Domino’s Pizza Firm’s Operational Management

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Executive Summary

This report presents an analysis of the operational management of Domino’s Pizza enterprise. It elaborates the key strategies and functional issues that affect the business. Two key sections that included the strategic and basic operative issues of the business were analysed. The implemented approach was qualitative. Data was collected by administering questionnaire instruments to the staff, managers, esteemed customers, and suppliers. The area of research and analysis of the study focused on the Domino’s Pizza enterprise. The population that was used for the study comprised 800 people. 66 respondents were issued with questionnaires. Two hypotheses that were developed from the literature review were tested using the SPSS analysis version 21 software. The results from the research indicated that inappropriate handling of issues that relate to internal and external environments of the business such as those affecting employees, customers, and suppliers affect the operational performance of a business. It was also realised that performance of the business is related to proper operational management that touches on good deliveries and processes to customers and suppliers. They should also cover both internal and external environment of the business.

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Introduction

The accomplishment of business goals in every organisation depends on operational management approaches that put the demands of its customers into consideration. Such factors include experience, delivery of services, good relations with suppliers, and business environment that offers a fair competitive advantage to maximise profits. The best operation management approaches entails various forms that include enterprise resource planning, supply chain techniques, and total quality control among others. Involvement of employees in delivery of quality services to customers requires prioritisation of performance and service delivery cultures that focus on the vision of the enterprise. Businesses gain competitive advantages due to quality delivery; hence, a greater focus on products, services, and customer experiences that are based on higher quality is paramount to the success of the business. Other studies have highlighted quality, good service delivery, motivation, and teamwork as key factors that promote business performances. This study aimed at identification and analysis of the issues that affect the performance of the Domino’s Pizza enterprise.

Existing Literature on the Key Issues of Operational Management

Provision of Quality Results

Many researchers have noted that improved performance of businesses is based on the quality of operational management. Effectiveness of service delivery is based on customer’s needs. Therefore, the staff and management are expected to exceed the expectations of the customers to improve production in an attempt to gain market stability. Therefore, the managers should aim at surpassing such customer expectations (Kruger 2001).

Strategies of Operation

According to Correa et al. (2007), underperforming businesses fail to implement effective strategies in management of operations and organisational leadership. Working strategies should incorporate designs and management networks that provide both high quality physical output and services that are good and immensely desired by many customers. There should be combination of product development methods that include traditional approaches that emphasise on physicality and other strategies that embrace quality value packaging. The staff should possess current knowledge about technology and environmental friendly methods of packaging products (Correa et al. 2007).

Processes and Product development

Effective development of products and process selection should be determined with respect to the customer expectations, experience, and convenience of accessing such merchandise. Good market timing that facilitates effective and efficient delivery of the products to the market is essential. Although, a business can have high quality goods that are offered at favourable prices, poor timing results in improper introduction of such goods in the market. This situation further leads to reduction of sales; hence, the business can easily run into losses to poor operational management. Managers should consider competitors of the business. Therefore, they should adopt relevant approaches to maintain a competitive advantage over other players in the business field (Correa et al. 2007).

Supply

Most businesses experience high costs during supply of products to markets due to poor establishment of supply networks that results in congestion. Operational mangers should ensure that supply chains are straight and have minimal intermediaries that consume time and money to reduce operational costs while maximising profits (Fisher 1997).

Design

Businesses that deal with direct delivery of merchandise to the consumers should adopt a proper design that favours product development (Powell 1995). High performance is enhanced through incorporation of consumer needs in functional designs. Therefore, the business should be geared towards collective work and responsibility. A proper design in product development leads to delivery of good quality products. The designs can also be used when the management is determining the relevant costs of the products in the market. Moreover, good performance designs or operations lead to effective time management. This situation improves productivity significantly (Fisher 1997). In addition, other factors such as social, economic, and political aspects influence the decisions of customers; hence, a perpetual business requires proper operational and management design. Process design is a component of enterprise that elaborates on the complexity or simplicity of a given product that is produced. It should include selection of equipment and procedures that suit the desired production (Fisher 1997).

