Competitive Strategies Of Pizza Cub Essay

Question:

Discuss about the Competitive Strategies being invoved by Pizza Cub in their Business Operation.

Answer:

Introduction

In the current business scenario, contemporary business organizations are gaining their competitive advantages by operating in various diversified sectors. Among all the potential business sectors, food and beverage sector is one of the most potential sectors. This is due to the reason that, food and beverage sectors cover a huge area of diverse food culture around the world (Davis et al. 2013). Moreover, in the present era of globalization, people around the world are having the access of different food culture, which is being effectively tapped by different business organizations operating in this sector (Govil & Rashmi, 2013). However, the current business scenario is much competitive than it was a decade ago. Thus, business organizations have to gain competitiveness in the market in order to stay ahead in the competition.

Pizza club is one of the leading organizations offering diverse range of pizza in New Zealand. They are comparatively new in this sector compared to their global competitors. However, with their diverse product portfolio catering to varied tastes of the customers helped them to target and attracts the customers effectively (Fernhaber & Patel, 2012). However, in the recent times, they are facing challenges in maintaining their operational facilities across New Zealand. Thus, they are in the need of an effective competitive strategy in order to stay ahead in the competition and to enhance their business potential.

This report will discuss about the competitive strategies being involved by Pizza club in their business operation. Different models including Porter generic strategies and SWOT will be discussed in this report in order to evaluate the competitiveness of them. Accordingly, recommendations will be provided, which will in turn help the organization to enhance their operational effectiveness.

Internal analysis

The internal analysis of pizza club will be done in order to gain an understanding of the competitive strategies being followed by them (Tanwar, 2013). Porter generic strategic model will be used in order to analyze the strategies of pizza club.

Porter generic strategies

Differentiation strategy

This model states about three competitive strategies namely focus, cost leadership and differentiation. According to this model, involving these three strategies will help the business organizations in gaining competitive advantages in the market. The first dimension states that, initiation of the differentiation strategy will help the business organizations in offering distinctive and unique products in the market, which will help them in staying ahead in the competition (Banker, Mashruwala & Tripathy, 2014). In the case of pizza club, the basic products that they are offering are same as their competitors. However, they have initiated the differentiation strategy in terms of their service delivery and product variation. According to the official website of pizza club, they are offering vast range of pizzas ranging from vegetables, chicken, meat and seafood. Moreover, differentiation is being initiated by them in terms of their service such store ambience, home delivery in less time and more area coverage. Thus, offerings of more flavor and variants are helping them to provide their customers unique experience among the competitors in the market.

Cost leadership

The next dimension is having the cost leadership in the market. According to this strategy, business organizations having cost leadership in the market will enable them to offer their products to their customers in lower prices. Thus, the more affordable will be the cost of the products, the more market area they will be cover with having more number of target customers (Valipour, Birjandi & Honarbakhsh, 2012). In the case of pizza club, they have initiated the process of cost leadership by sourcing their raw materials locally. Local sourcing of the raw materials helped them in reducing the cost involved in producing the end products. Eventually it helped them to offer their products in competitive process, which enhances their competitiveness in the market. Moreover, on the other hand, the reduction in the cost of production will increase the profitability in their daily operation. Thus, initiation of the cost leadership is helping pizza club in gaining competitiveness in the market.

Focus

Focus strategy is very much beneficial for the beneficial and effective for the contemporary business organizations such as pizza club. This is due to the reason that, majority of the contemporary business organizations has their own target market and according to the taste and preference pattern of the target customers, they offer their products in the market. In the case of pizza club, they are not offering niche products in the market and thus they do not have any niche marketing strategies (Wilson et al., 2012). However, due to the fact that they are catering to the customers of New Zealand, thus their product portfolio is being designed and offered accordingly. The flavor and variants of pizzas and other food products are being offered according to the local food culture and taste. This strategy helps them in effectively meeting the requirement of the local customers, which in turn are the target customers for pizza club.

