California Pizza Kitchen’s Strategic Analysis

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Introduction

In this part of the report an external analysis regarding the California Pizza Kitchen (CPK) will be conducted. The main objective of this external analysis is to scan the external environment for factors which might open up new opportunities or present threats to survival for California Pizza Kitchen. To determine, an external analysis based on Porter’s Five Forces Model and a PEST analysis was conducted.

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Location Type Branch
Annual Sales (Estimated) Less than $500,000
Employees (Estimated) 1 to 4
SIC Code 581222, Pizza
NAICS Code 722110, Full-Service Restaurants
Products, Services and Brands Information not found

Porter’s Five Forces Model

Porter’s Model of Five Forces is one of the most versatile frameworks to analyze the industry’s external environment. With the application of this model, California Pizza Kitchen will be able to understand and determine the competitive and market characteristics of the food and beverage industry.

Bargaining Power of Suppliers

The supplier power is based on the concentration of suppliers and the availability of suppliers within the region where California Pizza Kitchen operates: China, USA, Japan etc. It is important for CPK to monitor the needs and the wants of their suppliers (Cravens, 2000) as well as determine what meets CPK needs. CPK utilizes fresh ingredients and may increase community ties by utilizing locally grown products.

Bargaining Power of Customers

California Pizza Kitchen has to be careful and aware of customers wants and needs because of the customer’s influence over a company. CPK’s management should take the responsibility of interacting with her customers in order to internalize, understand and make adjustments accordingly with respect to their tastes and preferences. For example, when Pizza Hut opens a new franchise in a new location, a product adaptation is completed. This determines what suits the local population and therefore should also be conducted by CPK to stay competitive and give the customers what they want. (Cravens, 2000) Surveys should be developed in order for a research and development team to determine local statistics to include health and fitness levels in order to create new dishes that would appeal to the local population.

Rivalry among Competitors

There is a great deal of competition between two similar companies in the same industry. For example, the biggest rival among the competitors of California Pizza Kitchen is Pizza Hut. Pizza Hut is among the best pizza chains with outstanding service delivery around the globe; it has approximately 40,000 franchise outlets, delivery units and kiosks in various countries globally.

Availability of Substitutes

A substitute product for any California Pizza Kitchen product can cause the company to lose its business. Any product that is in the market has a substitute available and the substitute for pizza is burgers and fried food. For example, California Pizza Kitchen is easily substituted for Burger King, McDonalds, Subway or KFC. (Hollensen, 2003) CPK must ensure that it is as available as fast food restaurants but advertise as a family, evening out and quick healthy facility with fresh ingredients. It must determine and maintain facilities in prime locations.

Threat of New Entrants

This is another one of the competitive forces that affects the company in a big way. For example, the entrance of Dominos within the food and beverage industry can cause California Pizza Kitchen to lose some of its business. Several food organizations are breaking into new areas to increase customer numbers. McDonalds began selling coffee; Starbucks is selling Danishes and Sandwiches. In order for CPK to remain as a front runner they must maintain innovative ideas that are fresh and new in the industry.

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PEST Analysis

The abbreviation for PEST analysis is Political, Environmental, Social, and Technological analysis. This analysis will help California Pizza Kitchen to know its environmental challenges, how to operate the company in the present and help CPK to prep itself for the future. This analysis will help California Pizza Kitchen to match its resources with its activities and move it in the right direction.

Political Analysis

Here the political term refers to the global, national, regional and local trends, changes or events. Since CPK operates in approximately 10 countries around the globe, the company needs to adhere to the rules and regulations of that country in which it operates. California Pizza Kitchen needs to work with various special interest groups within the company and the market as well. (Kevin & Kotler, 2008)

Environmental Analysis

California Pizza Kitchen is extremely committed and responsible to the environment.. The current policy of the company follows all environmental regulations and promotes cleanliness in their surroundings. California Pizza Kitchen has a very clean and tidy environment inside and out and implemented a proper system to dispose of the garbage. The company supports charitable programs and takes the first steps for promoting, supporting and participating in the welfare of the community. California Pizza Kitchen has sponsored educational programs in local community schools and donates funds for different fundraisers for non-profit schools which focus on children, youth sports and educational programs (Kevin & Kotler, 2008)

Social Analysis

The social term in the analysis refers to the developments within the society: culture, behavior, the expectations of the customer, the attitude of the company towards the society etc. California Pizza Kitchen has introduced CPKids Programs as part of the California Pizza Kitchen Foundation. California Pizza Kitchen maintains a relationship with their communities.

