Chapter 2 Case Analysis: Pizza Wars Come to Campus Nicole Chick, Kaylee Acierno, Rani Naseem, Chris Dimando, Liang Xi, Mohammed

Chapter 2: Strategy and Sustainability What is strategy? A set of decisions and plans and policies by which a company aims to gain advantages over its competitors (Skinner, 1969) Strategy is an organization’s action plan to achieve the mission (Heizer and Render, 2009) Elements of strategy include: Environment Corporate/Business Operations Strategy Implementation

Chapter 2: Strategy and Sustainability Types of strategy include Blue Ocean (emerging new market) Undefined market Capture the attention of a new market and retain Red Ocean (traditional market) Market it defined Low prices (low-cost strategy) Premium value (differentiation strategy)

Chapter 2: Strategy and Sustainability Red Ocean; Low-Cost Strategy Provide low-cost, standardized products to the general public Dollar General franchises Wal-Mart Differentiation Strategy Produce exclusive customized products to serve all segment within a market Coach Purses Apple brand electronics

Chapter 2: Strategy and Sustainability Implementing the chosen strategy involves many competitive factors Quality, Time, Flexibility, and Price/Cost Meeting the launch date After-sale support from the supplier Environmental impact

Consistent pattern of decisions Internal analysis 2-15 Consistent pattern of decisions Internal analysis External Mission Distinctive Competence Objectives (cost, quality, flexibility, delivery) Policies (process, quality systems, capacity, and inventory) Operations Strategy Business strategy Functional strategies in marketing, finance, engineering, human resources, and information systems Results Corporate strategy

Case Descriptions- Business Strategy BSB., Inc. is currently operating in the low-cost strategy of the Red-Ocean segment. Provide cheap food Aimed towards the defined market of college students, on/off campus

Case Descriptions- Internal Analysis Mission BSB is running three food-service facilities : Large cafeteria The Dogwood Room which is located on the second in the same building, serves the upscale luncheon buffet. Small grill BSB,Inc is under contract to provide food services 6000 students and 3000 faculty, staff, and support personnel. Mission: BSB., Inc. will provide the highest-quality food possible at the lowest prices, to students on and off campus. The hours of operations and flexible menu items will satisfy each student, and ensure they return. 1. housed on the ground floor of the main administration building. this cafeteria is open for breakfast, lunch, and dinner daily. 2. which is located on the second in the same building, serves the upscale luncheon buffet. 3. located in the corner of a recreational building. It is open from 11 A.M to 10 P.M. Daily and until midnight on Friday and Saturday nights.

Case Descriptions- External Analysis Objectives 20% of food prepared in dorm rooms, 36% of food delivered from off campus, 44% of food consumed off campus

Case Descriptions- External Analysis Objectives Reasons students aren’t satisfied : Lack of variety Class schedule Cars Microwaves/refrigerators Objectives: Provide low-cost food to students Catch student’s interest in the food selection, retain business Create an improvement to current strategy that will overcome future competition 20% of food prepared in dorm rooms, 36% of food delivered from off campus, 44% of food consumed off campus Lack of variety. The student's class schedules did not always fit with cafeteria serving hours A large percentage of students have cars, Large percentage of students have refrigerators and microwave ovens in their rooms

Case Descriptions- Strategy Implementation Policies Case Descriptions- Strategy Implementation Results Improvements: Expand menu to include pizza Delivery to entire campus Strategy Implementation: More employees, training, bicycle Results Sales/profits/customer satisfaction increased over the past 10 months Improvements: Ms Kershaw decided to expand the menu at the grill to include pizza. Started a delivery service that covered the entire campus. In this way students will have not only greater variety but also food delivered quickly to their rooms. Strategy Implementation: To achieve this goal, a pizza oven was installed, the existing personnel were trained to make pizzas, and additional personnel were hired to deliver the pizzas by bicycle. In order to keep the costs down and provide fast delivery, the combinations of the topping s are limited. Results Sales over the past 10 months had steadily increased, along with profits. Follow-up customer surveys indicated a high level of satisfaction with the reasonably priced and speedily delivered pizzas