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Fisher (1997) revealed that design is also factored in the overall business operations. The factors that are considered under this design component include the premise location, orientation, layout, and capacity among others. Operation managers should ensure proper planning of an all-encompassing business capacity to meet the desired production demands. There is a need to determine proper business locations that ease accessibility of shoppers and merchants. This component of design should also be considered in terms of premise longevity. Other important factors that managers should consider in designing the location of the enterprise include operational expenses, initial capital infrastructure, and employees among others (Fisher 1997). Finally yet importantly, the nature of job is a crucial factor for operational designs. Responsibilities should be allocated in accordance with skills, competencies, and relevant selection techniques that promote delivery of quality (Fisher 1997).

System planning

Operational mangers should be conversant with the systems that are put in place to run the enterprise. They should be aware of extensions or replacements that are required by the systems. For example, when an increase in production is experienced, adjustments can be necessary to match the expanding capacity. Jung et al. (2008) posit that this situation can also be influenced by increased product demands. Smaller enterprises such as the Domino’s Pizza can require an increase in equipment installation, more workforce, and implementation of training programs and seminars to enhance quality delivery (Jung et al. 2008).

Leadership and Management

Effective leadership and management involve engagement of staff in teamwork in an attempt to improve participation. Good leaders encourage motivation of employees by embracing viable ideas that they bring forth for the success of the business. Many researchers have noted that provision of opportunities for employees to present their ideas through participatory approaches enhances discovery of talents that are beneficial to organisations (Jung et al. 2008).

Framework and Hypothesis Developed

Framework and Hypothesis Developed

The research framework was achieved by evaluating issues that affect the operational management and performance of Domino’s Pizza enterprise.

This framework led to generation of two hypotheses stated below.

  • H0: Effective operational management practices have no significant effect on the performance of the business enterprise.
  • H1: Effective operational management practices have significant effects on the performance of the business enterprise.

Research Method that was used

The study implemented a qualitative research design where measurement of variables and analysis of data were accomplished using statistical tools with respect to the tested hypotheses. Data was obtained from questionnaires that were administered to the managers, staff, customers, and suppliers. Operation managers and their assistances were chosen as the preferred leaders of the Domino’s Pizza enterprise. The employees were randomly selected while the customers were issued with questionnaires after every fourth purchase.

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The suppliers were issued with questionnaires upon delivery of raw materials. In some cases, the questionnaires were also administered at the respective collection points where such suppliers were available. The questionnaires were collected after two days for analysis. Two variables namely operational management and business performance issues were identified. These issues were measured in accordance with the operational management aspects such as leadership, planning, design, quality delivery, supply, and operational strategies (Sugiyono 2008).

The research processes adopted a census sampling method. In this case, the questionnaire used four-point indicators in Likert scale where scores were marked on response as 1 – strongly agree, 2- agree, 3 –disagree, and 4 – strongly disagree (Sugiyono 2008). The instruments were tested for their validity using the Pearson Product Moment Correlation (PPMC). They were indicated as having 0.3. Any questionnaire that had an R-value above 0.3 was regarded to be of higher validity (Cooper & Emory 2002). The reliability of the instruments was also tested using the Cronbach’s Alpha and a cut point was realised at 0.6. A correlation negative R-value and Cronbach’s Alpha were both identified to be above the set standards. Therefore, the validity and reliability of the instruments were recommended for the study (Hair et al. 1998).

Table1: Results for Validity and Reliability Test

No. Variables Total correlation Cronbach’s α Illustration
Operational management issues (x) 0.682 Reliable
Leadership and management
Planning
Design
Delivery
Quality of product
Supply strategy
0.522
0.63
0.57
0.733

0.64
0.45

Valid
Valid
Valid
Valid

Valid
Valid

Business performance (y) 0.644 Reliable

Results and Discussions

Characters of the Respondents

66 respondents were selected for the study. Male participants who were aged between 25 and 45 years comprised 64-percent of the sample population. Females added up to 36-percent and the majority age ranged from 32 to 40 years. The education levels of the respondents were also taken into consideration. Majority of them were holders of post-secondary education certificates. 23-percent of the sample population had attained degree level education. The managers were degree holders while 58-percent of the staff had attained diploma-level education.

