focus future efforts...
1- explain and discuss the economic and political environment of China.
1- explain and discuss the economic and political environment of China.
The political environment in China and how does it effect Apple.Inc The economic environment in China....
The political environment in China and how does it effect Apple.Inc The economic environment in China. Does the company pricing structure fit economic conditions for Apple.Inc?
Analyze the political, economic, cultural and legal challenges the company currently faces in any of the...
Analyze the political, economic, cultural and legal challenges the company currently faces in any of the country it operates if we talk about Saudi Basic Industries Corporation (SABIC)
Describe the political risk, economic risk, and legal risk in doing business in a foreign country.
Describe the political risk, economic risk, and legal risk in doing business in a foreign country.
the four components of the general environment for business (economic, sociocultural, technological and political). For this...
the four components of the general environment for business (economic, sociocultural, technological and political). For this week's journal, search the Internet for an article that discusses a company that is dealing with the challenges one of those environments presents. Write about what the challenge is and reflect on how the company is dealing or could deal with the challenge.
Discuss the economic environment (economic system, main products and services, economic risk) in USA.
Discuss the economic environment (economic system, main products and services, economic risk) in USA.
whats are Foreign exchange risk, political risk, economic risk, geographical risk, legal risk? with Examples (International...
whats are Foreign exchange risk, political risk, economic risk, geographical risk, legal risk? with Examples (International Finance)
If you were the president and you had a balanced budget and faced a macro-economic environment...
If you were the president and you had a balanced budget and faced a macro-economic environment that featured 7% unemployment, 1% GDP growth, and 1% inflation what sort of fiscal policy would you implement to improve the situation if the unemployment rate dropped from 7% to 6%? Explain?
How will COVID-19 influence Global Political, Economic and socio-cultural environment?
How will COVID-19 influence Global Political, Economic and socio-cultural environment?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT