Evaluation Of Competitive Environment

Evaluation Of Competitive Environment conceptionIn any businesses, understanding micro- economical and macro-economic environment that business is operational in is very important stage because the component parts in these two environments live with soaked set on the success of business. Micro-economic environment involves demand and supply for the business, grocery place organise and fiscal value structure. In opposite words, those ar internal detailor of the business that to some degree business can control. On the other hand, macro-economic environment comprises of external factors that can non be controlled by the business plainly have strong influence on the business for example economic situation, inflation, concern footstep.This report allow foring describe and analysis the impacts of micro and macro-economic environment on dominoes pizza pie pie business. The purpose of this report is to use knowledge and opening in economics for exertr subject to apply into practical situation.MICRO-ECONOMIC purlieuThe business overview dominos pizza pie is an American restaurant set up and foreign franchise pizza delivery corporation. Founded in 1960, dominos is the second-largest pizza chain in the United States and has more than than 10,000 corporate and franchised inserts in 70 countries and completely 50 states of United State. dominoes Pizza was bought fall out by Bain great in 1998 and went public in 2004.In Australia, dominoes Pizza is the largest pizza chain in terms of both web store reduce and network sales. In addition, Australias franchisee is the largest for the dominoes Pizza taint in the world. Dominos Pizza holds the exclusive master franchise rights for the Dominos brand and network in Australia, New Zealand, France, Belgium, the Netherlands and the Principality of Monaco. The Dominos brand is owned by Dominos Pizza, Inc, a listed US company.Dominos Pizza Enterprises are operating(a) in five countries, with approxi mately 845 stores hiring about 21,000 people and making more than 60 million pizzas a year.Dominos StaffProductsThe current Dominos menu features a variety ofItalian-Americanentrees and side dishes. Pizza is the main focus, with traditional, speciality and custom pizzas available in a variety of crust styles and hintpings. Besides, Dominos likewise try to appeal to a larger base of customers by blasting its menus offering pastas, sides and desserts, chips.http//blog.vovici.com/Portals/60483/images/dominos_pizza_pie.png http//whatifeedmyhusband.files.wordpress.com/2010/12/img_2916.jpghttphttps://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhvVlQoxZgP68aURnqMsNz3FSh9s83Fjd8IqmJsDH1TiJrhv7nKeYWBQfrsPOHn6_8lk-7wqoDaGP5wr9fpYQnGyGcJtSXAT5eWqvb9P_tuhVAD6dgZc7Fab0B0z1anZKQ-Yzn8mpAt6hIj/s1600/DSC_5602.JPG http//slice.seriouseats.com/images/2013/01/20130108-dominos-chain-reaction-bread-bowl-pasta-5.jpgCustomersDominos target market is the consumers who is looking for reasonably- expenditured pizza and quick delivery. Dominos mainly focuses on delivery and pick-up customers. Demographically, Dominos does not tar get at a specific segmentation. Instead, it targets. Moreover, Dominos also concentrates on online pizza orders, so it can r distributively the greatest number of consumers age also improving its ability to meet customer demand, by 2012 online and nimble ordering account for up to 40% of sales.CompetitorsDomestically, Dominos faces highly militant with main challenges coming from Pizza Hut, Papa Johns and various local/regional competitors.Direct competitorsPizza Hut 271 stores Pizza Haven 150 stores Pizza Capers 95 storesCUsersQuanDesktopdownload (2).jpgCUsersQuanDesktopimages.jpgCUsersQuanDesktopdownload.jpgCrust Gourmet Pizzas Eagle Boys Pizza 281 stores CUsersQuanDesktopdownload (1).jpgCUsersQuanDesktopcrust_logo_vine__Square_normal.jpg substantiating competitorsDominos pizza has a huge variety of indirect competitors or close substitute products within fast food industry equal Mc Donald, KFC, Subway, Nandos, Hungry Jack, SushiMarket dispenseDominos Pizza is the market leade r in the Australian arrange pizza market with 46.1% followed by Pizza Hut (29.8%), Eagle Boys Pizza (14%), Pizza Haven (3%) and other (7%) chassis Market shareEvaluation of competitive environmentmonopolistic competition is a market structure where many producers of somewhat divergent products compete with one some other (Robert, 2010, p 401). Dominos chain is operating in a fast food industry with a number of similar producers. These producers are competing together within Australia to gain market share in pizza market. Although the products produced and sold are basically the same among these producers, in