International Business (Domino's Pizza) Essay Example | Topics and Well Written Essays - 1750 words

International Business (Domino's Pizza) - Essay Example The paper will discuss the methods of international expansion the company used to date and its appropriate development methods, Domino's Pizza methods using in different markets, as well as the possible combination of international expansion methods. The paper will also critically appraise the current strategy and give appropriate recommendations for further development. 2. The most appropriate Domino's Pizza development method, as well as the best method of international expansion is licensing and franchising: "We have developed a large, global, diversified and committed franchise network that is a critical component of our system-wide success and our leading position in pizza delivery. As of March 21, 2004, our franchise store network consisted of 6,878 stores, 63% of which were located in the contiguous United States" (7). These system has doubtless advantages namely for such global international company as Domino's Pizza. The franchise system allows minimizing such negative barriers of international expansion as language barrier, local governmental measures and the registration of trademark. The system also provides the adaptation of Domino’s Pizza rights and regulations to the cultural differentiations of various countries: â€Å"We also adapt our system to the local market to accommodate cultural differences in delivery vehicles, store design, signage, etc. Pizza toppings are the most common cultural adaptation. We have pickled ginger in India, squid in Japan and green peas in Brazil† (3). Domino’s Pizza quick service restaurants in different countries are not a wholly subsidiary of Domino Pizza Company (like McDonald’s in the UK). 's in the UK). They are based on Franchising Agreement with Domino's Pizza International, Inc. A franchisee must have appropriate local market, business strategies and experience knowledge: "Internationally, we have also been able to grow our franchise network by attracting franchisees with business experience and local market knowledge. We generally use our master franchise model, which provides our international franchisees with exclusive rights to operate stores or sub-franchise our well-recognized brand name in their markets" (7). Through well developed franchising system Domino's Pizza Company gains constant royalty payments which allow the company to develop an d expand to international markets: "A substantial percentage of our earnings is generated by our committed, owner-operator franchisees through royalty payments and revenues to our vertically-integrated distribution system. Royalty payments yield strong profitability to us because there are minimal corresponding company-level expenses and no capital requirements associated with their collection" (3). The growth and revenue of Domino's Pizza is mainly provided by its franchising system development and royalty payments from numerous stores throughout the world. The company has chosen the most appropriate method of international expansion. Domino's Pizza makes franchising agreements with appropriate firms working in relevant market segments and having local market features knowledge.