The results from the measured variables indicated that the education levels of the employees had high correlation with their individual performances in areas such as leadership, planning, supply, delivery, and design among others. Most of them scored a mean that was above 3.

The tested hypothesis indicated a significant level at alpha 0.26 (0.35). This result strongly reveals that issues of operational management affect the performance of the Domino’s Pizza enterprise.

Significant at: α ≤ 0.05, t-table=1.950.

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Other Issues that were identified

Designs used in Domino’s Pizza

Most of the respondents, especially the staffs who carry out duties at the Domino’s Pizza enterprise, indicated that the system design used in the business is not effective. Proper assessment of customer needs is not properly conducted. This situation was evidenced by 30-percent of frequent customers who were interviewed. According to the measurements, they showed dissatisfaction with the character of products sold in the market (Fisher 1997). Majority of the employees revealed that there is a need to improve the production processes by adding new equipment and servicing existing ones. This situation has been aggravated by the increased demand for products in the region. Although there has been notable development in terms of facility layout and capacity improvement as indicated by the management and various staffs, a problem of location hinders rapid development of the enterprise due to unavailability of space and competition by other players in the industry. The location of nearby highways has also prevented the Domino’s Pizza enterprise from expansion.

Prices of Goods

Most of the customers appreciated the prices of the products that are offered by the Domino’s Pizza since they were lower than the ones of the competitors. The managers confirmed the above statement by mentioning that their products were produced because of lower production cost incurred. This situation has resulted in improved production and capacity expansion. It has also led to hiring of more staff to meet the increasing production demands. Such improvements have significantly boosted the economy of scale; hence, the business can effectively manage production costs. The increased purchase of the Domino’s Pizza products is because effective packaging that is offered by the business are environmental friendly and are liked by many customers. This situation has been confirmed by almost 50-percent of the suppliers and customers that were interviewed.

Quality

The quality was majorly appreciated with respect to service delivery and availability of clean products that were also needed by the customers. The managers also mentioned that they strongly took into account customer requirements to ensure conformity of products. The products are also good in features such as colour, texture, and variety. The Domino’s Pizza has a competitive advantage over its rivals due to production of diversified products that offer a wide range of selection to the customers. Most employees bragged that they possess innovative skills. They also mentioned that the business offers motivation and other incentives to those who invent new products that are not known by customers. This state of affairs has significantly improved the experiences of customers (Heiser & Render 2004).

Service

The Domino’s Pizza business only faces a problem of service delivery in terms of transportation, especially in cases that entail long distant customers who prefer their products to those of other competitors. A good number of customers raised the alarm of time and duration taken by the staff to deliver products to the market. The operational manager mentioned that solutions to such problems are underway. The company has also hired two transporters to curb as a temporary solution to the slow pace at which products reach the market. However, there is a need to purchase more vehicles to improve transportation and distribution of products to both uptown and countryside markets (Heiser & Render 2004).

Flexibility

The Domino’s Pizza enterprise has achieved excellence in delivery of diverse and varied volumes of products to the market because the management has encouraged incorporation of flexibility in the business. Products can be changed to suit the needs of customers at any given moment. Supple services that are rendered to the customers have heightened flexibility of the business. This situation has enabled it to manage its inventories effectively to ensure adequate production (Fisher 1997).