that respect are still different feature differentiate them, namely brand image, store design, location, additional services. What helps customers distinguish Dominos from other pizza stores are the distinct logo and design in store, easy online order and tracking as well as quick delivery service. In addition, roadblock to entry pizza market is not really high. Although d ifferentiation is a large and necessary expense for the large fast food chains, it is not difficult for private startups to overcome and thus not a of import barrier to market entry. As a result, it can be cerebrate that Dominos is operating in noncompetitive competition environment.Evaluation of contain CurveOperating in Monopolistic competition environment and occupying 46.1% chained pizza market give Dominos a certain military unit to determinate pizza price in the market. Ii is assumed that Dominos increases its price majority of customers would switch to other place for pizza uniform Pizza Hut, Eager Boys Pizza or switch to substitute products of pizza like burger, chicken, sushi. However, not all customers will do that some of them will still buy Dominos pizza because of its convenient location or quick delivery. Therefore, demand curve for Dominos is relatively elastic but not horizontal as can be seen in the graph. foresee Demand curve of DominosAs a nature of Monopol istic competition environment, firms that are operating in that environment can adopt the objective of maximizing their profit. As a result, price will be above marginal cost (as can be seen in the graph). Dominos also can maximize its profits by producing and selling the bar of pizza at q* at which the pizza price will high marginal cost of producing pizza. However, this pricing strategy need to be considered carefully and should be only employed in the short run because of the fact that in the long run if Dominos support the price so high and its competitors reduce the price, Dominos will lose its customers base which nitty-gritty that the demand curve for Dominos will shift to the left principal to decreased profit of Dominos. In addition, this strategy also encourage impudently entrant to enter into the pizza market which also have the outcome of shifting demand curve of Dominos to the left.Cost structure of Dominos stubborn cost and protean costThe short-run total cost of Dominos break down into two categories fixed costs and versatile costs.Fixed costs are the costs change with the level of outputs (Robert, 2010, p 296). For Dominos, these costs comprise of Management salaries, Plant and equipment, marketing expenses, occupancy expenses, store related expenses and communication expenses. On the other hand, variable costs are unchanged with the level of output. The variable costs of Dominos include the cost on nutriment and paper and employment. (For more detail refer to cecal appendage 3)Figure Cost structure of DominosEvaluation of cost structureAs can be seen from the cost structure of Dominos, the proportion of variable cost is relatively higher than fixed cost, 71% as hostile to 29%. In short term, declining honest fixed cost is radical reason for the falling amount total cost and with high output, fall marginal product causes marginal cost to increase which eventually causes average variable cost and average total cost to rise (Rob ert, 2010). Therefore, cost structure of Dominos indicates that as its pizza stores increase their sold pizza to stores capacity, the effect of declining average fixed cost will in short go away and the effect of diminishing marginal product will be soon prominent leading to average total cost increasing quickly. This also explains why more Dominos pizza stores are going to be opened quickly within one year so that the average total cost will decrease again. This is illustrated in the graph below, as the average total cost increase quickly from A to B and its current stores nearly reach to capacity, Dominos will open another store to reduce the cost to C so that it can keep competitive price with its competitors.Diseconomies of scale occur as the firm finds it increasingly difficult to handle the complexities of large scale management (Robert, 2010, p 306). However, at the moment it is not a case for Dominos as the magnification strategy employed by the company is franchising. Thi s strategy allows Dominos to expand operation without adding complexity to the management because the business model has been standardized to be able to be copied within a market and easily managed by manager. Therefore, in the long run Dominos still can manage its cost store by store and leverage the economies of scale for each new store opened.MACRO-ECONOMIC ENVIRONMENTPolitical