Case Descriptions- Process, Inventory, Capacity, and Quality Systems The strain on the grill: Added Competition: Pizza Hut and Dunkin’ Donuts are expected to open for business soon. Name-brand facilities might attract more business Larger variety in food More demand Longer delivery time More space/ equipment The strain on the grill: As the demand for pizza grew, so did the need for space and equipment. The capacities of existing equipment and space allocated for making and cooking pizzas now were insufficient to meet demand, and deliveries were being delayed. The capacity problem resulted in an increase in delivery time. Added Competition: Pizza Hut and Dunkin’ Donuts are expected to open for business soon. Name-brand facilities might attract more business Larger variety in food

Strengths and Weaknesses Conducted surveys to define customer needs and trends Adapted to customer needs by providing Pizza and offering campus delivery Weaknesses Insufficient capacities of equipment and space causing inability to meet demand and delayed delivery Limited amount of toppings available for Pizza causing customers to look elsewhere Strengths – Showing a strength in internal personnel, Kershaw started conducting surveys very shortly after becoming a manager. This allowed Kershaw to identify and adapt to the needs of the customer by providing pizza services with the option of delivery. Weaknesses- When adapting to customer needs, Kershaw took space from grill activities for the pizza oven, preparation, and staging areas. When the demand grew for the pizzas, the need for more space and equipment also grew. Without capable existing equipment and space, there was a delay in delivery time. Originally, the decision to offer a limited amount of toppings had been to increase delivery time and increase efficiency. When sales began to level off, Kershaw began to wonder if this had become a weakness. The supervisor of the grill had informed her that there was an increasing number of requests for toppings that they did not offer. Since there has been a rise of specialty pizza competition in the off-campus market, Kershaw’s market was affected.

Opportunities and Threats Close proximity campus provides most amenities students require allowing BSB, Inc. to take advantage of their campus location Possibility to focus on and market to students that have cars and purchase food off campus Threats New Food Court offering services from popular privately owned companies in direct competition with BSB, inc. “Pizza Wars” off-campus and the increase in demand of specialty pizzas Opportunities – The on-campus location of BSB, inc. allows students to receive their services much quicker than off-campus locations. Kershaw implemented bicycle delivery which reduces delay caused by traffic, allowing BSB the opportunity to offer ease of service to the students. BSB, inc. has a large amount of opportunity to market to students with cars that purchase food off campus. Off-campus delivery and services require more time and Kershaw can use this to her advantage to draw in more customers. Threats – The university has decided to build a new food court that will be offering other similar foods, causing competition for Kershaw to rise. The biggest threat of the new food court is the name brand companies that will be placed. Dunkin Donuts, Taco Bell, and Pizza Hut all have established brand names in the market and attract loyal customers despite higher prices and slower services. Larger corporations might also have the financial means to locate their businesses in a more convenient location than BSB, inc. This would prevent Kershaw’s previous strength of offering quick convenient services to students to become less dominant. “Pizza Wars” off-campus has caused the general market to demand more toppings and variety in their pizza. Since Kershaw increased efficiency by offering less toppings, this is the biggest external threat to the business. Customers that may have specific preferences or enjoy more variety will turn to off-campus businesses to satisfy their wants.

Case Questions/Answers How would you describe the mission of BSB, Inc., on this campus? Does BSB, Inc., enjoy any competitive advantages? Low-cost food for students on campus Variety of meals/ operating times Satisfy student needs: cut down off-campus deliveries and minimize in-home preperation Specific to pizza business: quick delivery for students Students in college often do not have much money to spend. Low cost food is a must. It is also important that the variety of food is prominent, students will get bored easily with the same foods every day. The location of classrooms/dorms in comparison to the location of food is also important, as is the operating hours. Winter months will cause students to flock towards the facilities close to their classrooms/dorms. Mission should always reflect the best interest of students; they are the reason for the campus and need to have their requests met

Case Questions/Answers Initially, how did Renee Kershaw choose to use her own pizza operations to compete with off-campus eateries? What were her competitive priorities. Focus on the convenience aspect: delivery On-campus delivery= speedy service Low-prices in comparison to large pizza chains off-campus Delivery was Renee’s initial competitive advantage. She knew that no other facility on campus delivered, and many facilities off campus take long because they operate using a car rather than a bike, like Kershaw. Students may also take note that they are supporting their local businesses on campus. Low prices are always attractive to students; large restaurant chains often include many overhead costs in the price of their product. Kershaw is able to offer very low prices due to her limited toppings and small business aspect.