Technological Analysis

The technological term refers to the development, such as, processing of the products, and how the machines are programmed and operated. With the use of technology in the operation, CPK has reduced the cost of production and the performance of the organization has increased helping the company with its supply chain operations. CPK needs to introduce multinational development teams so that it ensures that the system design meets the need of the company. With the help of parallel development, CPK will be able to assign different parts of the system to different subsidiaries of the business. The manager needs to listen to the ideas of the employees as well. A review and possible change in the department’s structure so that it would be able to fulfill the communication needs. (Kevin & Kotler, 2008)

Analysis of the internal environment

California pizza kitchen is an organization that has established itself as a food company especially in pizza services. Its concentration is mainly in the state of California where pizza is part of the American lifestyle. This in mind, CPK has a mandate to make its products attractive and of high quality to keep up with competition from other food companies. It has to implement strategical plans and evaluate its staff (Robins, et al 2008). Some of the company’s components can be drawn from various sources.

Tardiff et al, information industry directory, is a trade and industry publication that provides the source on organizational structure. An organization structure refers to the way work is divided among the organizational members and the lines of authorities. CPK adopts the decentralized structure. Numerous individuals are involved in decision-making which makes the decision process flexible and autonomous, unlike centralized structures (Tardiff, et al 1997). Such groups have the ability to rapidly adjust to change in the organization which allows the advantage of flexibility. This publication is reliable in that it gives detailed information on the type of organizational structures employed by the top 50 food companies in California. It provides up to date information that is truthful and thus adding to its reliability.

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In Holtz, et al blogging for business, business blogs and internet sites are available as sources that feature limited components of an organization. This blog site may help in advertisement or in trying to evaluate the performance of the staff in service rendering. These sources are not always reliable since rival companies have the ability to place false information in an effort to tarnish their competitors’ name.

In the cited media spectrum, another mainstream business press: Forbes on occasion will run features on components such as organization targets and how it plans to get there. This creates a good source of the organization planning and budgeting strategies. California pizza kitchen uses the SWOT analysis system to budgeting. This is the major method of analyzing a company as it grows and expands (Griffin, 2006). Strength, weakness, opportunity and threat form the basis of this method. This source is reliable since its’ sales is determined and based on the truthfulness of the information.

Social networks have the objective of focusing on the performance and the quality of people in the organization. Most of the time, the major goal of any organization is to attract a large or several consumer groups. With the help of social networks, management is able to estimate the influence that is brought about by the company’s services and the success of certain strategies of marketing. Such sources are relevant in that they reach the consumer at every level and make it possible for the firm to know detailed information concerning their services.

Mainstream business press such as pod cast and radio have helped increase the awareness of the public the cultures and values of the company. For instance, California pizza kitchen has introduced programs for kids. CPkids is a program for children below the age of 10 and allows the company to maintain its relationship with the community (Daft, 2000). The results are that the community is able to acknowledge the presence of the company’s programs and participation in the community.

Critical analysis of the corporate and business strategies of CPK

Business strategies

California pizza kitchen embraces the focused business strategy; this has led to the improved performance of the organization. By using this approach, the company has managed to attract many customers by leveraging the cross channel analytics hence optimizing the customer’s dynamics and needs. The company therefore is customer focused, performance focused, and employee focused. The customers and the employees are the main pillars of every successful organization and therefore they should be accorded necessary attention and proper treatment. The prerogative of California pizza kitchen management is to ensure that the employees are not only rewarded through the motivational trips but also through regular promotions. This strategy boosts the personalities of various employees within the different sectors of the company. In order to realize a wider magnitude of profit margins, California pizza kitchen lays strategies aimed at responding quickly to the customer needs. This is enhanced through the understanding of the customers deeply thus enabling the organization’s management change the business environment accordingly to suit them. Owing to the customer focused orientation, California pizza kitchen has managed to market their services and products online thus acquire more customers across the globe.