environment in AustraliaRecently, Australia stood out as an attractive investment destination due to a governmental placement that has been evaluated as being highly effective in responding to economic challenges .The adaptability of Australian government policy to economic changes has been ranked in the top two countries in the region (IMD World Competitiveness Yearbook, 2009). Australia also has an open, competent and transparent legal framework due to a strong system of checks and balances, and a highly respected judicial and law enforcement system.Moreover, tax policy, task law, environmental law, trade restrictions and tariffs are carefully constructed and implemented consistently which lead a clear guideline and safe environment for businesses (Australian Trade Commission, 2011).stinting environment in AustraliaThe parsimoniousness of Australia is one of the largest economies in the world. In 2011, it was the thirteenth largest national economy by nominal GDP and the 17th-largest measured by PPP adjusted GDP, about 1.7% of the world economy. Australia is the 19th largest importer and 19th largest exporter. helping sector is the main contributor to the Australian economy with 68% of GDP. The excavation sector presents 19% of GDP. frugal produce is largely dependent on the mining sector and agricultural sector with the products to be exported mainly to the eastward Asian market.Australia is a member of the APEC, G20, OECD and WTO. The country has also signed desolate trade agreements with ASEAN, Chile, New Zealand, Thailand, and the United States. The ANZCERTA agreemen t with New Zealand has greatly increase integration with the New Zealand economy subjecting to form a Single Economic Market by 2015.Growth rateAustralia is one of the fastest growing economies among developed countries. Despite of the effect of global financial crisis, Australian economy still shows a replete(p) sign of continual growth. The main industries convey largely to Australian economy include mining, tourism, education, agriculture and manufacturing. diachronic entropy ChartFigure Australia GDP growth rateUnemployment rate unemployed rates in Australia fluctuated between 5 to 5.4% between 2010 and 2012, this is a adapted indicator of a growth and healthy economy as inborn rate of unemployment is 5%, especially in the worlds current situation where the unemployment rates in other developed countries are alarmingly high much(prenominal) as 7.8% in US and 11.8% in Europe.Historical Data ChartFigure Australian unemployment rateInflation rate.Historical Data ChartConsu mer Price major power (CPI) shows a downward trend over the period from 2010 to 2012 reflecting an effective monetary policy of Australian government.Figure Australia inflation rateInterest rateInterest rates in Australia tend to decrease significantly during 2011-2012 this indicates a healthy economy that encourages investment and capital markets remain open to corporationsHistorical Data ChartFigure Australia interest rateEvaluation of influence of micro-economics on Dominos businessThrough above overview of macro-economic environment, it can be stated that Australian economy currently is favorable for organizations operating in and Dominos is not an exception. Economy is still growing and creating more jobs indicating that people will have more usable income to spend, hence demand for pizza will increase in the future. This is demonstrated by the fact that disposable income per capita in Australia over last decade has been increasing 2.6% per year in average, meanwhile revenue of Dominos has been also increasing significantly at average rate of 20%. This fact also shows that pizza is in all likelihood to be a normal good because quantity demanded increase with the growth of consumers incomes.In addition, low unemployment rate and interest rate are good indicators for Dominos because it cans easily access to financial and human resources which are the differentiate factors of any business. However, the problem face Dominos is the increase of food price and wages. As these are two main costs that make up for about 75% of total cost, an increase in those cost will influence the ability of Dominos to keep the competitive prices to customers.APPENDIX extension 1 Management salary and feesAppendix 2 Statement of income 2012Fixed costValue ($000) variable quantity costValue ($000)Management salaries5,142Food and paper expenses78,679Plant and equipment costs8,588In store employees wages60,140 dispraise and amortization expense10,029Occupancy expenses7,837Marke ting expenses11,477Store related expenses5,887 colloquy expenses6,669Total55,647Total138,819Appendix 3 Fixed cost and Variable cost of Dominos in 2012