Case Questions/Answers What impact will the new food court have on Kershaw’s pizza operations? What competitive priorities might she choose to focus on now? Increased competition More food variety: Name-brand companies with popular items Locations: closer/farther relative to students classes throughout the day Needs to focus on heavy advertisement to out-weigh popular food chains Emphasize the delivery convenience The increased competition of Dunkin Donuts and Pizza Hut will have an effect on Kershaw’s operations because they are most-likely heavily advertised in the media. Kershaw’s business is fairly small and probably does not have the means to advertise as heavily as they do. The students are more familiar with the name brands, and might remain loyal to them, rather than BSB., Inc. facilities. Larger franchises may be able to buy larger/more convenient space for their facilities to be built on campus. This may turn out to be more convenient for the students (close to dorm/classroom) She needs to make sure her company’s name is everywhere on campus, emphasizing the convenience of delivery in these advertisements could sway the decisions of where to eat for the students.

Case Questions/Answers If Kershaw were to change the competitive priorities for the pizza operation, how might this impact her operating processes and capacity decisions? A move to quality and variety require more resources Efficient workspace enables operations excellence If Kershaw were to change her competitive priorities within her pizza operation, a few changes will need to be made with regards to the operating process and capacity allocation. If she is to move with the competition and offer more variety in toppings, then not only will service/delivery time will increase, but so will her operating costs due to increased stock. This change will disallow for her to keep as many premade pizzas on hand due to her already limited space and increasing ingredients, which will lead to slower delivery times and a more expensive pizza. Without a price increase, profit margins are sure to narrow, making it harder to employ the increase in help needed. An increase in capacity would most likely be needed if she were to implement these changes without sacrificing delivery time. Perhaps she should move the pizza operation to its own separate building. This would free up storage capacity and allow for Kershaw to design an efficient workspace required for employees to compete with the new competition. I believe a careful study of the importance of the pizza sector of her business before she makes any changes. Perhaps if the pizza sector is not as viable as she once thought, she could leave the pizza operations as they are, and add different products that were previously not offered on campus to ensure she maintains the competitive edge.

Case Questions/Answers Can you outline a positioning strategy for Kershaw’s operation on campus? Transition from generic low-cost pizza to high-end gourmet pizza Advertise its durable competitive advantage of fast on campus delivery Extended menu with same ingredients Kershaw can go two ways with her position in this pizza war. If she chooses to eventually exit due to fierce off campus competition, then it would be wise to make no change to her current operation. This will effectively lose market share as time continues, however this can give her ample time to develop and offer new cutting edge products to offer the students. With that being said, I believe she should stay away from this approach. Her current advantage of proximity to campus allows her to deliver her quality, generic premade pizzas faster than off campus competition. This advantage she has of location should allow her to still compete with the larger, off campus rivals even if she must sacrifice some speed of delivery for higher quality, gourmet pizzas. Also by offering other products that use the same ingredients as pizza, such as a calzone, she can offer more with the same ingredients. By offering a high quality gourmet pizza, she differentiates BSB by offering fast, friendly, quality pizza that uses an assortment of quality toppings and delivering it faster than the competition for a similar price. This is accomplished by cost control and possibly moving to a different building if additional space is needed due to increase in market share. I believe the quality stance is the best fit for Kershaw to compete on campus.

Possible Solutions for BSB, Inc. Encourage Pizza Business: Heavily advertise delivery service “Toppings of the month” Coupons/membership card Offer calzones To stay above the competition, Kershaw needs to promote her delivery service as the #1 motive for students to stay loyal to her pizza. This is something no other facility on campus offers, and is a great asset to her company. Kershaw should feature “Toppings of the month” or something similar; With a standard set of toppings every month, plus a few irregular toppings to keep the students attention. A variety of toppings will ensure that the students are satisfied. Coupons offered to students will encourage sales: Possibly offer coupons for free delivery with purchase of $’x’ or more. Membership cards will increase loyalty and add to customer retention. Calzones use the same ingredients and would cost nothing additional to make. A different variety for students