Corporate strategy

California pizza kitchen uses the related diversification strategy in order to realize her objectives. This has enabled the company achieve and exploit the economies of scope. The company therefore coagulates the available resources and the core competencies of her employees especially those in managerial hierarchy in coming up with viable policies which integrates the company to meet the international standards (Hill & Jones, 2010). This kind of strategy has enabled California pizza kitchen invest in new business ventures. The company will be able to do this without incurring additional costs thus enabling them realize their economies of scope.

Assessment of performances of strategies and factors that contributed to the success and failure

The success of the strategies of embraced at CPK are attributed to the following factors.

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Action Planning

The successful implementation of strategies at California Pizza Kitchen is attributed to the developed detailed action plans which are strictly adhered to b the management authority. The necessary and crucial steps of implementation have been clearly outlined in the work plan manual of the company. This includes various personnel who will be responsible for various executions of duties as stipulated by the management authority f the company. The action plan of the CPK allocates adequate resources and sets the time frames for accomplishment of various action steps. This therefore enables the CPK to effectively translate their broad strategy statements into simpler specific work assignments hence improved efficiency in execution of the company’s duties. This therefore greatly enhances the company’s attainments of her objectives.

Human resource factors

The human resource section of California Pizza Kitchen is part and puzzle of the strategic implementation. The personnel in the human resource section have high competency in handling of the organizations affairs. The human resource is responsible for allocating the resources to the activities of the organization. This includes the recruitment of the highly skilled personnel who are endowed with the responsibilities of monitoring and evaluation of the organizations’ affairs. The human resource in CPK often organizes the capacity building workshops for the company’s employees (Baltes, 2004). This equips the employees with the modern skills and technology of pursuing the organizations goals effectively.

Employees

The CPKs employees are people of high integrity and competency. The human resource sections of the CPK have enacted the policies, modalities and mechanisms of ensuring the recruited employees meet the optimal required standards. The decentralization of powers gives the employees of the CPK an opportunity to raise viable opinions aimed at developing the company and also raise the thorny issues which are detrimental to the performance of the company. The CPKs employees’ welfare is therefore well catered for, the participation of the junior employees in decision making on matters related to the development of the company makes the employees feel recognized and appreciated. This therefore greatly boosts the employees’ job satisfaction thus enhancing the company’s performance (Flood, 2000). The regular refresher courses steps up the employees’ skills of performing the company’s activities. Thus enhancing and embracing professionalism amongst the employees.

Culture

Cultural integration an association should be embraced by every organization (Daft, 2000). California Pizza Kitchen plays a key role in assisting the society achieve the developmental agendas, for instance CPK have successfully introduced the kids programs as part of their foundation. They therefore play a crucial role in the society through their contributions in fund raisings to promote and nurture talents in numerous sports events in the society. The organization carries out the advocacy issues on child care and molestation especially children below 10 years of age. CPK has therefore maintained her relationship with the community.

Ethical analysis of CPK

The management of CPK is dedicated to the employee commitment and satisfactory service delivery to her clients. In the quest of the organization to achieve her mission and vision, the following virtues are upheld by the leaders and the individual employees of CPK at all times.

Leadership

The heads of departments, supervisors and all personnel in the management hierarchy of CPK are people of high integrity. The employees of CPK are accorded the necessary support by their respective departmental leaders. This includes the provision of the necessary tools and equipment and also the creation of conducive working environment. The healthy and safe environment at CPK therefore enables the employees to comfortably discharge their duties (McMakin, & Lundgren, 2009). Vices such as gossiping, favoritism, and backbiting are detrimental to the organization and thus stringent measures have been put in place by CPK’s management to cope with situation in case of any reported incidences.