Market Order Winners and Qualifiers of Domino’s Pizza Enterprise

A bar chart showing the percentages of respondents on issues of operation management
Figure 1: A bar chart showing the percentages of respondents on issues of operation management

Order winner is a trait that is exhibited by a certain product that makes it gain a competitive advantage over others. Its unique trait enables customers to scramble for the product. On the other hand, a qualifier is a trait of a given product that it exhibits to meet the requirements of competitiveness in the market (Heiser & Render 2004). The Domino’s Pizza enterprise produces ready-made foodstuffs that have a variety of flavours. However, the research reveals that the company is always recognises the health of the customers. It also offers products that cover both normal and vegetarian customers. In addition, the enterprise also delivers quality products at comparatively lower prices than those that are offered by its competitors to capture both order winner and qualifier positions (Heiser & Render 2004).

Importance of Market Order-Winner and Qualifiers to an Alternative Market Segment

The Domino’s Pizza uses both market order-winner and qualifiers to ensure that its status in the market remains stronger. Indeed, it has surpassed its competitors in terms of the product quality. The relative production costs of such products by the Domino’s Pizza are less than the ones of its competitors. Therefore, it has gained stability that enables it to maintain market competitiveness. The business is currently adjusting to timely introduction of products in the market. It is also conscious of product specification due to the traits that are possessed by market order-winners and qualifiers. The Domino’s Pizza enterprise also ensures that the perception of consumers about the order winners and qualifiers match their discernment so that a fit is realised. This situation increases sales whilst improving product performance in the market (Heiser & Render 2004).

Product Life Cycle

Another criterion that is factored by the Domino’s Pizza enterprise is the product life cycle. The longevity of products is guaranteed through the product process and time of design. Most customers value the performance of products of Domino’s Pizza enterprise more than their price. Surprisingly, although the firm adopts a low price strategy, its products are of higher standards than those that are offered by the competitors (Heiser & Render 2004).

Operations of the Domino’s Pizza enterprise

The main operational objective of the Domino’s Pizza enterprise is to raise efficiency and establish stability based on excellence delivery. The operations at market level enable it to function fully through enhancement of performance, financial stability, and planning effectiveness. Marketing operations also ensure that the business strategies are aligned with the organisational objectives (Slack, Johnston, & Chambers 2007). Various activities that are undertaken in the business operations at market level include innovation, demand focus, and product advertisement. Other functions that are implemented entail effective budgeting and planning in an attempt to improve the performance of the enterprise, which is measured at specific periods. Every employee is entitled to a specific responsibility to ensure that high performance is achieved (Slack, Johnston, & Chambers 2007).

How the operation supports the market that it serves

Domino’s Pizza enterprise has a clearly defined market segment that enables easy identification of the various consumer demands. The enterprise also provides rich information about relevant products and other innovative ideas to both customers and suppliers. In addition, it offers sizeable discounts to customers, especially when launching new products and/or during peak seasons when sale volumes are high (Slack, Johnston, & Chambers 2007).

Service Delivery System used in the Domino’s Pizza

Proper service delivery system should encompass customers’ expectations and desires through application of various resources that include labour, time, place, experience, and business psychology among others. The enterprise provides products that can be consumed within the premise to save time whilst ensuring the best customer experience to enable repeat business (Slack, Johnston, & Chambers 2007). Domino’s Pizza service delivery system is open to the customers since they are involved in the process by offering opinions, which are highly regarded. This approach ensures quality delivery at all times to avoid procrastination. The premise is currently striving to implement decentralisation of service delivery where customers obtain the products at their doorsteps rather than making frequent visits to the premise (Slack, Johnston, & Chambers 2007). The business has established better ways of making orders using an online platform to facilitate product distribution. The service delivery system of the Domino’s enterprise can be classified as high contact since most of the operations are closer to customers. It ensures that the personnel frequently interact with the public to ensure quality that matches consumer expectations (Slack, Johnston, & Chambers 2007).

Delivery Management Infrastructure

The research revealed that the enterprise’s management has chosen facilities, equipment, and procedures that provide support to the business operations. This situation has made service delivery flexible. At the outset, the enterprise ensures products security throughout the distribution process to ensure that customers are safe and products are supplied under the best conditions and within the required period (Slack, Johnston, & Chambers 2007).

