Global Business Today 8th Edition by Charles Hill

Exercise 7

Domino's Pizza
Domino's Pizza made its name by pioneering home delivery service in the United States. In recent years, however, the growth story has been overseas. With the U.S. fast-food market saturated and consumer demand weak, Domino's is looking to international markets for growth opportunities. The company is no newcomer to international business-it opened its first international store in Canada in 1983-but today, almost all new store openings are outside of the United States. At the beginning of 2012, the company had 4,835 stores internationally and 4,907 domestic stores. Its plans call for opening another 350 to 450 international stores a year for the next few years.
As it expands its international businesses, there are some things that Domino's has kept the same as in the United States, and there are some things that are very different. What is the same is the basic business model of home delivery. This sets it apart from many of its U.S. rivals, who changed their basic offering when they entered foreign markets. For example, when Yum Brands Inc. introduced Pizza Hut into China, it radically altered the format, establishing Pizza Hut Casual Dining, a chain that offers a vast selection of American fare-including ribs, spaghetti, and steak-in a full-service setting. Pizza Hut adopted this format because table service was what the locals were used to, but Domino's isn't interested. "We go in there with a tried-and-true business model of delivery and carry-out pizza that we deploy around the world," states Domino's international president, Richard Allison. "In emerging markets, we've got more tables than you would find in the U.S., but we have no plans to lean toward a casual dinning model where the server comes out and takes an order."
On the other hand, there are things that vary from country to country. In the United States, pizza is viewed as casual food, frequently mentioned in the same breadth as beer and football. In Japan, it's viewed as more upscale fare. This is reflected in the offering. Japanese pizzas come with toppings that the average American couldn't fathom. Domino's has sold a $50 pizza in Japan featuring foie gras. Other premium toppings include snow crab, Mangalitsa pork with Bordeaux sauce, and beef stew with fresh mozzarella. Japanese consumers value aesthetics and really care about the look of food, so presentation is key. Patrons expect every slice to have precisely the same amount of toppings, which must be uniformly spaced. Shrimp, for example, are angled with the tails pointing the same way.
Pizza consumption is low in Japan-the average Japanese pizza customer only consumes the product four times a year. To boost this, Domino's has been working to create more occasions to enjoy it. For example, on Valentine's Day, its Japanese stores deliver heart-shaped pizzas in pink boxes. Heart-shaped pizzas also appear on Mother's Day.
To promote the offering in Japan, rather than spending money on commercials, Domino's tries to create news, like topics that people talk about. If the topic is fun and hot, Domino's believes that people will talk about it, which ultimately translates into better sales. One promotion in particular received heavy coverage. The chain offered 2.5 million yen (about $31,000) for one hour's work at a Domino's store. In all, about 12,000 people applied for the "job." The lucky winner was a rural housewife who had never eaten pizza. She flew to a small island to deliver pizza to schoolchildren, who were also new to pizza. The event received heavy news coverage-free advertising in other words.
In India, where Domino's has more than 400 stores and has plans for 1,000 more, 50 percent of the menu is vegetarian in order to match the preferences of the large Hindu population. For delivery, Domino's has a fleet of mopeds, which makes sense in large cities like Mumbai where traffic congestion is awful. Because Indians like things spicy, instead of including Parmesan cheese packets, Domino's includes an "Oregano SpiceMix." In general, the toppings have far more spice than in the United States. Although Indians are used to full service in restaurants, Domino's doesn't use servers or bus boys in their stores, even though they typically have a few tables in each store for those who want to eat on premises. Instead, they are educating their customers to clean up after themselves, with in-store trashcans that say "Use Me" in big bold letters.
What do you think Domino's does from an organizational perspective to make sure that it accommodates local differences in consumer tastes and preferences?