pestel and vrine analysis for papa john's
TRANSCRIPT
Muhammad Aqdas Muzaffar
Background
PESTEL in China
VRINE
Recommendation
References
Background PESTEL VRINE Recommendation References
Introduction• Papa john’s is the third largest take-out and pizza
delivery restaurant chain in the world with headquarters in Jeffersontown, Kentucky.
• Brand slogan: Better Ingredients. Better Pizza. • Papa john’s was founded by John Schnatter at age of 22
and the first papa john’s store was opened in 1985• Internationally, there are over 4,600 Papa John's
establishments, including over 3,200 in the U.S. and the remainder spread among 34 other countries. In china, Papa john’s has more than 200 brunches, and this country became the biggest market of Papa john’s outside the United States
Background PESTEL VRINE Recommendation References
Papa John’s in China
Background PESTEL VRINE Recommendation References
PESTEL Analysis of the Chinese Market
Background PESTEL VRINE Recommendation References
Political
• Political environment is stable• In 2004, trade agreement with WTO to
encourage the development of the tertiary industry including fast-food industry
• In 2010, “Notice on further improving the food industry”
• Pointed the significance of developing food industry.
• “National food industry development plan”
Background PESTEL VRINE Recommendation References
Economic
• China’s economy is developing greatly, which is the world’s no.2 economy
• Suffered from Severe economic condition since 2008
Background PESTEL VRINE Recommendation References
Economic
• GDP
Background PESTEL VRINE Recommendation References
Economic
• GDP per capita
Background PESTEL VRINE Recommendation References
Economic
• Chinese disposable income per capita
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Economic
• National Bureau of Statistics of China: January-October in 2015, Chinese food industry revenue reached 2.6246 trillion RMB, increased by 11.8% compared to same time in 2014.
Background PESTEL VRINE Recommendation References
Sociocultural
• Trend of having western fast food——pizza become a popular food
• More and more Chinese people tend to go to restaurants rather than cooking by themselves
• Chinese people like to dine in rather than take out
• Chinese cities are crowded
Background PESTEL VRINE Recommendation References
Technological
• The development of Internet:• Social media (weibo, wechat, etc.)• Online order• App (Experience sharing app like
Dazhongdianping, etc.)
Background PESTEL VRINE Recommendation References
Environmental
• Pollution of food packaging is severe• Green packaging and environmental
friendly processes became popular.• Save water and energy in stores is
important
Background PESTEL VRINE Recommendation References
Legal
• In 2009, Implement the new “Food safety law”
• In 2015, the revised version of the “Food safety law”
• Government enhanced the monitor and control of the food industry.
Background PESTEL VRINE Recommendation References
Effective Operating System • Commissary System and Domestic QC Centre
SystemValuable? • High quality pizza with fresh ingredients
• Economies and efficiencies of scale
Rare? • Scarce• Equally (or more) effective operating system not very
common
Inimitable & Non-substitutable?
• Difficult and costly to imitate• Almost inimitable for small companies in the industry• No patents or copyrights
Exploitable? • Well-organized to exploit the system• Long presence in market and established relations with
suppliers
Background PESTEL VRINE Recommendation References
Background PESTEL VRINE Recommendation References
Arenas
Current Situation:• Food industry: western food, pizza• Market segments: young people• Geographic area: Chinese market
Background PESTEL VRINE Recommendation References
Vehicles
Current Situation:• Some franchised stores are explored to
the expired ingredient and Husi rotted-meat scandal in China
Background PESTEL VRINE Recommendation References
Vehicles
Recommendation• Use high quality franchisee:• Choose franchisee under specific rules:
Lowest net capital, current asset, cash flow and previous performance
• More monitor and control on individual stores
Background PESTEL VRINE Recommendation References
Differentiators
Current Situation:• Papa John’s dose not express its
differentiators to Chinese customers and can not compete with rivals effectively
Recommendation:• Set the image of high quality pizza in
Chinese market
Background PESTEL VRINE Recommendation References
Staging and Pacing
Current Situation:• Planned to open 20 more stores per year.
In recent two years, more than 60 stores closed down.
Recommendation:• Slow down the pace of expansion
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Economic Logic
• Cost side: Remain the same• Revenue side:• Advertising:• 1. Cooperate with search engine like
Baidu• 2. Social media like weibo and wechat
Background PESTEL VRINE Recommendation References
Chines Business, (2015). To reverse the tide pizza magnate Papa John let go of Beijing and Tianjin guide. [online] Available at: http://www.cb.com.cn/info/2015_1121/1153943.html [Accessed 25 Nov. 2015].
Fortunechina.com, (2015). Papa John's lessons. [online] Available at: http://www.fortunechina.com/business/c/2013-05/27/content_157731.htm [Accessed 25 Nov. 2015].
Kraneshares (2015), International Monetary Fund 2015 Forecast- China Largest Contributor to Global GDP Growth. [Online] Available at: http://www.etftrends.com/2015/04/international-monetary-fund-2015-forecast-china-largest-contributor-to-global-gdp-growth/ (Accessed: 24 November 2015 ).
Lutz, A. (2015). Papa John's just made subtle dig at Domino's. [online] Business Insider. Available at: http://uk.businessinsider.com/papa-johns-is-focusing-on-pizza-2015-5?r=US&IR=T [Accessed 25 Nov. 2015].
Background PESTEL VRINE Recommendation References
National Bureau of Statistics of China (2015), The Total Revenue of Social Consumption Increased By 11% in October, 2015. [Online] Available at:http://www.stats.gov.cn/tjsj/zxfb/201511/t20151111_1271251.html (Accessed: 24 November 2015).
Statista, (2015). Papa John's: restaurants in China 2014 | Statistic. [online] Available at: http://www.statista.com/statistics/279095/number-of-papa-johns-restaurants-in-china/ [Accessed 25 Nov. 2015].
Wong, V. (2014). How Papa John’s Turned Beijing Into a Money Pit. [online] Businessweek.com. Available at: http://www.bloomberg.com/bw/articles/2014-11-07/how-papa-john-s-turned-beijing-into-a-money-pit [Accessed 25 Nov. 2015].
Background PESTEL VRINE Recommendation References