Business Strategy

Porter's Five Competitive Forces Model:

Background:  Porter's Five Forces is a business strategy that is helpful to use in order to understand a specific business's situation. This strategy was developed in the year 1979 by Micael E. Porter, it lists five important forces that determines a business's power in the market.

Papa John's Competitive Five Forces:

Threat of Rivalry (HIGH): 
The threat of rivalry depends on how much competition there is amongst pizza businesses. Papa John's has a high rivalry level because they have a lot of competition against chained pizza franchises and local restaurants  A lot of other pizzas restaurants, that sells similar products and are about the same size as Papa John's, are in competition (i.g. Pizza Hut, Domino's Pizza, Little Caesar's). There are also family owned pizza bistros that are considered in competition with Papa John's due to the roughly comparable business size. Papa John's try to differentiate themselves with its fresh ingredients for a better pizza.

Threat of New Entrants (HIGH): 
Threat of new entrants level is based off of how easy it is for new businesses to enter the existing market competition. Papa John's threats of new entrants are high because it is relatively east to enter. Pizza restaurants are somewhat not as expensive as other businesses to open and enter. So pizza franchises and family owned pizzerias are continuously opening for those people who have enough capital. 

Threat of Substitution (HIGH): 
The threat of substitution level depends on how many other alternatives there are to a product and/or service (in this case it is pizza). Papa John's pizza substitution is very high because there is a relatively good amount of substitution to their pizza, the main product. Consumers have other choices to purchase like frozen pizza for a cheaper price or they can buy pizza for Costco for the maximum price of only $10. Things like that increase the level of substitution for Papa John's as high. 


Bargaining Power of Buyers (HIGH): 
The bargaining power of buyers all depends on how many other choices the customers have when it pertains to a good deal. With Papa John's bargaining power of buyers as relatively high, there are a lot of other places where customers can up and go to buy a similar pizza product that Papa John's offer, for a better price. There are a lot of other restaurants available for the customers to compare prices; if the prices are too high, the customers will tend to go somewhere else. But Papa John's, however, Papa John's creates an advantage for the competition by making their pizza a quality pizza by making the ingredients to be guaranteed to be fresh at all times. Papa John's also try to do as many promotions on their food selections in order to attract more customers.

Bargaining Power of Suppliers (HIGH): 
The bargaining power of suppliers pertains to how many other alternatives there are in purchasing their products from. For Papa John's the power of suppliers is high because Papa John's only buys their ingredients from QCC (Quality Control Center located in Canford, NJ). Papa John is not allowed to use or purchase any other ingredients elsewhere besides QCC every week, twice a week. For example, if there is a special in February like the cheeseburger pizza, consumers are most likely to purchase more of the promotion special. So, the QCC will increase the price of beef. 

Competitive Strategy 

         

   Because the pizza industry is a highly competitive industry, they are not only competing with companies like Pizza Hut, Domino's, Little Caesar's, but they are also competing alongside independently family owned pizza shops. 

            Papa John's focuses on a Industry-wide differentiation strategy. There are reportedly over 3,600 papa johns stores across the nation, mainly because it is a franchise company. 


 Store owners pay a fee of 5% of net sales to Papa John's International, in addition of about  7% of net sales on advertisement.  In January 2002, Papa John's became the first national pizza chain to make online ordering available to U.S. customers.

 Papa John's focuses on on providing better pizza for its customers, hence their slogan, "better ingredients better pizza" making them provide differentiation. Because of this advertisement, their pizza is a bit more costly than the average pizza. And also for the fact that Papa John's have  custom made pizzas for special occasions as well as pies, breadsticks, buffalo wings, and more. 

Business Processes

Papa John's used a combination of dynamic and structured processes to run their business. The structured processes are the ones where we understand exactly what to do and are used on day-to-day operations because we perfectly know the steps. On the other hand, the dynamic processes are demonstrated when things are changing all the time. After the definitions of structured and dynamic processes, we can classify which are the dynamic and structured processes used at Papa John's.

Papa John's structured processes are placing orders for the customers, purchasing material from the supplier, making payroll for their employees, doing daily inventories, taking care of the driver dispatch and the deliveries, dealing with the dough management and the MDOG (Management Daily Operating Guide).

In addition, Papa John's dynamic processes are dealing with the weather and the traffic to make the deliveries. Social networking is part of Papa John's dynamic processes because they use direct mail and discount emails and text to let their customers know about the store news like discounts and new kind of pizzas as the same of a website.

Value Chain

     The value chain for our local Papa John's is as followed. Starting with inbound logistics, we receive our entire inventory from one supplier. That supplier is the Quality Control Center (QCC) located in Cranford, NJ. From the QCC we receive the pizza dough, tomatoes to make sauces and all of our meat and cheese toppings. We place orders twice a week, on Sundays and Wednesdays, guaranteeing our fresh ingredients. Moving on to the operations and manufacturing section of the value chain, this is basically how we make the pizza. All employees are trained through an online program named ULearn. Through this program, employees are required, each month, to take courses to learn how to make different style pizzas, desserts, and appetizers. As for outbound logistics, this is how we receive orders. All Papa John's orders can be placed by phone and internet through our website or mobile app. We also offer delivery and carry-out to our customers. For Sales and Marketing, we advertise through direct mail offering specials and coupon flyers. We provide customer service with our employees. Our staff consists of an Insider, the person receiving and making order. The driver who delivers orders and the manager who supervises and assists with making sure orders are complete and delivered efficiently.