Domino's PESTLE Analysis

Published in Companies category by MBA Skool Team

Here is a detailed PESTLE analysis of Domino's which examines political, economic, social, technological, legal & environmental factors.

Political Factors:

The political factors in the Domino's PESTLE Analysis can be explained as follows:

Dominos is a multinational pizza restaurant chain which was founded in America in 1960. Dominos operates in around 85 countries worldwide. Its’s important for it to adjust itself as per the political environment and political risks in the system of the respective countries. Regulations related to wages, hygiene and food quality varies from country to country and it is of utmost importance to comply with these regulations which thereby affects their cost. These varying regulations also affect the packaging and labelling of Dominos.

Political stability and level of consideration of restaurants sector in the country’s economy are important for Dominos being a fast food restaurant. Trade barriers of the host country might protect Dominos but the trade barriers levied by other countries may harm the business of Dominos. Many countries have pricing regulations for services that have affected the overall profitability of Dominos. Other political factors include Intellectual property protection, taxation, wage legislation, industry safety regulations in the service sector, anti-trust laws related to restaurants, etc.

Image: Wikimedia

Economic Factors:

Below are the economic factors in the PESTLE Analysis of Domino's:

Some of the significant economic factors that affect Dominos’ s business performance and conditions are economic growth, consumer services industry growth rate, inflation, deflation, unemployment rate, interest rate, wage policies. The type of economic system whether it is monopoly, oligopoly or a perfect competition is also an important economic factor to consider.

Every country has its own GDP growth rate and this affects how Dominos grows in the near future. Also, the exchange rate of the country Dominos operates in impacts the profitability of Dominos pizza. Thus,x stability of the host country currency is important as an unstable currency would discourage investors. Other than this, if there is an increase in the unemployment level of any country, there would be greater supply of jobs than demand and this would mean that there would be more people who would work a lower wage thereby lowering the costs of Dominos Pizza. Finally, Govt intervention in free market and related services would affect Dominos too.

Social Factors:

Following are the social factors impacting Domino's PESTLE Analysis:

The culture of an organisation in an environment is impacted by society’s culture and method of doing things. This culture includes certain social factors like demography trends, power structure in society, participation of women in workforce, etc. These factors impact both the operational and marketing aspect of Dominos. Thus a thorough understanding of customers, their beliefs, attitudes, values, their lifestyle and level of education, all of it would help Dominos to design its product and marketing messages. The demographics of a segment i.e. their ages and genders have a vast impact on whether a product can be marketed to them. Also, the class distribution of the population is extremely important as Dominos would not be able to promote a premium product to the general audience in the market if the majority of them belong to lower class; rather they would go for niche marketing. Dominos should ensure that it doesn’t lose the connection to the target segment’s interests and priorities. It should be fully aware about the level of health standards and the importance of environment protection that prevails in the industry.

Technological Factors:

The technological factors in the PESTLE Analysis of Domino's are mentioned below:

Technology is rapidly disrupting a lot of industries. It has the potential to transform the price structure and the competitive landscape of an industry in a very limited amount of time. Thus, it become extremely important for Dominos to continuously innovate in order to survive in the market and also to maximize profits. It helps the firm not only to move towards their goal of becoming a market leader but also to avoid obsolescence in near future. Though Dominos is a pizza company but its differentiating factor has always been its mastered execution which has made it very easy and convenient to get its products. Dominos has been a leader in terms of pioneering ways to deliver pizza. Now, it has come up with the Dominos Innovation Garage where it lets the employees try, test and create ideas that can eventually be used at original stores.

Other technological factors impacting Dominos include mobile and internet penetration for people to use its app or access the website, level of acceptance of technology in the society, acceptance of mobile payments, empowerment of supply chain partners, etc.

Following are the legal factors in the Domino's PESTLE Analysis:

The legal framework and government institutions differ from country to country and many of them do not have it robust enough to protect the intellectual property rights of any organisation. If the data is stolen then Dominos will lose its competitive edge and have a high chance of failure. Thus, it needs to assess the data laws in the countries it operates in and comply with the same. In terms of enforcement, there are business laws placed by the government that are different from the home market, there are discrimination laws to ensure protection of employees in Dominos to ensure fairness, same opportunities regardless of age, gender, religion, etc. Heath and safety laws are also created to avoid the horrible conditions that the workers faced during industrial revolution. There are also some laws to ensure a certain level of quality and reasonable price for some products to keep the consumer safe which thereby increases the costs of Dominos.

Environmental Factors:

In the Domino's PESTLE Analysis, the environmental elements affecting its business are as below:

This aspect highlights the different environmental trends and standards in different markets that affects the profitability of the organisation. Dominos needs to know the level of consumer activism regarding environmental concerns that will help them to develop environmentally friendly products. It is important to know the per capita and national carbon emissions of the operating country to better predict its environment policy. Also knowing the waste management policy of these countries would enable Dominos to adhere to the waste management requirements.

The environmental standards and regulations highly impacts the decisions such the location of the plant, its product development and pricing strategy, etc. Relying of renewal energy is expensive but it receives huge support both from the government and the customer base who may be ready to even pay a premium price to Dominos for its products. Finally, the current weather conditions has a significant impact on Dominos Pizza for the transportation of both the raw materials and the finished goods, specially in case of unexpected monsoon.

To conclude, the above Domino's PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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