Furthermore, services delivery entails the use of vehicles to transport products to considerably long distances. Consumers who reside near the plant can obtain the products by either visiting the premise or the products can be delivered to their doorsteps using trolleys and motor cycles. The management also provides equipment for self-service to customers. The cost of delivery is substantially lower. As a result, most of the customers afford such deliveries to their doorsteps (Slack, Johnston, & Chambers 2007).

Importance of Service Delivery to Customers

Domino’s Pizza enterprise has benefitted a lot due to provision of good service delivery. At the outset, there has been increased repeat business. Good delivery has ensured increased sales volume due to recurrent customers. Most of the consumers who participated in the interview mentioned that they carry out continuous transactions with the enterprise due to the good and considerably cheap services that it offers. This situation has ensured development of good rapport between the enterprise and customers. Secondly, service delivery has heightened the reputation of the company. The research revealed that the enterprise has gained a status within its operational environment. As a result, its productivity has been increasing because of the intensifying sales that are favoured by quality. Nowadays, most customers have also lured their friends to shop from the Domino’s Pizza.

Recommendation

Successful operational management requires strategic planning to ensure effective and efficient running of activities an enterprise. From the results and discussions above, it can be deduced that Domino’s Pizza enterprise needs a few changes to realise effective operations despite its fair competitive environment (Jung & Wang 2006). Firstly, the business first should develop a functioning culture to enable its staff to focus on strategic goals that address the achievements of the business. In addition, the managers should adopt an effective plan that captures quality improvement, customer experience, market share, and competitions among others. The Domino’s Pizza enterprise should also include its performance measures as a part of the core values with a view of redefining its evaluation procedures to ensure frequent quality improvement (Lakhal, Pasin & Liman 2006).

Conclusion

The report has elaborated on the operational management and the issues that affect the performance of the Domino’s Pizza enterprise. It reveals that effective control of issues that surround operation management can lead to successful business performance. Therefore, managers should be creative and innovative. They should also consider customer needs and expectations without abandoning the welfare of staff and suppliers.

References

Cooper, D & Emory, D 2002, Business Research Methods, Irwin, Chicago.

Correa, H, Ellram, L, Scavarda, A & Cooper, M 2007, ‘An operations management view of the services and goods mix’, International Journal of operations and production Management vol. 27 no. 5, pp. 444-63.

Fisher, M 1997, ‘What is the right supply chain for your products?’, Harvard Business Review vol. 75 no. 2, pp. 105-16.

Hair Jr, J, Rolph, E, Anderson, R & Black, W 1998, Multivariate Data Analysis, Prentice-Hall, New Jersey.

Heiser, J & Render, B 2008, Operations Management, Prentice-Hall, New Jersey, NJ.

Jung, J & Wang, Y 2006, ‘Relationship between Total Quality Management (TQM) and continuous improvement of international project management (CIIPM)’, Technovation vol. 26 no. 5, pp. 716-22.

Jung, J, Su, X, Baeza, M & Hong, S 2008, ‘The effect of organisational culture stemming from national culture towards quality management deployment’, The Total Quality Management Journal vol. 20 no. 6, pp. 622-35.

Kruger, V 2001, ‘Main Schools of TQM: the big five’, The TQM Magazine, vol. 13 no. 1 , pp. 146-55.

Lakhal, L, Pasin, F & Liman, M 2006, ‘Quality management practices and their impacts on performance’, International Journal of Quality and Reliability Management vol. 23 no. 6, pp. 625-46.

Powell, T 1995, ‘Total Quality Management s Competitive Advantage: A Review and Empirical study’, Strategic Management Journal vol. 16 no. 1, pp. 15-37.

Slack, N, Johnston, R & Chambers, S 2007, Operations management, Prentice Hall, New York, NY.

Sugiyono, J 2008, Statistical for Research, Alfabeta Press, Bandung, Indonesia.

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