How Canadian Businesses Should Adapt To The Global Business Environment: A Case Study Of Boston Pizza

PESTLE Analysis of Boston Pizza

Boston Pizza is a Canada based pizza restaurant chain that has its franchises located in Canada, USA and Mexico. The company started in 1964 from Aberta, Canada with the name Boston Pizza and Spaghetti House by Gus Agioritis who was a Greek Immigrant in Canada. By 1970 the company had 17 outlets in west Canada, including 15 franchises and in the next 10 year the company opened 16 restaurants in British Columbia. In 1978, the company was acquired by Ron Coyle and in 1983 it was acquired by Treliving and Melville who divested the 15 restaurants to franchisees and turned one restaurant into a corporate training restaurant. They also established operation standards for the company. By 1995, the company grew to 95 restaurants in West Canada making more than 110 million CAD in sales and became a huge success in Canada. By 2012, the company had 348 restaurants working under the brand in Canada alone with another 40 restaurants operating in USA and Mexico. As of 2012, the revenue of the company was estimated to be around 943.1 million CAD (Bostonpizza.com, 2018; Shaw, 2016). Currently two of the biggest competitors of Boston Pizza include Dominoes Pizza and Pizza Hut (owler.com, 2018).

The aim of this study is to analyze the business environment in Canada for Boston Pizza and the challenges and opportunities posed by the Canadian market, understand how the competitors have reacted to the business environment and its efficacies, identifying the tools and strategies that can be used to ensure global entry and market expansion and developing recommendations for Boston Pizza based on it.

Analysis of the business environment is an important strategy that helps to identify the internal and external factors that can influence the performance of the business (Prajogo, 2016). This process involves the assessment of the opportunities and threats present in the market which can be used in the decision making process by the management. The process also helps to align the business strategies to the environment of the business (Belás et al., 2015). Due to the dynamic nature of the consumer market where the demands and expectations of the customers are constantly evolving and changing which causes changes in the market. Such environmental factors can significantly impact the environment and therefore it is necessary to analyze the environment (Virglerová et al., 2016). One of the most effective strategies for the analysis of the environment is PESTLE which provides a bird’s eye view of the business environment and process which can help the managers and strategy developers to understand their position in the market and understand the future position the company can hold (Khan et al., 2015). The PESTLE analysis helps to assess various factors that forms a part of the business environment such as Political, Economic, Social, Technological, Legal and Environmental (Zalengera et al., 2014; Venkatachalam, 2018). Discussed below is the PESTLE analysis for Boston Pizza.

SWOT Analysis of Boston Pizza

Political Factors: Boston Pizza is a multinational company operating from Canada, USA and Mexico. With each region of operations the political factors such as governmental and state policies needs to be considered. If the local governments are in favor of the growth of Boston Pizza then it can help the company to grow in those regions, proliferating the number of restaurants which in turn can increase employment in the areas and provide the people with a recreational opportunity. The policies also play an important role in the business setup and therefore the success of the company. Thus places where the state or local policies can favor the growth of Boston Pizza would be the best options for the company (Bostonpizza.com, 2018; Shaw, 2016; openpr.com, 2016).

Economic factors: The economic system of a place where the Boston Pizza restaurants and outlets operate has a significant role in the business. The overall operations of the business can be influenced by the Gross Domestic Products, Per Capita Income and macro economy of the region. Additionally, the rates of unemployment and inflation also influence the business. Regions that have a well developed economy and foreign direct investments can help to ensure better success of the outlets and restaurants of Boston Pizza (openpr.com, 2016).

Social Factors: These factors are related to the people of the regions where the business operates in and influenced by the beliefs, culture and religion of the people. The main social factors that can impact the business include the demography, life expectancies and lifestyle. Locations where the consumption of fast food is high, or this a high urban population has more chances of success for the company (Shaw, 2016).

Technological factors: Development of technologies which helps in online food ordering, easy payments and live tracking of food delivery can help to promote the sales of the company. Thus by using such technologies Boston Pizza can ensure its future growth. Since Boston Pizza is a multinational company, developing such technologies can help the company to increase its market reach (Khan et al., 2015).

Legal Factors: Legal factors such as the national and state rules and regulations associated with the food and hospitality industry, food safety policies, and occupational health and safety policies and labor policies needs to be followed and respected to ensure that the company can keep on operating from those regions. Additionally, the company also should adhere to the standards of food quality to support its future sustenance (Venkatachalam, 2018).

Competition from Dominoes Pizza and Pizza Hut

Environmental Factors: Environmental factors such as safety and hygiene of the premises is important that can reduce the risks of accidents and adverse health impacts on the customers as well as the employees. Additionally strategies such as recycling and optimization and reducing wastage can help to implement environmental sensitivity to the business and help to develop the brand image and loyalty among the customers (Zalengera et al., 2014).

SWOT analysis is another strategy that can help to analyze the strengths, weaknesses, opportunities and threats of the business, and can help the management to develop strategies that can be used to convert weakness to strengths and threats to opportunities (Bull et al., 2016; Blockeel et al., 2016). Discussed below is the SWOT analysis for Boston Pizza:

Strengths:

• It is one of the biggest casual dining business in Canada
• Renovations are done every 7 years which increases the sales
• Has a good brand position and wide channels for distribution
• The business attracts a wide customer base
• Competitive pricing
• Food items are free of trans fat
• 6 Menu items with Heart and Stroke health Check

Weaknesses:

• Challenge to maintain the brand image across all the 300+ outlets
• Older outlets are resistant towards change
• The budget for media campaigns are influenced by the sales from previous campaigns
• Some promotions lack effective measurements for success
• Heart & Stroke Health Check™ is not well promoted
• Lacks ‘bench strength’ due to inexperienced marketing team
• Formalized process of market review does not exist which can cause miscommunications
• The company always expects to cross the previous targets.