Effectiveness of competitiveness of pizza club

Thus, from the above analysis of the competitive strategies being involved by pizza club, it is being seen that, they are involving all the three generic strategies in their business operation. Moreover, it is also been seen that, initiation of the above discussed strategies are helping them in catering their target market effectively along with offering the products at lower prices (Chakrabarti & Mitchell, 2013). However, there still some challenges and future threats that may be faced by them in their business operation. Thus, SWOT analysis will be involved in the following sections in order to determine the challenges and opportunities of pizza club.

SWOT analysis

Strengths

  • One of the key strengths being identified is the brand value gained by pizza club in the short span of their operation. This is due to the reason that, the service ambience, products variants and added facilities have helped them to target their customer more effectively (Wang & Tzeng, 2012). This in turn helped them to gain positive word of mouth in the market. This positive brand value will be helpful for them to further penetrate in the existing market and to enter in the new market.
  • As given in the official website of pizza club, they are having huge variety of products to be offered to their customers ranging for the vegetarian and non vegetarian customers (Chen & Cui, 2013). Thus, they are being effective in targeting in different taste and preference pattern of the customers.
  • Sourcing of raw materials from the local suppliers is helping them in reducing the cost of sourcing raw material along with having the access to the fresh raw materials. Thus, reduction in the cost of production enables them to offer their product in more competitive prices (Ben-Daya, As’ad & Seliaman, 2013). This is helping them in catering and reaching out to more number of customers.

Weaknesses

  • One of the key weaknesses for pizza club being identified is the lower brand value compared to the global brands. This is due to the reason that, pizza club is being originated just a few years ago and gradually they are developing in the market. However, on the other hand, the global brands in this sector are having huge brand value, which further helps them to attract more customers. Thus, in the current competitive scenario in this sector, pizza club is facing difficulty in competing with their global competitors.
  • Pizza club is having their market coverage only around the major cities in New Zealand. On the other hand, their global competitors are having more market penetration with having global brand profile (Ross, 2013). Thus, it is difficult for pizza club to cater and reach out to vast number of customers compared to their competitors. Limited market coverage is also limiting their business potentiality in the market. In addition, having no global brand value is refraining them to effectively penetrate in the existing market as well as in the new market.
  • As discussed earlier, one of the key competitive strategies being involved by pizza club is the lower priced products. Thus, due to the initiation of the lower price of their product portfolio, the profit percentage for them is lower compared to their competitors. This is creating challenges for them in investing further to expand their market coverage.

Opportunities

  • Currently, pizza club is operating in any foreign countries however; entering in the global market will provide huge opportunities for them. This is due to the reason that, entering in the global market will help them to attract more number of customers along with enhancement in the brand value.
  • Currently, they are catering to different flavor and variants of pizza for their existing customers (Chernev, 2012). However, with the increase in more flavor and variants, they will be able to cater and reach out to more number of customers by meeting diversified requirements. Thus, the size of the target market will get increased.
  • Another key opportunity for them being identified is the diversification policy. According to the concept of diversification, pizza club can also enter in related sectors to their existing business line (Bowen, Baker & Powell, 2015). For instance, pizza club is currently offering variants of pizzas for their customers. However, initiation of different product line such as different other snacks items will help them to increase the diversity in the target customer base. In addition, it will also help them to reduce the business risk being associated with single product line.

Threats

  • Food and beverage sector is facing rapid influx of new entrants both in the market of New Zealand as well as in the global scenario. Thus, threat of new entrants is increasing rapidly for pizza club (Porter & Heppelmann, 2014). Thus, with more increase in the competition, the business potentiality will gradually decrease for them.
  • Taste and preference pattern of the customers is one of the key factors being considered to gauge the potentiality in this sector. However, in the recent time, the taste and preference pattern of the customers are changing rapidly and this is causing threat for the future growth of pizza club. This is due to the reason that, it will be difficult for pizza club to frequently change their product offerings according to the change in the taste pattern of the customers.
  • Global customer awareness is increasing regarding the ill effect of the fast food around the world (Servaes & Tamayo, 2013). Thus, being operating in the fast food sector, pizza club will face the challenge to attract new customers. Moreover, this awareness of the customers is rapidly increasing, which will have negative impact on the business potential of pizza club.