The employees of CPK are recognized by the management through rewards and promotions. To foster the employee commitments therefore, the management of CPK entrusts the employees with their responsibilities and therefore accords the employees minimal supervision (Savoie, 1990). The junior employees of CPK are allowed to have a say and power to make decisions in matters relating to the assigned task.

Clear documents and accountability

The documents and records regarding the running of various affairs and transactions at CPK are neatly kept for the purposes of accountability and are available for verification at any time upon request by the auditing firms.

Respect

The mode of treatment of the clients determines the clients’ satisfaction and the quest to be associated with the organization (Griffin, 2006). Respect is the utmost virtue which is exercised CPK. Unconditional respect is accorded to one another amongst the employees, the employer and the clients. All clients of CPK are accorded equal respect regardless of their social status, race, age, title and origin.

Recommendations

In regard to the review of the environmental analysis concerning CPK, it is necessary for the human resource division to come with the new products which tallies and caters for the customer’s taste and preferences. It is therefore the company’s prerogative to follow the information revolution and monitor the trends by leveraging the consumer insight hence delivering the high quality products (Speculand, 2009). The advancement on technological aspects also leads to the quality provision of services; this is an aspect which should be embraced by all the organizations in order to meet the global requirements. The implementation strategies should be formulated in a way that it links with the company’s objectives; this ensures that the realistic goals are achieved.

Conclusion

California pizza kitchen has managed to create a name that is respectable throughout the world and created vast opportunities for provision of jobs to different states. With its efficient service of pizza supply, the firm can be viewed as on the verge of becoming a global family style restaurant with the freshest ingredients. Mainstream press has largely assisted in the transformation and the growth of CPK into a top 50-food company. Strategic management involves the allocation of resources to support the strategies chosen by the organization to achieve its ambitions. The successful implementation of any project depends on the strategies and the approach used. The strategic management and implementation process therefore involves the integration of various management activities which includes the strategic control in monitoring and evaluation of the organizations progress. For the successful strategic implementation to be realized, a realistic organizational design and structure should be put in place. The development of the information and the decision processes should be done systematically as per the stipulate doctrines of the organization (Speculand, 2009). The human resource division which is responsible for steering the company’s affairs should follow the recommended procedures in managing the human resources including the approach to the leadership system, the reward schemes and also the staff recruitment on the basis of meritocracy and competence.

References

Alkhafaji, F.A. (2003). Strategic management: formulation, implementation, and control in a dynamic environment. New York , USA:Routledge.

Baltes, P. (2004). Strategic implementation: tools used to ensure strategic plans are completed, Minnesota: College of St. Scholastica.

Cravens, D. W. (2000). Strategic marketing. New York: McGraw Hill.

Daft, R. L. (2000). Management. New York: Dryden Press.

Flood, P. (2000). Managing strategy implementation: an organizational behavior perspective. USA: Wiley-Blackwell.

Griffin, R.W. (2006). Management. USA: Cengage Learning.

Hill, C.W.L. & Jones, G.R. (2010). Strategic Management: An Integrated Approach. South-Western Mason, USA: Cengage Learning.

Hollensen, S. (2003). Marketing management: A relationship approach. New Jersey, USA: Financial Times/Prentice Hall.

Holtz, S. Demopoulos, T. (2006). Blogging for business. New York: Kaplan Publishing.

Kevin, K. & Kotler, P. (2008). Marketing management. New Jersey, USA: Prentice Hall.

McMakin, A., & Lundgren, E. (2009). Risk communication: A hand book for communicating environmental, safety, and health risks. USA: Wiley-IEEE.

Robins, P. S.& T. Judge, T. A. (2008). Organizational Behavior. New Jersey: Pearson Prentice Hall.

Savoie, J.D. (1990). Innovations and trends in management development. Institute of Public Administration of Canada.

Speculand, R. (2009). Beyond Strategy: The Leader’s Role in Successful Implementation. USA: John Wiley and Sons.

Tardiff, J. C. Alampi, M. (1997). Information industry directory, 1998 Descriptive listings. New York: Gale Research.

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