Opportunities:

• Takeout delivery has become more popular
• Customers prefers restaurants that has takeout options
• Increase in the trend of wellness, diet consciousness and healthy eating
• Strong demand for low calorie and low fat food
• Online food ordering is becoming more popular

Threats:

• Reduced demand for processed food after the maple leaf incident
• Increase in competition from Dominoes Pizza and Pizza Hut which affects the market of Boston Pizza
• Economic recession

(Bostonpizza.com, 2018)

In order to address the changes in the business environment it is necessary that the environmental factors are addressed by the business and thereby ensure its continuance in the market. The competitors of Boston Pizza (Dominoes and Pizza Hut) have reacted to the business environment in Canada in the following ways:

• The companies have selected the regions that have governmental policies that are favorable to food chains such as Dominoes and Pizza Hut. This has allowed the companies to flourish in these regions and proliferate their outlets thereby increasing their revenues. The strategy has helped both Dominoes and Pizza hut to become successful in Canada and have captured a big market segment away from Boston Pizza (Peng, 2017).
• Dominoes and Pizza Hut opened their outlets in regions that have the highest per capita income, GDP share and employment rates and have avoided the regions that have a high inflation or unemployment rates. This have helped to facilitate an increase in the customer base and company revenues as the factors support higher spending of the people compared to regions that has high unemployment and inflation. Also by selecting regions that has good foreign investments have also ensured better revenues from those locations (Sheehan et al., 2018).
• Selecting a region that has more social acceptance for fast food have helped the competitors of Boston Pizza to prosper its operations in various regions of Canada. The companies have actively sought out the places that have a good consumption of fast food and good life expectancy of the people which have helped to ensure better sales. Also, selecting regions with high number of urban population and metropolitan lifestyle also helped to further increase the sales (Jogaratnam, 2017).
• In order to adapt to technological advancements and environmental challenges, the companies have utilized technologies that can allow online order placement, easy payments and live tracking of food which have helped to attract more customers (Bharwani& Talib, 2017).
• The companies have also ensured that the legal regulations and framework/policies relating to the control of food quality, hygiene and safety as well as labor laws and occupational health and safety policies are being followed across all the centers along with any additional legal requirements pertaining to a region or state to ensure that the companies can continue their operations in those regions without violating any laws (Jogaratnam, 2017).
• Additionally, environmental sensibility and awareness have been adopted by the competitors of Boston Pizza by implementing policies to reduce wastage, optimize resource usage and recycling. This has also helped to develop a good image for the brands in the market (Sheehan et al., 2018).

In order to overcome the competition in the market from Dominoes Pizza and Pizza Hut it is vital that Boston Pizza use different tools and strategies to expand its business further and increase its global reach/presence. Discussed below are some of the most effective strategies/tools:

Introducing new products: Boston Pizza can introduce new products in the market which are currently not on the menu of the competitors.

Expand to new locations: Opening stores in new regions where Dominoes or Pizza hut do not operate can help to capture those markets. This can be achieved through creating more franchises.

Increasing Brand value: The Company can use CSR strategies to increase the brand image and positive media coverage

Purchasing smaller companies: Since Boston Pizza is already an international brand with a significant economic strength; it can buy out smaller companies other locations worldwide that is showing a promising growth. This can help to overcome competition in those regions due to the already established fame.

Developing partnerships or mergers: Boston Pizza can develop partnerships or mergers with select hotel businesses in other countries which can help them to minimize the economic risks of the business.

Expanding beyond Canada, USA and Mexico: Boston Pizza have seen a significant success in Canada as well as in USA and Mexico, which suggests that the customer like the brand. Expanding out of Canada, USA and Mexico and entering other countries such as UK, Germany, France, Spain, Holland, Denmark, Sweden, Norway, Finland, Australia, Hong Kong and Japan can further help Boston Pizza to increase its market share and overcome competition.

Tools and Strategies for Market Expansion

(Jogaratnam, 2017; Peng, 2017; Bharwani & Talib, 2017)

Based upon the findings above some recommendations can be made for Boston Pizza that can help to increase the functional excellence on a global basis:

Attracting and retaining talented workers: Boston Pizza can increase its operational excellence by developing policies to attract and retain experienced and skilled workers. This strategy can ensure that the company’s operations adhere to the best practices and quality standards. Providing rewards and recognition of excellent performers can help to encourage better performance from the workers (Peng, 2017).

Incorporating innovation and excellence in the work culture: Developing a work culture that is based on excellence and innovation can help the company to implement new ideas that can attract more customers and improve market share and penetration thereby fostering growth of the company (Kageyama & Kosuga, 2017).

Using strategically aligned practices: Work practices that are strategically aligned to the organizational goals and values can help the company to implement actions that are specific to the organizational needs and thus promote operational and functional excellence (Jogaratnam, 2017).

Customer retention: retaining customer is one of the most significant strategies that can help to promote better brand image and also ensure long term growth and success of the company in the market and overcome the competition (Sheehan et al., 2018).

Conclusion:

From the discussion above it can be understood that even though Boston Pizza have seen a significant growth since its beginning which have helped it to expand beyond Canada and into the US and Mexican market. However due to the presence of global giants such as Dominoes Pizza and Pizza Hut, the market share of the company has been drastically affected. PESTEL and SWOT analysis have shown that the company still has some opportunities through which it can address the change in the business environment. By understanding how the competitors have reacted to the business environment can also provide valuable strategic insights to Boston Pizza that it can use to overcome its challenges. Recommendations have been made based on such studies that can help the company to grow further and achieve more success in the future.

References:

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Recommendations for Boston Pizza

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