External analysis

Apart from the internal analysis of pizza club, external analysis will also be done in the following sections. PESTLE analysis will be used in order to evaluate the external factors being faced by them.

Political environment

Political environment in New Zealand is stable and business friendly due to the change in the government policies according to the change in the business scenario. Moreover, the political regime in New Zealand is also favorable for the newly incorporated organizations such as pizza club. They are also availing the financial benefits due to the sourcing of locally produced raw materials. Thus, the political environment in New Zealand is favorable for their business (Kelsey, 2015). However, rapid change in the political scenario will have negative impact on their business. This is due to the reason that, change in the political scenario may also change the regulations in the country.

Economic environment

New Zealand is a developed country and thus the average purchasing power of the customers is high and favorable for pizza club. Moreover, with having lower rate of unemployment in New Zealand, pizza club is having good market opportunity. However, with the increase in the inflow of the foreign direct investment in the country, the competition is increasing with the increase in the global competitors in the market (Alfaro & Charlton, 2013). In addition, challenges such as economic rescission may also be faced by them, which will reduce the business potential of pizza club.

Social environment

The brand image and value that is being gained by pizza club is helping them in attracting more customers in their existing market. However, the recent development in the market of New Zealand regarding the rising awareness among the customers about the negative impact of the fast food is posing challenges in the market growth of pizza club (Carter et al., 2012). Though, the current business scenario for them in New Zealand is huge due to the high level of fast food consumption of fast food of the customers.

Technological environment

Technology is rapidly evolving in the food and beverage sector and thus it is important for pizza club to cope up with the change. However, one issue that they are facing is the rapid inflow of the updated technology in this sector (Bigliardi & Galati, 2013). This is due to the reason that, small and new entrants in the market such as pizza club will not have capital to cope with the rapid change in technology. Thus, their global competitors are having more updated technologies compared to them, which further attracts the customers.

Legal environment

There are various legislations and regulations regarding the food safety and standard. Thus, it is important for pizza club adhere to these regulations. In addition, it is also important to train the employees in maintaining the food safety and standards.

Environmental factors

In the current scenario, customers are more conscious about the environment. Thus, it is important for pizza club to initiate green strategies in order to attract their customers (Toniolo et al., 2013). However, their global competitors are having more effective green strategies such as recycling the packages. However, it will be difficult for pizza club to initiate due to the involvement of huge capital.

Conclusion

Thus, from the above discussion, it can be concluded that, pizza club is having various competitive advantages in the market such as local sourcing and product variants. However, there are various issues being identified, which are creating barrier in effectively competing in the market. One of the key issues being identified is the lack of capital. This is due to the reason that, pizza club is a new entrant and thus they are not having the access of huge capital. In addition, another issue that they are facing is the limited market coverage along with lack of brand image compared to its global competitors.

Recommendations

  1. Pizza club should opt for crowd funding in order to increase the access of more capital. Initiation of the crowd funding will help them to gather more fund from the market easily. This will help them to invest in innovative ideas, which will further help them to enhance their competitive advantages.
  2. Another recommended step will be the entering in the global market. Currently, pizza club is operating in the market of New Zealand, which is limiting their market potentiality. Thus, they should enter in the market of neighboring countries such as Australia. This will help them to enhance their business performance along with enhancing the brand value.
  3. The last recommendation will be the initiation of the healthier food items in the market. This will help them in effectively targeting the health conscious customers along with gaining competitive advantages in the market. Initiation of healthier products will create distinctive image of them among their target customers.

References

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