Explaining the Business Model of Dominos

Discuss about the Business Developments and Future Research.

A business model can be defined as the rationale of the way an organization creates and delivers value, social and cultural context. The business model identifies sources of revenue and the manner in which an organization shall be profitable. On the other hand, disruption can be defined as disturbance, interruption or hindrance in a process or activity. According to de Jong & van Dijk (2015), business models are under attack due to the rapid innovations and inventions. The current business models are under extreme disruption and displacement. This essay shall discuss the case of Dominos Pizza Inc. Dominos Pizza Enterprises Ltd is the largest chain for pizza in Australiaa in terms of network sales and store numbers. Australia has the largest franchisee for Dominos in the world. For examining the business model canvas by Osterwalder, the value proposition, customers, finances and infrastructure shall be explained.

The existing business model for Dominos can be explained using Osterwalder and Pigneur’s work and thesis. The following building blocks shall help in explaining the business model of Dominos.

In the existing business model, Dominos conducts the most important activity of delivering pizza in the least amount of time. However, due to the advances in technology, there lie threats as Dominos is deviating from its core activity of making pizza and delivering it in the least time to other activities such as building digital capabilities like mobile applications. The digital advances may be an opportunity for the company to enhance its business network. However, it may be a threat as the people are confused if Dominos is a restaurant chain or a tech company.

The key resources may be defined as the assets available to an organization allowing to run the operations effectively. Dominos has a large human workforce to handle the operations and meet the consumer demands. Apart from human resources, the organization is backed by physical and intellectual resources. With the advances in technology, Dominos is developing its intellectual resources. However, the human resources are under threat as the main focus is shifting from making the best pizza to developing and maintaining the best technological apps.

Dominos builds successful relationships with its partners. The journey of Dominos does not stop with pizza, but they also intend to partner with companies and individuals across the supply chain. Dominos is in partnership with Schweppes, JBS, Leprino Foods and various others who provide the brand with the best produce, equipments, store and franchisees (Dominos.com.au, 2018). The advancement in technology shall help in making the produce better which opens a wide opportunity for Dominos in serving the best quality pizzas. Dominos is in partnership with Apple where the Dominos Pizza Live Tracker app helps in knowing the users the status of their order (Dominos.com.au, 2018).

Threats Due to Advances in Technology

The value proposition is built to explain how the unique offer at Dominos shall differentiate from its competitors. Dominos is developing applications and exploring the digital world to enhance the overall customer experience. Dominos offers online ordering and tracking system to enrich the customer experience. However, the price of products is increasing at Dominos as the company is focusing on developing mobile applications and technology. It forms a part of the organizational cost adding to newness thereby distinguishing from the competitors.

For building an effective business model, multiple set of customer segments may be determined. Dominos serves the mass market and has no specific segmentation. As Dominos is a restaurant chain, it has a wide view of potential customers. However, with the advancement in technology where the company is making major technological innovations, the customer segment has increased opportunities. In 2013, Dominos made the use of Splunk Enterprise software for boosting the operational and sales data. Moreover, the customer segment was enhanced as the company also launched Pizza Profiles where the customers could reorder their favourite combinations in five simple clicks.

The value proposition is delivered to the target customers using fast, cost effective and efficient channels. An organization can reach its clients through multiple platforms through store front, distributors or a combination of both. In the year 2015, Dominos launched DXP for delivery driving experts. The pizzas could be kept warm with this technology thereby improving the customer segment. However, it costs the company between $20,000 and $25,000 for each franchise. For so many years, Dominos has been delivering the pizza to the customers who place order online. The advancement in technology that led to creation of DXP is disrupting the business model as the van has a capacity of 80 pizzas. It shall increase the cost of maintenance and delivery for a few orders to be delivered.

The main reason of success of Dominos is the customer relationship. It uses social media for maintaining relationships with the customers. However, the advances of technology are also leading to threats. There is a chance of miscommunication and misinterpretation of messages in case of social media response while managing customers. Moreover, the focus of companies is shifting towards self-service. It threatens certain market segment as not all the customers are tech savvy. They require personal assistance that might hinder the relevance of customer segments.

This building block comprises of the cost structure such as fixed cost, variable cost, economies of scope and scale. The costs associated with the business involve salary or rent to be paid by the franchise. Dominos experiences economies of scale when the products are produced in bulk. Automated delivery seems inevitable. Other pizza companies are looking into driverless tech, too. Pizza Hut, Domino’s Plano, Texas-based rival, said it is working with Toyota to launch a fleet of delivery trucks. In renderings, they look like toasters on wheels.

Value Proposition of Dominos

Dominos makes income from every customer segment. It generates money from selling pizzas and other food and beverages. The team of Dominos constantly strives to achieve best practice operations while sourcing high quality ingredients. It is argued that the revenue streams may be threatened due to advanced business technologies as the focus of the Dominos is shifting from selling its core products- pizza.

There are two different perspectives of business models- business models as value proposition and business models as a profit formula. It is analysed that business models as value proposition. Value proposition help in satisfying customer needs. Dominos may improve its product or services for the purpose of creating customer value. However, there are limits to improvement. Dominos tailors its products and service according to the needs of certain customer segments thereby creating value. Dominos must give weight on intangibles as it is a value element in the restaurant industry. Dominos must work hard to maintain its brand image.

Business models are also considered as a means of profit formula. The business models are formulated in a manner that serves profitability for every organization. It is a company’s plan for generating revenues and profits. Value finance is one of the main dimensions of business model where it is determined how a firm shall make money and sustain profit over a prolonged period of time. It is suggested that Dominos must create utility for its customers through its products and services to capture profits. It is analysed that a business model is a step-by-step action for the businesses to operate in a profitable manner. Investors that focus on business models are leaving room for an ineffective management team and believe the best business models can run themselves.

Conclusively, The business model identifies sources of revenue and the manner in which an organization shall be profitable. Dominos conducts the most important activity of delivering pizza in the least amount of time. Apart from human resources, the organization is backed by physical and intellectual resources. Dominos is in partnership with Schweppes, JBS, Leprino Foods and various others who provide the brand with the best produce, equipments, store and franchisees. Dominos offers online ordering and tracking system to enrich the customer experience. However, the price of products is increasing at Dominos as the company is focusing on developing mobile applications and technology. Moreover, the customer segment was enhanced as the company also launched Pizza Profiles where the customers could reorder their favourite combinations in five simple clicks. For so many years, Dominos has been delivering the pizza to the customers who place order online.

References

Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range Planning, 43(2–3), 354-363.

de Jong, M., & van Dijk, M. (2015). Disrupting beliefs: A new approach to business-model innovation. McKinsey Quarterly.

Johnson, M. W., Christensen, C. M., &Kagermann, H. (2008). Reinventing your business model. Harvard Business Review, 86(12), 50. Scroll down to find the article.

Osterwalder, A., &Pigneur, Y. (2010). Business Model Generation. New Jersey: Wiley (the unit textbook). The textbook is available from the CQUniversity library for free.

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