Papa John's Case Study
Business Level Strategy:
Papa John’s use of differentiation as a business level strategy is a major component of their continued success. Creating pizza with higher quality ingredients was rare in the industry when Papa John’s introduced this concept. Papa John’s not only differentiates through superior quality but also through a significant emphasis on legendary customer service. Papa John’s uses these elements of differentiation to create superior brand loyalty.
Corporate Level Strategy:
Corporate level strategies of Papa John’s consist of diversification by investing in businesses outside the scope of the pizza industry, strategic alliances with other companies, as well as a global strategy. Diversification is evidenced through the formation of the variable interest entity BIBP commodities and vertically integrating into the printing business to lower marketing costs. Papa John’s has formed strategic alliances with Six Flags and Sony in order to increase brand awareness among consumers. Papa John’s global strategy is evidenced through international growth. Papa John’s had zero restaurants outside the US in 1997 that number has grown to over five hundred in 2007.
Quantitative Analysis:
International sales during 2007 increased by 28% over 2006 this is shown in greater detail in Appendix A. The domestic increase in sales is less than 1%. This data signifies the potential of continued growth internationally. Company owned domestic store revenue decreased significantly from 2006 to 2007. This is evidenced visually in Appendix B. A large part of this decrease can be attributed to the sluggish American economy. Avoiding this volatility by divesting from company owned stores by selling them to franchisees will allow for a more consistent and diverse revenue stream.
Internal Analysis:
Papa John’s economy of scale has given them a strength most competitors do not possess. In this fragmented industry this is valuable, rare, costly to imitate, and is exploited
Papa John’s use of differentiation as a business level strategy is a major component of their continued success. Creating pizza with higher quality ingredients was rare in the industry when Papa John’s introduced this concept. Papa John’s not only differentiates through superior quality but also through a significant emphasis on legendary customer service. Papa John’s uses these elements of differentiation to create superior brand loyalty.
Corporate Level Strategy:
Corporate level strategies of Papa John’s consist of diversification by investing in businesses outside the scope of the pizza industry, strategic alliances with other companies, as well as a global strategy. Diversification is evidenced through the formation of the variable interest entity BIBP commodities and vertically integrating into the printing business to lower marketing costs. Papa John’s has formed strategic alliances with Six Flags and Sony in order to increase brand awareness among consumers. Papa John’s global strategy is evidenced through international growth. Papa John’s had zero restaurants outside the US in 1997 that number has grown to over five hundred in 2007.
Quantitative Analysis:
International sales during 2007 increased by 28% over 2006 this is shown in greater detail in Appendix A. The domestic increase in sales is less than 1%. This data signifies the potential of continued growth internationally. Company owned domestic store revenue decreased significantly from 2006 to 2007. This is evidenced visually in Appendix B. A large part of this decrease can be attributed to the sluggish American economy. Avoiding this volatility by divesting from company owned stores by selling them to franchisees will allow for a more consistent and diverse revenue stream.
Internal Analysis:
Papa John’s economy of scale has given them a strength most competitors do not possess. In this fragmented industry this is valuable, rare, costly to imitate, and is exploited